cpc — Audit Report / Information 2020

Dec 25, 2020

CHIEFTEK PRECISION CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’

REPORT DECEMBER 31, 2020 AND 2019

---

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of CHIEFTEK PRECISION CO., LTD.

Opinion

We have audited the accompanying parent company only balance sheets of CHIEFTEK PRECISION CO., LTD. (the “Company”) as of December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Company’s 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, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s 2020 parent company only financial statements are stated as follows:

~2~

Adequacy of allowance for valuation loss on individually recognized obsolete or damaged inventories

Description

Refer to Note 4(9) for the accounting policy on inventory, Note 5 for the information on accounting estimates and assumption uncertainty in relation to inventory valuation, and Note 6(3) for the details of inventory. As of December 31, 2020, the balances of inventories and allowance for inventory valuation losses were NT$477,611 thousand and NT$27,594 thousand, respectively.

The Company engages primarily in the manufacture and sales of linear guides and linear blocks. As the end-users require high-quality performances, there is a risk of inventory devaluation or obsolescence. The Company measures its inventories at the lower of cost and net realizable value. The net realizable value of the Company’s inventories aged over a certain period is calculated based on the historical extent of inventory clearance and degree of price markdown. The allowance for valuation loss mainly arises from individually identified obsolete inventories, and the procedures of such identification involves subjective judgment, which might result in high degree of estimation uncertainty. Considering that the Company’s inventory and the allowance for inventory valuation losses are material to the financial statements, we, considered the allowance for inventory valuation loss as one of the key audit matters.

How our audit addressed the matter

We performed the following audit procedures in response to the abovementioned key audit matter:

• A. We obtained understanding of the Company’s operations and its industry characteristics to assess the reasonableness of the Company’s policies on and procedures for allowance for inventory valuation loss.

• B. We verified whether the dates used in the inventory aging reports that the Company applied to value inventories were accurate and complete. We recalculated and evaluated the reasonableness of allowance for inventory valuation losses in order to confirm whether the reported information was in line with the Company’s policies.

• C. We selected samples from inventory items by each sequence number to verify its net realizable value and to evaluate the reasonableness of allowance for inventory valuation loss.

~3~

Authenticity of sales revenue

Description

Refer to Note 4(23) for the accounting policy on revenue recognition and Note 6(16) for the details of operating revenue.

The Company sells a variety of linear guides, ball screws and linear modules, and the target market reaches globally, including Taiwan, Asia, Europe, America and so forth. Since the customers are numerous and scattered, and the number of transactions is voluminous, it will take a longer time to verify their authenticity. Thus, we considered the authenticity of sales revenue as one of the key audit matters for the year.

How our audit addressed the matter

We performed the following audit procedures in response to the abovementioned key audit matter:

• A. We confirmed the process of revenue recognition, including reviewing customer basic information and credit limit table, revenue recognition basis, authorizing procedures and collection processes. Also, we selected samples from different customers to evaluate the management’s effectiveness of internal controls over sales revenue recognition.

• B. We performed a series verification sample test for the sales revenue transactions of the year, including vouching customers’ orders, shipping orders, export declaration documents, customer receipt records and sales invoices or subsequent receipts, to confirm whether the sales revenue transactions really occurred.

• C. We tested the manual accounting entries recognized for sales revenue, including verifying the transactions nature of the relevant manual entries and checking the relevant supporting documents. For the same purpose, we also checked the relevant supporting documents and the rationality of the debit notes issued after the balance sheet date.

Responsibilities of management and those charged with governance for the parent company only financial statements

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

~4~

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

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

Auditors’ responsibilities for the audit of the parent company only financial statements

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

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

• A. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

• D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’

~5~

report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

• F. Obtain sufficient appropriate audit evidence regarding the parent company only 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 audit. We remain solely responsible for our audit opinion.

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

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

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

~6~

Lin, Yung-Chih

Independent Accountants

Lin, Tzu-Shu

PricewaterhouseCoopers, Taiwan Republic of China February 25, 2021

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying 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, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

~7~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(2) and 12 6(2) and 7 7 6(23) 5 and 6(3) 6(4) 6(5) and 8 6(6) 6(7)(8) and 7 6(23) 6(5)	December 31, 2020 AMOUNT % $ 399,455 12 15,480 1 170,192 5 210,545 6 8,983 - 3,380 - 450,017 13 33,329 1 1,291,381 38 412,044 12 1,361,380 40 129,601 4 101,250 3 25,160 1 48,474 2 3,237 - 4,462 - 2,085,608 62 $ 3,376,989 100	December 31, 2019	December 31, 2019
		AMOUNT $ 399,455 15,480 170,192 210,545 8,983 3,380 450,017 33,329 1,291,381 412,044 1,361,380 129,601 101,250 25,160 48,474 3,237 4,462 2,085,608 $ 3,376,989	AMOUNT $ 419,025 18,984 154,733 267,370 1,630 - 509,433 23,604 1,394,779 295,776 1,105,943 130,248 120,143 26,060 57,161 2,135 1,925 1,739,391 $ 3,134,170	%
Current assets 1100 Cash and cash equivalents 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 1220 Current income tax assets 130X Inventories 1410 Prepayments 11XX Total current assets Non-current assets 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1915 Prepayments for equipment 1920 Guarantee deposits paid 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets				13 1 5 8 - - 16 1
				44
				10 35 4 4 1 2 - -
				56
				100

(Continued)

~8~

CHIEFTEK PRECISION CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December 31, 2020 December 31, 2019 Notes AMOUNT % AMOUNT % 6(9)(26) $ 358,000 11 $ 220,000 7 6(16) 97 - 2,349 - 77,992 2 79,155 3 47,725 1 17,045 1 6(10) and 7 94,979 3 119,496 4 6(23) - - 15,109 - 6(6)(19)(26) 5,214 - 4,912 - 6(11)(26), 8 and 9 92,278 3 99,028 3 676,285 20 557,094 18 6(11)(26), 8 and 9 434,924 13 402,202 13 6(23) 18,973 - 4,211 - 6(6)(19)(26) 126,586 4 126,431 4 6(12) 7,163 - 6,664 - 6(4) - - 12,783 - 587,646 17 552,291 17 1,263,931 37 1,109,385 35 6(13)(15) 811,876 24 811,876 26 6(14) 440,667 13 440,667 14 6(13)(15) 162,016 5 144,552 5 29,394 1 17,047 1 731,978 22 640,037 20 ( 36,323) ( 1) ( 29,394) ( 1 ) 6(13) ( 26,550) ( 1) - - 2,113,058 63 2,024,785 65 6(6), 7 and 9 $ 3,376,989 100 $ 3,134,170 100

Liabilities Current liabilities 2100 Short-term borrowings 2130 Current contract liabilities 2150 Notes payable 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2280 Current lease liabilities 2320 Long-term liabilities, current portion 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2640 Net defined benefit liabilities 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Common stock Capital reserves 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interest 3500 Treasury stocks 3XXX Total equity Significant Contingent Liabilities and Unrecognized Contract Commitments 3X2X Total liabilities and equity

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

~9~

CHIEFTEK PRECISION 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 per share amount)

Items

Year ended December 31 2020 2019 Notes AMOUNT % AMOUNT % 6(16) and 7 $ 1,068,294 100 $ 1,040,726 100 6(3)(12)(21)(22) ( 703,276) ( 66) ( 652,831) ( 62) 365,018 34 387,895 38 6(4) ( 68,823) ( 7) ( 82,238) ( 8) 6(4) 82,238 8 94,712 9 378,433 35 400,369 39 6(7)(12)(21)(22) and 7 ( 32,598) ( 3) ( 44,232) ( 4) ( 80,601) ( 7) ( 81,062) ( 8) ( 61,232) ( 6) ( 59,576) ( 6) 12 ( 320) - ( 547) - ( 174,751) ( 16) ( 185,417) ( 18) 203,682 19 214,952 21 6(17) and 7 473 - 2,575 - 6(18) 8,667 1 4,904 1 6(6)(7)(8)(19) and 12 ( 32,061) ( 3) ( 18,081) ( 2) 6(5)(6)(20) ( 7,077) ( 1) ( 9,131) ( 1) 6(4) 74,062 7 15,140 1 44,064 4 ( 4,593) ( 1) 247,746 23 210,359 20 6(23) ( 44,651) ( 4) ( 35,715) ( 3) $ 203,095 19 $ 174,644 17 6(12) ($ 750) - $ 550 - 6(23) 150 - ( 110) - 6(4) ( 6,929) ( 1) ( 12,347) ( 1) ($ 7,529) ( 1) ($ 11,907) ( 1) $ 195,566 18 $ 162,737 16 6(24) $ 2.51 $ 2.15 $ 2.51 $ 2.14

4000 Sales revenue 5000 Operating costs 5900 Gross profit 5910 Unrealized gain from inter-affiliate accounts 5920 Realized gain from inter-affiliate accounts 5950 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment loss 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income (loss)(Net) Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8311 Actuarial (loss) gain on defined benefit plan 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8300 Other comprehensive loss for the year 8500 Total comprehensive income for the year Earnings per share (in dollars) 9750 Basic 9850 Diluted

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

~10~

CHIEFTEK PRECISION 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)

2019 Balance at January 1, 2019 Profit for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) for the year Appropriations of 2018 earnings: Legal reserve Special reserve Cash dividends Stock dividends Balance at December 31, 2019 2020 Balance at January 1, 2020 Profit for the year Other comprehensive loss for the year Total comprehensive income (loss) for the year Appropriations of 2019 earnings: Legal reserve Special reserve Cash dividends Purchase of treasury stocks Balance at December 31, 2020	Notes		Share capital - common stock		Capital reserve				Retained Earnings	Retained Earnings	Retained Earnings	Other Equity Interest	Treasury stocks		Total
							Legal reserve		Special reserve		Unappropriated retained earnings	Financial statements translation differences of foreign operations
	6(4) 6(15) 6(15) 6(13)(15) 6(4) 6(15) 6(15) 6(13)		$ 738,069 - - - - - - 73,807 $ 811,876 $ 811,876 - - - - - - - $ 811,876		$ 440,667 - - - - - - - $ 440,667 $ 440,667 - - - - - - - $ 440,667		$ 97,280 - - - 47,272 - - - $ 144,552 $ 144,552 - - - 17,464 - - - $ 162,016		$ 12,367 - - - - 4,680 - - $ 17,047 $ 17,047 - - - - 12,347 - - $ 29,394	$ 664,519 174,644 440 175,084 ( 47,272 ) ( 4,680 ) ( 73,807 ) ( 73,807 ) $ 640,037 $ 640,037 203,095 ( 600 ) 202,495 ( 17,464 ) ( 12,347 ) ( 80,743 ) - $ 731,978		($ 17,047 ) - ( 12,347 ) ( 12,347 ) - - - - ($ 29,394 ) ($ 29,394 ) - ( 6,929 ) ( 6,929 ) - - - - ($ 36,323 )	$ - - - - - - - - $ - $ - - - - - - - ( 26,550 ) ($ 26,550 )	$ 1,935,855 174,644 ( 11,907 ) 162,737 - - ( 73,807 ) - $ 2,024,785 $ 2,024,785 203,095 ( 7,529 ) 195,566 - - ( 80,743 ) ( 26,550 ) $ 2,113,058

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

~11~

CHIEFTEK PRECISION 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)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Expected credit impairment loss Loss on (reversal of) inventory market price decline Share of profit of subsidiaries, associates and joint ventures accounted for under equity method Unrealized gain from inter-affiliate accounts Realized gain from inter-affiliate accounts Depreciation Gain arising from lease modifications Amortization Impairment loss Interest income Interest expense Changes in operating assets and liabilities Changes in operating assets Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Prepayments Changes in operating liabilities Current contract liabilities Notes payable Accounts payable Other payables Net defined benefit liabilities Cash inflow generated from operations Dividends received Interest received Interest paid Income tax paid Net cash flows from operating activities

