cpc — Audit Report / Information 2021

Dec 20, 2021

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT

DECEMBER 31, 2021 AND 2020

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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.

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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

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

Opinion

We have audited the accompanying consolidated balance sheets of CHIEFTEK PRECISION CO., LTD. and its subsidiaries (collectively referred herein as the “Group”) as of December 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, International Financial Reporting Interpretations Committee Interpretations, and Standing Interpretations Committee Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

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

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Key audit matters for the Group’s 2021 consolidated financial statements are stated as follows:

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

Description

Refer to Note 4(11) 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(4) for the details of inventory. As of December 31, 2021, the balances of inventories and allowance for inventory valuation losses were NT$510,806 thousand and NT$68,908 thousand, respectively.

The Group 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 Group measures its inventories at the lower of cost and net realizable value. The net realizable value of the Group’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 Group’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 Group’s operations and its industry characteristic to assess the reasonableness of the Group’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 Group 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 Group’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.

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Authenticity of sales revenue

Description

Refer to Note 4(24) for the accounting policy on revenue recognition and Note 6(16) for the details of operating revenue.

The Group sells a variety of linear guides, ball screws and linear modules with a global target market, including Taiwan, Asia, Europe, America and so forth. Since the customers are numerous and located in different countries, and the number of transactions is voluminous, it takes a longer time to verify the existence of sales revenue. Thus, we considered the authenticity of sales revenue as one of the key audit matters for this year’s audit.

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, authorization 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 reasonableness of the debit notes issued after the balance sheet date.

Other matter - Parent company only financial statements

We have audited and expressed an unqualified opinion on the parent company only financial statements of CHIEFTEK PRECISION CO., LTD. as of and for the years ended December 31, 2021 and 2020.

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

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

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

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

Auditors’ responsibilities for the audit of the consolidated financial statements

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

• A. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and 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.

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

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

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

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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.

Lin, Yung-Chih

Independent Accountants

Tien, Chung-Yu

PricewaterhouseCoopers, Taiwan

Republic of China March 2, 2022

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

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

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CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 6(3) and 12 6(23) 5 and 6(4) 6(5) and 8 6(6) 6(7)(8) 6(23) 6(5)	December31,2021 AMOUNT % $ 801,950 21 70,412 2 46,317 1 401,437 11 6,756 - - - 441,898 12 45,386 1 1,814,156 48 1,711,186 45 123,377 3 79,576 2 12,919 1 43,508 1 7,999 - 4,478 - 1,983,043 52 $ 3,797,199 100	December31,2020	December31,2020
		AMOUNT $ 801,950 70,412 46,317 401,437 6,756 - 441,898 45,386 1,814,156 1,711,186 123,377 79,576 12,919 43,508 7,999 4,478 1,983,043 $ 3,797,199	AMOUNT $ 654,597 7,360 27,767 344,675 9,515 20,398 556,943 36,049 1,657,304 1,532,120 129,601 101,595 25,160 48,474 9,775 5,312 1,852,037 $ 3,509,341	%
Current assets 1100 Cash and cash equivalents 1136 Financial assets at amortized cost - current 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 1220 Current income tax assets 130X Inventories 1410 Prepayments 11XX Total current assets Non-current assets 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				19 - 1 10 - - 16 1
				47
				44 4 3 1 1 - -
				53
				100

(Continued)

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CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December31,2021 December31,2020 Notes AMOUNT % AMOUNT % 6(9)(26) $ 230,000 6 $ 379,012 11 6(16) 2,626 - 4,807 - 161,421 4 77,992 2 49,456 1 49,211 2 6(10) 169,011 5 110,835 3 6(23) 50,557 2 3,848 - 6(6)(20)(26) 5,308 - 5,214 - 6(11)(26), 8 and 9 78,553 2 94,658 3 746,932 20 725,577 21 6(11)(26), 8 and 9 624,585 17 517,984 15 6(23) 10,968 - 18,973 - 6(6)(20)(26) 121,278 3 126,586 4 6(12) 7,481 - 7,163 - 764,312 20 670,706 19 1,511,244 40 1,396,283 40 6(13) 811,876 21 811,876 23 6(14) 440,667 12 440,667 12 6(15) 182,266 5 162,016 5 36,323 1 29,394 1 891,999 23 731,978 21 ( 50,626) ( 1 ) ( 36,323) ( 1) 6(13) ( 26,550) ( 1 ) ( 26,550) ( 1) 2,285,955 60 2,113,058 60 6(6) and 9 $ 3,797,199 100 $ 3,509,341 100

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 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 consolidated financial statements.

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CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

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

Items

Year ended December 31 2021 2020 Notes AMOUNT % AMOUNT % 6(16) $ 1,856,920 100 $ 1,381,885 100 6(4)(12)(21)(22)( 1,083,133 ) ( 58) ( 815,950 ) ( 59) 773,787 42 565,935 41 6(7)(12)(21)(22) and 7 ( 103,858 ) ( 6) ( 89,881 ) ( 7) ( 124,813 ) ( 7) ( 136,440 ) ( 10) ( 70,421 ) ( 4) ( 61,232 ) ( 4) 12 8,685 1 ( 2,013 ) - ( 290,407 ) ( 16) ( 289,566 ) ( 21) 483,380 26 276,369 20 6(2)(17) 2,009 - 2,020 - 6(18) 10,387 - 15,587 1 6(19) and 12 ( 41,665 ) ( 2) ( 21,015 ) ( 1) 6(5)(6)(20) ( 6,852 ) - ( 11,466 ) ( 1) ( 36,121 ) ( 2) ( 14,874 ) ( 1) 447,259 24 261,495 19 6(23) ( 138,470 ) ( 7) ( 58,400 ) ( 4) $ 308,789 17 $ 203,095 15 6(12) ( $ 593 ) - ($ 750 ) - 6(23) 118 - 150 - ( 14,303 ) ( 1) ( 6,929 ) ( 1) ( $ 14,778 ) ( 1) ($ 7,529 ) ( 1) $ 294,011 16 $ 195,566 14 6(24) $ 3.82 $ 2.51 $ 3.81 $ 2.51

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment gain (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 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 that will not be reclassified to profit or loss 8311 Actuarial loss on defined benefit plans 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 Total 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 consolidated financial statements.

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CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Retained Earnings

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 2021 Balance at January 1, 2021 Profit for the year Other comprehensive loss for the year Total comprehensive income (loss) for the year Appropriations of 2020 earnings Legal reserve Special reserve Cash dividends Balance at December 31, 2021	Notes		Share capital - commonstock		Capital reserve		Legal reserve		Special reserve	Unappropriated retained earnings	Financial statements translation differences of foreignoperations		Treasury stocks		Totalequity
	6(15) 6(15) 6(13) 6(15) 6(15)		$ 811,876 - - - - - - - $ 811,876 $ 811,876 - - - - - - $ 811,876		$ 440,667 - - - - - - - $ 440,667 $ 440,667 - - - - - - $ 440,667		$ 144,552 - - - 17,464 - - - $ 162,016 $ 162,016 - - - 20,250 - - $ 182,266		$ 17,047 - - - - 12,347 - - $ 29,394 $ 29,394 - - - - 6,929 - $ 36,323	$ 640,037 203,095 ( 600 ) 202,495 ( 17,464 ) ( 12,347 ) ( 80,743 ) - $ 731,978 $ 731,978 308,789 ( 475 ) 308,314 ( 20,250 ) ( 6,929 ) ( 121,114 ) $ 891,999	($ 29,394 ) - ( 6,929 ) ( 6,929 ) - - - - ($ 36,323 ) ($ 36,323 ) - ( 14,303 ) ( 14,303 ) - - - ($ 50,626 )	$ - - - - - - - ( 26,550 ) ($ 26,550 ) ($ 26,550 ) - - - - - - ($ 26,550 )		$ 2,024,785 203,095 ( 7,529 ) 195,566 - - ( 80,743 ) ( 26,550 ) $ 2,113,058 $ 2,113,058 308,789 ( 14,778 ) 294,011 - - ( 121,114 ) $ 2,285,955

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

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CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Expected credit impairment (gain) loss Loss on inventory market price decline Depreciation Gain arising from lease modifications Loss on disposal of property, plant and equipment Amortization Impairment loss Interest income Interest expense Changes in operating assets and liabilities Changes in operating assets Notes receivable Accounts receivable Other receivables Inventories Prepayments Changes in operating liabilities Current contract liabilities Notes payable Accounts payable Other payables Advance receipts Net defined benefit liabilities Cash inflow generated from operations Interest received Interest paid Income tax paid Net cash flows from operating activities

