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EDT Annual Report 2021

Jun 22, 2022

52271_rns_2022-06-22_80cb01e0-8b9e-4973-8077-21b80ecdc59c.pdf

Annual Report

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Stock Code: 3038

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Emerging Display Technologies Corp. Annual Report 2021

Notes to Readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

  • Taiwan Stock Exchange Market Observation Post System: https://mops.twse.com.tw

  • Annual Report is available at: https://www.edtc.com

  • Printed on April 25, 2022

Spokesperson and Deputy Spokesperson

Name: Hsieh, Wen-Hsiung Kuo, Kun-He Title: Vice President of Chairman’s Office Deputy Manager of Finance Dept. Tel: 886-7-812-4832 ext. 1689 886-7-812-4832 ext. 3005 E-mail: [email protected] [email protected]

Headquarters, Branches and Plant

Headquarters: No. 5, Central 1[st] Road, Cianjhen Dist., Kaohsiung, Taiwan, R.O.C. Plant: No. 5, South 3[rd] Road, Cianjhen Dist., Kaohsiung, Taiwan, R.O.C. Tel: 886-7-812-4832

Stock Transfer Agent

Yuanta Securities - Stock Transfer Agent

Address: B1F, No. 210, Sec. 3, Chengde Rd., Taipei, Taiwan Tel: 886-2-2586-5859 Website: https://www.yuanta.com.tw

Auditors

KPMG

Auditors: Po Jen, Yang / Yen Ta, Su Address: 12F.-6, No. 211, Chung Cheng 4[th] Rd., Kaohsiung, Taiwan Tel: 886-7-213-0888 Website: https://home.kpmg/tw

Overseas Securities Exchange

Not Applicable.

Corporate Website

https://www.edtc.com

Contents

I. Letter to Shareholders…………………………………………………………….…….. 1
II. Company Profile
2.1 Date of incorporation………………………………………….……………………... 6
2.2 Company history………………………………………………….……………….…. 6
III. Corporate Governance Report
3.1 Organization……………………………………………….……………………….…. 8
3.2 Directors and management team……………...……………………..…………….. 11
3.3 Remuneration to ordinary directors, independent directors, supervisors,
general manager, and assistant general managers…...…………………………. 16
3.4 Implementation of corporate governance…………….………………………....... 20
3.5 Information on CPA (external auditor) professional fees………………………… 53
3.6 Information on replacement of CPA……………….………………………………. 53
3.7 The company’s chairperson, general manager, or any managerial officer in
charge of finance or accounting matters has in the most recent year held a
position at the accounting firm of its certified public accountant or at an
affiliated enterprise of such accounting firm………………………………….... 53
3.8 Changes in shareholding of directors, supervisors, managerial officers, and
major shareholders………………..……………………………...…………………. 54
3.9 Relationships among the top 10 shareholders…………………...……………….. 55
3.10 Total ownership of shares in investee enterprises……………...………………. 55
IV. Capital Overview
4.1 Capital and shares……………………………………….…………………...……… 56
4.2 Issuance of corporate bonds………………………………………………………. 62
4.3 Preferred shares……………………………………….…………………………….. 62
4.4 Global depository receipts…………………….……………………………………. 62
4.5 Status of employee stock options…………………………………………………. 62
4.6 Status of employee retricted stock…………….………………………………….. 62
4.7 Status of new shares issuance in connection with mergers and acquisitions.. 62
4.8 Financing plans and implementation…………..………..……………………..….. 62
V. Operational Highlights
5.1 Business activities………………………………….……………….…..…………… 63
5.2 Market and sales overview………………………………………………………… 69
5.3 Employee statistics………………………………………………….……………… 76
5.4 Disbursements for environmental protection…………………………………….. 76
5.5 Labor relations………………………………………………………....……………. 76
5.6 Cyber security management……………………………………………………….. 80
5.7 Important contracts………………………………………………………………….. 82

VI. Financial Information

VI. Financial Information
6.1 Five-year financial summary…………………………………………...……..…..… 83
6.2 Five-year financial analysis……………………………………………….…..…….. 87
6.3 Audit committee’s review report for the most recent year……………………….. 89
6.4 Consolidated financial statements for the years ended December 31,
2021 and 2020, and independent auditors’ report………………….…….……… 90
6.5 Parent-company-only financial statements for the years ended
December 31, 2021 and 2020, and independent auditors’ report………..……... 158
6.6 If the company or its affiliates have experienced financial difficulties in the
most recent fiscal year or during the current fiscal year up to the date of
printing of the annual report, the annual report shall explain how said
difficulties will affect the company’s financial situation………………….…….… 228
VII. Review of Financial Conditions, Operating Results, and Risk Management
7.1 Financial position………….……………….………………………………………… 229
7.2 Financial performance……………….……...………………………………………. 230
7.3 Cash flows…………………......……….…………………………………………….. 231
7.4 Major capital expenditure items…………..………………………………………… 231
7.5 Investment policy in last year, main causes for profits or losses,
improvement plans and the investment plans for the coming year…….……… 231
7.6 Risk analysis and assessment……………………..……..………………………… 232
7.7 Other important matters……………………………….…………………………….. 235
VIII. Special Disclosure
8.1 Summary of affiliated companies…………………………….…………………….. 236
8.2 Private placement securities in the most recent years…….…………………… 238
8.3 The shares in the company held or disposed of by subsidiaries in the
most recent years…………………….…………………………………………….. 238
8.4 Other matters that require additional description…………………………………. 238
IX. The situations listed in Article 36, paragraph 3, subparagraph 2 of the
Securities and Exchange Act, which might materially affect shareholders’
equity or the price of the company’s securities, has occurred during the
most recent fiscal year or during the current fiscal
year up to the date of printing of the annual report…………….………………. 238

I. Letter to Shareholders

Dear Shareholders,

First and foremost, I would like to thank you for taking time from your busy schedule to attend this shareholders’ meeting. On behalf of edt, I would like to express my upmost appreciation for your support and encouragement.

The results of our operating performance in 2021 and outlook for the future are as following:

2021 Business Report

1. Operating Performance

Our consolidated net revenue totaled NT$4,183,403 thousands in 2021, an increase of 11.94% from NT$3,737,299 thousands registered in the previous year. This mainly attributes to a continuous optimization of product portfolio in 2021, and the average unit price has increased year by year. However, the strong exchange rates, together with sharp price hikes of major components such as TFT panels and ICs, have caused the entire material cost to rise, which is not conducive to the gross profit margin and profit performances. Therefore, our consolidated net profit only grew by a mere of 1.52% and earnings per share (EPS) stood at NT$1.60 in 2021. In individual products, the sales proportion of LCD modules (LCM) dropped to less than 30%, but the demand for Capacitive Touch Panel (CTP) and their modules increased relatively with the shipment amount representing a lion’s share of nearly 70%. Through the adjustment of product portfolio, our revenue posted a positive and significant growth. Although the cost of the above-mentioned materials has risen sharply, the gross margin performance was not as bright as the previous year. Aided by the cost improvement and operational efficiency, we continues to keep our profitability performance.

Looking back on the past year, although there were still many unfavorable macroenvironmental elements, we continued to enhance and improve the touch function of Capacitive Touch Panel (CTP) for diverse small niche markets to service the market demand of various emerging applications that accompany the growth of the “Internet of Things” and expect to achieve stable profit growth.

Combining CTP and TFT-LCD were generally called “Touch Display” which had the diverse development of touch function and will be deepened with the growth of emerging application markets. Encouraged by the improvement of various wireless information transmission technologies and medium-high end mobile computing products, simple and intuitive user interface design has become the mainstream for interactive information display system. Innovation in projected capacitive technology still awaits the touch panel industry to research and develop.

  • 1 -

In the competitive environment of the diversified customized demand market, we have corresponded material application and software design with manufacturing process innovation, implemented professional and technical services, and is committed to the improvement of production yield rate and efficiency as well as effective operating cost control. Holding up to the support of our shareholders, we facilitate the best allocation of company resources and strive to achieve the set operating goals.

  1. Consolidated financial results & profitability analysis

Unit: NT$ thousands

Unit: NT$thousands
2021 2020
Operating profit 266,855 333,952
Non-operatingincome and expenses 1,069 (59,843)
Profit before tax 267,924 274,109
Net profit 236,535 232,996
Returnonassets 6.77% 6.68%
Returnonshareholders’equity 11.67% 11.84%
Pre-tax income to paid-incapital 16.49% 16.87%
Profitratio 5.65% 6.23%
Earningsper share(NT$) 1.60 1.57

  1. Research and development Status

  2. (1) From the establishment of edt, the research and development of new technology has been highly valued. We spare no effort in improving product quality and developing new varieties. Research and development results of 2021 are as following:

Item R&D Results Description of Benefits
1 CTP Water Tolerance
Improvement with AI		 We have designed a water-tolerance algorithm in the MCU
through self-capacitance sensing technology to achieve a
single-finger click function at the center of the display during
the flushing process of the shower head. However, the
surrounding area will be false touch due to the capacitive
coupling effect caused by the flowing water. We hope to
solve this problem through AI algorithms, and make this
technologycommerciallyavailable.
2 SpaceGesture Technology
Development		 Develop a touchless human-machine interface interactive
gesture sensing function through self-capacitance sensing
technologyto fulfill customer’s needs for touchless solution.
3 Capacitive Touch Panel with
Pressure Sensing Function		 The water-tolerance algorithm developed by us is currently
limited to tap water and rainwater. Through capacitive
pressure sensing technology, we hope to solve the problem
of unstable control in the case of salt water with high
conductivity.
4 Microchip maXTouch Solution
Development		 Build CTP technology related OS integration through the
realproject with Microchip.
5 AIoT+Audio Recognition
Technology Application
Development		 Develop the AIoT technology to control white goods.
  • 2 -
6 Floating Imaging with Air Touch
Technology Development
The floating image display allows users to click on the
screen by touching the floating screen instead of the
physical buttons. It can be applied to elevators, restaurant
POS(point of sale) machines, medical devices, public
signage information machines,etc.
7 Light Field Floating Image
Technology Development		 It is new image display and interaction technology, different
from the traditional direct-view 2D screen/image and 2D
touch, to provide a more humane, more natural, more
intuitive image visual and interactive experience for people.
It also changes the interaction interface and promotes a
deeper integration between the real world and the virtual
world. Thus it will bring new business opportunities for us in
smart medical care, smart entertainment, smart retail, and
smart mobility.
8 Flexible Liquid Crystal Device
Technology Development		 While the development of liquid crystal displays in the
direction of ultra-thin and light-weight, and the trend of
curved wearable products, we use a soft plastic substrate to
create a flexible liquid crystal display with additional
advantages such as bendability, drop resistance, shatter
resistance,and light-weight.
9 Embedded Solution Platform Finish 3 types Embedded Solution Platform including
STM32F750, STM32H750 and STM32H7B0. The
STM32H7B0 platform supports 4 product sizes of 3.5
inches, 4.3 inches, 5 inches, and 7 inches. As the LCD
connect interface of these 4 sizes are all the same, they
can use the same platform by simply selecting the
correspondingsize inside theprogram.
10 Add-On Board for Embedded
Product		 The Add-On Board developed by us has a variety of serial
ports and can assist customers in pre-development testing
and product integration application through the combination
with various types of environment sensing sensors or
situation sensingsensors.
11 Intellectual Property Rights
(include Patents and Trade
Secret)		 Number of intellectual property right proposals totaled 25,
which include 15 patent proposals and 10 trade secret
proposals. Number of intellectual property rights granted
totaled 15(proposals accumulated in thepreviousyears).
  • (2) Future research and development projects and corresponding budget

In addition to sparing no effort in the research and development of existing areas, we are also quite prepared for new application related software / hardware technologies, such as touch function, somatosensory technology, and embedded system software in response to the vast market of increasingly popular interaction displays. We plan on investing NT$135,600 thousand for below research and development projects in 2022:

  •  CTP Water Tolerance Improvement with AI

  •  SpaceGesture Technology Development

  •  Capacitive Touch Panel with Pressure Sensing Function

  •  Microchip maXTouch Solution Development

  •  AIoT+Audio Recognition Technology Application Development

  • 3 -

Summary of Business Plan for 2022

1. Business objectives

  • (1) Develop new technologies to expand market.