For the years ended December 31, Notes 2020 2019 $ 247,746 $ 210,359 12 320 547 6(3) 15,354 ( 1,561 ) 6(4) ( 74,062 ) ( 15,140 ) 6(4) 68,823 82,238 6(4) ( 82,238 ) ( 94,712 ) 6(5)(6)(21) 72,342 76,397 6(6)(19) ( 251 ) - 6(7)(21) 10,627 2,334 6(7)(8)(19) 9,049 - 6(17) ( 473 ) ( 2,575 ) 6(20) 7,077 9,131 3,504 6,239 ( 15,779 ) 38,203 56,825 64,006 ( 7,353 ) 2,579 44,062 40,232 ( 9,725 ) ( 10,003 ) ( 2,252 ) 2,255 12,357 ( 97,182 ) 30,680 ( 50,565 ) 1,010 ( 62,392 ) ( 251 ) ( 230 ) 387,392 200,160 6(4) - 121,770 473 1,720 ( 7,246 ) ( 9,120 ) ( 47,328 ) ( 123,189 ) 333,291 191,341

(Continued)

~12~

CHIEFTEK PRECISION 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)

CASH FLOWS FROM INVESTING ACTIVITIES Interest received from borrowings and lending among related parties Cash paid for acquisition of investments accounted for under equity method - subsidiaries Cash paid for acquisition of property, plant and equipment Interest paid for acquisition of property, plant and equipment Acquisition of intangible assets Increase in prepayments for equipment Increase in guarantee deposits paid Increase (decrease) in other non-current assets Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Payments of lease liability Increase in long-term borrowings Decrease in long-term borrowings Payments of cash dividends Buy-back of treasury shares Net cash flows from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

For the years ended December 31, Notes 2020 2019 $ - $ 855 6(4) ( 48,503 ) ( 18,623 ) 6(25) ( 299,522 ) ( 176,768 ) 6(5)(20)(25) ( 5,627 ) ( 3,326 ) 6(7) ( 783 ) ( 21,031 ) ( 46,597 ) ( 114,417 ) ( 1,102 ) ( 568 ) ( 2,537 ) 1,511 ( 404,671 ) ( 332,367 ) 6(26) 138,000 100,000 6(26) ( 4,869 ) ( 4,825 ) 6(26) 400,000 200,000 6(26) ( 374,028 ) ( 175,020 ) 6(15) ( 80,743 ) ( 73,807 ) 6(13) ( 26,550 ) - 51,810 46,348 ( 19,570 ) ( 94,678 ) 6(1) 419,025 513,703 6(1) $ 399,455 $ 419,025

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

~13~

CHIEFTEK PRECISION CO., LTD.

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

1. HISTORY AND ORGANIZATION

• (1) CHIEFTEK PRECISION CO., LTD. (the “Company”) was incorporated on October 19, 1998 as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) and other related regulations. The Company primarily engages in the research, development, manufacture and sales of miniature linear guides, miniature ball screws, miniature linear modules, electro-optics equipment and semiconductor process equipment.

• (2) The common stocks of the Company were originally listed on the Taipei Exchange from December 28, 2012, and have been authorized to trade in Taiwan Stock Exchange since December 23, 2020.

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

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These parent company only financial statements were authorized for issuance by the Board of Directors on February 25, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard (“IASB”)
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’ Note: Earlier application from January 1, 2020 is allowed by the FSC.	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. Amendment to IFRS 16, ‘Covid-19-related rent concessions’

This amendment provides a practical expedient for lessees from assessing whether a rent concession related to COVID-19, and that meets all of the following conditions, is a lease modification:

• (a) Changes in lease payments result in the revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

~14~

• (b) Any reduction in lease payments affects only payments originally due on or before June 30,2021; and

• (c) There is no substantive change to other terms and conditions of the lease.

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

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

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

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

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

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

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

~15~

(1) Statement of compliance

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

(2) Basis of preparation

• A. Except for the defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation, these parent company only financial statements have been prepared under the historical cost convention.

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

(3) Foreign currency translation

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

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

• B. Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon retranslation at the balance sheet date are recognized in profit or loss.

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

• D. All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘other gains and losses’.

~16~

(4) Classification of current and non-current items

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

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

• (b) Assets held mainly for trading purposes;

• (c) Assets that are expected to be realized within 12 months from the balance sheet date;

• (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than 12 months after the balance sheet date.

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

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

• (b) Liabilities arising mainly from trading activities;

• (c) Liabilities that are to be settled within 12 months from the balance sheet date;

• (d) Liabilities for which the repayment date cannot be extended unconditionally to more than 12 months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(5) Cash equivalents

• A. Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amount of cash and subject to an insignificant risk of changes in value.

• B. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents.

• (6) Accounts and notes receivable

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

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

(7) Impairment of financial assets

For debt instruments measured as financial assets at amortized cost, at each reporting date, the Company recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (“ECLs”) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant

~17~

financing component, the Company recognizes the impairment provision for lifetime ECLs.

• (8) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

• (9) Inventories

• Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses. When the cost of inventory is higher than net realizable value, a write-down is provided and recognized in operating costs. If the circumstances that caused the write-down cease to exist, such that all or part of the write-down is no longer needed, it should be reversed to that extent and recognized as deduction of operating costs.

• (10) Investments accounted for using equity method / subsidiaries

• A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

• B. Unrealized gains or losses resulting from inter-company transactions with subsidiaries are eliminated. Necessary adjustments are made to the accounting policies of subsidiaries, to be consistent with the accounting policies of the Company.

• C. After acquisition of subsidiaries, the Company recognizes proportionately the share of profit and loss and other comprehensive income in the income statement as part of the Company’s profit and loss and other comprehensive income, respectively. When the share of loss from a subsidiary exceeds the carrying amount of Company’s interest in that subsidiary, the Company continues to recognize its share in the subsidiary’s loss proportionately.

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

• E. According to Regulations Governing the Preparation of Financial Statements by Securities Issuers, “ Profit for the year” and “Other comprehensive income for the year” reported in an entity's nonconsolidated statement of comprehensive income, shall equal to “profit for the year” and “Other comprehensive income” attributable to owners of the parent reported in that entity's consolidated statement of comprehensive income. Total equity reported in an entity's non-

~18~

consolidated financial statements, shall equal to equity attributable to owners of parent reported in that entity’s consolidated financial statements.

(11) Property, plant and equipment

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

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

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

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

Assets		Useful lives	Useful lives	Useful lives
Buildings and structures	3	～	50	years
Machinery and equipment	2	～	12	years
Transportation equipment	5	～	8	years
Office equipment	1	～	8	years
Other equipment	2	～	10	years

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

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

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:

• (a) Fixed payments, less any lease incentives receivable;

• (b) Amounts expected to be payable by the lessee under residual value guarantees; and

~19~

• (c) Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The Company subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost comprising the following:

• (a) The amount of the initial measurement of lease liability;

• (b) Any lease payments made at or before the commencement date;

• (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.

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

• D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize the difference between remeasured lease liability in profit or loss.

• (13) Intangible assets

• A. Trademarks and patents

Separately acquired trademarks of corporate identity system and patents are stated initially at cost. Trademarks and patents have a finite useful life and are amortized on a straight-line basis over their estimated useful lives of 10 to 20 years.

• B. Computer software

• Computer software is stated initially at cost and amortized on a straight-line basis over its estimated useful life of 3 years.

• C. Turn-key professional technique

• The subsidiary, CSM Maschinen GmbH ( Which was merged into cpc Europa GmbH with the approval of the local authority since 2020.), was commissioned to develop and design linear guide, robotic arm and equipment for exhibition which are stated initially at cost and amortized on the economic life of Turn-key professional technique of 10 years.

• D. Other intangible assets

Technology contribution is stated initially at cost, and regarded as having an indefinite useful life as it was assessed to generate continuous net cash inflow in the foreseeable future.

~20~

Technology contribution is not amortized, but is tested annually for impairment.

(14) Impairment of non-financial assets

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

(15) Borrowings

• A. Borrowings comprise long-term and short-term banks loans. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

• B. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a other non-current assets for liquidity services and amortized over the period of the facility to which it relates.

• (16) Notes and accounts payable

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

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

• (17) Derecognition of financial liabilities

• A financial liability is derecognized when the obligation specified in the contract is either discharged or cancelled or expires.

• (18) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(19) Employee benefits

• A. Short-term employee benefits

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

• B. Pensions

~21~

• (a) Defined contribution plan

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

  - (b) Defined benefit plan

     - i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

     - ii. Remeasurements arising on defined benefit plan are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.

• C. Employees’ compensation and directors’ and supervisors’ remuneration

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

• (20) Income tax

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

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

• C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at

~22~

the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

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

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

• F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(21) Share capital

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

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

(22) Dividends

• Prior to 2018, dividends are recorded as liabilities in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

From 2019, cash dividends are recorded as liabilities in the Company’s financial statements in the period in which they are resolved by the Board of Directors. Stock dividends are recorded as stock dividends to be distributed in which they are resolved by the Company’s shareholders, and are reclassified to ordinary shares on the effective date of new shares issuance.

~23~

(23) Revenue recognition

Sales of goods

• A. The Company manufactures and sells linear guides, ball screws and linear modules. Sales are recognized when control of the products has been transferred, being when the products are delivered to the external customer, and there is no unfulfilled obligation that could affect the buyer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

• B. Sales revenue is recognized based on the contract price, net of output tax and sales returns and discounts. The sales are made with a credit term of 30 ~ 180 days after monthly closing. As the time interval between the transfer of committed goods and the payment of customer does not exceed one year, the Company does not adjust the transaction price to reflect the time value of money.

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

(24) Government grants

Government grants are recognized at their fair value only when there is reasonable assurance that the Company will comply with any conditions attached to the grants and the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes expenses for the related costs for which the grants are intended to compensate.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY:

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

(1) Critical judgements in applying the Group’s accounting policies

None.

(2) Critical accounting estimates and assumptions

Evaluation of inventories

• A. As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory

~24~

consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is calculated based on the inventory clearance and historical date of discounts. Therefore, there might be material changes to the evaluation.

• B. As of December 31, 2020, the carrying amount of inventories was $450,017.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

	December	31,2020	December	31, 2019
Cash on hand	$	1,249	$	1,165
Checking accounts and demand deposits		398,206		417,860
	$	399,455	$	419,025

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

• B. The Company has no cash and cash equivalents pledged to others as of December 31, 2020 and 2019.

(2) Notes and accounts receivable, net

2019. Notes and accounts receivable, net
		December	31, 2020		December	31,2019
Notes receivable		$	15,480		$	18,984
		December	31,2020		December	31, 2019
Accounts receivable		$	171,312		$	155,533
Less: Allowance for doubtful accounts	(		1,120)	(		800)
		$	170,192		$	154,733

• A. The ageing analysis of notes receivable and accounts receivable (including related parties) that were past due is as follows:

Not past due Less than 30 days 31 to 90 days 91 to 180 days Over 180 days	December	Notes receivable 15,480 $ - - - - 15,480 $ 31,2020	December	Notes receivable 18,875 $ 109 - - - 18,984 $ 31,2019
	Accounts receivable 375,121 $ 602 6,021 1 112 381,857 $		Accounts receivable 403,506 $ 97 15,410 3,467 423 422,903 $

The above ageing analysis was based on past due date.

• B. As of December 31, 2020, December 31, 2019 and January 1, 2019, the balances of notes

~25~

receivable and accounts receivable (including related parties) from contracts with customers amounted to $397,337, $441,887 and $550,335, respectively.

• C. Without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’s notes and accounts receivable were its book value.

• D. As of December 31, 2020 and 2019, the Company does not hold any collateral as security for accounts receivable.

• E. Information relating to credit risk is provided in Note 12(2), ‘Financial instruments’.