Year ended December 31 Notes 2021 2020 $ 447,259 $ 261,495 12 ( 8,685 ) 2,013 6(4) 4,610 16,434 6(5)(6)(21) 77,068 79,316 6(6)(19) - ( 251 ) 6(19) 10 - 6(7)(21) 10,479 11,146 6(7)(8)(19) 12,874 9,049 6(17) ( 2,009 ) ( 2,020 ) 6(20) 6,852 11,466 ( 18,550 ) ( 208 ) ( 47,450 ) ( 48,454 ) 2,759 ( 6,263 ) 113,014 63,300 ( 9,337 ) ( 7,511 ) ( 2,181 ) 843 59,595 12,357 245 30,500 48,216 928 - ( 1,699 ) ( 275 ) ( 251 ) 694,494 432,190 2,009 2,020 ( 6,846 ) ( 11,718 ) ( 67,009 ) ( 74,846 ) 622,648 347,646

(Continued)

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CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in financial assets at amortized cost - current Cash paid for acquisition of property, plant and equipment Interest paid for acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in prepayments for equipment Decrease (increase) in guarantee deposits paid Decrease (increase) in other non-current assets Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in short-term borrowings Payments of lease liability Increase in long-term borrowings Decrease in long-term borrowings Payments of cash dividends Purchase of treasury stocks Net cash flows used in financing activities Effect of foreign exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Year ended December 31 Notes 2021 2020 ($ 63,052 ) $ 269 6(25) ( 203,131 ) ( 300,388 ) 6(5)(20)(25) ( 7,479 ) ( 5,627 ) 17 - 6(7) ( 1,353 ) ( 783 ) ( 5,898 ) ( 46,597 ) 1,776 ( 2,075 ) 834 ( 2,433 ) ( 278,286 ) ( 357,634 ) 6(26) 934,000 1,241,000 6(26) ( 1,081,866 ) ( 1,175,553 ) 6(26) ( 5,214 ) ( 4,869 ) 6(26) 240,000 488,590 6(26) ( 147,131 ) ( 453,697 ) 6(15) ( 121,114 ) ( 80,743 ) 6(13) - ( 26,550 ) ( 181,325 ) ( 11,822 ) ( 15,684 ) ( 1,727 ) 147,353 ( 23,537 ) 6(1) 654,597 678,134 6(1) $ 801,950 $ 654,597

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

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CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(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 and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the research, development, manufacture and sale 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.

• THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

• These consolidated financial statements were authorized for issuance by the Board of Directors on March 2, 2022.

• APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

follows:
New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard (“IASB”)
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’ Amendments to IFRS 16, ‘Covid-19-related rent concessions beyond June 30, 2021’	January 1, 2021 January 1, 2021 April 1, 2021 (Note)

Note: Earlier application from January 1, 2021 is allowed by the FSC.

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

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

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2022 are as follows:

New Standards,Interpretations andAmendments	Effective date by IASB
Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts–cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018–2020	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

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

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

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

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Effective date by
New Standards, Interpretations and Amendments IASB
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New Standards,Interpretations and Amendments	Effective date by IASB
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets	To be determined by IASB
between an investor and its associate or joint venture’
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9 –	January 1, 2023
comparative information’
Amendments to IAS 1, ‘Classification of liabilities as current or	January 1, 2023
non-current’
Amendments to IAS 1, ‘Disclosure of accounting policies’	January 1, 2023
Amendments to IAS 8, ‘Definition of accounting estimates’	January 1, 2023
Amendments to IAS 12, ‘Deferred tax related to assets and	January 1, 2023
liabilities arising from a single transaction’

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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(1) Statement of compliance

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

• (2) Basis of preparation

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

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

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

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

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

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

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

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

• B. Subsidiaries included in the consolidated financial statements:

Name of investor	Name of subsidiary	Business activities Professional investment Lease of real estate property Sale of high precision linear motion components and rendering after-sales service Sale of high precision linear motion components and rendering after-sales service	December 31, December 31, 2021 2020 100 100 100 100 100 100 100 100 Ownership (%)	Note
			December 31, 2021 100 100 100 100
CHIEFTEK PRECISION CO., LTD. (“CHIEFTEK PRECISION”) CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD.	CHIEFTEK PRECISION HOLDING CO., LTD. CHIEFTEK PRECISION INTERNATIONAL LLC CHIEFTEK PRECISION USA CO., LTD. (“cpc USA”) cpc Europa GmbH (“cpc Europa”)			- - - -

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Ownership (%)
Business December 31, December 31,
Name of investor Name of subsidiary activities 2021 2020 Note
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Name of investor	Name ofsubsidiary	Business activities	December 31, 2021	December 31, 2020	Note
CHIEFTEK	CHIEFTEK	Professional	100	100	-
PRECISION	PRECISION	investment
HOLDING CO.,	(Hong Kong)
LTD.	Co., Limited
CHIEFTEK	Chieftek Machinery	Production,	100	-	Note
PRECISION	(Kunshan) Co.,	processing
HOLDING CO.,	Ltd. (“Chieftek	and sale of
LTD.	(Kunshan)”)	high precision
		linear motion
		components
		and after-sales
		service
CHIEFTEK	Chieftek Machinery	Production,	-	100	Note
PRECISION	(Kunshan) Co.,	processing
(Hong Kong)	Ltd. (“Chieftek	and sale of
Co., Limited	(Kunshan)”)	high precision
		linear motion
		components
		and after-sales
		service

• Note: On August 31, 2021, the Group has commenced organizational restructuring through capital reduction and withdrawal of 100% share capital of Chieftek Machinery (Kunshan) Co., Ltd. from Chieftek Precision (Hong Kong) Co., Limited and transferred the shares to CHIEFTEK PRECISION HOLDING CO., LTD..

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

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

• E. Significant restrictions: None.

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

• (4) Foreign currency translation

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

• A. Foreign currency transactions and balances

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

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• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are 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 re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• (d) All 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’.

• B. Translation of foreign operations

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

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

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

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

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

(5) Classification of current and non-current items

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

• (a) Assets arising from operating activities that are expected to be 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

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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.

(6) 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.

• (7) Financial assets at amortized cost

• A. Financial assets at amortized cost are those that meet all of the following criteria:

  • (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

  • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

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

• (8) Accounts and notes receivable

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

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

(9) Impairment of financial assets

• For debt instruments measured as financial assets at amortized cost, at each reporting date, the Group 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 financing component, the Group recognizes the impairment provision for lifetime ECLs.

(10) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expires.

(11) 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,

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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 lower 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.

• (12) 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 Group 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:

are as follows:
Assets Buildings and structures Machinery and equipment Transportation equipment Office equipment Leasehold improvements Other equipment	Useful lives
	2 ～ 50 years 2 ～ 15 years 3 ～ 10 years 1 ～ 10 years 3 ～ 15 years 2 ～ 10 years

(13) 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 Group. For short-term leases or leases of lowvalue assets, lease payments are recognized as an expense on a straight-line basis over the lease

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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

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

The Group 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 remeasure the lease liability. The lessee shall also decrease the carrying amount of right-of-use assets to reflect the partial or full termination of the lease, and recognize the difference in profit or loss.

• (14) 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 has been merged into cpc Europa GmbH with the approval of the local authority since 2020, was commissioned by the Company to develop

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and design linear guide, robotic arm and equipment for exhibition which are stated initially at cost and amortized over 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 is assessed to generate continuous net cash inflow in the foreseeable future. Technology contribution is not amortized, but is tested annually for impairment.

(15) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is 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.

(16) 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 other non-current assets for liquidity services and amortized over the period of the facility to which it relates.

• (17) 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.

(18) Derecognition of financial liabilities

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

(19) 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.

(20) Employee benefits

• A. Short-term employee benefits

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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 expenses in that period when the employees render service.

• B. Pensions

• (a) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expenses 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 plans

  • i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability 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. Remeasurement arising on defined benefit plans is recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.

• C. Employees’ compensation and directors’ remuneration

• Employees’ compensation and directors’ and 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 Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(21) 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

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

(22) 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.

(23) Dividends

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

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ordinary shares on the effective date of new shares issuance.

(24) Revenue recognition

Sales of goods

• A. The Group manufactures and sells linear guide, ball screw 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 Group 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 Group 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.

(25) Government grants

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

• (26) Operating segments

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

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

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

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

• None.