    • Develop touchless technology.

    • Optimize optical bonding process.

  • (2) Develop innovative business model for touch display solution.

    • Develop new channel for smart embedded product.

    • Enhance the service ability of software / firmware.

  • (3) Upgrade digital production information and construct intelligent factory.

    • Intellectualization of manufacturing process to lower human factors.

  • (4) Enhance efficacy of research and development.

    • Develop human machine somatosensory technology.

    • Establish the development ability of machine learning technology.

  • Expected sales numbers and its basis

  • (1) Expected sales numbers for 2022:

    • LCD modules 2,700 thousand units CTP and its modules 2,300 thousand units

  • (2) Basis for expected sales numbers of 2022:

    • With the emerging trend of various pan-intelligent products, applications for internet of things, smart home, and wearable devices, the future market demand and application of touch panels will continue to grow.

    • The considerable growth potential for various small and medium size TFT panels in intelligent application and pan-industrial electronic products will drive up the sale of TFT modules.

    • Integrated touch display design has become the mainstream gradually with various application market and the customization requirements are relatively high. We believe that there will be a yearly double-digit growth for solutions of touch function combined with display panel.

3. Key sales strategies

  • (1) Continuous technological development of the CTP manufacturing process and its material, as well as lamination technology / surface treatment / free form cutting technology of related touch sensors and display panels.

  • (2) Actively develop new high value-added products and markets, such as large size products and small and medium size displays with embedded systems, and combined with optical bonding, UV resistance for outdoors, water tolerance, antibacterial touch, 3D gesture control and so on.

  • (3) Both business model of low-volume high-mix and high-volume low-mix has pros and cons. Under the principle of 50/50, we will adopt the sales strategy with most appropriate percentage of above two business models according to supply chain and new technology appliance.

Future Development Strategies

  1. Focus on the innovative technology development of Capacitive Touch Panel (CTP) and continuous proportional increase of niche type Capacitive Touch Panel product structure.

  2. 4 -

  3. Enhance differentiation design ability of TFT-LCD module, actively seek out sales orders for TFT, and satisfy the different customized needs of clients.

  4. Continuously enhance design development of pan-industrial control and medical application products to maintain future growth and profitability. Develop embedded system solution, assist the customer in integrated software, firmware and hardware design, and further differentiate and provide high value-added.

  5. Actively build IP strategies and invest in research and development to develop futuristic product technology such as 3D gesture, water tolerance touch and intelligent algorithm, so as to seize prior opportunity into high margin markets.

  6. Improve the localized and immediate service quality for major clients via the technical service function of overseas channels.

The Impact of the External Competitive Environment, Regulatory Environment and Macroeconomic Conditions

  1. In response to the requirements of RoHS and REACH directives of EU and considering the environmental and climate changes caused by the greenhouse effect, we are currently striving to move towards the trend of net zero carbon emissions through measures such as energy conservation and waste reduction, self-produced green electricity, and the use of clean energy. We expect to formulate commitments and goals to reduce carbon emissions, and propose our systematic carbon reduction policies and measures in the years to come.

  2. In response to trade war, we will effectively readjust and reallocate production line in each area to lower tariff influence to zero.

  3. The crisis of COVID-19 epidemic is yet to be lifted, and the basis of supply chain deployment has switched from cost reduction in the past to risk reduction for the time being, while shortening the distance of supply chain or localizing production at the same time. To this end, we review the list of backup suppliers established in the past and confirm their supply capacity accordingly. We have also built up a good interactive relationship at ordinary times in order to ensure the smooth supply in times of crisis.

  4. The supply shortage under the globalized economic system caused by COVID-19 epidemic is impacting all walks of life for the moment. Aided by long and stable cooperation ties with customers, we have now made an effort into a sustained growth in revenue and profit in the years to come by providing the optimized product portfolio, improving the manufacturing process, and strengthening supply chain communication with effective management.

  5. Over 90% of our operating revenue is export in 2021. Since exchange rate fluctuations have a significant impact on us, efficient and stable financial operations will be used for risk aversion.

With dedication to becoming the leading brand with the most complete solutions of small and medium size interaction displays, edt stride to hold up to shareholders’ expectations and achieve the basis for sustainability and stable development.

Chairman

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  • 5 -

II. Company Profile

2.1 Date of incorporation: September 23, 1994.

2.2 Company history:

Year Milestones
1994 Invested USD250,000 for the merger and acquisition of US distributor
EMERGING DISPLAY TECHNOLOGIES CORP., leading to 100%
shareholdings ownershipof the subsidiary.
1996 Achieved ISO 9002 QualityCertification.
1997 Achieved ISO 9001 QualityCertification.
1999 Achieved QS 9000 Quality Certification, the first LCD manufacturer in
Taiwan to obtain such status.
2001 Companystock listed TPEx.
2002 Converge from TPEx listed companyto TWSE listed company.
2003 Corporate headquarters moved to No.5, Central 1st Road, K.E.P.Z.
Kaohsiung.
2005 Manufacturing headquarters moved to No.5, South 3rd Road, K.E.P.Z.
Kaohsiung.
First stage expansion of China DongGuan factorycompleted.
2006 Achieved TS16949 QualityCertification.
2012 Achieved OHSAS 18001 Quality Certification.
Full lamination optical bonding manufacturing process of Thin Film
Transistor Liquid Crystal Display (TFT) and Capacitive Touch Panel
(CTP)modules development completed.
2013 Mass production of TFT and CTP full lamination, shipments totaled
100,000pieces for one month.
2014 Import of laser etching dry process to manufacture Film Sensor.
Development of embedded touch technology application for
manufacturing process to strengthen the application competitiveness
of futureproducts.
2015 Mass production and shipment of touch module designed for an
internationally renowned robot, thus elevating the company’s visibility
and expanding into market applications of relevant products for
Internet of Things(IoT).
2016 Mass production of monitor module supplied for internationally
renowned large plants, confirming the capability of strict quality level
in medical market and long-term supply guarantee.
Obtained AVN touch module design of international brands, improving
the market visibilityfor the capabilityof supplyingon-vehicleproducts.
  • 6 -
2017 Successfully developed the renowned white goods case,
implemented automatic equipment of optical bonding assemble, and
further elevated and expanded the customized service.
Successfully obtained the cases of hardware and software embedded
design in netcom phone brand to expand the appliance in the
Embedded Displaymarket.
2018 Participated the partnership with the tier one IC supplier for UI
software to enhance the software capability and service support to
Embedded products.
Succeeded to get the electric car charging station project, whichedt
achieves to provide high value added Embedded product including
the displaywith touch,assembly,and software design.
2019 Dual-touch design for car dashboard application moved to mass
production successfully, way to penetrate the high-end automobile
display/touch market.
Won 2019 Smart Innovation Application Award by integration of
“floating touch” and “smart window” energy saving technology through
hand gesture or blue-tooth remote control design.
Established regional sales branch in Frankfurt of Germany, aim to
expand and raise thepan European market share.
2020 Achieved ISO 13485: 2016 Quality Certification for medical
application.
Provided the embedded solution to US COVID-19 rapid tester
company, which awarded by National Institutes of Health(NIH), Rapid
Acceleration of Diagnostics(RADxSM).
2021 Started the “Employee Stock Ownership Trust” to improve employee
benefits.
Won the smart-payment application project by integration of RF
antenna to touch panel which performed much better cost advantage
and friendlyuser experience.
  • 7 -

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

III. Corporate Governance Report
3.1 Organization
3.1.1 Organization structure Shareholders’ Meeting
Board of Directors
Audit Committee
Audit Office
Compensation Committee
Chairman
Chairman’s Office
Sustainable Development
President & CEO
Committee
Quality Assurance
Finance System
Procurement Manufacturing Development Administration
Legal Affairs & Market Production Equipment Production Process Business Planning Industrial Safety &
Research & Development Production Management Management Information
Global Business Development
----- End of picture text -----

  • 8 -

3.1.2 Major corporate functions

  •  Chariman: Overall management of all company affairs in accordance with the resolutions of Shareholders’ Meetings and meetings of the Board of Directors.

  •  Audit Office: Audit and improvement proposals for the internal control systems of sales, finance, accounting, and general affairs.

  •  Audit Committee: To assist the Board of Directors in supervising a fair presentation of the Company’s financial statements, the selection (dismissal), independence, and performance of CPAs (certified public accountants), the effective implementation of internal controls, compliances with relevant laws and regulations, and the management and control of existing or potential risks, and so on.

  •  Compensation Committee: Policy and structure evaluation of salaries to directors and managerial personnel. Also, suggestions to the board of directors may be references for decisions.

  •  Chairman’s Office: Corporate governance affairs, public relations, organization communication and coordination.

  •  President & CEO: By order of the Board of Directors and the chairman to engage and manage all company policies, systems, and decisions, as well as strategy planning and integration of technical units.

  •  Sustainable Development Committee: Coordination of overall sustainable development policy and strategy goal settings, matters such as follow up of progress in action and performance improvements, and preparation as well as issuance of annual sustainability report.

  •  Quality Assurance: Quality assurance and control as well as reliability evaluation and assurance.

  •  Global Business Development: Development and expansion of demand market as well as technical support of business development.

  •  Procurement: Purchase of materials, assets and miscellaneous goods, supplier management.

  •  Legal Affairs & Market: Domestic and foreign regulation compliance, contract review, IPRs management, litigation, as well as collection and analysis of industry information.

  • 9 -

  •  Research & Development: Design and development of new products and new technologies.

  •  Manufacturing: Manufacturing of various products.

  •  Production Management: Overall production and processing schedule planning, resources planning management, and warehouse management.

  •  Production Equipment: Evaluating / planning / examining production equipments.

  •  Production Process Development: Introducing the mass production, setting and improving the production process, developing and introducing new process.

  •  Industrial Safety & Business Planning: Industrial safety and hygiene, waste disposal, and regular maintenance of environmental and electronic facilities.

  •  Finance: Financial planning, capital allocation, interaction with banks, budget preparation and control, cost control, accounting, stock-related affairs, major investments, and overseas subsidiaries management.

  •  Administration: Overall matters such as company personnel, general affairs, documentation, and on-the-job training.

  •  Management Informantion System: Provision of software and hardware equipment as well as support and backup of relevant system.