(3) Inventories

Inventories
Raw materials Supplies Work in progress Finished goods Raw materials Supplies Work in progress Finished goods	Allowance for Cost market price decline 80,104 $ 2,714) ($ 59,355 10,048) ( 272,410 12,981) ( 65,742 1,851) ( 477,611 $ 27,594) ($ December31,2020 December 31, 2019	Book value
		77,390 $ 49,307 259,429 63,891
		450,017 $
	Allowance for Cost market price decline 83,509 $ 36) ($ 57,206 5,286) ( 335,181 5,937) ( 45,777 981) ( 521,673 $ 12,240) ($	Book value
		83,473 $ 51,920 329,244 44,796
		509,433 $

The cost of inventories recognized as expense for the year:

For the years ended December 31,

			2020			2019
Cost of goods sold		$	688,270		$	655,205
Allowance for (reversal of) inventory
market price decline			15,354	(		1,561)
Gain on physical inventory	(		9)	(		282)
Revenue from sale of scraps	(		339)	(		531)
		$	703,276		$	652,831

~26~

(4) Investments accounted for under equity method

• A. Movements in investments accounted for under equity method were as follows:

			Forthe years ended	Forthe years ended	Forthe years ended	December31,
			2020			2019
At January 1		$	282,993		$	370,873
Addition of investments accounted for using
equity method			48,503			18,623
Share of profit or loss of subsidiaries,
associates and joint ventures accounted
for under equity method			74,062			15,140
Cash dividends under equity method			-	(		121,770)
Other equity interest-financial statements
translation differences of foreign operations	(		6,929)	(		12,347)
Unrealized gain from downstream sales	(		68,823)	(		82,238)
Realized gain from downstream sales			82,238			94,712
At December 31		$	412,044		$	282,993

• B. Details of investments accounted for under equity method (Negative amounts were listed as “Other non-current liabilities”)

CHIEFTEK PRECISION HOLDING CO., LTD. CHIEFTEK PRECISION INTERNATIONAL LLC CHIEFTEK PRECISION USA CO., LTD. cpc Europa GmbH CSM Maschinen GmbH cpc Europa GmbH	December31,2020 December 31, 2019 268,728 $ 211,424 $ 101,592 59,251 32,543 24,352 9,181 - - 749 412,044 295,776 - 12,783) ( 412,044 $ 282,993 $

• C. On November 6, 2019, the Board of Directors has resolved to commence organizational restructuring through withdrawing share capital of CHIEFTEK PRECISION USA CO., LTD. from the subsidiary, CHIEFTEK PRECISION HOLDING CO., LTD. The capital reduction base date of CHIEFTEK PRECISION HOLDING CO., LTD. was set on December 31, 2019.

• D. On November 22, 2019, the Board of Directors has resolved to carry out the merger of cpc Europa GmbH and CSM Maschinen GmbH. In order to simplify the merger process, the Company purchased Turn-key professional technique held by CSM Maschinen GmbH based on its book value and settled the short-term borrowings and related liabilities that the Company had guaranteed for $18,623, and regarded is as a reinvestment. CSM Machinen GmbH was merged into cpc Europa GmbH with the approval of the local authority since 2020.

• E. For more information regarding the subsidiaries of the Company, please refer to Note 4(3), ‘Basis

~27~

of consolidation’ in the 2020 consolidated financial statements.

• F. As of December 31, 2020 and 2019, no investments accounted for under equity method held by the Company were pledged to others.

~28~

(5) Property, plant and equipment

AtJanuary1,2020 Cost Accumulated depreciation 2020 At January 1 Additions Transferred from prepayments for equipment Transferred after acceptance inspection Depreciation Disposals－Cost ' －Accumulated depreciation At December 31 At December31,2020 Cost Accumulated depreciation

Construction in progress Buildings and equipment and Machinery and Transportation Office Other before acceptance Land structures equipment equipment equipment equipment inspection Total 316,864 $ 468,307 $ 867,890 $ 4,822 $ 16,167 $ 140,817 $ 335,290 $ 2,150,157 $ - 131,987) ( 771,297) ( 2,687) ( 13,253) ( 124,990) ( - 1,044,214) ( 316,864 $ 336,320 $ 96,593 $ 2,135 $ 2,914 $ 15,827 $ 335,290 $ 1,105,943 $ 316,864 $ 336,320 $ 96,593 $ 2,135 $ 2,914 $ 15,827 $ 335,290 $ 1,105,943 $ - 7,560 9,026 95 1,025 6,701 241,864 266,271 - - - - - - 55,284 55,284 - 143,644 41,409 - - 3,622 188,675) ( - - 13,792) ( 42,275) ( 498) ( 1,385) ( 8,168) ( - 66,118) ( - - 2,886) ( - 80) ( 481) ( - 3,447) ( - - 2,886 - 80 481 - 3,447 316,864 $ 473,732 $ 104,753 $ 1,732 $ 2,554 $ 17,982 $ 443,763 $ 1,361,380 $ 316,864 $ 619,511 $ 915,439 $ 4,917 $ 17,112 $ 150,659 $ 443,763 $ 2,468,265 $ - 145,779) ( 810,686) ( 3,185) ( 14,558) ( 132,677) ( - 1,106,885) ( 316,864 $ 473,732 $ 104,753 $ 1,732 $ 2,554 $ 17,982 $ 443,763 $ 1,361,380 $

~29~

AtJanuary1,2019 Cost Accumulated depreciation 2019 At January 1 Additions Transferred from prepayments for equipment Transferred after acceptance inspection Depreciation Disposals－Cost ' －Accumulated depreciation At December 31 At December31,2019 Cost Accumulated depreciation

Construction in progress Buildings and equipment and Machinery and Transportation Office Other before acceptance Land structures equipment equipment equipment equipment inspection Total 316,864 $ 465,048 $ 835,794 $ 3,537 $ 13,781 $ 135,254 $ 53,833 $ 1,824,111 $ - 118,378) ( 723,957) ( 2,430) ( 12,897) ( 117,624) ( - 975,286) ( 316,864 $ 346,670 $ 111,837 $ 1,107 $ 884 $ 17,630 $ 53,833 $ 848,825 $ 316,864 $ 346,670 $ 111,837 $ 1,107 $ 884 $ 17,630 $ 53,833 $ 848,825 $ - 2,491 20,077 1,285 1,999 3,703 188,047 217,602 - - - - - - 109,993 109,993 - 768 13,373 - 582 1,860 16,583) ( - - 13,609) ( 48,694) ( 257) ( 551) ( 7,366) ( - 70,477) ( - - 1,354) ( - 195) ( - - 1,549) ( - - 1,354 - 195 - - 1,549 316,864 $ 336,320 $ 96,593 $ 2,135 $ 2,914 $ 15,827 $ 335,290 $ 1,105,943 $ 316,864 $ 468,307 $ 867,890 $ 4,822 $ 16,167 $ 140,817 $ 335,290 $ 2,150,157 $ - 131,987) ( 771,297) ( 2,687) ( 13,253) ( 124,990) ( - 1,044,214) ( 316,864 $ 336,320 $ 96,593 $ 2,135 $ 2,914 $ 15,827 $ 335,290 $ 1,105,943 $

~30~

• A. Property, plant and equipment of the Company were all for operating purposes as of December 31, 2020 and 2019.

• B. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows:

Amount capitalized Range of the interest rates for capitalization	Forthe years endedDecember31,	Forthe years endedDecember31,
	2020 5,627 $ 1.12%	2019
		3,326 $
		1.45%

• C. Information about the property, plant and equipment that were pledged to others as collateral as of December 31, 2020 and 2019 is provided in Note 8, ‘Pledged assets’.

• －

• (6) Leasing arrangements lessee

• A. The Company leases land in Southern Taiwan Science Park of Ministry of Science and Technology. Rental contracts are typically made for a period of 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

• B. The carrying amount of right-of-use assets and the depreciation charge are as follows: Carrying amount:

Carrying amount:
Land Depreciation charge: Land	December31,2020 December31,2019 129,601 $ $130,248 Forthe years endedDecember31,	December31,2019
		$130,248
	2020 6,224 $	2019
		$ 5,920

• C. For the years ended December 31, 2020 and 2019, the Company has no additions to right-of-use assets.

• D. The information on income and expense accounts relating to lease contracts is as follows:

		For theyears ended December31,	For theyears ended December31,
Items affecting profit or loss		2020	2019
Interest expense on lease liabilities	$	2,418	$	2,407
Expense on short-term lease contracts	$	2,077	$	1,909
Gain from leases modification	($	251)	$	-

• E. For the years ended December 31, 2020 and 2019, the Company’s total cash outflow for leases were $9,364 and $9,141, respectively.

• F. The Company has applied the practical expedient to “Covid-19-related rent concessions”, and recognized the gain from changes in lease paymants arising from the rent concessions amounting to $251 for the year ended December 31, 2020, shown as part of “Other gains and losses”.

~31~

(7) Intangible assets

Trademarks Patents Software At January 1, 2020 Cost 578 $ 9,323 $ 10,369 $ Accumulated amortization 578) ( 3,114) ( 9,076) ( Accumulated impairment - - - Net value - $ 6,209 $ 1,293 $ Net value at January 1, 2020 - $ 6,209 $ 1,293 $ Additions－acquired separately - 783 - Amortization - 610) ( 945) ( Impairment loss - - - Net value at December 31, 2020 - $ 6,382 $ 348 $ At December 31, 2020 Cost 578 $ 10,106 $ 10,369 $ Accumulated amortization 578) ( 3,724) ( 10,021) ( Accumulated impairment - - - Net value - $ 6,382 $ 348 $

~32~

Trademarks Patents Software At January 1, 2019 Cost 578 $ 9,288 $ 10,286 $ Accumulated amortization 578) ( 2,528) ( 7,328) ( Accumulated impairment - - - Net value - $ 6,760 $ 2,958 $ Net value at January 1, 2019 - $ 6,760 $ 2,958 $ Additions－acquired separately - 35 83 Amortization - 586) ( 1,748) ( Net value at December 31, 2019 - $ 6,209 $ 1,293 $ At December 31, 2019 Cost 578 $ 9,323 $ 10,369 $ Accumulated amortization 578) ( 3,114) ( 9,076) ( Accumulated impairment - - - Net value - $ 6,209 $ 1,293 $		Turn-key professional technique Others Total 69,805 $ 60,000 $ 149,957 $ - 13,500) ( 23,934) ( - 24,577) ( 24,577) ( 69,805 $ 21,923 $ 101,446 $ 69,805 $ 21,923 $ 101,446 $ 20,913 - 21,031 - - 2,334) ( 90,718 $ 21,923 $ 120,143 $ 90,718 $ 60,000 $ 170,988 $ - 13,500) ( 26,268) ( - 24,577) ( 24,577) ( 90,718 $ 21,923 $ 120,143 $

~33~

• A. For the years ended December 31, 2020 and 2019, no borrowing costs were capitalized as part of intangible assets.

• B. Details of amortization on intangible assets are as follows:

		For theyears ended	For theyears ended	December31,
		2020		2019
General and administrative expenses	$	386	$	568
Research and development expenses		10,241		1,766
	$	10,627	$	2,334

• C. Impairment information on the intangible assets is provided in Note 6(8) ‘Impairment of nonfinancial assets’.

• (8) Impairment of non-financial assets

• A. The Company recognized impairment loss for the year ended December 31, 2020 of $9,049 (listed as “Other gains and losses”). Details of such loss are as follows:

Impairment loss–intangible assets		Recognized in profit or loss Recognized in other comprehensiveincome 9,049 $ - $ Forthe yearendedDecember31,2020	Recognized in profit or loss Recognized in other comprehensiveincome 9,049 $ - $ Forthe yearendedDecember31,2020
		9,049 $	- $

• B. The recoverable amount of the special technology (shown as “intangible assets-other intangible assets”) acquired by the Company was assessed to be impaired based on the residual life of the patent. For the year ended December 31, 2020, the Company recognized impairment loss of $9,049. This situation did not happen in 2019.