(2) Critical accounting estimates and assumptions

• Evaluation of inventories

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• A. As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is calculated based on the inventory clearance and historical data of discounts. Therefore, there might be material changes to the evaluation.

• B. As of December 31, 2021, the carrying amount of inventories was $441,898.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash: Cash on hand Checking accounts and demand deposits Cash Equivalents: Time deposits	December 31, 2021 1,294 $ 799,322 800,616 1,334 801,950 $	December 31,2020
		1,369 $ 651,729
		653,098
		1,499
		654,597 $

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

• B. The Group has no cash and cash equivalents pledged to others as of December 31, 2021 and 2020.

• (2) Financial assets at amortized cost - current

Financial assets at amortized cost-current
Restricted demand deposits (Note) Time deposits with maturity of over 3 months	December 31,2021 63,206 $ 7,206 70,412 $	December 31,2020
		- $ 7,360
		7,360 $

Note : The demand deposits were restricted due to the Group’s application of repatriating offshore funds according to “The Management, Utilization, and Taxation of Repatriated Offshore Funds Act”.

• A. The Group recognized interest income of $62 and $117 from financial assets at amortized cost for the years ended December 31, 2021 and 2020, respectively, shown as part of “Interest Income”.

• B. As of December 31, 2021 and 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortized cost held by the Group was its book value.

• C. The Group has no financial assets at amortized cost pledged to others as of December 31, 2021 and 2020.

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

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‘Financial instruments’.

(3) Notes and accounts receivable, net

‘Financial instruments’. Notes and accounts receivable, net
	December	31,2021	December	31, 2020
Notes receivable	$	46,317	$	27,767
	December	31,2021	December	31, 2020
Accounts receivable	$	417,378	$	370,745
Less: Allowance for doubtful accounts	(	15,941)	(	26,070)
	$	401,437	$	344,675

• A. The ageing analysis of the Group’s notes and accounts receivable is as follows:

Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December	Notes receivable 46,143 $ - - - 174 46,317 $ 31,2021	Accounts Notes receivable receivable 283,508 $ 27,592 $ 11,726 - 41,760 - 15,188 - 18,563 175 370,745 $ 27,767 $ December 31,2020
	Accounts receivable 358,480 $ 19,335 21,394 1,313 16,856 417,378 $

The above ageing analysis was based on past due date.

• B. As of December 31, 2021, December 31, 2020 and January 1, 2020, the balances of notes receivable and accounts receivable from contracts with customers amounted to $463,695, $398,512 and $352,262, 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 Group’s notes and accounts receivable was its book value.

• D. As of December 31, 2021 and 2020, the Group does not hold any collateral as security for accounts receivable.

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

(4) Inventories

Inventories
Raw materials Supplies Work in process Finished goods		December 31, 2021
	Allowance for Cost market price decline 64,678 $ 3,540) ($ 80,027 10,629) ( 231,543 19,502) ( 134,558 35,237) ( 510,806 $ 68,908) ($		Bookvalue
			61,138 $ 69,398 212,041 99,321
			441,898 $

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Raw materials Supplies Work in process Finished goods		December31,2020
	Allowance for Cost market price decline 80,104 $ 2,714) ($ 67,896 10,676) ( 274,069 13,003) ( 201,751 40,484) ( 623,820 $ 66,877) ($		Bookvalue
			77,390 $ 57,220 261,066 161,267
			556,943 $

The cost of inventories recognized as expense for the year:

		For theyears ended	For theyears ended	December 31,	December 31,
		2021		2020
Cost of goods sold	$	1,078,067	$		799,877
Allowance for inventory market price decline		4,610			16,434
Loss (gain) on physical inventory		1,069	(		22)
Revenue from sale of scraps	(	613)	(		339)
	$	1,083,133	$		815,950

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(5) Property, plant and equipment

																			Construction
																Leasehold			in progress
					Buildings										improvements				and equipment
						and	Machinery and		Transportation				Office			and other		before acceptance
AtJanuary1,2021			Land		structures			equipment		equipment		equipment				equipment			inspection		Total
Cost		$	367,121	$		750,993	$	944,425	$	6,789	$		22,495	$		156,286	$		443,763	$	2,691,872
Accumulated depreciation			-	(		166,993)	(	831,312)	(	4,915)	(		19,627)	(		136,905)			-	(	1,159,752)
		$	367,121	$		584,000	$	113,113	$	1,874	$		2,868	$		19,381	$		443,763	$	1,532,120
	2021
At January 1, 2021		$	367,121	$		584,000	$	113,113	$	1,874	$		2,868	$		19,381	$		443,763	$	1,532,120
Additions			-			955		7,284		329			1,019			3,438			231,373		244,398
Transferred from	prepayments for
equipment			-			-		-		-			-			-			10,864		10,864
Transferred after	acceptance inspection		-			193		9,734		-			-			16,337	(		26,264)		-
Depreciation			-	(		20,579)	(	36,374)	(	535)	(		1,787)	(		11,569)			-	(	70,844)
Disposals－Cost			-			-	(	2,111)	(	1,320)	(		985)	(		14)			-	(	4,430)
－Accumulated depreciation			-			-		2,111		1,294			984			14			-		4,403
Net currency exchange differences		(	1,412)	(		3,064)	(	688)	(	5)	(		17)	(		139)			-	(	5,325)
At December 31,	2021	$	365,709	$		561,505	$	93,069	$	1,637	$		2,082	$		27,448	$		659,736	$	1,711,186
At December 31, 2021
Cost		$	365,709	$		748,444	$	957,336	$	5,747	$		22,229	$		175,530	$		659,736	$	2,934,731
Accumulated depreciation			-	(		186,939)	(	864,267)	(	4,110)	(		20,147)	(		148,082)			-	(	1,223,545)
		$	365,709	$		561,505	$	93,069	$	1,637	$		2,082	$		27,448	$		659,736	$	1,711,186

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																			Construction
																Leasehold			in progress
					Buildings										improvements				and equipment
						and	Machinery and		Transportation				Office			and other		before acceptance
AtJanuary1,2020			Land		structures			equipment		equipment		equipment				equipment			inspection		Total
Cost		$	369,768	$		606,091	$	896,524	$	6,654	$		21,295	$		146,309	$		335,290	$	2,381,931
Accumulated depreciation			-	(		151,497)	(	788,483)	(	4,354)	(		17,750)	(		128,888)			-	(	1,090,972)
		$	369,768	$		454,594	$	108,041	$	2,300	$		3,545	$		17,421	$		335,290	$	1,290,959
	2020
At January 1, 2020		$	369,768	$		454,594	$	108,041	$	2,300	$		3,545	$		17,421	$		335,290	$	1,290,959
Additions			-			8,174		9,026		95			1,287			6,701			241,864		267,147
Transferred from	prepayments for
equipment			-			-		-		-			-			-			55,284		55,284
Transferred after	acceptance inspection		-			143,644		41,409		-			-			3,622	(		188,675)		-
Depreciation			-	(		16,570)	(	45,614)	(	524)	(		1,966)	(		8,418)			-	(	73,092)
Disposals－Cost			-			-	(	2,886)		-	(		80)	(		554)			-	(	3,520)
－Accumulated depreciation			-			-		2,886		-			80			554			-		3,520
Net currency exchange differences		(	2,647)	(		5,842)		251		3			2			55			-	(	8,178)
At December 31,	2020	$	367,121	$		584,000	$	113,113	$	1,874	$		2,868	$		19,381	$		443,763	$	1,532,120
At December31,2020
Cost		$	367,121	$		750,993	$	944,425	$	6,789	$		22,495	$		156,286	$		443,763	$	2,691,872
Accumulated depreciation			-	(		166,993)	(	831,312)	(	4,915)	(		19,627)	(		136,905)			-	(	1,159,752)
		$	367,121	$		584,000	$	113,113	$	1,874	$		2,868	$		19,381	$		443,763	$	1,532,120

~31~

• A. Property, plant and equipment of the Group were all for operating purposes as of December 31, 2021 and 2020.

• 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:

	For the years ended December 31,	For the years ended December 31,
	2021	2020
Amount capitalized	7,479 $	5,627 $
Range of the interest rates for capitalization	1.05%	1.12%

• C. Information about the property, plant and equipment that were pledged to others as collateral as of December 31, 2021 and 2020 is provided in Note 8, ‘Pledged assets’.

• －

• (6) Leasing arrangements lessee

• A. The Group 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	December 31,2021 December 31,2020 123,377 $ 129,601 $ For the years ended December 31,	December 31,2020 129,601 $
	2021 2020 6,224 $ 6,224 $

• C. For the years ended December 31, 2021 and 2020, the Group has no additions to right-of-use assets.