  • 10 -

3.2 Directors and management team 3.2.1 Information on directors

3.2 Directors and management team
3.2.1 Information on directors		 3.2 Directors and management team
3.2.1 Information on directors		 3.2 Directors and management team
3.2.1 Information on directors		 3.2 Directors and management team
3.2.1 Information on directors		 3.2 Directors and management team
3.2.1 Information on directors		 3.2 Directors and management team
3.2.1 Information on directors		 3.2 Directors and management team
3.2.1 Information on directors
As of April 19, 2022
Job Title Nationality
or Place of
Registration
Name		 Gender,
Age
(Years)		 Date of
Election /
Appoint-
ment to
current
term
Term
of
Office
(Years)
Commence-
ment Date of
First Term		 No. of Shares Held
at Time of Election

No. of Shares
Currently Held		 Shares Currently
Held by Spouse &
Minor Children		 Shares Held
Through
Nominees		 Principal Work Experience and
Academic Qualifications
 Positions Held
Concurrently in the
Company and/or in
Any Other Company		 Other Officer(s) or Director(s) with which
the Person Has a Relationship of Spouse
or Relative within the Second Degree		 Remarks
(Note 2)
No. of
Shares		 Share-
holding
Ratio
No. of
Shares		 Share-
holding
Ratio
No. of
Shares		 Share-
holding
Ratio
No. of
Shares		 Share-
holding
Ratio		 Job Title Name Relationship
Chairman R.O.C. Tseng, Jui-Ming Male
51~60		 Jul. 26,
2021		 3 Sep. 14, 1994 11,043,723 6.80% 11,043,723 7.02% 256,759 0.16% 0 0.00% MBA, CSU, Taiwan / Hitachi / Sharp None Director Hsieh, Hui-Tai In-law Siblings None
Director R.O.C. Hsieh, Hui-Tai Female
51~60		 Jul. 26,
2021		 3 Jun. 8, 2006 6,386,867 3.93% 6,301,867 4.00% 0 0.00% 0 0.00% San Sin High School, Taiwan /
Director of Jen Da Transportation		 None Chairman Tseng, Jui-Ming In-law Siblings None
Director R.O.C. Wang, Tai-Kuang
(Note 1)		 Male
51~60		 Jul. 26,
2021		 3 Jul. 26, 2021 1,666,487 1.03% 1,666,487 1.06% 1,802,813 1.15% 0 0.00% Master, Physics and Astronomy,
NCU, Taiwan / Business Manager
class of Taiwan AI Academy /
Solomon Technologies Corp.		 President & CEO of
the Company		 None None None None
Director R.O.C. Yu, Cheng-Chung Male
51~60		 Jul. 26,
2021		 3 Jul. 26, 2021 1,002,000 0.62% 1,002,000 0.64% 0 0.00% 0 0.00% Bachelor, International business,
CYCU, Taiwan / Citizen Watch /
Grand Pacific Optoelectronics Corp.		 Vice President of the
Company		 None None None None
Director R.O.C. Ying Dar
Investment
Development
Corp.		 None Jul. 26,
2021		 3 Jun. 8, 2006 5,346,672 3.29% 5,346,672 3.40% 0 0.00% 0 0.00% None None None None None None
Representative
of Director
R.O.C.		 Ying Dar
Investment
Development
Corp.: Huang,
Hsiu-Wen		 Female
41~50		 Jul. 26,
2021		 3 Jul. 26, 2021 220,862 0.14% 220,862 0.14% 17,404 0.01% 0 0.00% MBA, CUNY, Baruch College, USA /
Yuanta Securities Corp.		 Financial Executive of
the Company
None		 None None None
Director R.O.C. Bae Haw
Investment
Development
Corp.		 None Jul. 26,
2021		 3 Jun. 8, 2006 3,447,716 2.12% 3,447,716 2.19% 0 0.00% 0 0.00% None None None None None None
Representative
of Director
R.O.C.		 Bae Haw
Investment
Development
Corp.: Hsieh,
Wen-Hsiung		 Male
51~60		 Jul. 26,
2021		 3 May 2, 2013 261,253 0.16% 261,253 0.17% 0 0.00% 0 0.00% Bachelor, Accounting, FCU, Taiwan /
Yuanta Securities Corp.		 Vice President &
Chairman’s Special
Assistant & Corporate
Governance Officer
of the Company
None		 None None None
Independent
Director		 R.O.C. Huang, Hui-Ling Female
51~60		 Jul. 26,
2021		 3 Jul. 26, 2021 0 0.00% 0 0.00% 0 0.00% 0 0.00% Master, Accounting, NCCU, Taiwan /
DBS Bank / Ta Chong Bank / KPMG /
Deloitte / Partner of Legence
AccountingFirm
None		 None None None None
Independent
Director		 R.O.C. Li, Chi-Cheng Male
61~70		 Jul. 26,
2021		 3 Jun. 2, 2015 0 0.00% 0 0.00% 0 0.00% 0 0.00% Ph.D, MBA, NCKU, Taiwan /
Professor of Cheng Shiu University /
Representative of supervisor of Yung
Chi Paint & Varnish Mfg. Co.,Ltd.		 None None None None None
Independent
Director		 R.O.C. Huang, Fu-Di Male
51~60		 Jul. 26,
2021		 3 Jun. 2, 2015 0 0.00% 0 0.00% 0 0.00% 0 0.00% Bachelor, Statistics, FCU, Taiwan /
KPMG / Representative of supervisor
of Taiwan FushingIndustryCorp.
None		 None None None None

  • Note 1: Wang, Tai-Kuang has served as the representative of Ying Dar Investment Development Corp. during June 8, 2006 to July 25, 2021.

  • Note 2: Where the chairperson of the board of directors and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto.

  • 11 -

Form 1: Major shareholders of corporate shareholders

Name of Institutional Shareholders Major Shareholders of the Corporate Shareholder
YingDar Investment Development Corp. EmergingDisplayTechnologies Corp.(100%)
Bae Haw Investment Development Corp. EmergingDisplayTechnologies Corp.(100%)

Form 2: If any major shareholder listed in Form 1 is a corporate / juristic person, list its major shareholders in this form

Name of Corporate / Juristic Person Major Shareholders of the Corporate / Juristic Person
Not Applicable

Disclosure of information regarding the professional qualifications and experience of directors and the independence of independent directors:

Qualification
Name
Professional Qualifications and Experience		 Independence Analysis No. of Other Public
Companies at which
the Person
Concurrently Serves
as An Independent
Director
Tseng, Jui-Ming Once worked at Hitachi and Sharp, then established the Company.
Continuously served as the Chairman until now, and has more than five years
of experience in manufacturing and operation management.
Not having any of the conditions defined in Article 30 of the Company Law.		 Not an employee of the Company nor any of its related companies.
Not a director, supervisor or employees of other companies controlled by the same person had shares over half of
the Company’s director seats or voting rights.
Not a director, supervisor or employees of other companies or institutions whom or his/her spouse is also the
chairman, general manager or employee of equivalent position in the Company.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or
institution that has financial or business relations with the Company.
Not a professional individual, sole proprietor, partner, owner of a company or institution, director, supervisor,
manager or a spouse thereof of a sole proprietorship, partnership, company, or institution providing auditing or
services including commercial, legal, financial, accounting or consultation services to the Company or its related
companies withcumulative remuneration less than NT$500,000 in thepast twoyears.		 0
Hsieh, Hui-Tai Graduated from San Sin High School in Taiwan. Served as the Director of Jen
Da Transportation for many years, and has more than five years of
experience in financial accounting.
Not having any of the conditions defined in Article 30 of the Company Law.
Not an employee of the Company nor any of its related companies.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5 percent or more of the total
number of issued shares of the Company or that ranks among the top-5 in shareholding or the representatives
served as directors or supervisors appointed in accordance with Article 27, Paragraph 1 or 2 of the Company Act.
Not a director, supervisor or employees of other companies controlled by the same person had shares over half of
the Company’s director seats or voting rights.
Not a director, supervisor or employees of other companies or institutions whom or his/her spouse is also the
chairman, general manager or employee of equivalent position in the Company.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or
institution that has financial or business relations with the Company.
Not a professional individual, sole proprietor, partner, owner of a company or institution, director, supervisor,
manager or a spouse thereof of a sole proprietorship, partnership, company, or institution providing auditing or
services including commercial, legal, financial, accounting or consultation services to the Company or its related
companies withcumulative remuneration less than NT$500,000 in thepast twoyears.		 0
  • 12 -
Wang, Tai-Kuang Once worked at Solomon, and served as the Marketing Executive for many
years after the Company was established. Also advanced study in Business
Manager class of Taiwan AI Academy. Concurrently the Company’s President
and CEO, and has more than five years of experience in marketing,
manufacturing and operation management.
Not having any of the conditions defined in Article 30 of the Company Law.		 Not a spouse, relative within the second-degree of kinship, of the employees, directors, supervisors of the
Company nor any of its related companies.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5 percent or more of the total
number of issued shares of the Company or that ranks among the top-5 in shareholding or the representatives
served as directors or supervisors appointed in accordance with Article 27, Paragraph 1 or 2 of the Company Act.
Not a director, supervisor or employees of other companies controlled by the same person had shares over half of
the Company’s director seats or voting rights.
Not a director, supervisor or employees of other companies or institutions whom or his/her spouse is also the
chairman, general manager or employee of equivalent position in the Company.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or
institution that has financial or business relations with the Company.
Not a professional individual, sole proprietor, partner, owner of a company or institution, director, supervisor,
manager or a spouse thereof of a sole proprietorship, partnership, company, or institution providing auditing or
services including commercial, legal, financial, accounting or consultation services to the Company or its related
companies withcumulative remuneration less than NT$500,000 in the past two years.
Not a spouse or a relative within the second degree of kinshipto anyother director of the Company.		 0
Yu, Cheng-Chung Once worked at Citizen Watch and Grand Pacific Optoelectronics Corp..
Concurrently the Company’s Vice President in charge of the Global Business
Development Dept. and has more than five years of experience in marketing
and operation management.
Not havinganyof the conditions defined in Article 30 of the CompanyLaw.		 Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor
children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of
issued shares of the Company or ranking as one of the top-10 shareholders. Nor a spouse, relative within the
second-degree of kinship, of the aforementioned shareholder.
Not a spouse, relative within the second-degree of kinship, of the employees, directors, supervisors of the
Company nor any of its related companies.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5 percent or more of the total
number of issued shares of the Company or that ranks among the top-5 in shareholding or the representatives
served as directors or supervisors appointed in accordance with Article 27, Paragraph 1 or 2 of the Company Act.
Not a director, supervisor or employees of other companies controlled by the same person had shares over half of
the Company’s director seats or voting rights.
Not a director, supervisor or employees of other companies or institutions whom or his/her spouse is also the
chairman, general manager or employee of equivalent position in the Company.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or
institution that has financial or business relations with the Company.
Not a professional individual, sole proprietor, partner, owner of a company or institution, director, supervisor,
manager or a spouse thereof of a sole proprietorship, partnership, company, or institution providing auditing or
services including commercial, legal, financial, accounting or consultation services to the Company or its related
companies withcumulative remuneration less than NT$500,000 in the past two years.
Not a spouse or a relative within the second degree of kinshipto anyother director of the Company.
 0
Ying Dar Investment
Development Corp.
Representative:
Huang, Hsiu-Wen		 Once worked at Yuanta Securities in charge of underwriting, and has served
as Internal Audit Supervisor of the Company for many years. Concurrently the
Company’s Financial Executive and has more than five years of experience in
securities insurance, financial accounting, and operation management.
Not havinganyof the conditions defined in Article 30 of the CompanyLaw.		 0
Bae Haw Investment
Development Corp.
Representative:
Hsieh, Wen-Hsiung		 Once worked at Yuanta Securities in charge of underwriting, and has served
as Financial Executive of the Company for many years. Concurrently the
Company’s Vice President, Chairman’s Special Assistantant, and Corporate
Governance Officer, and has more than five years of experience in securities
insurance, financial accounting, and operation management.
Not having any of the conditions defined in Article 30 of the Company Law.		 0
Huang, Hui-Ling
(Independent Director /
the convener of Audit
Committee)		 Master of Accounting at NCCU in Taiwan.
Once worked at DBS Bank, Ta Chong Bank, KPMG, Deloitte. Concurrently
the partner of Legence Accounting Firm, and has more than five years of
experience in financial accounting and operation management.
Not havinganyof the conditions defined in Article 30 of the CompanyLaw.		 The independent director or their spouse or any relative within the second degree did not serve as a director,
supervisor, or employee of the Company or any of its affiliates.
The independent director or their spouse or any relative within the second degree (or through nominees) did not
held any share of the Company.
The independent director or their spouse or any relative within the second degree did not serve as a director,
supervisor, or employee of any company having a specified relationship with the Company (see Article 3,
paragraph 1, subparagraphs 5 to 8 of the Regulations Governing Appointment of Independent Directors and
Compliance Matters for Public Companies).
Not a professional individual, sole proprietor, partner, owner of a company or institution, director, supervisor,
manager or a spouse thereof of a sole proprietorship, partnership, company, or institution providing auditing or
services including commercial, legal, financial, accounting or consultation services to the Company or its related
companies, so did not receive any pay from the Company or its related companies.		 0
Li, Chi-Cheng
(Independent Director /
the member of Audit
Committee)		 Ph.D of MBA at NCKU in Taiwan.
Once served as Chair of Business Administration Dept. and Director of the
Institute of Business Management of Cheng Shiu University. Concurrently a
full-time professor of Business Administration Dept. (Institute) of Cheng Shiu
University, and has more than five years of experience in operation
management.
Not havinganyof the conditions defined in Article 30 of the CompanyLaw.		 0
Huang, Fu-Di
(Independent Director /
the member of Audit
Committee)		 Bachelor of Statistics at FCU in Taiwan.
Once worked at Core Pacific Securities and KPMG, and has more than five
years of experience in securities insurance and financial accounting.
Not havinganyof the conditions defined in Article 30 of the CompanyLaw.		 0
  • 13 -