• C. The recoverable amount was assessed based on the use right of the intangible assets. For the years ended December 31, 2020 and 2019, the discount rates were 9.4% and 7.1%, respectively.

• (9) Short-term borrowings

Short-term borrowings
Nature Bank unsecured borrowings Nature Bank unsecured borrowings	December31,2020 358,000 $ December31,2019 220,000 $	Interestraterange 0.52%～0.95% Interestraterange 0.87%～1.03%	Collateral
			None Collateral
			None

For more information about interest expense recognized by the Company for the years ended December 31, 2020 and 2019, please refer to Note 6(20), ‘Finance costs’.

~34~

(10) Other payables

Accrued salaries and bonuses Employees’ compensation and directors’ and supervisors’ remuneration payable Equipment payable Miscellaneous payable Others	December31,2020 December31,2019 46,589 $ 42,589 $ 20,500 20,500 5,243 30,601 5,386 5,120 17,261 20,686 94,979 $ 119,496 $

- (11) Long term borrowings

Long-term borrowings
Nature	Expirydate	December31,2020	Interest rate range 1.04%～ 1.35% 1.25%～ 1.30% Interest rate range 1.35%～ 1.80% 1.25%～ 1.80%	Collateral
		354,702 $ 172,500 527,202 92,278) ( 434,924 $ December31,2019		Land, buildings and structures None Collateral
		343,230 $ 158,000 501,230 99,028) ( 402,202 $		Land, buildings and structures None

For more information about interest expense recognized by the Company for the years ended December 31, 2020 and 2019, please refer to Note 6(20),‘Finance cost’.

(12) Pensions

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

~35~

monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contribution for the deficit by next March.

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

	December	31, 2020	December	31, 2019
Present value of defined benefit obligations	($	12,772)	($	11,769)
Fair value of plan assets		5,609		5,105
Net defined benefit liability	($	7,163)	($	6,664)

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

Year ended December 31, 2020 Balance at January 1 Interest (expense) income Remeasurements: Return on plan assets Change in financial assumptions Experience adjustments Pension fund contribution Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets Net defined benefit liability 5,105 $ 6,664) ($ 36 46) ( 5,141 6,710) ( 171 171 - 401) ( - 520) ( 171 750) ( 297 297 5,609 $ 7,163) ($
	11,769) ($ 82) ( 11,851) ( - 401) ( 520) ( 921) ( - 12,772) ($

~36~

Present value of

==> picture [450 x 212] intentionally omitted <==

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

defined benefit Fair value of plan Net defined
obligations assets benefit liability
Year ended December 31, 2019
Balance at January 1 ($ 12,050) $ 4,606 ($ 7,444)
Interest (expense) income ( 108) 41 ( 67)
( 12,158) 4,647 ( 7,511)
Remeasurements:
Return on plan assets - 161 161
-
Change in financial assumptions ( 181) ( 181)
Experience adjustments 570 - 570
389 161 550
Pension fund contribution - 297 297
Balance at December 31 ($ 11,769) $ 5,105 ($ 6,664)
----- End of picture text -----

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

• (e) The principal actuarial assumptions used were as follows:

Utilisation Report announced by the government. The principal actuarial assumptions used were as follows:
Discount rate Future salary increases	Forthe years endedDecember31,
	2020 0.30% 3.25%	2019
		0.70%
		3.25%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with Taiwan Life Insurance 5th Mortality Table.

~37~

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

		Discountrate	Discountrate			Future salaryincreases	Future salaryincreases
	Increase	0.25%	Decrease	0.25%	Increase 0.25%		Decrease 0.25%
December 31, 2020
Effect on present value of
defined benefit obligation	($	254)	$	265	$	225	($	217)
December 31, 2019
Effect on present value of
defined benefit obligation	($	226)	$	235	$	200	($	193)

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

• (f) Expected contributions to the defined benefit pension plan of the Company for the year ending December 31, 2021 amount to $297.

• (g) As of December 31, 2020, the weighted average duration of the retirement plan is 8 years. The analysis of timing of the future pension payment was as follows:

The analysis of timing of the future pension payment was as follows:
Within 1 year 2-5 years Over 6 years	3,051 $ 4,307 5,734
	13,092 $

• B. Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2020 and 2019 were $11,251 and $11,585, respectively.

~38~

(13) Share capital

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

thousands of shares):
	For theyears ended	December31,
	2020	2019
Balance at beginning of year	81,188	73,807
Stock dividends	-	7,381
Purchase of treasury stocks	445) (	-
Balance at end of year	80,743	81,188

• B. On June 12, 2019, the Company’s stockholders adopted a resolution to issue shares of common stock due to capitalization of retained earnings of $73,807 and obtained approval from the SFC. The effective date of capitalization was set on August 7, 2019.

• C. Treasury shares

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

Reason for reacquisition To be reissued to employees	Shares at beginning Shares at of year Increase Decrease end ofyear - 445 - 445 For theyear ended December31,2020	Shares at beginning Shares at of year Increase Decrease end ofyear - 445 - 445 For theyear ended December31,2020
		445

No treasury shares were reacquired or retired by the Company in 2019.

• (b) Pursuant to the R.O.C Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus. As of December 31, 2020 and 2019, －

• the treasury shares amounted to $26,550 and $ , respectively.

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

• (d) Pursuant to the R.O.C Securities and Exchange Act, treasury shares should be reissued to the employees within 5 years from the reacquisition date and shares not reissued within the 5- year period are to be retired.

• D. As of December 31, 2020, the Company’s authorized capital was $1,500,000 (including $30,000 reserved for employee stock options), and the paid-in capital was $811,876 (81,188 thousand shares) with par value of $10 (in dollars) per share.

~39~

(14) Capital reserve

For the years ended December 31, 2020 and 2019 Share premium Others Total Balances at beginning and end of year $ 440,553 $ 114 $ 440,667

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

(15) Retained earnings

• A. The legal reserve shall be exclusively used to cover accumulated deficit, to issue new stocks, or to distribute cash to shareholders in proportion to their share ownership. The use of legal reserve for the issuance of stocks or cash dividends to shareholders in proportion to their share ownership is permitted provided that the balance of such reserve exceeds 25% of the Company’s paid-in capital.

• B. According to the Company’s Articles of Incorporation, the Company’s dividend policy is to distribute the current year’s earnings, if any, in the following order:

• (1) pay all taxes and dues;

• (2) offset any loss of prior years;

• (3) set aside 10% as legal reserve;

• (4) set aside or reverse special reserve as required by regulations or the Competent Authority;

• (5) The appropriation of the remaining amount after deducting items (1) to (4), along with the unappropriated retained earnings of prior years can be distributed in accordance with a resolution passed during a meeting of the Board of Directors and approved at the shareholders’ meeting. However, the distribution of dividends shall not be lower than 20% of the current year’s profit after deducting items (1) to (4). In order to continually expand the scale of operations, increase competitiveness and support the Company’s long-term development plans, future capital requirements and long-term financial plan, the Company’s dividend policy is to distribute stock dividends and partially as cash dividends. Cash dividends shall not be less than 10% of the total dividends distributed to shareholders. The Board of Directors of the Company shall adopt a resolution by a majority of more than two-thirds of the directors present to distribute whole or a part of the distributable dividends, bonuses, capital reserves or legal reserve in the form of cash, and report to the shareholders during their meetings, which is not applicable to the aforementioned provisions that are subject to shareholders’ resolutions.

• C. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit

~40~

balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings. As of December 31, 2019, pursuant to the regulations for the deduction amount to stockholders’ equity from other equity items, the Company has set aside special reserve of $29,394, which cannot be distributed to shareholders.

• D. The Company recognized cash dividends distributed to owners amounting to $80,743 ($1.0 (in dollars) per share) for the year ended December 31, 2020. The Company recognized cash dividends distributed to owners amounting to $73,807 ($1.0 (in dollars) per share) and stock dividends amounting to $73,807 ($1.0 (in dollars) per share) for the year ended December 31, 2019. On February 25, 2021, the Board of Directors proposed for the distribution of cash dividends from 2020 earnings in the amount of $121,114 ($1.5 (in dollars) per share) for the year ended December 31, 2020.

(16) Operating revenue

• A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods at a point in time in the following major geographical regions:

eographical regions:
2020 Revenue from external customer contracts Timing of revenue －At a point in time 2019 Revenue from external customer contracts Timing of revenue －At a point in time	China 301,828 $ 301,828 $ China 244,064 $ 244,064 $	Taiwan 263,765 $ 263,765 $ Taiwan 237,480 $ 237,480 $	Germany 137,592 $ 137,592 $ Germany 175,528 $ 175,528 $	Singapore 129,071 $ 129,071 $ America 96,188 $ 96,188 $	Others 236,038 $ 236,038 $ Others 287,466 $ 287,466 $	Total
						1,068,294 $
						1,068,294 $
						Total
						1,040,726 $
						1,040,726 $

B. Contract liabilities

• (1) The Company has recognized revenue-related contract liabilities related to the contract revenue of $97, $2,349 and $94 on December 31, 2020, December 31, 2019 and January 1, 2019, respectively.

• (2) The revenue recognized that were included in the contract liability balance at the beginning of 2020 and 2019 amounted to $2,292 and $84 for the years ended December 31, 2020 and 2019, respectively.

(17) Interest income

2019, respectively. Interest income
Interest income from bank deposits Other interest income	For theyears ended December31,
	2020 460 $ 13 473 $	2019
		1,707 $ 868
		2,575 $

~41~

(18) Other income

Government grants income － Other income others

	Forthe years ended	Forthe years ended	December31,
	2020		2019
$	4,800	$	-
	3,867		4,904
$	8,667	$	4,904

(19) Other gains and losses

Gain arising from leases modification Currency exchange loss Impairment loss Other losses

		Forthe years ended	Forthe years ended	December31,
		2020		2019
	$	251	$	-
(		23,262)	(	18,081)
(		9,049)		-
(		1)		-
($		32,061)	($	18,081)

(20) Finance costs

Interest expense:

Interest expense on bank borrowings Interest expense on lease liabilities Less: Capitalization of qualifying assets

		Forthe years endedDecember31,	Forthe years endedDecember31,
		2020	2019
	$	10,286	$	10,050
		2,418		2,407
(		5,627)	(	3,326)
	$	7,077	$	9,131

(21) Expenses by nature

For the year ended December 31, 2020

	Forthe yearendedDecember31,2020	Forthe yearendedDecember31,2020	1,2020
Employee benefit expense Depreciation Amortization Employee benefit expense Depreciation Amortization	Operatingcost Operatingexpense Total 206,014 $ 91,152 $ 297,166 $ 60,163 12,179 72,342 - 10,627 10,627 266,177 $ 113,958 $ 380,135 $ For theyear ended December31,2019		Total
			297,166 $ 72,342 10,627
			380,135 $
	Operating cost 201,158 $ 68,155 - 269,313 $	Operating expense 93,248 $ 8,242 2,334 103,824 $	Total
			294,406 $ 76,397 2,334
			373,137 $

~42~

(22) Employee benefit expense

Employee benefit expense
Wages and salaries Labor and health insurance expense Pension costs Directors’ and supervisors’ remuneration Other personnel expenses Wages and salaries Labor and health insurance expense Pension costs Directors’ and supervisors’ remuneration Other personnel expenses	Operating cost Operating expense Total 172,036 $ 75,321 $ 247,357 $ 18,458 5,878 24,336 8,275 3,022 11,297 - 4,452 4,452 7,245 2,479 9,724 206,014 $ 91,152 $ 297,166 $ For theyear ended December31,2020 Forthe yearendedDecember31,2019
	Operating cost 162,964 $ 22,064 8,632 - 7,498 201,158 $	Operating expense 75,642 $ 6,525 3,020 4,966 3,095 93,248 $	Total
			238,606 $ 28,589 11,652 4,966 10,593
			294,406 $

• A.As of December 31, 2020 and 2019, the Company had 394 and 474 workers, among these, 6 directors were not full-time employees, respectively.