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

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Gain from lease modifications	For theyears ended December 31,	For theyears ended December 31,
	2021 2020 2,326 $ 2,418 $ 12,042 $ 11,992 $ - $ 251) ($	2020
		2,418 $
		11,992 $

• E. For the years ended December 31, 2021 and 2020, the Group’s total cash outflow for leases were $19,582 and $19,279, respectively.

• G. The Group 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”.

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(7) Intangible assets

Intangible assets
								Turn-key
								professional
		Trademarks		Patents		Software		technique		Others		Total
AtJanuary1,2021
Cost	$	578	$	10,106	$	12,848	$	90,718	$	60,000	$	174,250
Accumulated amortization	(	578)	(	3,724)	(	12,155)	(	9,072)	(	13,500)	(	39,029)
Accumulated impairment		-		-		-		-	(	33,626)	(	33,626)
Net value	$	-	$	6,382	$	693	$	81,646	$	12,874	$	101,595
2021
Net value at January 1, 2021	$	-	$	6,382	$	693	$	81,646	$	12,874	$	101,595
Additions－acquired separately		-		1,226		127		-		-		1,353
Amortization		-	(	705)	(	702)	(	9,072)		-	(	10,479)
Impairment loss		-		-		-		-	(	12,874)	(	12,874)
Net currency exchange differences		-		-	(	19)		-		-	(	19)
Net value at December 31, 2021	$	-	$	6,903	$	99	$	72,574	$	-	$	79,576
At December31,2021
Cost	$	578	$	11,333	$	12,712	$	90,718	$	60,000	$	175,341
Accumulated amortization	(	578)	(	4,430)	(	12,613)	(	18,144)	(	13,500)	(	49,265)
Accumulated impairment		-		-		-		-	(	46,500)	(	46,500)
Net value	$	-	$	6,903	$	99	$	72,574	$	-	$	79,576

~33~

								Turn-key
								professional
		Trademarks		Patents		Software		technique		Others		Total
AtJanuary1,2020
Cost	$	578	$	9,323	$	12,746	$	90,718	$	60,000	$	173,365
Accumulated amortization	(	578)	(	3,114)	(	10,606)		-	(	13,500)	(	27,798)
Accumulated impairment		-		-		-		-	(	24,577)	(	24,577)
Net value	$	-	$	6,209	$	2,140	$	90,718	$	21,923	$	120,990
2020
Net value at January 1, 2020	$	-	$	6,209	$	2,140	$	90,718	$	21,923	$	120,990
Additions－acquired separately		-		783		-		-		-		783
Amortization		-	(	610)	(	1,464)	(	9,072)		-	(	11,146)
Impairment loss		-		-		-		-	(	9,049)	(	9,049)
Net currency exchange differences		-		-		17		-		-		17
Net value at December 31, 2020	$	-	$	6,382	$	693	$	81,646	$	12,874	$	101,595
At December31,2020
Cost	$	578	$	10,106	$	12,848	$	90,718	$	60,000	$	174,250
Accumulated amortization	(	578)	(	3,724)	(	12,155)	(	9,072)	(	13,500)	(	39,029)
Accumulated impairment		-		-		-		-	(	33,626)	(	33,626)
Net value	$	-	$	6,382	$	693	$	81,646	$	12,874	$	101,595

~34~

• A. For the years ended December 31, 2021 and 2020, 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,
		2021		2020
General and administrative expenses	$	666	$	905
Research and development expenses		9,813		10,241
	$	10,479	$	11,146

(8) Impairment of non-financial assets

• A. The Group recognized impairment loss for the years ended December 31, 2021 and 2020 of $12,874 and $9,049 (listed as “Other gains and loss”), respectively. Details of such loss are as follows:

follows:
Impairment loss －intangible assests		Recognised in other Recognised Recognised in other comprehensive in profit comprehensive income or loss income - $ 9,049 $ - $ For theyears ended December 31, 2021 2020
	Recognised in profit or loss 12,874 $			Recognised in profit or loss
		- $		9,049 $		- $

• B. The impairment loss reported by operating segments is as follows:

The Company				Recognised in other Recognised Recognised in other comprehensive in profit comprehensive income or loss income - $ 9,049 $ - $ For theyears ended December31, 2021 2020	Recognised in other Recognised Recognised in other comprehensive in profit comprehensive income or loss income - $ 9,049 $ - $ For theyears ended December31, 2021 2020	Recognised in other Recognised Recognised in other comprehensive in profit comprehensive income or loss income - $ 9,049 $ - $ For theyears ended December31, 2021 2020	Recognised in other Recognised Recognised in other comprehensive in profit comprehensive income or loss income - $ 9,049 $ - $ For theyears ended December31, 2021 2020	Recognised in other Recognised Recognised in other comprehensive in profit comprehensive income or loss income - $ 9,049 $ - $ For theyears ended December31, 2021 2020
				Recognised in other comprehensive income 2021
		Recognised in profit or loss				Recognised in profit or loss
		12,874 $		- $		9,049 $		- $

• C. The recoverable amount of the special technology (shown as “intangible assets-other intangible assets”) acquired by the Group was assessed to be impaired based on the residual life of the patent. For the years ended December 31, 2021 and 2020, the Group recognized impairment loss of $12,874 and $9,049, respectively.

• D. The recoverable amount was assessed based on the use right of the intangible asset. For the year －

• ended December 31, 2021, the recoverable amount was $ because the patent is about to expire. For the year ended December 31, 2020, the discount rate was 9.4%.

~35~

(9) Short-term borrowings

Short-term borrowings
Nature Bank unsecured borrowings Nature Bank unsecured borrowings Bank secured borrowings	December31,2021 230,000 $ December31,2020 358,000 $ 21,012 379,012 $	Interestraterange 0.57%~0.85% Interestraterange 0.52%~0.95% 1.30%	Collateral
			None Collateral
			None Endorsements and guarantees by the Company

For more information about interest expense recognized by the Group for the years ended December 31, 2021 and 2020, please refer to Note 6(20), ‘Finance costs’.

(10) Other payables

1, 2021 and 2020, please refer to Note 6(20), ‘Finance Other payables	costs’.
Accrued salaries and bonuses Employees’ compensation and directors’ and supervisors’ remuneration payable Equipment payable Others	December31,2021 72,660 $ 27,000 15,207 54,144 169,011 $	December31,2020
		52,658 $ 20,500 5,253 32,424
		110,835 $

- (11) Long term borrowings

Long-term borrowings
Nature	Expirydate December31,2021 February 21, 2023～ December 28, 2027 493,138 $ November 20, 2023～ May 15, 2027 210,000 703,138 78,553) ( 624,585 $ Expirydate December31,2020 August 21, 2023～ December 28, 2027 440,142 $ February 22, 2022～ May 15, 2027 172,500 612,642 94,658) ( 517,984 $	Interest rate range	Collateral
Long-term bank borrowings Secured borrowings Unsecured borrowings Less: Current portion Nature		1.04%～ 2.81% 1.14%～ 1.30% Interest rate range	Land, buildings and structures None Collateral
Long-term bank borrowings Secured borrowings Unsecured borrowings Less: Current portion		1.04%～ 2.81% 1.25%～ 1.30%	Land, buildings and structures None

~36~

For more information about interest expense recognized by the Group for the years ended December 31, 2021 and 2020, please refer to Note 6(20), ‘Finance costs’.