Diversity and independence of the Board of Directors:

1. Diversity of the Board of Directors

The Company has set up the policy of diversified members of the Board under Article 20 of the “Corporate Governance Practice Principles”, including considerations of the basic condition and value of the members of the Board (e.g. gender, age, nationality, and culture) and the professional knowledge and skills (e.g. law, accounting, industry, finance, marketing, or technology). Also, the Board shall possess the ability to make operational judgments, ability to perform accounting and financial analysis, ability to conduct management administration, ability to conduct crisis management, knowledge of the industry, an international market perspective, ability to lead, ability to make policy decisions, and so on. In accordance with the provisions of the Articles of Incorporation and considering the aforementioned diversity policy, the Company’s Board of Directors shall review the academic qualifications, professional ability, integrity, independence, etc. of each director candidate, and propose an appropriate list of director candidates, which will be then submitted to the Shareholders’ Meeting for election. This expects to strengthen the corporate governance and promote the sound development of composition and structure of the Board of Directors.

Of nine directors in the Company’s 10[th] session of Board of Directors, Chairman Tseng, Jui-Ming and President Wang, Tai-Kuang have served as chairman and general manager to lead the development of the Company for a long period of time, and are fully equipped with operational judgment, management, industry knowledge, international market outlook, and leadership decisionmaking skills, etc. Director Yu, Cheng-Chung has also been in charge of the Company’s Global Business Development Dept. for many years, not only has an international market view, but also has a solid understanding of product marketing and industrial development. Huang, Hsiu-Wen and Hsieh, Wen-Hsiung, two representatives of corporate directors, are the current and former Financial Executives of the Company, respectively. The latter also serves as the Corporate Governance Officer. Both of them have high accounting and financial analysis capabilities, crisis management, and leadership decision-making capabilities. Director Hsieh, Hui-Tai also has the financial accounting profession required for the Company’s business. Among the three independent directors, Huang, Hui-Ling is currently the partner of Legence Accounting Firm, and also worked as a financial consultant in the past. Independent Director Huang, Fu-Di has many years of working experience in large securities companies and accounting firms. Both of them have considerable accounting and financial analysis capabilities, business management and leadership, and decision-making capabilities. Independent Director Li, Chi-Cheng is a Ph.D of MBA, and served as Chair of the Business Management Dept. and Director of the Institute of Business Management of Cheng Shiu University. He is currently a full-time professor of Business Management Dept. (Institute), and has rich experiences in business management and leadership decision-making.

Currently, four directors with employee status (including their representatives) account for 44%, three independent directors account for 33%, and three female directors account for 33%. Most directors are between 51 and 60 years old and in their prime of life. The Company pays attention to gender equality in the composition of the Board of Directors, and aims to account for 30% of the seats of female directors. After the re-election of the Board of Directors in 2021, there are three female directors (including representatives of corporate directors), an increase of two seats over the previous session, accounting for 33% and the set target is reached. In the future, the Company will aim for the term of independent directors to be less than three terms (nine years), and actively seek candidates for independent directors who meet the Company's diversity policy to join the 11[th] session of the Board of Directors.

The composition of members of the Board of Directors is listed as below:

Core items of
diversified policy
Job title and
name of director		 Core items of
diversified policy
Job title and
name of director		 Basic composition Basic composition Basic composition Basic composition Basic composition Basic composition Basic composition Basic composition Professional knowledge and skills Professional knowledge and skills Professional knowledge and skills Professional knowledge and skills Professional knowledge and skills Professional knowledge and skills Professional knowledge and skills Professional knowledge and skills

Nationality		 Gender As
employees
concurrently		 Age Seniority of
independent
director		 Ability to
make
operational
judgments		 Ability to perform
accounting and
financial analysis		 Ability to
conduct
management
administration		 Ability to
conduct crisis
management		 Knowledge
of the
industry		 An
international
market
perspective		 Ability to
lead
Ability to
make
policy
decisions
41~50
years old		 51~60
years old		 61~70
years old		 Under
3 years
3~9
years
Chairman Tseng, Jui-Ming R.O.C. Male
Director Hsieh, Hui-Tai R.O.C. Female
Director Wang, Tai-Kuang R.O.C. Male
Director Yu, Cheng-Chung R.O.C. Male
Director Ying Dar Investment Development
Corp. Representative:
Huang,Hsiu-Wen		 R.O.C. Female
Director Bae Haw Investment Development
Corp. Representative:
Hsieh, Wen-Hsiung		 R.O.C. Male
Independent director Huang,Hui-Ling R.O.C. Female
Independent director Li, Chi-Cheng R.O.C. Male
Independent director Huang,Fu-Di R.O.C. Male
  • 14 -

2. Independence of the Board of Directors

It has been stipulated by the Company in Article 21 of the “Corporate Governance Practice Principles” that, unless approved by the competent authority, more than half of the seats among directors shall not have spouses or relatives within the second degree of kinship. Currently there are three independent directors, accounting for 33% of all directors in compliance with the regulations of the Financial Supervisory Commission on independent directors at the time of election and during the term of office. Except for Chairman Tseng, Jui-Ming and Director Hsieh, HuiTai, who are second-degree relatives, all the other directors (including independent directors) are not spouses or relatives within the second degree, which complies with Article 26-3, Paragraphs 3 and 4 of the Securities and Exchange Act. Therefore, the Board of Directors of the Company is independent. Regarding the independence and kinship of directors, please refer to the aforementioned descriptions of “Information on Directors” and “Disclosure of information regarding the professional qualifications and experience of Directors and the independence of Independent Directors”.

3.2.2 Information on the management team

3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team 3.2.2 Information on the management team
As of April 19,2022
Job Title Nationality
Name		 Gender
Date of
Appointment
to Position
Shares held		 Shares held by
spouse and minor
children		 Shareholding
by Nominee
Arrangement
Principal Work Experience and
Academic Qualifications
 Positions
Concurrently
Held in
Other
Companies
at Present
Other Managerial
Officer(s) with which
the Person Has a
Relationship of
Spouse or Relative
within the Second
Degree		 Remarks
(Note)
No. of
Shares		 Share-
holding
Ratio		 No. of
Shares		 Share-
holding
Ratio
No. of
Shares
Share-
holding
Ratio		 Job
Title		 Name Relation
-ship
President
& CEO		 R.O.C. Wang, Tai-Kuang Male Mar. 10,
2004		 1,666,487 1.06% 1,802,813 1.15% 0 0.00% Master, Physics and Astronomy, NCU, Taiwan /
Business Manager class of Taiwan AI Academy /
Solomon Technologies Corp.		 None None None None None
Vice President
R.O.C.		 Yu, Cheng-Chung Male Mar. 1, 2014 1,002,000 0.64% 0 0.00% 0 0.00% Bachelor, International Business, CYCU, Taiwan /
Citizen Watch/ GrandPacific Optoelectronics Corp.
None		 None None None None
Vice President
& Chairman’s
Special
Assistant &
Corporate
Governance
Officer
R.O.C.		 Hsieh, Wen-Hsiung Male Mar. 8, 2017
261,253		 0.17% 0 0.00% 0 0.00% Bachelor, Accounting, FCU, Taiwan /
Yuanta Securities Corp.		 None None None None None
Vice President
R.O.C.		 Kao, Neng-Sen Male Mar. 1, 2018
43,459		 0.03% 0 0.00% 0 0.00% Master, Material Science and Engineering, ISU,
Taiwan/Yu-ChunCorp.		 None None None None None
Vice President
R.O.C.		 Huang, Shih-Pin Male Mar. 1, 2022
5,000		 0.00% 0 0.00% 0 0.00% Bachelor, Mechanical Engineering, CSU, Taiwan /
Hitachi		 None None None None None
Financial
Executive		 R.O.C. Huang, Hsiu-Wen Female Mar. 8, 2017
220,862		 0.14% 17,404 0.01% 0 0.00% MBA, CUNY, Baruch College, USA /
Yuanta Securities Corp.		 None None None None None
Accounting
Supervisor		 R.O.C. Kuo, Kun-He Male Mar. 8, 2017
20,000		 0.01% 0 0.00% 0 0.00% Bachelor, Accounting, THU, Taiwan /
Gallant Ocean International Inc.		 None None None None None

Note: Where the chairperson of the board of directors and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto.