• B. The average employee benefit expense for the years ended December 31, 2020 and 2019 was $754 and $618, respectively. The average wages and salaries for the years ended December 31, 2020 and 2019 was $638 and $509, respectively with a decrease of 25.19 %. The supervisor’s remuneration for the years ended December 31, 2020 and 2019 was $930 and $818, respectively.

• C. Remuneration policies, standards and packages, procedures of determining remuneration, and the relevance between the Company’s operating performance and future risk exposure:

• (a) The Company’s remuneration to the directors and supervisors is examined and reviewed by the Remuneration Committee. The committee makes recommendations for the board discussions. The resolution made the Board will be based on the individual’s degree of participation in and contribution to the Company’s daily operation, while also on the industry’s standard.

• (b) The Company has set up related guidelines in appointment, termination, and remuneration of general manager and vice general managers. The standard of remuneration is aligned with the key performance indicators scheme set by human resource department of the Company. Before the rewarding principle being approved by the Board, individual’s performance and contribution to overall business operation, as well as the peer industry norm are put into consideration by the Remuneration Committee.

~43~

• (c) Employee’ rewarding policy:

  • i. Due to there is a positive correlation between the Company’s operation capacity and the employees’ personal ability, contribution and individual performance, and considering the future risks, the employee’s compensation policy is relatively irrelevant to future.

  • ii. The overall salaries are primarily consisting of fixed wages, short-term stimulatory rewards, such as performance bonus, employees’ compensation, etc., and long-term stimulatory rewards, such as employee stock options, treasury stock transfer, etc.

  • iii. According to the Articles of Incorporation, the Company should appropriate 3% to 15% of net profits of the year for employees’ companion.

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

• E.For the years ended December 31, 2020 and 2019, the Company’s employees’ compensation was $16,000 for both years; while directors’ and supervisors’ remuneration was $4,500 for both years. The aforementioned amounts were recognized in salary expenses.

• The expenses recognized for 2020 were accrued based on the earnings of current year and the percentage specified in the Articles of Incorporation of the Company. The employees’ compensation and directors’ and supervisors’ remuneration for 2020 as resolved by the Board of Directors were $16,000 and $4,500, respectively. The employees’ compensation will be distributed in the form of cash.

• The employees’ compensation and directors’ and supervisors’ remuneration for 2019 as resolved

• by the Board of Directors were $16,000 and $4,500, respectively, and the employees’ compensation was distributed in the form of cash. Employees’ compensation and directors’ and supervisors’ remuneration for 2019 as resolved by the Board of Directors were equal to the amounts recognized in the 2019 financial statements.

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

• (23) Income tax

• A. Income tax expense:

• (a) Components of income tax expense:

~44~

For the years ended December 31,

		2020				2019
Current income tax:
Income tax incurred in current year	$	27,791			$	55,296
Prior year’s income tax under estimation		1,048				1,129
Total current income tax		28,839				56,425
Deferred income tax:
Origination and reversal of temporary
differences		15,812	(			20,710)
Income tax expense	$	44,651			$	35,715
(b) The income tax relating to components of other	comprehensive income			is as follows:
	For	the years ended December 31,
		2020				2019
Remeasurement of defined benefit obligations	($	150)	$			110
B. Reconciliation between income tax expense and accounting		profit
	For	the years ended December 31,
		2020				2019
Tax calculated based on profit before tax and
statutory tax rate	$	49,549		$		42,072
Effect of items disallowed by tax regulation	(	490)	(			323)
Effect from investment tax credits	(	5,456)	(			7,163)
Prior year's income tax under estimation		1,048				1,129
Income tax expense	$	44,651		$		35,715

~45~

C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

						2020	2020
							Recognized
					Recognized			in other
					in	profit or	comprehensive
			January1			loss		income		December31
Temporary differences:
Deferred tax assets:
Loss on inventory market
value decline		$	2,448		$	3,071	$	-		$	5,519
Unused compensated
absences			3,185	(		69)		-			3,116
Unrealized gain on inter
affiliates			16,447	(		2,683)		-			13,764
Pensions			1,909			-		150			2,059
Rent expense			219	(		219)		-			-
Unrealized loss on foreign
currency exchange			1,852	(		1,150)		-			702
		$	26,060	($		1,050)	$	150		$	25,160
Deferred tax liabilities:
Investment (income) loss	($		2,310)	($		14,813)	$	-	($		17,123)
Depreciation	(		1,901)			51		-	(		1,850)
	($		4,211)	($		14,762)	$	-	($		18,973)
		$	21,849	($		15,812)	$	150		$	6,187

~46~

2019

January1 Recognized in profit or loss Temporary differences: Deferred tax assets: Loss on inventory market value decline 2,760 $ 312) ($ Unused compensated absences 3,355 170) ( Unrealized gain on inter affiliates 18,942 2,495) ( Pensions 2,019 - Rent expense - 219 Unrealized loss on foreign currency exchange - 1,852 27,076 $ 906) ($ Deferred tax liabilities: Investment (income) loss 23,636) ($ 21,326 $ Depreciation 1,953) ( 52 Unrealized gain on foreign currency exchange 238) ( 238 25,827) ($ 21,616 $ 1,249 $ 20,710 $

Recognized in other comprehensive income December31 - $ 2,448 $ - 3,185 - 16,447 110) ( 1,909 - 219 - 1,852 110) ($ 26,060 $ - $ 2,310) ($ - 1,901) ( - - - $ 4,211) ($ 110) ($ 21,849 $

D. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority. There were no disputes existing between the Company and the Tax Authority as of February 25, 2021.

~47~

(24) Earnings per share (“EPS”)

Earnings per share (“EPS”)
Basic earnings per share Profit attributable to ordinary shareholders Diluted earnings per share Profit attributable to ordinary shareholders Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders Diluted earnings per share Profit attributable to ordinary shareholders Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares	Forthe yearendedDecember31,2020
	Weighted average number of shares outstanding EPS Amount aftertax (sharesinthousands) (indollars) 203,095 $ 80,847 2.51 $ 203,095 $ 80,847 - 227 203,095 $ 81,074 2.51 $ Forthe yearendedDecember31,2019
	Weighted average number of shares outstanding EPS Amount aftertax (sharesinthousands) (indollars) 174,644 $ 81,188 2.15 $ 174,644 $ 81,188 - 272 174,644 $ 81,460 2.14 $

~48~

(25) Supplemental cash flow information

A. Investing activities with partial cash payments

			Forthe years ended	Forthe years ended	Forthe years ended	December31,
			2020			2019
Purchase of property, plant and equipment		$	266,271		$	217,602
Add: Opening balance of notes payable			25,323			3,633
Opening balance of payable for
equipment			30,601			14,783
Less: Ending balance of notes payable	(		11,803)	(		25,323)
Ending balance of payable for
equipment	(		5,243)	(		30,601)
Capitalization for interest	(		5,627)	(		3,326)
Cash paid during the year		$	299,522		$	176,768

B. Investing and financing activities with no cash flow effects

B. Investing and financing activities with no cash flow effects	B. Investing and financing activities with no cash flow effects	B. Investing and financing activities with no cash flow effects	B. Investing and financing activities with no cash flow effects	B. Investing and financing activities with no cash flow effects	B. Investing and financing activities with no cash flow effects	B. Investing and financing activities with no cash flow effects	B. Investing and financing activities with no cash flow effects	B. Investing and financing activities with no cash flow effects
Changes in liabilities from financing activities 2020 2019 (a) Prepayments for equipment reclassified to property, plant and equipment 55,284 $ 109,993 $ Forthe years endedDecember31, Short-term borrowings Lease liabilities Long-term borrowings Liabilities from financingactivities-gross At January 1, 2020 220,000 $ 131,343 $ 501,230 $ 852,573 $ Changes in cash flow from financing activities 138,000 4,869) ( 25,972 159,103 Net changes in other non-cash financing - 5,326 - 5,326 At December 31, 2020 358,000 $ 131,800 $ 527,202 $ 1,017,002 $ Short-term borrowings Leaseliabilities Long-term borrowings Liabilities from financing activities-gross At January 1, 2019 120,000 $ - $ 476,250 $ 596,250 $ Effects of retrospective application adjustments - 136,168 - 136,168 Balance at January 1 after adjustments 120,000 136,168 476,250 732,418 Changes in cash flow from financing activities 100,000 4,825) ( 24,980 120,155 At December 31, 2019 220,000 $ 131,343 $ 501,230 $ 852,573 $
					2020
				$		55,284
						Long-term borrowings
At January 1, 2020 Changes in cash flow from financing activities Net changes in other non-cash financing At December 31, 2020 At January 1, 2019 Effects of retrospective application adjustments Balance at January 1 after adjustments Changes in cash flow from financing activities At December 31, 2019		Short-term borrowings
		220,000 $ 138,000 - 358,000 $ Short-term borrowings	131,343 $ 4,869) ( 5,326 131,800 $ Leaseliabilities			501,230 $ 25,972 - 527,202 $ Long-term borrowings	852,573 $ 159,103 5,326 1,017,002 $ Liabilities from financing activities-gross
		120,000 $ - 120,000 100,000 220,000 $	- $ 136,168 136,168 4,825) ( 131,343 $			476,250 $ - 476,250 24,980 501,230 $		596,250 $ 136,168 732,418 120,155 852,573 $

(26) Changes in liabilities from financing activities

~49~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

==> picture [485 x 15] intentionally omitted <==

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

Names of related parties Relationship with the Company
----- End of picture text -----

Names of relatedparties	Relationship with the Company
cpc Europa GmbH	A subsidiary of the Company
CSM Maschinen GmbH	A subsidiary of the Company (Note)
CHIEFTEK PRECISION INTERNATIONAL LLC	A subsidiary of the Company
CHIEFTEK PRECISION USA CO., LTD.	A subsidiary of the Company
Chieftek Machinery (Kunshan) Co., Ltd.	A subsidiary of the Company

Note: CSM Machinen GmbH was merged into cpc Europa GmbH with the approval of the local authority since 2020.

(2) Key management compensation

• A. Sales of goods and services

authority since 2020. y management compensation Sales of goods and services
Chieftek Machinery (Kunshan) Co., Ltd. cpc Europa GmbH CHIEFTEK PRECISION USA CO., LTD.	2020 2019 282,865 $ 244,064 $ 137,592 175,528 84,631 96,188 505,088 $ 515,780 $ For theyears ended December31,
		2019
		244,064 $ 175,528 96,188
		515,780 $

Prices of goods sold to related parties are determined based on mutual agreement at each time, and the credit term is 180 days after monthly-closing, T/T. For third parties, the credit terms ranged from 30 to 180 days after monthly-closing.

• B. Acquired intangible (Turn-key professional technique)

Commission CSM Maschinen GmbH cpc Europa GmbH	2020 2019 - $ 20,913 $ For theyears ended December31, For theyears ended December31,
	2020 2019 438 $ 3,279 $

• C. Commission

The commissions paid to subsidiary is on normal commercial terms.

• D. Receivables from related parties

Receivables from related parties
Accounts receivable: Chieftek Machinery (Kunshan) Co., LTD. cpc Europa GmbH CHIEFTEK PRECISION USA CO., LTD.	December31,2020 112,420 $ 69,311 28,814 210,545 $	December31,2019
		151,797 $ 78,103 37,470
		267,370 $

~50~

	December31,2020	December31,2019	December31,2019
Other receivables:
CHIEFTEK PRECISION USA CO., LTD.	30 $	$	44
The receivables from related parties arise mainly from sale transactions and sales of property.
The receivables are unsecured in nature and bear no interest. There are no		provisions held against
receivables from related parties.

E. Other payables

E.	receivables from related parties. Other payables
		December31,	2020	December31,2019
	cpc Europa GmbH	$	438	$		1,028
F.	Loans to related parties
	Interest income:
		For the years ended December 31,
		2020			2019
	CHIEFTEK PRECISION INTERNATIONAL LLC	$	-	$		855
	The loans to subsidiaries are repayable upon maturity and carry interest			at 1.5%~ 2.0%		for the
	years ended December 31, 2020 and 2019.