(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’ 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:

year, the Company will make contribution for the deficit by next March. The amounts recognized in the balance sheet are as follows:	year, the Company will make contribution for the deficit by next March. The amounts recognized in the balance sheet are as follows:	year, the Company will make contribution for the deficit by next March. The amounts recognized in the balance sheet are as follows:	year, the Company will make contribution for the deficit by next March. The amounts recognized in the balance sheet are as follows:	year, the Company will make contribution for the deficit by next March. The amounts recognized in the balance sheet are as follows:
Movements in net defined benefit liabilities are as follows: December31,2021 December31,2020 Present value of defined benefit obligations 13,487) ($ 12,772) ($ Fair value of plan assets 6,006 5,609 Net defined benefit liability 7,481) ($ 7,163) ($ Present value of defined benefit obligations Fair value of plan assets Net defined benefitliability YearendedDecember31,2021 At January 1 12,772) ($ 5,609 $ 7,163) ($ Interest (expense) income 38) ( 16 22) ( 12,810) ( 5,625 7,185) ( Remeasurements: Return on plan assets - 84 84 Change in demographic assumptions 11) ( - 11) ( Change in financial assumptions 468 - 468 Experience adjustments 1,134) ( - 1,134) ( 677) ( 84 593) ( Pension fund contribution - 297 297 Balance at December 31 13,487) ($ 6,006 $ 7,481) ($
	12,772) ($ 38) ( 12,810) ( - 11) ( 468 1,134) ( 677) ( - 13,487) ($		5,609 $ 16 5,625 84 - - - 84 297 6,006 $	7,163) ($ 22) ( 7,185) ( 84 11) ( 468 1,134) ( 593) ( 297 7,481) ($
At January 1 Interest (expense) income Remeasurements: Return on plan assets Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Balance at December 31

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

~37~

YearendedDecember31,2020 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 11,769) ($ 82) ( 11,851) ( - 401) ( 520) ( 921) ( - 12,772) ($	Fair value of plan assets Net defined benefitliability 5,105 $ 6,664) ($ 36 46) ( 5,141 6,710) ( 171 171 - 401) ( - 520) ( 171 750) ( 297 297 5,609 $ 7,163) ($

(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, 2021 and 2020 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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

Discount rate Future salary increases	For theyears ended December 31,	For theyears ended December 31,
	2021	2020
	0.70%	0.30%
	3.25%	3.25%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with Taiwan Life Insurance 6th and 5th Mortality Table.

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

~38~

Discount rate Future salary increases

Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%

==> picture [445 x 121] intentionally omitted <==

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

December 31, 2021
Effect on present value of
defined benefit
obligation ($ 269) $ 282 $ 243 ($ 233)
December 31, 2020
Effect on present value of
defined benefit
($ 254) $ 265 $ 225 ($ 217)
obligation
----- End of picture text -----

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

• (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2022 amount to $297.

• (g) As of December 31, 2021, the weighted average duration of the retirement plan is 9 years. The analysis of timing of the future pension payment was as follows:

Within 1 year	$	6,462
2-5 years		1,030
Over 6 years		6,818
	$	14,310

• 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 other subsidiaries are subject to local government sponsored defined contribution plan. In accordance with related laws of the respective local government, the independent pension fund of employees is administered by the government. Other than the monthly contributions, these subsidiaries do not have further obligations. The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2021 and 2020 were $18,148 and $14,698, respectively.

(13) Share capital

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

~39~

	Forthe years endedDecember31,	Forthe years endedDecember31,
	2021	2020
Balance at beginning of year	80,743	81,188
Purchase of treasury stocks	-	445) (
Balance at end of year	80,743	80,743

• B. Treasury stocks

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

For the year ended December 31, 2021

	Forthe yearendedDecember31,2021	Forthe yearendedDecember31,2021	Forthe yearendedDecember31,2021	021
Reason for reacquisition To be reissued to employees Reason for reacquisition To be reissued to employees	Shares at beginning Shares at ofyear Increase Decrease end ofyear 445 - - 445 Forthe yearendedDecember31,2020			Shares at end ofyear
				445
	Shares at beginning ofyear -	Increase 445	Decrease -	Shares at end ofyear
				445

• (b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury stock 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, 2021 and 2020, the treasury shares amounted to $26,550.

• (c) Pursuant to the R.O.C. Securities and Exchange Act, treasury stocks 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 stocks 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.

• C. As of December 31, 2021, 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.

(14) Capital reserve

For the years ended December 31, 2021 and 2020 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 reserve 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

~40~

Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve 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. The above is not subject to provisions that require shareholders’ approval.

• 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 balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings. As of December 31, 2020, pursuant to the regulations for the deduction amount to stockholders’ equity from other equity items, the Company has set aside special reserve of $36,323, which cannot be distributed to shareholders.

• D. The Company recognized cash dividends distributed to owners amounting to $121,114 ($1.5 (in dollars) per share) for the year ended December 31, 2021. The Company recognized cash dividends distributed to owners amounting to $80,743 ($1.0 (in dollars) per share) for the year

~41~

ended December 31, 2020. On March 2, 2022, the Board of Directors proposed for the distribution of cash dividends from 2021 earnings in the amount of $121,114 ($1.5 (in dollars) per share) and stock dividend distribution in the amount of $80,743 ($1.0 (in dollars) per share).

(16) Operating revenue

Operating revenue
Revenue from contracts with customers	For theyears ended December31,
	2021 1,856,920 $	2020
		1,381,885 $

• A. The Group derives revenue from the transfer of goods at a point in time in segments. Please refer to Note 14, ‘Segment information’ for details.

• B. The Group has recognized revenue-related contract liabilities amounting to $2,626, $4,807 and $3,964 as of December 31, 2021, December 31, 2020 and January 1, 2020, respectively. Revenue recognized that were included in the contract liability balance at the beginning of 2021 and 2020 for the years ended December 31, 2021 and 2020 were $4,648 and $2,531, respectively.

(17) Interest income

Interest income
			Forthe years ended			December31,
			2021			2020
Interest income from bank deposits		$	1,937		$	1,889
Interest income from financial assets
measured at amortized cost			62			117
Other interest income			10			14
		$	2,009		$	2,020
Other income
			Forthe years ended			December31,
			2021			2020
Government grants revenue		$	4,684		$	4,800
Other income – others			5,703			10,787
		$	10,387		$	15,587
Other gains and losses
			Forthe years ended			December31,
			2021			2020
Gain from lease modifications		$	-		$	251
Currency exchange loss	(		28,637)	(		12,159)
Impairment loss	(		12,874)	(		9,049)
Loss on disposal of property, plant and
equipment	(		10)			-
Other losses	(		144)	(		58)
	($		41,665)	($		21,015)

(18) Other income

(19) Other gains and losses

~42~

(20) Finance costs

Finance costs
			Forthe years ended			December31,
			2021			2020
Interest expense:
Interest expense on bank borrowings		$	12,005		$	14,675
Interest expense on lease liabilities			2,326			2,418
Less: Capitalization of qualifying assets	(		7,479)	(		5,627)
		$	6,852		$	11,466

(21) Expenses by nature

Expenses by nature
Employee benefit expense Employee benefit expense Depreciation Amortization Employee benefit expense Depreciation Amortization Wages and salaries Labor and health insurance expense Pension costs Other personnel expenses Wages and salaries Labor and health insurance expense Pension costs Other personnel expenses	Operatingcost Operatingexpense Total 305,862 $ 163,337 $ 469,199 $ 53,333 23,735 77,068 - 10,479 10,479 359,195 $ 197,551 $ 556,746 $ Operating cost Operating expense Total 218,673 $ 155,444 $ 374,117 $ 60,501 18,815 79,316 - 11,146 11,146 279,174 $ 185,405 $ 464,579 $ Forthe yearendedDecember31,2021 Forthe yearendedDecember31,2020 Forthe yearendedDecember31,2021
	Operating cost Operating expense Total 258,349 $ 142,105 $ 400,454 $ 25,239 10,433 35,672 12,394 5,776 18,170 9,880 5,023 14,903 305,862 $ 163,337 $ 469,199 $ Forthe yearendedDecember31,2020		Total
			400,454 $ 35,672 18,170 14,903
			469,199 $
	Operating cost 182,028 $ 19,204 9,025 8,416 218,673 $	Operating expense 134,464 $ 10,060 5,719 5,201 155,444 $	Total
			316,492 $ 29,264 14,744 13,617
			374,117 $

(22) Employee benefit expense

A. According to the Articles of Incorporation of the Company, a ratio of distributable profit of the

~43~

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.

• B. For the years ended December 31, 2021 and 2020, the Company’s employees’ compensation were $22,000 and $16,000, respectively; while directors’ and supervisors’ remuneration were $5,000 and $4,500, respectively. The aforementioned amounts were recognized in salary expenses.

The expenses recognized for 2021 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 2021 as resolved by the Board of Directors were $22,000 and $16,000, respectively. The employees’ compensation will be distributed in the form of cash.

The employees’ compensation and directors’ and supervisors’ remuneration for 2020 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 2020 as resolved by the Board of Directors were equal to the amounts recognized in the 2020 financial statements.