  • 15 -

3.3 Remuneration to ordinary directors, independent directors, supervisors, general manager, and assistant general managers 3.3.1 Remuneration to ordinary directors and independent directors

Unit: NT$ thousands

Job Title Job Title Name Remuneration to directors Remuneration to directors Remuneration to directors Remuneration to directors Remuneration to directors Remuneration to directors Remuneration to directors Remuneration to directors Sum of A+B+C+D and
ratio to net income (%)		 Sum of A+B+C+D and
ratio to net income (%)		 Remuneration received bydirectors for concu Remuneration received bydirectors for concu Remuneration received bydirectors for concu Remuneration received bydirectors for concu rrent service as an employee rrent service as an employee rrent service as an employee rrent service as an employee Sum of A+B+C+D+E+F+G
and ratio to net income (%)		 Sum of A+B+C+D+E+F+G
and ratio to net income (%)		 Remuneration
received from
investee enterprises
other than
subsidiaries or from
the parent company
Base compensation
(A)		 Retirement pay and
pension(B)		 Director profit-sharing
compensation(C)		 Expenses and
perquisites(D)		 Salary, rewards, and
special disbursements(E)		 Retirement pay and
pension(F)		 Employee profit-sharing
compensation(G)
The
Company
All
consolidated
entities		 The
Company
All
consolidated
entities		 The
Company		 All
consolidated
entities		 The
Company
All
consolidated
entities		 The
Company		 All
consolidated
entities		 The
Company		 All
consolidated
entities		 The
Company
All
consolidated
entities		 The Company All consolidated
entities
The Company

 All
consolidated
entities
Amount
in cash

Amount
in stock

Amount
in cash
Amount
in stock
Director Chairman Tseng,Jui-Ming 6,037 6,037 None None 5,100 5,100 220 220 11,357
4.79%		 11,357
4.79%		 16,273 16,273 452 452 1,733 None 1,733 None 29,815
12.57%		 29,815
12.57%		 None
- Hsieh,Hui-Tai
- Huang, Mao-
Hsiung (Note 1)
- Wang, Tai-
Kuang (Note 2)
- Yu, Cheng-
Chung (Note 2)
- Ying Dar
Investment
Development
Corp.
Representative
of Ying Dar
Investment
Development
Corp.
Huang, Hsiu-
Wen (Note 2)
- Bae Haw
Investment
Development
Corp.
Representative
of Bae Haw
Investment
Development
Corp.
Hsieh, Wen-
Hsiung
Independent
Director		 - Huang, Hui-Ling
(Note 2)		 None None None None 2,238 2,238 100 100 2,338
0.99%		 2,338
0.99%		 None None None None None None None None 2,338
0.99%		 2,338
0.99%		 None
- Li, Chi-Cheng
- Huang, Fu-Di
1. Please describe the policy, system, standards and structure in place for paying remuneration to directors and describe the relationship of factors such as the duties and risks undertaken and time invested by the directors to the amount of remuneration paid: By Article 16 of Articles of
Incorporation, the remuneration of independent directors is referred to the level of the related public companies, the Company’s operation status, their value of contribution, and performance evaluations of the Board. Their remunerations were linked with the rationality and fairness of their
performance and risk, then submitted to the Compensation Committee for review and to the Board of Directors for approval.
2. In addition to what is disclosed in the above table, please specifythe amount of remuneration received bydirectors in the most recent fiscalyear forprovidingservices(e.g.,for servingas a non-employee consultant to theparent company/anyconsolidated entities / invested enterprises): None.

Note 1: Huang, Mao-Hsiung resigned the Director on July 26, 2021, and retired form the Company on March 31, 2022. Therefore, the Company did not accrue his employee profit-sharing compensation. Note 2: Director Yu, Cheng-Chung and Independent Director Huang, Hui-Ling took office on July 26, 2021. Wang, Tai-Kuang, former representative of Ying Dar Investment Development Corp. was re-appointed as general director, and Huang, Hsiu-We was the new representative, effective immediately since July 26, 2021.

  • 16 -
Ranges of remuneration paid to
each of the Company’s directors		 Name of directors Name of directors Name of directors Name of directors
Sum of A+B+C+D Sum of A+B+C+D+E+F+G
The Company All consolidated entities The Company All consolidated entities
Less than NT$ 1,000,000 Hsieh, Hui-Tai / Huang, Mao-Hsiung /
Wang, Tai-Kuang / Yu, Cheng-Chung /
Ying Dar Investment Development Corp. /
Huang, Hsiu-Wen / Bae Haw Investment
Development Corp. / Hsieh, Wen-Hsiung /
Huang,Hui-Ling/ Li,Chi-Cheng/ Huang,Fu-Di		 Hsieh, Hui-Tai / Huang, Mao-Hsiung /
Wang, Tai-Kuang / Yu, Cheng-Chung /
Ying Dar Investment Development Corp. /
Huang, Hsiu-Wen / Bae Haw Investment
Development Corp. / Hsieh, Wen-Hsiung /
Huang,Hui-Ling/ Li,Chi-Cheng/ Huang,Fu-Di		 Hsieh, Hui-Tai / Ying Dar Investment
Development Corp. / Bae Haw
Investment Development Corp. /
Huang, Hui-Ling / Li, Chi-Cheng /
Huang, Fu-Di		 Hsieh, Hui-Tai / Ying Dar Investment
Development Corp. / Bae Haw
Investment Development Corp. /
Huang, Hui-Ling / Li, Chi-Cheng /
Huang, Fu-Di
NT$1,000,000(inclusive)~ NT$2,000,000(exclusive) None None None None
NT$2,000,000 (inclusive) ~ NT$3,500,000 (exclusive) None None Huang, Mao-Hsiung / Huang, Hsiu-
Wen / Hsieh,Wen-Hsiung		 Huang, Mao-Hsiung / Huang, Hsiu-
Wen / Hsieh,Wen-Hsiung
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive) None None Yu,Cheng-Chung Yu,Cheng-Chung
NT$5,000,001(inclusive)~ NT$10,000,000(exclusive) Tseng,Jui-Ming Tseng,Jui-Ming Tseng,Jui-Ming/ Wang,Tai-Kuang Tseng,Jui-Ming/ Wang,Tai-Kuang
NT$10,000,001(inclusive)~ NT$15,000,000(exclusive) None None None None
NT$15,000,001(inclusive)~ NT$30,000,000(exclusive) None None None None
NT$30,000,001(inclusive)~ NT$50,000,000(exclusive) None None None None
NT$50,000,001(inclusive)~ NT$100,000,000(exclusive) None None None None
NT$100,000,000 or above None None None None
Total 12 12 12 12

3.3.2 Remuneration to supervisors

Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands
Job title Name Remuneration to supervisors Sum of A+B+C and
ratio to net income(%)		 Remuneration received from investee
enterprises other than subsidiaries or
from theparent company
Base compensation(A) Profit-sharingcompensation(B) Expenses andperquisites(C)
The Company All consolidated entities The Company All consolidated entities The Company All consolidated entities The Company All consolidated entities
Supervisor Lin,Yu-Fen(Note) None None 1,353 1,353 60 60 1,413
0.60%		 1,413
0.60%		 None
Supervisor Tseng,Shu-Ling (Note)
Supervisor Ting,Hng-Hsun(Note)
Ranges of remuneration paid to
each of the Company’s supervisors		 Name of supervisors Name of supervisors
Sum of A+B+C
The Company All consolidated entities
Less than NT$1,000,000 Lin,Yu-Fen / Tseng,Shu-Ling/ Ting,Hung-Hsun Lin,Yu-Fen / Tseng,Shu-Ling/ Ting,Hung-Hsun
NT$1,000,000(inclusive)~ NT$2,000,000(exclusive) None None
NT$2,000,000(inclusive)~ NT$3,500,000(exclusive) None None
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive) None None
NT$5,000,001(inclusive)~ NT$10,000,000(exclusive) None None
NT$10,000,001(inclusive)~ NT$15,000,000(exclusive) None None
NT$15,000,001(inclusive)~ NT$30,000,000(exclusive) None None
NT$30,000,001(inclusive)~ NT$50,000,000(exclusive) None None
NT$50,000,001(inclusive)~ NT$100,000,000(exclusive) None None
NT$100,000,000 or above None None
Total 3 3

Note: In accordance with the laws, the Company has established the Audit Committee and repealed the setup of supervisors after re-electing the Board of Directors on July 26, 2021.

  • 17 -

3.3.3 Remuneration to general manager and assistant general managers

Unit: NT$ thousands

Unit: NT$thousands
Job title Name Salary (A) Retirement pay and pension (B)
Rewards and special
disbursements(C)		 Employee profit-sharing compensation (D) Sum of A+B+C+D and
ratio to net income(%)
 Remuneration
received from investee
enterprises other than
subsidiaries or from
theparent company
The Company All consolidated
entities
The Company		 All consolidated
entities		 The Company All consolidated
entities		 The Company All consolidated entities
The Company		 All consolidated
entities
Amount in
cash		 Amount in
stock		 Amount in
cash		 Amount in
stock
President & CEO
Wang,Tai-Kuang		 12,697 12,697 428 428 3,828 3,828 2,078 None 2,078 None 19,031
8.02%		 19,031
8.02%		 None
Executive Vice
President		 Huang, Mao-Hsiung
(Note)
Vice President Yu,Cheng-Chung
Vice President &
Chairman’s
Special Assistant
& Corporate
Governance
Officer

Hsieh, Wen-Hsiung
Vice President Kao,Neng-Sen

Note: Since Huang, Mao-Hsiung retired on March 31, 2022, the Company did not accrue his employee profit-sharing compensation.

Ranges of remuneration paid to each of the Company’s
general manager and assistantgeneral managers		 Names ofgeneral manager and assistantgeneral managers Names ofgeneral manager and assistantgeneral managers
The Company All consolidated entities
Less than NT$1,000,000 None None
NT$1,000,000(inclusive)~ NT$2,000,000(exclusive) None None
NT$2,000,000(inclusive)~ NT$3,500,000(exclusive) Huang,Mao-Hsiung/ Hsieh,Wen-Hsiung/ Kao,Neng-Sen Huang,Mao-Hsiung/ Hsieh,Wen-Hsiung/ Kao,Neng-Sen
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive) Yu,Cheng-Chung Yu,Cheng-Chung
NT$5,000,001(inclusive)~ NT$10,000,000(exclusive) Wang,Tai-Kuang Wang,Tai-Kuang
NT$10,000,001(inclusive)~ NT$15,000,000(exclusive) None None
NT$15,000,001(inclusive)~ NT$30,000,000(exclusive) None None
NT$30,000,001(inclusive)~ NT$50,000,000(exclusive) None None
NT$50,000,001(inclusive)~ NT$100,000,000(exclusive) None None
NT$100,000,000 or above None None
Total 5 5

Names and distributions of employee profit-sharing compensation to managerial officers

Unit: NT$ thousands
Job title Name Amountinstock Amountincash Total As a % of net profit
Managerial
officers		 President & CEO Wang,Tai-Kuang None 2,078 2,078 0.88%
VicePresident Yu, Cheng-Chung
Vice President & Chairman’s Special Assistant &
Corporate Governance Officer		 Hsieh, Wen-Hsiung
VicePresident Kao,Neng-Sen
Financial Executive Huang,Hsiu-Wen
AccountingSupervisor Kuo,Kun-He
  • 18 -

3.3.4 Separately compare and describe total remuneration, as a percentage of net income stated in the parent company only financial reports or individual financial reports, as paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, supervisors, general managers, and assistant general managers, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure

Year 2021 Year 2020 The analysis of the ratio variation / The policies, standards, and packages, the procedure for determining remuneration,
and its linkage to operating performance and future risk exposure
Ratio of total
remuneration paid
to directors,
supervisors,
general managers
and assistant
general managers
to net income (%)		 14.39% 14.02% 1. The total amount of remuneration paid increased by 4.27% in 2021 compared with the preceding year, and the net income stated in
the parent-company-only financial reports increased by 1.63% in 2021 compared with that of 2020. Therefore, the ratio of total
remuneration to net income increased slightly.
2. In accordance with Article 22-1 of the “Articles of Incorporation”, the Company shall allocate 5 percent or more as employees’
compensation and 3 percent or less as remuneration for directors and supervisors when there is profit for the current year. The
Company’s combination of remuneration shall be determined in accordance with the organizational regulations of the
Compensation Committee, including cash remuneration, stock options, dividends, retirement benefits or resignation payments,
various allowances and other measures with substantial incentives. Its scope is consistent with the remuneration of directors and
managerial officers stated in “Regulations Governing Information to be Published in Annual Reports of Public Companies”.
3. On a regular basis, the Company evaluates the remuneration of directors and supervisors, and authorizes the Board of Directors to
negotiate in accordance with the degree of participation and contribution value of individual directors and supervisors. It is also
negotiated with reference to the industry standard, the Company’s operating conditions and performance evaluation results, and
the performance evaluation is put into implementation in accordance with the Company’s “ Evaluation Regulations of the Board’s
Performance”. The evaluation items include six major parts: alignment of the goals and missions of the Company, awareness of the
duties of a director, participation in the operation of the Company, management of internal relationship and communication, the
director’s professionalism and continuing education, and internal control. The general manager, assistance general managers and
other managerial officers will use the performance evaluation results implemented by the “Codes for assessment” as a reference
for bonus distribution. The evaluation project of manager performance is divided into four parts: leadership ability, team
performance, innovation ability, and coordination and cooperation. It also comprehensively considers the industry standard,
professional ability, goal achievement rate, contribution degree, company operation status, etc., and gives reasonable
remuneration accordingly. Directors, supervisors and managerial officers in the event of major negative events (such as improper
internal management or personnel fraud, etc.) will also affect the measurement of remuneration. The important decision of the
management level is made after balancing various risk factors, and the performance of relevant decision-making is reflected on the
Company’s profitability. Thus, the remuneration of the management level is related to the performance of risk control. The
performance appraisal and remuneration rationality of the aforementioned directors, supervisors, and managerial officers are all
reviewed by the Compensation Committee and the Board of Directors, and this remuneration system is reviewed in a timely
manner based on the actual operating conditions and relevant laws and regulations, an effort to seek the balance between the
Company’s sustainable operation and risk control.
  • 19 -