• G. Endorsements and guarantees provided to subsidiaries

Nature cpc Europa GmbH Guarantee for financing CSM Maschinen GmbH Guarantee for financing CHIEFTEK PRECISION INTERNATIONAL LLC Guarantee for financing	December31,2020 157,590 $ - - 157,590 $	December 31, 2019
		201,540 $ 50,385 59,960
		311,885 $

As of December 31, 2020 and 2019, the subsidiaries have drawn from the endorsements and guarantees, which are provided by the Company, in the amount of $21,012 and $93,315, respectively.

(3) Key management compensation

respectively. Key management compensation
Salaries and other short-term employee benefits	For theyears ended December31,
	2020 16,980 $	2019
		16,466 $

~51~

8. PLEDGED ASSETS

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

		Book	value
Asset pledged	December	31, 2020	December	31, 2019	Purpose ofcollateral
Land (Note)	$	316,864	$	316,864	Guarantee for long－
					term borrowings
Buildings and structures-net					Guarantee for long－
(Note)		446,355		235,873	term borrowings
	$	763,219	$	552,737

(Note) Listed as ‘Property, plant and equipment’.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

• (1) For details of endorsements and guarantees provided to others by the Company, please refer to Note 7(2) G. ‘Endorsements and guarantees provided to subsidiaries’.

• (2) As of December 31, 2020 and 2019, the Company’s remaining balance due for construction in progress and prepayments for equipment were $373,754 and $625,769, respectively.

• (3) On February 19, 2020, the Company entered into a mid-term secured syndicated loan contract for a credit line facility of $2,900,000 with 11 financial institutions including Mega International Commercial Bank Co., Ltd. The credit term is 7 years. Under the terms of the syndicated loan, the Company agrees that:

• A. The financial ratios stated in the Company’s semi-annual reviewed financial statements and annual audited financial statements shall meet the following financial ratios which will be assessed semi-annually:

  • (a) Current ratio (current assets/current liabilities): At least 100%.

  • (b) Liability ratio (total liabilities/net equity): Less than 220% in 2020; less than 200% in 2021 and 2022; less than 180% from 2023.

  • (c) Tangible net value (shareholders’ equity less intangible assets): At least $1,000,000.

• B. If the Company violates the above financial covenants, the Company should improve within 9 months after the fiscal year or half fiscal year. It will not be considered to default, if the audited or reviewed financial rates comply with the covenants after the improvement period. During the improvement period, the credit line which has not been withdrawn will be frozen, until the financial covenants are met. In addition, for withdrawn credit, its financing rate shall be increased by an additional 0.125% per annum from the date after the notification by the management bank to the date after the completion of improvement.

As of December 31, 2020, the Company has not violated any of the above covenants.

• －

• (4) For the details of operating lease agreements, please refer to Note 6(6), ‘Leasing arrangements lessee’.

~52~

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

12. OTHERS

(1) Capital management

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

(2) Financial instruments

• A. Details of the Company’s financial instruments by category are provided in Note 6.

• B. Financial risk management policies

• (a) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.

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

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

  • I. Foreign exchange risk

  • (i) The Company operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company used in various functional currency, primarily with respect to USD, EUR and JPY. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities.

  • (ii) Management has set up a policy to require the Company to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Company treasury.

  • (iii)The Company treasury’s risk management policy is to hedge anticipated cash flows (mainly sale export and purchase of inventory) in the major foreign currency in the future so as to decrease the risk exposure in the major foreign currency.

  • (iv)The Company has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. However, as the objective of the net

~53~

investments in foreign operations is for strategic purposes, the Company does not hedged the investments.

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

exchange rate fluctuations is as follows:	llows:	llows:
Exchange rate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 15,710 $ 28.48 JPY:NTD 32,962 0.2763 EUR:NTD 2,708 35.02 Investments accounted for under equity method USD:NTD 14,146 28.48 EUR:NTD 262 35.02 Financial liabilities Monetary items USD:NTD 3 28.48 JPY:NTD 5,274 0.2763 EUR:NTD 939 35.02 Exchange rate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 18,232 $ 29.98 JPY:NTD 63,563 0.2760 EUR:NTD 4,152 33.59 Investments accounted for under equity method USD:NTD 9,841 29.98 EUR:NTD 358) ( 33.59 Financial liabilities Monetary items USD:NTD 5 29.98 JPY:NTD 337 0.2760 EUR:NTD 213 33.59 December31,2020 Foreign currency amount(in thousands) December31,2019 Foreign currency amount(in thousands)	December31,2020		Book value (NTD)
		Exchange rate
			447,419 $ 9,107 94,836 402,864 9,180 83 1,457 32,944 Book value (NTD)
		Exchange rate
		29.98 0.2760 33.59 29.98 33.59 29.98 0.2760 33.59	546,590 $ 17,543 139,455 295,027 12,034) ( 154 93 7,291

Sensitivity analysis of foreign exchange risk is primarily for foreign currency monetary items at financial reporting date. If the exchange rate of NTD to other currencies had

~54~

appreciated/depreciated by 1% with all other factors remaining constant, the Company’s net profit after tax for the years ended December 31, 2020 and 2019 would increase/decrease by $4,076 and $5,587, respectively.

• (vi)The total exchange loss, including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2020 and 2019 amounted to $23,262 and $18,081, respectively.

• II. Price risk

• The Company is not engaged in any financial instruments with price variations, thus, the Company does not expect market risk arising from variations in the market prices.

III. Cash flow and fair value interest rate risk

• (i) The Company’s main interest rate risk arises from short-term and long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. However, partial interest rate risk is offset by cash and cash equivalents held at variable rates. For the years ended December 31, 2020 and 2019, the Company’s borrowings at variable rate were mainly denominated in NTD.

• (ii)The Company’s borrowings are measured at amortized cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.

• (iii)If the borrowing interest rate had increased/decreased by 10% with all other variables held constant, profit, net of tax for the years ended December 31, 2020 and 2019 would have decreased/increased by $823 and $804, respectively. The main factor is that changes in interest expense result from floating rate borrowings.

• (b) Credit risk

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

• II. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. The utilization of credit limits is regularly monitored.

• III. The Company manages its credit risk, whereby if the contract payments are past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition and the impairment is assessed when the contract payments are past due over certain days.

• IV. The Company classifies customers’ accounts receivable in accordance with credit rating of customer and credit risk on trade. The Company applies the simplified approach using

~55~

the provision matrix and the forecastability to adjust historical and timely information to estimate expected credit loss. The expected credit loss ranges from 2% to 100%. Movements in relation to the Company applying the simplified approach to provide loss allowance for accounts receivable are as follows:

		Forthe years ended	Forthe years ended	December31,
		2020		2019
	Accountsreceivable		Accountsreceivable
At January 1	$	800	$	253
Reversal of provision for
impairment loss		320		547
At December 31	$	1,120	$	800

(c) Liquidity risk

• I. Cash flow forecasting is performed in Finance division of the Company. Finance division monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.

• II. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Company treasury. Company treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. The Company is expected to readily generate cash inflows for managing liquidity risk.

• III. The Company has the following undrawn borrowing facilities:

The Company has the following undrawn	borrowing facilities:
Floating rate: Expiring within in one year Expiring beyond one year	December31,2020 1,047,000 $ 2,600,000 3,647,000 $	December31,2019
		1,270,000 $ 890,000
		2,160,000 $

• IV. The table below analyzes the Company’s non-derivative financial liabilities and relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

~56~

December31,2020	Less than 1year	Between 1 and2years - $ - - - 7,539 109,885 Between 1 and2years	Between 2 and 5 years	More than 5 years
Short-term borrowings Notes payable Accounts payable Other payables Lease liabilities Long-term borrowings (including current portion) December31,2019 Non-derivative financial liabilities:	358,453 $ 77,992 47,725 94,979 7,539 98,310 Less than 1year		- $ - - - 22,618 309,018 Between 2 and 5 years - $ - - - 21,697 302,395	- $ - - - 120,629 31,331 More than 5 years
Short-term borrowings Notes payable Accounts payable Other payables Lease liabilities Long-term borrowings (including current portion) Non-derivative financial liabilities:	220,388 $ 79,155 17,045 119,496 7,232 106,409	- $ - - - 7,232 109,401		- $ - - - 122,948 -

• V. The Company does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value information

• A. As of December 31, 2020 and 2019, the Company had no fair value financial instruments.

• B. Financial instruments not measured at fair value

The carrying amount of the Company’s financial instruments not measured at fair value (including cash and cash equivalents, notes receivable, accounts receivable, other receivables, guarantee deposits paid, short-term borrowings, notes payable, accounts payable, other payables, lease liabilities (current and non-current) and long-term borrowings (including current portion)) are approximate to their fair values.

13. SUPPLEMENTARY DISCLOSURES

(According to the regulatory requirement, only information related to the year ended December 31, 2020 is disclosed.)

(1) Significant transactions information

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

~57~

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): None.

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

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 3.

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

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

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

• J. Significant inter-company transactions during the reporting period: Please refer to table 6.

• (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 8.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 9.

(4) Major shareholders information

Major shareholders information: Please refer to table 10.

14. SEGMENT INFORMATION

Not applicable.

~58~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item Cash: Cash on hand Checking Deposits Demand Deposits－New Taiwan dollar －Foreign Currency	Description Including USD7,869 thousand @28.48, JPY26,233 thousand @0.2763 and EUR643 thousand @35.02	Amount
		1,249 $ 1,108 143,206 253,892
		399,455 $

~59~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF ACCOUNTS RECEIVABLE, NET DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Client Name Description Amount Company A Accounts receivable 39,372 $ Company B 〞 33,293 Company C 〞 21,228 Company D 〞 12,255 Others (Note) 〞 65,164 171,312 1,120) ( 170,192 $ Less: Allowance for doubtful accounts	Footnote
	－ － － － － －

Note: The amount of individual client included in others does not exceed 5% of the account balance.

~60~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF ACCOUNTS RECEIVABLE-RELATED PARTIES DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

==> picture [459 x 15] intentionally omitted <==

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

Client Name Description Amount Footnote
----- End of picture text -----

Cheiftek Machinery (Kunshan) Co., Ltd. Accounts receivable cpc Europa GmbH 〞 CHIEFTEK PRECISION USA CO., LTD 〞	112,420 $ － 69,311 － 28,814 － 210,545 $

~61~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF INVENTORIES DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item Cost Net RealizableValue Raw materials 80,104 $ 80,500 $ Supplies 59,355 63,646 Work in progress 272,410 321,623 Finished goods 65,742 99,270 477,611 565,039 $ Less: Allowance for inventory valuation losses 27,594) ( 450,017 $ Amount	Footnote
	(Note) 〞 〞 〞

Note: Refer to Note 4(9) ‘Inventories’ of parent company only financial statements for the way the Company determines net realizable value of inventories.

~62~

CHIEFTEK PRECISION CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Name	Balance as of January1,	Amount 211,424 $ 59,251 24,352 12,783) ( 749 282,993 $ 2020	Additions	Amount 57,354 $ 48,503 10,559 22,588 624 139,628 $	Decreases	Amount 50) ($ 6,162) ( 2,368) ( 624) ( 1,373) ( 10,577) ($	Balance as of D	ecember 31,2020	Amount 268,728 $ 101,592 32,543 9,181 - 412,044 $	Market price or Equity of subsidiaries and Associates	Market price or Equity of subsidiaries and Associates	Collateral	Footnote
	Number of shares (thousands of shares) 5,100 - 1,660 - - 6,760		Number of shares (thousands of shares) - - - - - -		Number of shares (thousands of shares) - - - - - -		Number of shares (thousands of shares) 5,100 - 1,660 - - 6,760	Percentage of ownership 100% 100% 100% 100% -		Unit Price (NTD) - $ - - - -	Totalprice
CHIEFTEK PRECISION HOLDING CO., LTD. CHIEFTEK PRECISION INTERNATIONAL LLC CHIEFTEK PRECISION USA CO.,LTD cpc Europa GmbH CSM Maschinen GmbH Total											268,728 $ 101,592 32,543 9,181 -	None 〞 〞 〞 〞	－ － － (Note 1) (Note 2)
											412,044 $

Note 1: The negative beginning and ending balances are listed as “Other non-current liabilities-others”.