Information about the appropriation of employees’ compensation and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors is 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:

Current income tax: Income tax incurred in current year Prior year income tax under (over) estimation Total current income tax Deferred income tax: Origination and reversal of temporary differences Income tax expense	2021 2020 128,319 $ 46,478 $ 5,797 3,890) ( 134,116 42,588 4,354 15,812 138,470 $ 58,400 $ Forthe years endedDecember31

• (b) The income tax relating to components of other comprehensive income is as follows:

		Forthe years endedDecember31	Forthe years endedDecember31
		2021	2020
Remeasurement of defined benefit
obligations	($	118)	($	150)

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B. Reconciliation between income tax expense and accounting profit

Reconciliation between income tax expense and accounting profit	Reconciliation between income tax expense and accounting profit	Reconciliation between income tax expense and accounting profit	Reconciliation between income tax expense and accounting profit	Reconciliation between income tax expense and accounting profit	Reconciliation between income tax expense and accounting profit	Reconciliation between income tax expense and accounting profit	Reconciliation between income tax expense and accounting profit
Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows: 2021 2020 Tax calculated based on profit before tax and statutory tax rate 132,183 $ 68,236 $ Effect of items disallowed by tax regulation 10,836 490) ( Effect from investment tax credits 3,329) ( 5,456) ( Effect from application of repatriating offshore funds 7,017) ( - Prior year's income tax under (over) estimation 5,797 3,890) ( Income tax expense 138,470 $ 58,400 $ Forthe years endedDecember31 January1 Recognized in profit or loss Recognized in other comprehensive income December 31 Temporary differences: Deferred tax assets: Loss on inventory market value decline 5,519 $ 1,508 $ - $ 7,027 $ Unused compensated absences 3,116 280 - 3,396 Unrealized gain on interafflilates 13,764 13,714) ( - 50 Pensions 2,059 - 118 2,177 Unrealized loss on foreign currency exchange 702 433) ( - 269 25,160 $ 12,359) ($ 118 $ 12,919 $ Deferred tax liabilities: Investment (income) loss 17,123) ($ 7,953 $ - $ 9,170) ($ Depreciation 1,850) ( 52 - 1,798) ( 18,973) ($ 8,005 $ - $ 10,968) ($ 6,187 $ 4,354) ($ 118 $ 1,951 $ 2021
		January1	Recognized in profit or loss	Recognized in other comprehensive income			December 31
	5,519 $ 3,116 13,764 2,059 702 25,160 $ 17,123) ($ 1,850) ( 18,973) ($ 6,187 $		1,508 $ 280 13,714) ( - 433) ( 12,359) ($ 7,953 $ 52 8,005 $ 4,354) ($		- $ - - 118 - 118 $ - $ - - $ 118 $	7,027 $ 3,396 50 2,177 269 12,919 $ 9,170) ($ 1,798) ( 10,968) ($ 1,951 $

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

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2020

Temporary differences: Deferred tax assets: Loss on inventory market value decline Unused compensated absences Unrealized gain on interafflilates Pensions Rent expense Unrealized loss on foreign currency exchange Deferred tax liabilities: Investment (income) loss Depreciation		January1	Recognized in profit or loss	Recognized in other comprehensive income	Recognized in other comprehensive income		December 31
	2,448 $ 3,185 16,447 1,909 219 1,852 26,060 $ 2,310) ($ 1,901) ( 4,211) ($ 21,849 $		3,071 $ 69) ( 2,683) ( - 219) ( 1,150) ( 1,050) ($ 14,813) ($ 51 14,762) ($ 15,812) ($		- $ - - 150 - - 150 $ - $ - - $ 150 $	5,519 $ 3,116 13,764 2,059 - 702 25,160 $ 17,123) ($ 1,850) ( 18,973) ($ 6,187 $

D. The Company’s income tax returns through 2019 have been assessed and approved by the Tax Authority. There were no disputes existing between the Company and the Tax Authority as of March 2, 2022.

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(24) Earnings per share (“EPS”)

Earnings per share (“EPS”)
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Forthe yearendedDecember31,2021
	Weighted average number of shares outstanding EPS Amount aftertax (sharesinthousands) (indollars) 308,789 $ 80,743 3.82 $ 308,789 $ 80,743 - 269 308,789 $ 81,012 3.81 $ Forthe yearendedDecember31,2020	EPS (indollars)
		3.82 $
		3.81 $
	Weighted average number of shares outstanding Amount aftertax (sharesinthousands) 203,095 $ 80,847 203,095 $ 80,847 - 227 203,095 $ 81,074	EPS (indollars)
		2.51 $
		2.51 $

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(25) Supplemental cash flow information

A. Investing activities with partial cash payments

			Forthe years ended	Forthe years ended	December31,
			2021		2020
Purchase of property, plant and equipment		$	244,398	$	267,147
Add: Opening balance of notes payable			11,803		25,323
Opening balance of payable for
equipment			5,253		30,601
Less: Ending balance of notes payable	(		35,637)	(	11,803)
Ending balance of payable for
equipment	(		15,207)	(	5,253)
Capitalization of interest	(		7,479)	(	5,627)
Cash paid during the year		$	203,131	$	300,388

B. Operating, investing and financing activities with no cash flow effects

(a) Write-offs of allowance for bad debts (b) Prepayments for equipment reclassified to property, plant and equipment	For the years ended December 31,
	2021 2020 817 $ 2,412 $ 10,864 $ 55,284 $

(26) Changes in liabilities from financing activities

												Liabilities from
			Short-term						Long-term			financing
			borrowings		Lease	liability			borrowings			activities-gross
At January 1, 2021		$	379,012		$	131,800		$	612,642		$	1,123,454
Changes in cash flow from
financing activities	(		147,866)	(		5,214)			92,869	(		60,211)
Impact of changes in
foreign exchange rate	(		1,146)			-	(		2,373)	(		3,519)
At December 31, 2021		$	230,000		$	126,586		$	703,138		$	1,059,724
												Liabilities from
			Short-term						Long-term			financing
			borrowings		Lease	liability			borrowings			activities-gross
At January 1, 2020		$	313,315		$	131,343		$	582,113		$	1,026,771
Changes in cash flow from
financing activities			65,447	(		4,869)			34,893			95,471
Changes in cash flow from
other non-financing
activities			-			5,326			-			5,326
Impact of changes in
foreign exchange rate			250			-	(		4,364)	(		4,114)
At December 31, 2020		$	379,012		$	131,800		$	612,642		$	1,123,454

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7. RELATED PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties

None.

(2) Key management compensation

For the years ended December 31, 2021 2020 Salaries and other short-term employee benefits $ 28,243 $ 26,373

8. PLEDGED ASSETS

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

PLEDGED ASSETS The Group’s assets pledged as collateral are as follows:
Asset pledged December 31, 2021 December 31, 2020 Land (Note) 365,709 $ 367,121 $ Buildings and structures-net (Note) 538,453 555,652 904,162 $ 922,773 $ Bookvalue	Purpose ofcollateral
	Guarantee for long- term borrowings Guarantee for long- term borrowings

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

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

• (1) As of December 31, 2021 and 2020, the endorsements and guarantees provided by the Company to －

• the subsidiary, cpc Europa GmbH, amounted to $ and $157,590, respectively, and the actual －

• amounts drawn down were $ and $21,012, respectively.

• (2) As of December 31, 2021 and 2020, the Group’s remaining balance due for construction in progress and prepayments for equipment were $165,890 and $373,754, 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 semiannually:

  • (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 as default, if the audited or reviewed financial ratios comply with the covenants after the improvement period. During the

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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, 2021, 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’.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

12. OTHERS

• (1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends 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 Group’s financial instruments by category are provided in Note 6.

• B. Financial risk management policies

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

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

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

  • I. Foreign exchange risk

  • (i) The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries denominated 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 group companies to manage their foreign

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exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury.

• (iii)The Group 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 Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. However, as the objective of the net investments in foreign operations is for strategic purposes, the Group does not hedge the investments.

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

follows:
Foreign currency Exchange amount (inthousands) rate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 16,887 $ 27.68 JPY:NTD 86,150 0.2405 EUR:NTD 4,721 31.32 Financial liabilities Monetary items JPY:NTD 4,840 0.2405 EUR:NTD 753 31.32 December31,2021	Book value (NTD)
	467,427 $ 20,719 147,855 1,164 23,905

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		December	31,2020
		Foreign currency	Exchange	Book value
	amount (inthousands)		rate		(NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD	$	10,750	28.48	$	306,154
JPY:NTD		32,962	0.2763		9,107
EUR:NTD		729	35.02		25,525
Financial liabilities
Monetary items
USD:NTD		3	28.48		83
JPY:NTD		5,274	0.2763		1,457
EUR:NTD		927	35.02		32,506

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 appreciated/depreciated by 1% with all other factors remaining constant, the Group’s net profit (loss) after tax for the years ended December 31, 2021 and 2020 would increase/decrease by $4,923 and $2,414, respectively.