3.4 Implementation of corporate governance

3.4.1 Operation of the Board of Directors

The number of board meetings held in the most recent fiscal year was: 7 (A) The attendance by the directors and supervisors was as follows:

Title Name No. of
meetings
attended in
person(B)
No. of
meetings
attended
by proxy		 In-person
attendance
rate (%)
【B/A】
Remarks
Chairman Tseng,Jui-Ming 7 0 100% Re-elected on July26,2021
Director Hsieh,Hui-Tai 5 0 71% Re-elected on July26,2021
Director Huang,Mao-Hsiung 3 0 100% Resigned on July26,2021
Director Wang,Tai-Kuang 4 0 100% Newlyelected on July26,2021
Director Yu,Cheng-Chung 4 0 100% Newlyelected on July26,2021
Director Ying Dar Investment
Development Corp.
Representative:
Huang,Hsiu-Wen		 7 0 100% Re-elected on July 26, 2021 and
re-appointed Huang, Hsiu-Wen as
representative
Director Bae Haw Investment
Development Corp.
Representative:
Hsieh,Wen-Hsiung		 6 0 86% Re-elected on July 26, 2021
Independent
Director		 Huang, Hui-Ling 3 0 75% Newly elected on July 26, 2021
Independent
Director		 Li, Chi-Cheng 7 0 100% Re-elected on July 26, 2021
Independent
Director		 Huang, Fu-Di 7 0 100% Re-elected on July 26, 2021
Supervisor Lin,Yu-Fen 2 0 67% Resigned on July26,2021
Supervisor Tseng,Shu-Ling 1 0 33% Resigned on July26,2021
Supervisor Ting,Hung-Hsun 2 0 67% Resigned on July26,2021
Other information required to be disclosed:
1. If any of the following circumstances exists, specify the board meeting date, meeting session number,
content of the motion(s), the opinions of all the independent directors, and the measures taken by the
Company based on the opinions of the independent directors:
(1) Any matter under Article 14-3 of the Securities and Exchange Act.
(2) In addition to the matters referred to above, any dissenting or qualified opinion of an independent
directory thatis on record orstatedin writingwith respect to any boardresolution.
The dates of the
meetings and
sessions
Contents of motion and the company’s responses
Matters
referred to in
Article 14-3 of
the Securities
and Exchange
Act
Matters
involving
objections or
expressed
reservations by
independent
directors
March 10, 2021
17thof 9thsession
To discuss the amendments of “Procedures for Loaning Funds to
Others”.

To discuss the amendment of internal control system, version 19,
andinternalaudit systemandrules,version8.

To discuss remuneration adjustments of 2021 for the Chairman
andmanagerialofficers.

Independent directors’ opinions: None.
The company’s responses: None.
Resolution: All motions were passed unchanged by all directors present excluding those directors
avoiding of motionsinconflict of interest onabove 3rdmotion.
August 4, 2021
2thof 10thsession
To engage the CompensationCommitteemembers.

Independent directors’ opinions: None.
The company’s responses: None.
Resolution: The motion was passed unchanged by all directors present excluding those directors
avoiding of motionsinconflict of interest.
November 4, 2021
4thof 10thsession
To discuss and review all remunerations of 2022 for directors and
managerialofficers.

To discuss year-end remunerations and bonuses to the Chairman
andmanagerialofficersfor 2021.

Independent directors’ opinions: None.
The company’s responses: None.
Resolution: All motions were passed unchanged by all directors present excluding those directors
avoiding of motionsinconflict of interest.

  • 20 -

  • The status of implementation of recusals of directors with respect to any motions with which they may have a conflict of interest:

3. The dates of the
meetings and sessions		 The dates of the
meetings and sessions		 Contents of motion Contents of motion Contents of motion The directors’ names The directors’ names Causes for avoidance Voting
March 10, 2021
17thof 9thsession		 To discuss remuneration
adjustments of 2021 for the
Chairman and managerial
officers.		 Tseng, Jui-Ming / Huang,
Mao-Hsiung / Ying Dar
Investment Development
Corp. Representative:
Wang, Tai-Kuang / Bae
Haw Investment
Development Corp.
Representative: Hsieh,
Wen-Hsiung		 Because the aforementioned
directors served as the
Chairman or managers of the
Company, they should be
avoidance in accordance with
the “Rules of Procedure for
Board of Directors Meetings”.		 This
motion
was
approved
by the
remaining
directors.
August 4, 2021
2thof 10thsession		 To engage the Compensation
Committee members.		 Huang, Hui-Ling / Li, Chi-
Cheng		 Because the aforementioned
directors were the members to
be engaged, they should be
avoidance in accordance with
the “Rules of Procedure for
Board of Directors Meetings”.		 This
motion
was
approved
by the
remaining
directors.
November 4, 2021
4thof 10thsession		 To discuss and review all
remunerations of 2022 for
directors and managerial
officers.
To discuss year-end
remunerations and bonuses
to the Chairman and
managerialofficersfor 2021.		 Tseng, Jui-Ming / Wang,
Tai-Kuang / Yu, Cheng-
Chung		 Because the aforementioned
directors served as the
Chairman or managers of the
Company, they should be
avoidance in accordance with
the “Rules of Procedure for
Board of Directors Meetings”.		 This
motion
was
approved
by the
remaining
directors.
Implementationofevaluations oftheBoard of Directors:
Evaluation
cycle
Evaluation period		 Scope of
evaluation		 Method of
evaluation		 Evaluation content
Once a
year		 January 1, 2021 ~
December 31, 2021		 Overall Board Internal
evaluation of
the Board		 Participation in the operation of the company
Improvement of the quality of the board of directors’
decision making
Composition and structure of the board of directors
Election and continuing education of the directors
Internalcontrol
Each director Self-evaluation
by each
director
Alignment of the goals and missions of the company
Awareness of the duties of a director
Participation in the operation of the company
Management of internal relationship and
communication
The director’s professionalism and continuing
education
Internalcontrol
Compensation
Committee
Self-evaluation
by each
Compensation
Committee
member
Participation in the operation of the company
Awareness of the duties of the compensation
committee
Improvement of quality of decisions made by the
compensation committee
Makeup of the compensation committee and
election of its members
Internalcontrol
July 26, 2021 ~
December 31, 2021
(established after re-
electing the Board of
Directors on July 26, 2021)
Audit
Committee		 Self-evaluation
by each Audit
Committee
member
Participation in the operation of the company
Awareness of the duties of the audit committee
Improvement of quality of decisions made by the
audit committee
Makeup of the audit committee and election of its
members
Internalcontrol

  1. Give an evaluation of the targets that were adopted for strengthening of the functions of the board during the current and immediately preceding fiscal years (e.g., establishing an audit committee, increasing information transparency, etc.) and the measures taken toward achievement thereof: (1) Enhancement for function of the Board of Directors

  2. After the re-election of directors on July 26, 2021, all directors have neither a spousal relationship nor a relationship within the second degree of kinship with any other director, with the exceptions of director Tseng, Jui-Ming and director Hsieh, Hui-Tai (in-laws siblings). Thus, the independence of the Board was improved.

  3. “Procedures for Election of Directors” and “Rules of Procedure for Board of Directors Meetings” were adopted to elect the directors in accordance with the Company’s diversity policy, then smooth the operation of the Board and follow the regulations. “Evaluation Regulations of the Board’s Performance” was also continuously amended and the Corporate Governance Officer was appointed to implement corporate governance and enhance the Company’s board functions.

  4. 21 -

Several members of the Board have attended continuing education courses that are related to corporate governance during their term in office. The courses are organized by institutions designated in the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE/TPEx Listed Companies, and can enhance director’s professional knowledge about corporate governance.

(2) Establishment of the Audit Committee

After the Company re-elected all directors at the Shareholders’ Meeting on July 26, 2021, the three elected independent directors set up an audit committee to be responsible for reviewing both annual and quarterly financial statements, revisions of internal control systems, as well as major assets or derivative transactions, fund loans, and endorsements, or guarantees, etc. This committee also conducts adequate communicates with CPAs (certified public accountants) and Chief Internal Auditor, thus assisting the Board of Directors to improve the corporate governance performance.

3.4.2 Audit Committee or attendance of Supervisors at Board Meetings:

The Company has established the Audit Committee and repealed the setup of supervisors on July 26, 2021.

Operation of the Audit Committee

The number of Audit Committee meetings held in the most recent fiscal year was: 2 (A) The attendance by the independent directors was as follows:

Title Name No. of
meetings
attended in
person(B)		 No. of
meetings
attended
by proxy		 In-person
attendance
rate (%)
【B/A】		 Remarks
Independent
Director		 Huang, Hui-Ling 2 0 100% Newly elected on July 26, 2021
Independent
Director		 Li, Chi-Cheng 2 0 100% Re-elected on July 26, 2021
Independent
Director		 Huang, Fu-Di 2 0 100% Re-elected on July 26, 2021
Other information required to be disclosed:
1. If any of the following circumstances exists, specify the audit committee meeting date, meeting session
number, content of the motion(s), the content of any dissenting or qualified opinion or significant
recommendation of the independent directors, the outcomes of audit committee resolutions, and the
measures taken by the Company based on the opinions of the audit committee: None.
(1) Any matter under Article 14-5 of the Securities and Exchange Act.
(2) In addition to the matters referred to above, any matter that was not approved by the audit committee
but was approved by a two-thirds or greater majority resolution of the board of directors.
2. Implementation of recusals of independent directors with respect to any motions with which they may
have a conflict of interest: None.
3. Communication between the independent directors and the chief internal audit officer and the CPAs that
serve as external auditor (including any significant matters communicated about with respect to the state
of the company’s finances and business and the method(s) and outcomes of the communication.)
Date /
Communication ways
Attendance
Communication points
Results of
communication
November 4, 2021
Forum
Independent Director: Huang, Hui-Ling
/ Li, Chi-Cheng / Huang, Fu-Di
CPA: Yang , Po-Jen
Chief Internal Auditor : Liu,Ying-Lan
Summary of reviewing the interim financial
report.
Annual audit plan.
Important revision of laws and regulations.
No comment
November 4, 2021
Audit Committee
Independent Director: Huang, Hui-Ling
/ Li, Chi-Cheng / Huang, Fu-Di
Chief Internal Auditor : Liu,Ying-Lan
Making and implementation method of
internal audit plan for 2022.
No comment
  • 22 -

Attendance by the Supervisors at Board of Directors Meetings

The number of board meetings held in the most recent fiscal year was: 3 (A) The attendance by the supervisors was as follows:

Title Name No. of meetings
attended(B)		 Attendance rate
(%) 【B/A】		 Remarks
Supervisor Lin,Yu-Fen 2 67% Resigned on July26,2021
Supervisor Tseng,Shu-Ling 1 33% Resigned on July26,2021
Supervisor Ting,Hung-Hsun 2 67% Resigned on July26,2021
Other information required to be disclosed:
1. Composition and duties of the supervisors:
(1) Communication between the supervisors and company employees and shareholders (e.g., the
channels and methods of communication): Specialist will contact the supervisors whenever
necessary and supervisors will attend shareholders’ meeting, thus establishing the channel of
communication between company employees and shareholders.
(2) Communication between the supervisors and the chief internal audit officer and the CPAs that serve
as external auditor (including matters communicated about with respect to the state of the
company’s finances and business and the method(s) and outcomes of the communication.)
Date /
Communication
ways
Communicator
Communication points
Results of
communication
March 10, 2021
E-mail
CPA: Yang , Po-Jen
Responsibilities of auditing financial
statements, audit scope, audit findings, and
independence declaration of auditors.
The items attended by the authorities.
Important revision of laws and regulations.
No comment
March 10, 2021
Board of DirectorsChief Internal Auditor : Liu, Ying-Lan
2020 Q4 internal audit report.
Implementation report of ethical corporate
management.
No comment
May 4, 2021
Board of DirectorsChief Internal Auditor : Liu, Ying-Lan
2021 Q1 internal audit report.
Report of communication with stakeholders.
Management report of intellectualproperty.
No comment
2. If any supervisor has expressed an opinion at a board meeting, specify the specify the board meeting
date, meeting session number, content of the motion, the outcome of the resolution by the board, and
the measures taken by the Company based on the opinion expressed by the supervisor: None.