Note 2: CSM Machinen GmbH was merged into cpc Europa GmbH with the approval of the local authority since 2020.

~63~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT-COST FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

[Refer to Note 6(5) ‘Property, plant and equipment’ of parent company only financial statements.]

~64~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT-ACCUMULATED DEPRECIATION

FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Refer to Note 6(5) ‘Property, plant and equipment’ of parent company only financial statements for the change in accumulated depreciation of property, plant and equipment. Refer to Note 4(11) ‘Property, plant and equipment’ of parent company only financial statements for the depreciation method and useful lives of the assets.

~65~

CHIEFTEK PRECISION CO., LTD.

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS-COST FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item	Balance as of January1,2020	Remeasurement of LeaseLiabilities	Balance as of December31,2020 141,745 $	Footnote
Land	136,168 $	5,577 $		－

~66~

CHIEFTEK PRECISION CO., LTD.

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSESTS-ACCUMULATED DEPRECIATION FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item	Balance as of January1,2020	Depreciation	Balance as of December31,2020 12,144 $	Footnote
Land	5,920 $	6,224 $		－

~67~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF CHANGES IN INTANGIBLE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Refer to Note 6(7) ‘Intangible assets’ of parent company only financial statements for the change in cost and accumulated amortization of intangible assets.

Refer to Note 4(13) ‘Intangible assets’ of parent company only financial statements for the amortization method and useful lives of the assets.

~68~

CHIEFTEK PRECISION CO., LTD.

STATEMENT OF CHANGES IN PREPAYMENTS FOR EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item Prepayments for equipment	Balance as of January1,2020 Additions Reclassifications(Note) 57,161 $ 46,597 $ 55,284) ($	Balance as of December 31, 2020
		48,474 $

Note: Transferred to “Property, plant and equipment”.

~69~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

==> picture [752 x 11] intentionally omitted <==

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

Nature Description December 31, 2020 Expiry date Interest rate Loan Commitments Collateral Footnote
----- End of picture text -----

Unsecured borrowings Citibank Taiwan 〞 The Export-Import Bank of the Republic of China 〞 DBS Bank 〞 Mega International Commercial Bank 〞 Hua Nan Bank 〞 Cathay United Commercial Bank 〞 E.SUN Commercial Bank	73,000 $ 2020.07.31～2021.01.27 0.80% 75,000 $ None － 70,000 2020.03.25~2021.03.25 0.52% 150,000 〞 － 60,000 2020.11.03~2021.02.01 0.85% 150,000 〞 － 50,000 2020.12.11~2021.06.09 0.95% 60,000 〞 － 45,000 2020.08.26~2021.02.26 0.81% 60,000 〞 － 30,000 2020.08.31~2021.02.27 0.90% 200,000 〞 － 30,000 2020.10.06~2021.01.06 0.73% 30,000 〞 － 358,000 $

~70~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF NOTES PAYABLE DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Client Name Company E Company F Company G Company H Company I Others (Note)	Description Notes payable 〞 〞 〞 〞 〞	Amount 9,856 $ 7,643 5,193 4,473 4,228 46,599 77,992 $	Footnote
			－ － － － － －

Note: The amount of individual client included in others does not exceed 5% of the account balance.

~71~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Client Name	Description		Amount	Footnote
Company J	Accounts payable	$	28,407	－
Others (Note)	〞		19,318	－
		$	47,725

Note: The amount of individual client included in others does not exceed 5% of the account balance.

~72~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF OTHER PAYABLES DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Refer to Note 6(10) ‘Other payables’ of parent company only financial statements.

~73~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF LONG-TERM LIABILITIES, CURRENT PORTION DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Creditor	Description Secured loan 〞 Unsecured borrowings	Loan amount 23,528 $ 18,750 50,000 92,278 $	Expiry date 2018.8.21～2023.8.21 2020.3.20~2025.3.20 2019.8.22～2023.2.22	Rate Collateral Footnote 1.35% Buildings and Structures － 1.04% 〞 － 1.25% None －
Mega International Commercial Bank Taipei Fubon Commercial Bank 〞

~74~

==> picture [751 x 56] intentionally omitted <==

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

CHIEFTEK PRECISION CO., LTD.
STATEMENT OF LONG-TERM BORROWINGS
DECEMBER 31, 2020
(Expressed in thousands of New Taiwan dollars)
Creditor Description Loan amount Expiry date Rate Collateral Footnote
----- End of picture text -----

Creditor	Description	Loa	n amount	Expirydate	Rate	Collateral	Footnote
Mega International Commercial Bank	Secured borrowings	$	35,624	2020.5.15~2027.5.15	1.30%	Buildings and	Signed joint loan contracts with eleven financial institutions including
						structures	Mega International Commercial Bank. With Mega International
Chang Hwa Bank	〞		23,750	〞	〞	〞	Commercial Bank as the management bank, it is divided into A, B, C
Taipei Fubon Commercial Bank	〞		23,750	〞	〞	〞	and D. Program A and B are secured borrowings. The Company started
First Commercial Bank	〞		17,813	〞	〞	〞	borrowing with program B since 2020.5.15.The first three years is a
Cathay United Commercial Bank	〞		17,813	〞	〞	〞	grace period, and the first repayment date is 2023.6.15. The loan is
Bank of Taiwan	〞		11,875	〞	〞	〞	repayable quarterly in 48 installments.
Hua Nan Bank	〞		11,875	〞	〞	〞
Shanghai Commercial & Savings Bank	〞		11,875	〞	〞	〞
Yuanta Commercial Bank	〞		11,875	〞	〞	〞
E.SUN Commercial Bank	〞		11,875	〞	〞	〞
DBS Bank	〞		11,875	〞	〞	〞
Mega International Commercial Bank	Unsecured borrowings		20,624	2020.5.15~2027.5.15	1.30%	None	Signed joint loan contracts with eleven financial institutions including
Chang Hwa Bank	〞		13,750	〞	〞	〞	Mega International Commercial Bank. With Mega International
Taipei Fubon Commercial Bank	〞		13,750	〞	〞	〞	Commercial Bank as the management bank, it is divided into A, B, C
First Commercial Bank	〞		10,313	〞	〞	〞	and D. Program C and D are unsecured borrowings. The Company
Cathay United Commercial Bank Bank of Taiwan Hua Nan Bank Shanghai Commercial & Savings Bank	〞 〞 〞 〞		10,313 6,875 6,875 6,875	〞 〞 〞 〞	〞 〞 〞 〞	〞 〞 〞 〞	started borrowing with program C since 2020.5.15. The first three years is a grace period, and the first repayment date is 2023.6.15. The loan is repayable quarterly in 48 installments.
Yuanta Commercial Bank	〞		6,875	〞	〞	〞
E.SUN Commercial Bank	〞		6,875	〞	〞	〞
DBS Bank	〞		6,875	〞	〞	〞

~75~

				CHIEFTEK PRECISION CO., LTD.	CHIEFTEK PRECISION CO., LTD.
			STATEMENT OF LONG-TERM BORROWINGS (Cont.)
				DECEMBER 31, 2020
			(Expressed in thousands of New Taiwan		dollars)
Creditor	Description		Loan amount	Expirydate Rate	Collateral	Footnote
Taipei Fubon Commercial Bank	Secured borrowings		100,000	2020.3.20~2025.3.20 1.04%	Buildings and	The first repayment date is 12 months after the first drawdown
					structures	date, and after, the loan is repayable quarterly in 16 installments.
Mega International Commercial Bank	〞		64,702	2018.8.21~2023.8.21 1.35%	〞	The first repayment date is 12 months after the first drawdown
						date, and after that, the loan is repayable quarterly in 17 installments.
Taipei Fubon Commercial Bank	Unsecured borrowings		62,500	2019.8.22~2022.2.22 1.25%	None	The first repayment date is 6 months after the first drawdown
						date, and after that, the loan is repayable quarterly in 8 installments.
			527,202
	Less：Current portion	(	92,278)
		$	434,924

~76~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

						Balance as of
	Item Description	Lease period	Discount rate	December 31, 2020			Footnote
Land	－	2005.11.25~2041.12.31	1.80%		$	131,800	－
			Less：Current portion	(		5,214)
					$	126,586

~77~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF SALES REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

==> picture [504 x 34] intentionally omitted <==

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

Amount
Item Quantity Subtotal Total Footnote
----- End of picture text -----

Sales: Linear guide 759,000 Others Sales Less: Sales returns Sales discounts and allowances Sales revenue, net	1,028,777 $ － 41,866 － 1,070,643 $ － 2,287) ( － 62) ( － 1,068,294 $

~78~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item			Amount
Raw materials at January 1, 2020		$	83,509
Add: Raw materials purchased			128,831
Less: Transferred to expenses	(		64)
Raw materials at December 31, 2020	(		80,104)
Raw materials during the year			132,172
Supplies at January 1, 2020			57,206
Add: Supplies purchased			89,290
Less: Transferred to expenses	(		1,139)
Losses on physical count of supplies	(		15)
Sale of supplies	(		4,970)
Supplies at December 31, 2020	(		59,355)
Supplies used during the year			81,017
Direct labor			149,195
Manufacturing overhead			280,026
Manufacturing cost			642,410
Work in progress at January 1, 2020			335,181
Add: Work in progress purchased			6,011
Gains on physical count of work in progress			16
Less: Transferred to expenses	(		3,256)
Sale of work in progress	(		2,414)
Work in progress at December 31, 2020	(		272,410)
Cost of finished goods			705,538

~79~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF OPERATING COSTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item			Amount
Finished goods at January 1, 2020		$	45,777
Add: Finished goods purchased			318
Gains on physical count of finished goods			8
Less: Transferred to expenses	(		5,013)
Finished goods at December 31, 2020	(		65,742)
Cost of production and marketing			680,886
Sale of cost of supplies			7,384
Cost of goods sold			688,270
Allowance for inventory market price decline			15,354
Gains on physical count of inventory	(		9)
Revenue from sale of scrap	(		339)
Operating costs		$	703,276

~80~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF MANUFACTURING OVERHEAD FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item Wages and salaries Utilities expense Insurance expense Depreciation Miscellaneous purchase expense Processing fee Others (Note)	Description － － － － － － －	Amount 31,116 $ 14,288 19,016 60,163 50,266 77,686 27,491 280,026 $	Footnote
			－ － － － － － －

Note: The amount of individual expense included in others does not exceed 5% of the account balance.

~81~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF SELLING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item Wages and salaries Traveling expense Freight Advertisement expense Others (Note)	Description － － － － －	Amount 14,019 $ 1,791 4,855 3,562 8,371 32,598 $	Footnote
			－ － － － －

Note: The amount of individual expense included in others does not exceed 5% of the account balance.

~82~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item Wages and salaries Director’s remuneration Depreciation Professional service fee Others (Note)	Description － － － － －	Amount 36,630 $ 4,452 5,864 6,612 27,043 80,601 $	Footnote
			－ － － － －

Note: The amount of individual expense included in others does not exceed 5% of the account balance.

~83~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Item Wages and salaries Depreciation Amortization Research material expense Others (Note)	Description － － － － －	Amount 27,694 $ 5,210 10,367 6,434 11,527 61,232 $	Footnote
			－ － － － －

Note: The amount of individual expense included in others does not exceed 5% of the account balance.