• (vi)The total exchange loss, including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2021 and 2020 amounted to $28,637 and $12,159, respectively.

II. Price risk

The Group did not engage in any financial instruments with price variations, thus, the Group does not expect market risk arising from variations in the market prices.

III. Cash flow and fair value interest rate risk

• (i) The Group’s main interest rate risk arises from short-term and long-term borrowings with variable rates, which expose the Group 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, 2021 and 2020, the Group’s borrowings at variable rate were mainly denominated in NTD, USD and EUR.

• (ii) The Group’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, 2021 and 2020 would have decreased/increased by $960 and $1,174, respectively. The main factor is that changes in interest expense result from floating rate borrowings.

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(b) Credit risk

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

• II. The Group manages its credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing 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 Group 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 Group wrote-off the financial assets, which cannot be reasonably expected to be recovered after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights. As of December 31, 2021 and 2020, the Group’s written-off financial assets that are still under recourse procedures amounted to $3,895 and $3,078, respectively.

• V. The Group classifies customers’ accounts receivable in accordance with the credit rating of customers and credit risk on trade. The Group applies the simplified approach using the provision matrix and the forecast ability to adjust historical and timely information to estimate expected credit loss. The expected credit loss ranges from 0.03% to 100%. Movements in relation to the Group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

			Forthe years ended	Forthe years ended	December31,
			2021		2020
			Accounts receivable		Accounts receivable
At January 1		$	26,070	$	25,914
Provision for impairment	(		8,685)		2,013
Write-offs	(		817)	(	2,412)
Effect of foreign exchange	(		627)		555
At December 31		$	15,941	$	26,070

(c) Liquidity risk

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

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sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group 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 Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. The Group is expected to readily generate cash inflows for managing liquidity risk.

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

Floating rate: Expiring within one year Expiring beyond one year	December 31, 2021 December 31, 2020 976,000 $ 1,183,578 $ 2,760,000 2,600,000 3,736,000 $ 3,783,578 $

• IV. The table below analyses the Group’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.

undiscounted cash flows.
December31,2021 Non-derivative financial liabilities: Short-term borrowings Notes payable Accounts payable Other payables Lease liability Long-term borrowings (including current portion)	Less than 1year 230,181 $ 161,421 49,456 169,011 7,539 88,142	Between 1 and 2years - $ - - - 7,539 150,145	Between 2 and5 years - $ - - - 22,618 429,539	More than 5 years
				- $ - - - 113,090 70,022

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Between 1 Between 2 More than
December 31, 2020 Less than 1 year and 2 years and 5 years 5 years
----- End of picture text -----

December31,2020	Less	than 1year	an	d 2years	an	d5 years		5 years
Non-derivative financial
liabilities:
Short-term borrowings	$	379,605	$	-	$	-	$	-
Notes payable		77,992		-		-		-
Accounts payable		49,211		-		-		-
Other payables		110,835		-		-		-
Lease liability		7,539		7,539		22,618		120,629
Long-term borrowings
(including current
portion)		103,093		114,668		323,366		108,173

• V. The Group 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, 2021 and 2020, the Group had no fair value financial instruments.

• B. Financial instruments not measured at fair value

• The carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, financial assets at amortized cost - current, notes receivable, accounts receivable, other receivables, guarantee deposits paid, short-term borrowings, notes payable, accounts payable, other payables and long-term borrowings (including current portion) are approximate to their fair values.

(4) Others

• A. As a cross-border operating group, due to the impact of COVID-19 pandemic, certain nations have taken preventive measures, which have reduced business activities and affected the sales of some operating entities of the Group in certain countries. The Group has taken relevant countermeasures, such as keeping in close contact with customers and manufacturers, strengthening employee health monitoring and continuing to pay attention to the development of the pandemic, in order to mitigate the impact on the operations. However, the actual extent of the possible impact will depend on the subsequent development of the pandemic.

• B. Due to the impact of COVID-19 pandemic and preventive measures imposed by the government, the Group has implemented workplace hygiene management and continued managing relevant matters, in compliance with the “Guidelines for Enterprise Planning of Business Continuity in Response to the Coronavirus Disease 2019 (COVID-19)”. The Group has maintained normal operations in its plants and so far, the pandemic has no significant impact on the Group’s operations.

13. SUPPLEMENTARY DISCLOSURES

(According to the regulatory requirement, only information for the year ended December 31, 2021 is

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disclosed.)

(1) Significant transactions information

• A. Loans to others: None.

• B. Provision of endorsements and guarantees to others: Please refer to table 1.

• 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 Group’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 2.

• 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 3.

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

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

• J. Significant inter-company transactions during the reporting period: Please refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 6.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 7.

(4) Major shareholders information

Major shareholders information: Please refer to table 8.

14. SEGMENT INFORMATION

(1) General information

The management of the Group has identified the operating segments based on how the Group’s chief operating decision maker regularly reviews information in order to make decisions.

(2) Measurement segment information

The chief operating decision-maker evaluates the performance of operating segments based on pretax income excluding non-recurring income. For details of operating segments’ accounting policies, please refer to Note 4.

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

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

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

For the year ended December 31, 2021
CHIEFTEK Chieftek
PRECISION (Kunshan) cpc Europa cpc USA Others Total
----- End of picture text -----

	CHIEFTEK PRECISION	Chieftek (Kunshan) cpcEuropa cpc USA	Chieftek (Kunshan) cpcEuropa cpc USA	Chieftek (Kunshan) cpcEuropa cpc USA	Others Total	Others Total
Segment revenue Inter-segment revenue External revenue Interest income Depreciation and amortization Capital expenditures Interest expense Segment pre-tax income Segment assets Segment liabilities Segment revenue Inter-segment revenue External revenue Interest income Depreciation and amortization Capital expenditures Interest expense Segment pre-tax income Segment assets Segment liabilities	1,443,674 $ 579,986 863,688 138 81,565 250,029 4,443 390,761 3,145,108 1,391,593	390,814 $ 407,030 $ 197,453 $ 16 1,344 705 390,798 405,686 196,748 1,735 - 94 265 2,271 440 36 912 672 - 41 - 69,323 38,974 33,302 247,553 126,409 96,036 14,062 21,607 3,124 Forthe yearendedDecember31,			9,995 $ 2,448,966 $ 9,995 592,046 - 1,856,920 42 2,009 3,006 87,547 - 251,649 2,368 6,852 1,205 533,565 182,093 3,797,199 80,858 1,511,244 2020
	CHIEFTEK PRECISION 1,068,294 $ 505,088 563,206 473 82,969 313,651 7,077 247,746 2,754,369 1,263,493	Chieftek (Kunshan) 406,019 $ - 406,019 1,210 379 - - 59,365 305,459 13,075	cpcEuropa 262,639 $ - 262,639 1 2,590 171 464 14,434 110,755 32,702	cpc USA Others 150,021 $ 12,126 $ - 12,126 150,021 - 230 106 1,354 3,170 705 - - 3,925 14,254 242) ( 88,246 250,512 1,377 85,636		Total
						1,899,099 $ 517,214 1,381,885 2,020 90,462 314,527 11,466 335,557 3,509,341 1,396,283

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(4) Reconciliation for segment income

Sales between segments are carried out at arm’s length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income. A reconciliation of reportable segments pre-tax income to profit before income tax from continuing operations is provided as follows:

			For theyears ended	For theyears ended	For theyears ended	December31,
			2021			2020
Reportable segments pre-tax income		$	532,360		$	335,799
Other segments pre-tax gain			1,205	(		242)
Inter segments gain	(		86,306)	(		74,062)
Profit before income tax		$	447,259		$	261,495

(5) Information on products and services

The Group is engaged solely in the research and development, manufacture and sale of miniature linear guide, miniature ball screw, and miniature linear modules; therefore, disclosure is not required.