3.4.3 Corporate governance – implementation status and deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and the reasons

Evaluation Item Implementation Status Implementation Status Deviations from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
1. Has the Company established
and disclosed its Corporate
Governance Best-Practice
Principles based on the
Corporate Governance Best-
Practice Principles for
TWSE/TPEx Listed
Companies?
The Company has established the
Corporate Governance Best-Practice
Principles based on “Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”.
The information has been disclosed on
the Market Observation Post System
website and the Company’s website.		 None.
  • 23 -
Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
2. Shareholding structure and
shareholders’ rights
(1) Does the Company have
Internal Operation
Procedures for handling
shareholders’ suggestions,
concerns, disputes and
litigation matters. If yes,
have these procedures
been implemented
accordingly?
(2) Does the Company know
the identity of its major
shareholders and the
parties with ultimate
control of the major
shareholders?
(3) Has the Company built
and implemented a risk
management system and
a firewall between the
Company and its
affiliates?
(4) Has the Company
established internal rules
prohibiting insider trading
of securities based on
undisclosed information?


The Company has designated a
spokesperson and deputy
spokesperson responsible for the
handling of issues such as suggestions
or dispute from shareholders.
Stock related divisions handle related
matters and accurately perceive
significant shares transactions of
shareholders.
The Company and its affiliated
companies operate independently.
Codes for the establishment and
management of subsidiaries have been
set forth. Regular and timely auditing
will be conducted by audit office,
finance department or CPA.
The “Codes for Ethical Management”
and “Procedures for Preventing Insider
Trading” implemented, regulates the
Company’s employees to follow
provision of the Securities and
Exchange Act and not to use
undisclosed information to engage in
insidertrading.		 None.
None.
None.
None.
3. Composition and
responsibilities of the board
of directors
(1) Have a diversity policy and
specific management
objectives been adopted
for the board and have
they been fully
implemented?		 The Company has set up the policy of
diversified members of the Board under
Article 20 of the “Corporate
Governance Practice Principles”,
including considerations of the basic
condition and value of the members of
the Board (e.g. gender, age, nationality,
and culture) and the professional
knowledge and skills (e.g. law,
accounting, industry, finance,
marketing, or technology). In order to
reach the ideal goal of corporate
governance, the Board shall have the
overall capability of operation
management, leadership and decision
making, knowledge in the industry, and
financial accounting. The management
objective, achievement of objective and
implementation of this policy are listed
in “Diversity and independence of the
Board of Directors”(page 14 in this
report) and disclosed on the
Company’s website.		 None.
  • 24 -
Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
(2) Has the Company
voluntarily established
other functional
committees in addition to
the remuneration
committee and the audit
committee?
(3) Has the Company
established rules and
methodology for
evaluating the
performance of its Board
of Directors, implemented
the performance
evaluations on an annual
basis, and submitted the
results of performance
evaluations to the board of
directors and used them
as reference in
determining
salary/compensation for
individual directors and
their nomination and
additional office terms?		 The Company currently only has the
Compensation Committee and the
Audit Committee. There are no other
functional committees.
“Evaluation Regulations of the Board’s
Performance” were implemented and
stated that evaluation of the Board’s
performance shall be completed before
the end of the first quarter of the
following year, including the overall
Board performance, each directo,
Compensation Committee and Audit
Committee. Evaluation method includes
self-evaluation of the Board, each
director/Compensation Committee
member/Audit Committee member.
The deliberative unit of Board of
Directors is responsible for the
performance evaluation which was
conducted by questionnaire survey.
First, the deliberative unit collects
information related to Board of
Directors and conducts an overall
evaluation, then each director/
Compensation Committee
member/Audit Committee member
would make a self-evaluation.The result
of performance evaluation will also be a
criterion for review and improvement of
directors/ Compensation Committeee
members/Audit Committee members,
and a reference for remuneration,
nomination and re-appointment.
2021 evaluation of the Board’s
performance was completed in the
beginning of 2022, and its result was
proposed at the Board meeting on
March 10, 2022. The measurement
items and evaluation result are listed in
Note 1 and disclosed on the
Company’s website.

Not in accordance with
Article 27 of “the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies”.
Considering the scale
of the Company, there
is no urgent need. Once
business scale has
expanded,
establishment will be as
required.
None.
  • 25 -
Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
(4) Does the Company
regularly evaluate its
external auditors’
independence?		 The Company has regulated it shall
regularly evaluate the independence
and suitability of the CPA engaged
under Article 29 of the “Corporate
Governance Practice Principles”.
Referencing “Statements of Auditing
Standards(SAS)” and “The Bulletin of
Norm of Professional Ethics for
Certified Public Accountant”, the
Company assesses the independence
and suitability of CPAs annually through
questionnaires to ensure the Company
and its subsidiaries or affiliated
companies have no conflicting interests
with CPAs. Items of assessment
include the independence and
objectiveness of their financial
interests, business relations as well as
family and personal relations.
Yang, Po-Jen/Su, Yen-Ta and Chen,
Yung-Hsiang/Su, Yen-Ta, CPAs for year
2021 and 2022 respectively, have
achieved the Company’s standards of
the independence after evaluation. The
evaluation result (as Note 2) and
“confirmation of independence”
provided by CPAs were submitted to
and passed by the Board meeting held
on March 10, 2021 and March 10,
2022. The evaluation of CPAs’
independence would be first reviewed
by the Audit Committee, then submitted
to the Board of Directors after the Audit
Committee was established on July 26,
2021.
None.
4. Does the TWSE/TPEx listed
company have in place an
adequate number of qualified
corporate governance officers
and has it appointed a chief
corporate governance officer
with responsibility corporate
governance practices
(including but not limited to
providing information
necessary for directors and
supervisors to perform their
duties, aiding directors and
supervisors in complying with
laws and regulations,
organizing board meetings
and annual general meetings
of shareholders as required
by law, and compiling
minutes of board meetings
and annual general
meetings)?
The Company appointed Hsieh, Wen-
Hsiung, Vice President & Chairman’s
Special Assistant, as the ” Corporate
Governance Officer” who is responsible
for relative affairs of corporate
governance to protect the rights of
shareholders and enhance the function
of the Board of Directors. Another
corporate governance personnel was
not deployed yet. That officer was with
a minimum of three year experience in
financial management in a public
company, and has participated in
appropriate educational training
courses to comply with the stipulations
of the regulations (as Note 4).
The main responsibilities of “Corporate
Governance Officer” are as below:		 None.
  • 26 -
Evaluation Item Implementation Status Implementation Status Deviations from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
A. Handling matters relating to board
meetings and shareholders’
meetings according to laws.
B. Producing minutes of board
meetings and shareholders’
meetings.
C. Furnishing information required for
business execution by directors.
D. Assisting in onboarding and
continuous development of directors.
E. Assisting directors with legal
compliance.
The corporate governance operation
status of year 2021 was listed below
and proposed at the Board meeting on
March 10, 2022:
A. Assisting directors for business
execution, furnishing information
required by them, and assisting them
for continuous education.
‧Irregularly revising the internal
procedures in accordance with the
latest corporate governance-
related laws and regulations and
furnishing those to directors as
references when they took office.
‧Furnishing information required for
business execution by directors.
Keeping a smooth communication
channel between directors and the
Company’s staff.
‧Arranging communication forums
with independent directors, chief
internal auditor and CPAs.
(Communication status is
disclosed on the Company’s
website and “3.4.2 Audit
Committee or attendance of
Supervisors at Board Meetings” in
this report.)
‧Furnishing education information
to directors.
B. Handling matters relating to board
meetings and shareholders’
meetings.
‧Confirming the convention of
board meetings and shareholders’
meetings in accordance with
related laws and Corporate
Governance Practice Principles.
‧Preparing the meeting notice,
handbook, and meeting minutes of
shareholders’ meeting before the
deadline.
  • 27 -
Evaluation Item Implementation Status Implementation Status Deviations from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
‧Planning the agenda for a Board
meeting and send notice to all
Board members seven days
before the meeting. Conducting
the meeting and provide meeting
data. Sending notice ahead on
proposal items with conflicts of
interest and completing the
meeting minutes with twenty days
after the meeting.
‧Reporting corporate governance
operation status to directors.
C. Performance evaluation of the Board
for year 2021.
D. Noticing the Board members
immediately after releasing important
message to make sure the Board
members were informed immediately
of the Company’s important
message.
E. Purchasing the “Directors Liability
Insurance” for directors.
F. Assisting directors with legal
compliance by irregularly sending
related laws and regulations.
5. Has the Company
established channels for
communicating with its
stakeholders (including but
not limited to shareholders,
employees, customers,
suppliers, etc.) and created a
stakeholders section on its
company website? Does the
Company appropriately
respond to stakeholders’
questions and concerns on
important corporate social
responsibility issues?		 The Company respects the rights of the
stakeholders. By identifying the
stakeholders and with proper
communication and involvement of
stakeholders, the Company can
understand the reasonable
expectations and needs and therefore
response properly to the major
corporation social responsibility issue
that concerned the stakeholders. The
Company has set up a section for the
stakeholders on the official website to
disclose and communicate the major
issues that concerned the stakeholders,
and submitted the communication
status with stakeholders to the Board
meeting periodically. The recent report
to the Board of Directors is scheduled
in May 2022, and its details is in Note
3. Besides, the Company has posted
phone number and email contact
information of the spokesperson and
deputy spokesperson on the Market
Observation Post System and the
Company’s website for communication
with the stakeholders. Also yearly
prepare the “Sustainability Report”
(named “Corporate Social
Responsibility Report” before year
2020) on the Company’s website of
referenceforthe stakeholders.
None.
  • 28 -
Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
6. Has the Company appointed
a professional shareholder
services agent to handle
matters related to its
shareholder meetings?		 The Company has commissioned the
professional stock affairs agent -
Yuanta Securities Stock Transfer Agent
to handle matters of shareholders’
meetings.		 None.
7. Information disclosure
(1) Has the Company
established a corporate
website to disclose
information regarding its
financials, business, and
corporate governance
status?
(2) Does the Company use
other information
disclosure channels (e.g.,
maintaining an English-
language website,
designating staff to handle
information collection and
disclosure, appointing
spokespersons,
webcasting investors
conference etc.)?
(3)Does the company publish
and report its annual
financial report within two
months after the end of the
fiscal year, and publish
and report its financial
reports for the first,
second, and third quarters
as well as its operating
statements for each month
before the specified
deadlines?