~84~

CHIEFTEK PRECISION CO., LTD. STATEMENT OF SUMMARY OF EMPLOYEE BENEFITS, DEPRECIATION, AND AMORTIZATION EXPENSES IN THE CURRENT PERIOD FOR THE YEAR ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Refer to Note 6(21) ‘Expense by nature’ and Note 6(22) ‘Employee benefit expense’ of parent company only financial statements.

~85~

CHIEFTEK PRECISION CO., LTD.

Loans to others

For the year ended December 31, 2020

Table 1

Expressed in thousands of NTD

No. (Note 1)	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31,2020	Balance at December 31,2020	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a single party （Note 2）	Ceiling on total loans granted （Note 2）	Footnote
													Item	Value
0	CHIEFTEK PRECISION CO., LTD.	CHIEFTEK PRECISION INTERNATIONAL LLC	Other receivables	Y	48,304 $	- $	- $	2.0%	Short-term financing	- $	Operational use	- $	－	- $	845,223 $	845,223 $	－

(Note 1) The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

• (1) Parent company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

(Note 2) Calculation of limit on loans granted to a single party and ceiling on total loans granted are as follows:

The limit on total amount of loan granted to certain entities with short-term finaincing need is set at 40% of the Company's net assets: the limit on an amount of loan granted to a single entity could not exceed 40% of the Company's net assets.

Table 1, Page 1

CHIEFTEK PRECISION CO., LTD.

Provision of endorsements and guarantees to others

For the year ended December 31, 2020

Table 2

Expressed in thousands of NTD

No. (Note 1)	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/ guarantee amount as of December 31, 2020	Outstanding endorsement/ guarantee amount at December 31, 2020	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided (Note 3)	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/ guarantor （Note 2）
0 0 0	CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD.	cpc Europa GmbH CSM Maschinen GmbH CHIEFTEK PRECISION INTERNATIONAL LLC	1 1 1	1,056,529 $ 1,056,529 1,056,529	199,740 $ 49,935 60,500	157,590 $ - -	21,012 $ - -	- $ - -	7% - -	1,056,529 $ 1,056,529 1,056,529	Y Y Y	N N N	N N N	－ － －

(Note 1) The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

• (1) Parent company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

(Note 2) The following code respresents the relationship with the Company:

(1) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(Note 3) (1) The total endorsements/guarantees provided shall not exceed 50% of the Companyʼs net assets, and the amount provided for each counterparty shall not exceed 20% of the Companyʼs paid-in capital. However, the limitation is not applied to subsidiaries that the Company directly or indirectly holds more than 50% of the voting shares.

(2) For trading partner, except for the abovementioned limit, the maximum amount for individual trading partner shall not exceed the higher of total purchase and sale transations during the most recent year.

Table 2, Page 1

Table 3

Expressed in thousands of NTD

CHIEFTEK PRECISION CO., LTD.

• Acquisition of real estate reaching NT$300 million or 20% of paid in capital or more For the year ended December 31, 2020

If the counterparty is a related party, information as to the last transaction of

Real estate acquired by	Real estate acquired	Date of the event	Transaction amount	Status of payment	Counterparty	Relationship with the counterparty		the real estate is disclosed below:	the real estate is disclosed below:		Basis or reference used in setting the price	Reason for acquisition of real estate and status of the real estate	Other commitments
							Original owner who sold the real estate to the counterparty	Relationship between the original owner and the acquirer	Date of the original transaction	Amount
CHIEFTEK PRECISION CO., LTD.	Sugu new factory construcion phase II	May 17, 2019	$ 454,419	$ 318,620	Hong Sheng Construction Corp.	–	–	–	–	$ -	Negotiation	Building for operation use	–

Table 3, Page 1

CHIEFTEK PRECISION CO., LTD.

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

For the year ended December 31, 2020

Purchaser/seller Table 4	Counterparty	Relationship with the counterparty		Transaction	Transaction		Description and reasons for difference in transaction terms compared to third party transactions	Description and reasons for difference in transaction terms compared to third party transactions	Balance Percentage of total notes/accounts receivable (payable) Footnote Notes/accounts receivable(payable) Expressed in thousands of NTD	Balance Percentage of total notes/accounts receivable (payable) Footnote Notes/accounts receivable(payable) Expressed in thousands of NTD	Balance Percentage of total notes/accounts receivable (payable) Footnote Notes/accounts receivable(payable) Expressed in thousands of NTD
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
CHIEFTEK PRECISION CO., LTD. cpc Europa GmbH Chieftek Machinery (Kunshan) Co., Ltd.	cpc Europa GmbH Chieftek Machinery (Kunshan) Co., Ltd. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD.	Subsidiary Subsidiary The Company The Company	(Sales) (Sales) Purchases Purchases	137,592) ($ 282,865) ( 137,592 282,865	(13%) (26%) 82% 100%	(Note 1) (Note 1) (Note 1) (Note 1)	- $ - - -	(Note 2) (Note 2) (Note 3) (Note 4)	69,311 $ 112,420 69,311) ( 112,420) (	17% 28% (99%) (100%)	－ － － －

(Note 1) 180 days after monthly-closing, T/T.

(Note 2) The collection period for third parties are from 30 days after monthly-closing to 180 days after next monthly-closing.

(Note 3) The payment period for third parties are from 30 days after monthly-closing to 60 days after next monthly-closing.

Table 4, Page 1

CHIEFTEK PRECISION CO., LTD.

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

December 31, 2020

Table 5

Creditor Table 5	Counterparty	Relationship with the counterparty	Balance as at December31,2020	Turnover rate	Overdue receivables		Amount collected subsequent to the balance sheet date Allowance for doubtful accounts Expressed in thousands of NTD
					Amount	Action taken
CHIEFTEK PRECISION CO., LTD.	Chieftek Machinery (Kunshan) Co., Ltd.	Subsidiary	112,420 $	2.14	- $	–	93,299 $ - $

Table 5, Page 1

Table 6

Expressed in thousands of NTD

CHIEFTEK PRECISION CO., LTD.

- Significant inter company transactions during the reporting period

For the year ended December 31, 2020

Number (Note1)	Companyname	Counterparty	Relationship (Note2)		Transaction	Transaction
				General ledgeraccount	Amount	Transactionterms	Percentage of consolidated total operating revenues or totalassets (Note 3)
0 1 2 3	CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION HOLDING CO., LTD. CHIEFTEK PRECISION USA CO., LTD. Chieftek Precision (Hong Kong) Co., Limited	cpc Europa GmbH CHIEFTEK PRECISION USA CO., LTD. Chieftek Machinery (Kunshan) Co., Ltd. CHIEFTEK PRECISION USA CO., LTD. CHIEFTEK PRECISION INTERNATINAL LLC Chieftek Machinery (Kunshan) Co., Ltd.	1 1 1 3 3 3	Sales revenue Accounts receivable Endorsements and guarantees Sales revenue Accounts receivable Sales revenue Accounts receivable Dividends receivable Rent payment Refundable deposits Dividend Income	($ 137,592) 69,311 157,590 ( 84,631) 28,814 ( 282,865) 112,420 26,906 12,126 1,424 49,918) (	180 days after monthly- closing, T/T － － 180 days after monthly- closing, T/T － 180 days after monthly- closing, T/T － － － － －	(10%) 2% 4% (6%) 1% (20%) 3% 1% 1% － (4%)

(Note 1) The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

(Note 2) Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary.

• (2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

(Note 3) Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

(Note 4) Only transactions over million are material.

(Note 5) Foreign currencies were translated into New Taiwan Dollars using the exchange rate (USD:NTD 1:28.48) as at December 31, 2020.

Table 6, Page 1

CHIEFTEK PRECISION CO., LTD.

Names, locations and other information of investee companies (not including investees in Mainland China) For the year ended December 31, 2020

Table 7

Expressed in thousands of NTD

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December31,2020	as at December31,2020	Net profit (loss) of the investee for the year ended December31,2020	Investment income (loss) recognized by the Company for the year ended December31,2020	Footnote
				Balance as at December31,2020	Balance as at December31,2019	Number of shares	Ownership (%)	Bookvalue
CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION HOLDING CO., LTD.	CHIEFTEK PRECISION HOLDING CO., LTD. CHIEFTEK PRECISION INTERNATIONAL LLC cpc Europa GmbH CHIEFTEK PRECISION USA CO., LTD. CSM Maschinen GmbH Chieftek Precision (Hong Kong) Co., Limited	Samoa United States of America Germany United States of America Germany Hong Kong	Professional investment Lease of real estate property Sale of high precision linear motion components and rendering after -sale services Sale of high precision linear motion components and rendering after -sale services Research, manufacture and sale of machineries Professional investment	152,263 $ 110,054 98,695 50,027 - 145,248	152,263 $ 61,551 98,695 50,027 19,349 145,248	5,100,000 - - 1,660,000 - 5,100,000	100 100 100 100 100 100	268,728 $ 101,592 9,181 32,543 - 257,597	49,572 $ 271) ( 14,434 10,327 - 47,724	49,572 $ 271) ( 14,434 10,327 - -	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Note 1) Subsidiary (Note 2)

(Note 1) CSM Machinen GmbH was merged into cpc Europa GmbH with the approval of the local authority since 2020.

(Note 2) Not required to disclose income (loss) recognized by the Company.

(Note 3) Foreign currencies were translated into New Taiwan Dollars using the exchange rate (USD:NTD 1:28.48) as at December 31, 2020.

Table 7, Page 1

Expressed in thousands of NTD

CHIEFTEK PRECISION CO., LTD.

Information on investments in Mainland China - Basic information

For the year ended December 31, 2020

Table 8

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December 31,2020	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December 31,2020	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020	Net income of investee for the year ended December 31, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2020 （Note 2）	Book value of investments in Mainland China as of December 31,2020	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2020	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Chieftek Machinery (Kunshan) Co., Ltd	Production, processing and sale of high precision linear motion components and rendering after-sale services	145,248 $	Note 1	145,248 $	- $	- $	145,248 $	47,719 $	100%	47,719 $	207,224 $	121,770 $	－

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2020	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA(Note 3)
CHIEFTEK PRECISION CO., LTD.	$ 145,248	$ 145,248	$ 1,267,835

(Note 1) Through investing in an existing company in the third area (Chieftek Precision (Hong Kong) Co., Ltd.) which then invested in the investee in Mainland China.

(Note 2) The investment income (loss) is recognized based on the investeesʼ financial statements that were audited by the parent company's auditor for the year ended December 31, 2020. (Note 3) The ceiling amount is 60% of the higher of net worth or consolidated net worth.

(Note 4) Foreign currencies were translated into New Taiwan Dollars using the exchange rate (USD:NTD 1:28.48) as at December 31, 2020.

Table 8, Page 1

CHIEFTEK PRECISION CO., LTD.

						CHIEFTEK PRECISION CO., LTD.	CHIEFTEK PRECISION CO., LTD.	CHIEFTEK PRECISION CO., LTD.	CHIEFTEK PRECISION CO., LTD.
Table 9 Investeein Mainland China	Sales	Information on investments in Mainland China-				Significant transactions, either directly or indirectly through a third are				Financing a, with investee companies in the Mainland Area			Interest during the year ended December 31, 2020 Others Expressed in thousands of NTD
		(purchase)		Property transaction		Accountsreceivable (payable) Provision of endorsements/guarantees orcollaterals For the year ended December 31, 2020
	Amount		%	Amount	%	Balance at December31,2020	%	Balance at December 31, 2020	Purpose	Maximum balance during the year ended December31,2020	Balance at December 31, 2020	Interestrate	Interest during the year ended December 31, 2020
Chieftek Machinery (Kunshan) Co., Ltd	$ 282,865		26%	$ -	-	$ 112,420	28%	$ -	-	$ -	- $	-	- $	- $

Table 9, Page 1

CHIEFTEK PRECISION CO., LTD.

Major shareholders information

December 31, 2020

Table 10

Expressed in share

Name of major shareholders	Number of shares	Number of shares
	Common stock	Ownership (%)
Hsu, Ming-Che	5,579,338	6.87%

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

Table 10, Page 1