(6) Geographical information

Geographical information for the years ended December 31, 2021 and 2020 is as follows:

Germany China Taiwan Singapore USA Others	Revenue(Note) Non-current assets Revenue (Note) Non-current assets 405,686 $ 6,451 $ 262,639 $ 8,650 $ 391,631 1,050 424,983 1,316 367,833 1,800,025 263,765 1,645,167 260,570 - 129,071 - 196,748 154,599 150,021 161,969 234,452 - 151,406 - 1,856,920 $ 1,962,125 $ 1,381,885 $ 1,817,102 $ Year ended December 31,2021 Year ended December 31,2020	Revenue(Note) Non-current assets Revenue (Note) Non-current assets 405,686 $ 6,451 $ 262,639 $ 8,650 $ 391,631 1,050 424,983 1,316 367,833 1,800,025 263,765 1,645,167 260,570 - 129,071 - 196,748 154,599 150,021 161,969 234,452 - 151,406 - 1,856,920 $ 1,962,125 $ 1,381,885 $ 1,817,102 $ Year ended December 31,2021 Year ended December 31,2020	Revenue(Note) Non-current assets Revenue (Note) Non-current assets 405,686 $ 6,451 $ 262,639 $ 8,650 $ 391,631 1,050 424,983 1,316 367,833 1,800,025 263,765 1,645,167 260,570 - 129,071 - 196,748 154,599 150,021 161,969 234,452 - 151,406 - 1,856,920 $ 1,962,125 $ 1,381,885 $ 1,817,102 $ Year ended December 31,2021 Year ended December 31,2020
	Revenue(Note) 405,686 $ 391,631 367,833 260,570 196,748 234,452 1,856,920 $
			8,650 $ 1,316 1,645,167 - 161,969 - 1,817,102 $

(Note) The revenue is classified based on the location of the customer’s country.

(7) Major customer information

Major customer information of the Group for the years ended December 31, 2021 and 2020 is as follows:

ollows:
		Yearended	December31,2021		Yearended	December31,2020
Client		Revenue	Segment		Revenue	Segment
A	$	243,111	CHIEFTEK PRECISION	$	95,815	CHIEFTEK PRECISION

~58~

Expressed in thousands of NTD

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

Provision of endorsements and guarantees to others

For the year ended December 31, 2021

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Table 1
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Nunber (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, 2021	Outstanding endorsement/ guarantee amount at December 31, 2021	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	CHIEFTEK PRECISION CO., LTD.	cpc Europa GmbH	1	1,142,978 $	157,590 $	- $	- $	- $	–	1,142,978 $	Y	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 1, Page 1

Expressed in thousands of NTD

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

- Acquisition of real estate reaching NT$300 million or 20% of paid in capital or more For the year ended December 31, 2021

Table 2

If the counterparty is a related party, information as to the last transaction of the real estate is disclosed below:

Real estate acquired by	Real estate acquired	Date of the event	Transaction amount	Status of payment	Counterparty	Relationship with the counterparty	Original owner who sold the real estate to the counterparty	Relationship between the original owner and the acquirer	Date of the original transaction	Amount	Basis or reference used in setting the price	Reason for acquisition of real estate and status of the real estate	Other commitments
CHIEFTEK PRECISION CO., LTD.	Sugu new factory construction phase II	May 17, 2019	$ 454,419	$ 400,131	Hong Sheng Construction Corp.	－	－	－	－	$ -	Negotiation	Building for operation use. Under construction.	－

Table 2, Page 1

Table 3

Expressed in thousands of NTD

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

• Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid in capital or more For the year ended December 31, 2021

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		transactions Differences in transaction terms compared to third party	transactions Differences in transaction terms compared to third party	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			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 PRECISION USA CO., LTD. Chieftek Machinery (Kunshan) Co., Ltd.	cpc Europa GmbH CHIEFTEK PRECISION USA CO., LTD. Chieftek Machinery (Kunshan) Co., Ltd. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION CO., LTD.	Subsidiary Subsidiary Subsidiary Parent company Parent company Parent company	(Sales) (Sales) (Sales) Purchases Purchases Purchases	($ 239,324) 116,153) ( 224,509) ( 239,324 116,153 224,509	(17%) (8%) (16%) 84% 100% 99%	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)	$ - - - - - -	(Note 2) (Note 2) (Note 2) (Note 3) (Note 3) (Note 3)	$ 59,642 45,887 44,958 59,642) ( 45,887) ( 44,958) (	14% 11% 11% (99%) (100%) (100%)	－ － － － － －

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

• (Note 2) The Company's collection terms to third parties are 30 to 180 days after monthly statements.

• (Note 3) The Company's collection terms to third parties are 30 to 60 days after monthly statements.

Table 3, Page 1

• Significant inter company transactions during the reporting period

Table 4

Expressed in thousands of NTD

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

For the year ended December 31, 2021

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	CHIEFTEK PRECISION CO., LTD. CPC Europa GmbH CHIEFTEK PRECISION USA CO., LTD.	cpc Europa GmbH CHIEFTEK PRECISION USA CO., LTD. Chieftek Machinery (Kunshan) Co., Ltd. CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION INTERNATINAL LLC	1 1 1 2 3	Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Rent payment Refundable deposits	($ 239,324) 59,642 ( 116,153) 45,887 ( 224,509) 44,958 1,304) ( 9,995 1,384	180 days after monthly- closing, T/T － 180 days after monthly- closing, T/T － 180 days after monthly- closing, T/T － 180 days after monthly- closing, T/T － －	(13%) 2% (6%) 1% (12%) 1% － 1% －

(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 1 million are disclosed.

(Note 5) Foreign currencies were translated into New Taiwan Dollars using the exchange rate (USD:NTD 1:27.68) as of December 31, 2021.

Table 4, Page 1

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES Names, locations and other information of investee companies (not including investees in Mainland China) For the year ended December 31, 2021

Table 5

Expressed in thousands of NTD

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as of December31,2021	as of December31,2021	Net profit (loss) of the investee for the year ended December31,2021	Investment income (loss) recognized by the Company for the year ended December31,2021	Footnote
				Balance as of December31,2021	Balance as of December31,2020	Number of shares	Ownership (%)	Bookvalue
CHIEFTEK PRECISION CO., LTD. CHIEFTEK PRECISION HOLDING CO., LTD.	CHIEFTEK PRECISION HOLDING CO., LTD. CHIEFTEK PRECISION INTERNATIONAL LLC CHIEFTEK PRECISION USA CO., LTD. cpc Europa GmbH Chieftek Precision (Hong Kong) Co., Limited	Samoa United States of America 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 Professional investment	152,263 $ 110,054 50,027 98,695 26	152,263 $ 110,054 50,027 98,695 141,168	5,100,000 - 1,660,000 - 927	100 100 100 100 100	188,567 $ 99,817 48,358 45,168 26	27,162 $ 1,091 21,689 36,364 38,964	27,162 $ 1,091 21,689 36,364 -	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Note 1)

(Note 1) Not required to disclose income (loss) recognized by the Company.

(Note 2) Foreign currencies were translated into New Taiwan Dollars using the exchange rate (USD:NTD 1:27.68) as of December 31, 2021.

Table 5, Page 1

Information on investments in Mainland China - Basic information For the year ended December 31, 2021

Expressed in thousands of NTD

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

Table 6

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, 2021	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December 31,2021	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December 31,2021	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2021	Net income of investee for the year ended December 31, 2021	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2021 （Note 2）	Book value of investments in Mainland China as of December 31,2021	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2021	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	141,168 $	Note 1	141,168 $	- $	- $	141,168 $	42,871 $	100%	42,871 $	192,904 $	221,687 $	－

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2021	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.	$ 141,168	$ 141,168	$ 1,371,573

(Note 1) Through investing in an existing company in the third area (CHIEFTEK PRECISION HOLDING 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 auditors for the year ended December 31, 2021.

(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 1:27.68) as of December 31, 2021.

Table 6, Page 1

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China - Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area For the year ended December 31, 2021

Table 7

Expressed in thousands of NTD

Investee in MainlandChina	Sales(purchase)	Sales(purchase)	Propertytransaction	Propertytransaction	Accounts receivable	(payable)	Provision of endorsements/guarantees or collaterals	Provision of endorsements/guarantees or collaterals		Financing	Financing		Others
	Amount	%	Amount	%	Balance at December31,2021	%	Balance at December 31, 2021	Purpose	Maximum balance during the year ended December31,2021	Balance at December 31, 2021	Interest rate	Interest during the year ended December 31, 2021
Chieftek Machinery (Kunshan) Co., Ltd	$ 224,509	16%	$ -	-	$ 44,958	11%	$ -	-	$ -	- $	-	- $	- $

Table 7, Page 1

CHIEFTEK PRECISION CO., LTD. AND SUBSIDIARIES

Major shareholders information

December 31, 2021

Table 8

Expressed in share

Name of the major shareholder	Number	of shares
	Common stock	Ownership (%)
Hsu, Ming-Che Xinzhide Investment Co., Ltd.	5,579,338 4,397,000	6.87% 5.41%

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 8, Page 1