The Company has established a
website where information on financial
operations and corporate governance is
disclosed timely.
The Company has websites in Chinese
and English. In addition to a designated
specialist responsible for the collection
and disclosure of company information,
persons with comprehensive
understanding of the company’s
finance and business or are able to
coordinate departments to provide
relevant information are chosen as the
spokesperson and deputy
spokesperson and provide statements
on behalf of the Company. Besides, the
movie of investor conference was put
on the Company’s website. All above
measures are to insure the timely and
full disclosure of information that may
influence the decisions of shareholders
and stakeholders.
The Company did not announce and
report the annual financial report within
two months after the end of the fiscal
year, but already announced and
reported the first, second and third
quarter financial reports and operation
of each month in advance before the
prescribed period.
None.
None.
Not in accordance with
Article 55 of the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies due to the
complicated process of
preparing annual
consolidated financial
report. The Company
will continuously
improve it.
  • 29 -
Evaluation Item Implementation Status Implementation Status Implementation Status Implementation Status Deviations from the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
8. Has the Company disclosed
other information to facilitate
a better understanding of its
corporate governance
practices (including but not
limited to employee rights,
employee wellness, investor
relations, supplier relations,
rights of stakeholders,
directors’ and supervisors’
continuing education, the
implementation of risk
management policies and risk
evaluation standards, the
implementation of customer
relations policies, and
purchasing liability insurance
for directors and
supervisors)?
A. Suitable educational courses are
selected by directors and managerial
officers (including corporate
governance officer) according to
their time and professional
background. Status of continuing
education in recent years is listed in
Note 4.
B. The Company’s risk management
policy and procedure are listed as
“7.7 Other important matters” in this
report and disclosed on the
Company’s website.
C. The Company annually purchased
liability insurance for directors.
Current insurance has a
compensation limit of US$5 million,
and its period is one year starts from
January 18, 2022. The details of
liability insurance has been
submitted to the Board meeting held
on March 10,2022.
None.
9. Please describe improvements that have already been made based on the Corporate Governance
Evaluation results released for the most recent fiscal year by the Corporate Governance Center, Taiwan
Stock Exchange, and specify the priority enhancement objectives and measures planned for any
matters still awaiting improvement. (If the Company was not included among the companies evaluated
for the given recent year, this item does not need to be completed.)
Indicators
Assessmentresults
Improvements
Whether the Audit Committee of the
Company discloses its annual task
focuses and operationsituations or not?
The Audit Committee is not yet established
for the moment.
The Company has established the
Audit Committee and implemented by
indicators onJuly26,2021.
Whether the Company’s annual report
discloses the link between performance
evaluation and remuneration of directors
and managers or not?
In the annual report, it is not stated that the
remuneration payment procedures have
taken into account of relevant results of the
performance evaluation of directors and
managers.
The Company has implemented by
indicators in 2021.
Indicators Assessmentresults Improvements
Whether the Audit Committee of the The Audit Committee is not yet established The Company has established the
Company discloses its annual task for the moment. Audit Committee and implemented by
focuses and operationsituations or not? indicators onJuly26,2021.
Whether the Company’s annual report In the annual report, it is not stated that the The Company has implemented by
discloses the link between performance remuneration payment procedures have indicators in 2021.
evaluation and remuneration of directors taken into account of relevant results of the
and managers or not? performance evaluation of directors and
managers.

Note 1: The measurement items and evaluation result of the Board’s performance in year 2021 are listed as below:

Evaluation
scope		 Measurement items Evaluation
result		 Items to be
improved		 Improvement plan or actions
Overall
Board		 Participation in the operation of
the company
Improvement of the quality of
the board of directors’ decision
making
Composition and structure of the
board of directors
Election and continuing
education of the directors
Internalcontrol
The achieving
rate is 97%. It
still looks good.
Enhance
directors to
attend
diverse
courses
beyond
their
specialty.
Increase
the number
of training
hours for
directors to
enhance
their
professional
knowledge
and skills.

The improvement actions are as follows which
have already been adopted by the Board of
Directors and is now in full operation since 2022:
Actively provide the information of diverse
courses to the Board members in order to
strengthen prior notice and planning for
education and training, and increase directors’
willingness and training hours.
Provide diverse training channel such as
remote learning and physical lessons for the
Board members to attend.
Evaluate whether to hire external lecturers to
teach in the Company and facilitate education
and training participation by the Board
members.
Individual
director		 Alignment of the goals and
missions of the company
Awareness of the duties of a
director
Participation in the operation of
the company
Management of internal
relationship and communication
The director’s professionalism
and continuing education
Internal control		 The achieving
rate is 97%. It
still looks good.
  • 30 -
Evaluation
scope		 Measurement items Evaluation
result		 Items to be
improved		 Improvement plan or actions
Compensation
Committee
Participation in the operation of
the company
Awareness of the duties of the
compensation committee
Improvement of quality of
decisions made by the
compensation committee
Makeup of the compensation
committee and election of its
members
Internalcontrol		 The achieving
rate is 99%. It
looks great.		 None. None.
Audit
Committee		 Participation in the operation of
the company
Awareness of the duties of the
audit committee
Improvement of quality of
decisions made by the audit
committee
Makeup of the audit committee
and election of its members
Internal control		 The achieving
rate is 100%. It
looks great.

Note 2: The key items of the CPA’s independence assessment standards are listed as below:

Assessment item Assessment
result		 Comply with
independence or
not
The CPA has rotated regularly (generally not more than 7 years per term) for at least a certain period
(generallynotless than 2years) beforereturning.		 Yes Yes
The CPA has no spousal, direct kinship, direct in-law, or relative relationship of second degree or
closer withtheresponsible persons or managers ofthe Company.		 Yes Yes
The CPA or his/her spouse or minor children have no investment, financial benefit sharing, or
financial loan relationshipwiththe Company.		 Yes Yes
The CPA has completed all financialstatement auditsforthe Company onschedule. Yes Yes
The CPA has providedfinancialand taxconsultationservicesforthe Companyirregularly. Yes Yes
The CPA hashandledno accounts onbehalfofthe Company. Yes Yes
The CPA is not currently employed by the Company to handle regular affairs, not receiving a fixed
salary, andnot serving as a directororsupervisor.		 Yes Yes
The CPA has not served as a director, supervisor, manager, or as a staff member who has a
significantinfluence onthefinancialstatement audit cases; andhasresignedfor less thantwo years.		 Yes Yes
The CPA isnotinvolvedin majordecisions ofthe Company. Yes Yes
The Companyhasnot threatened tofilelegalproceedings against the CPA. Yes Yes
The Company has not threatened to revoke appointment for non-audit cases or force the CPA firm to
accept an inappropriate accounting policyfora specific transaction.		 Yes Yes
The Companyhasnot threatened to terminate the appointment or renewal foraudit cases. Yes Yes
The Company has not exerted pressure on the CPA to improperly reduce the audit work that should
have beenperformedinordertolowerprofessional fees.		 Yes Yes
The Company’s personnel have not oppressed the auditors with professional attitudes to force them
to accept amatterunderdispute.		 Yes Yes
The Companyhas obtained the “confirmation of independence” issued bythe CPA every year. Yes Yes

Note 3: The major issues that concerned the stakeholders, main communication channels and response method are listed as below:

Stakeholders
Major issues		 Main communication channels,
responsemethod andfrequency		 Communication with the
stakeholdersinyear 2021
Employee ‧Economy performance
‧Market image
‧Diversified and equality
‧Work health and safety		 ‧Convene employee welfare committee (irregularly)
‧Hold labor-management meeting (quarterly)
‧Convene occupational safety and health committee
(quarterly)
‧Annouce on the Company’s internal and external
website (irregularly)
‧Convene catering service committee (2~3 months)
‧Compile corporate social responsibility report (yearly)
‧Contact person: Admistration Dept.—Ms. Lo
(E-mail: [email protected])		 ‧Encouraged employees to
appreciate the arts and cultural
performances, and there were
126 people who were subsidized
for this purpose with a total
amount of NT$60 thousand.
‧Subsidized employees for leisure
travel activities with a total of
1,356 people, or an amount of
NT$740 thousand.
Customer ‧Economy performance
‧Purchasing practice
‧Supplier’s environment
evaluation
‧Energy management
‧Waste water and waste
‧Employer-employee
relations
‧Diversified and equality
‧Work health and safety		 ‧Conduct the Customer Satisfaction Survey (yearly)
‧Communicate via e-mail, conference, and audit
(irregularly)
‧Annouce on the Company’s external website
(irregularly)
‧Compile corporate social responsibility report (yearly)
‧Contact person: Global Business Development
Division—Mr. Wu (E-mail: [email protected])		 ‧Excellent performance of
corporate social responsibility
performance (CSR) ranked in the
top 25% of all suppliers reviewed
by EcoVadis, and received the
Silver Medal for CSR
performance.
‧Participated on-line “The Society
for Information Display” and
“Embedded World” to adequately
communicate with customers on-
line.
‧Customer satisfaction acceptance
index reached 4.18 (full mark is
5).
  • 31 -
Stakeholders
Major issues		 Main communication channels,
responsemethod andfrequency		 Communication with the
stakeholdersinyear 2021
Supplier ‧Market image
‧Raw materials
‧Employer-employee
relations
‧Industrial relations		 ‧Conduct supplier evaluation and on-site audit
(irregularly)
‧Annouce on the Company’s external website
(irregularly)
‧Compile corporate social responsibility report (yearly)
‧Contact person: Procurement Division—Mr. Sheng
(E-mail: [email protected])		 ‧Total 245 suppliers has signed
“edtSupplier Quality and
Transportation Agreement”, which
contains responsibility of society
and environment, and compliance
of laws and regulations requested
by the Company. 97.2% of main
suppliers have signed this
agreement.
Government ‧Economy performance
‧Market image
‧Compliance of
environmental
regulations
‧Green gas emission
‧Waste water and waste
‧Water resource
management
‧Employer-employee
relations
‧Work health and safety		 ‧Feedback related data for government’s request
(irregularly)
‧Audit the compliance of regulations
‧Participate related union / association (irregularly)
‧Compile corporate social responsibility report (yearly)
‧Contact person: Admistration Dept.—Mr. Tan
(E-mail: [email protected])		 ‧Participated in the on-line forums
held by the competent authority,
including the Prevention of
Insider-Trading Conference, the
TWSE(Taiwan Stock Exchange)
Corporate Governance
Conference, the Labor Standards
Act Institute, etc.
‧Irregularly cooperated with the
TWSE to check the routine
requirements according to laws
and regulations.
‧Irregularly met the request of the
TWSE to fill in various online
questionnaire.
Stockholder
/ Investor		 ‧Economy performance
‧Market image
‧Waste water and waste
‧Employer-employee
relations
‧Industrial relations
‧Work health and safety		 ‧Hold stockholders’ meeting and investor conference
(yearly)
‧Set up hotline and e-mail of spokesperson
(irregularly)
‧Annouce on the Market Observation Post System
(irregularly)
‧Annouce on the Company’s external website
(irregularly)
‧Compile corporate social responsibility report (yearly)
‧Contact person: Spokesperson—Mr. Hsieh (E -mail:
[email protected]), deputy spokesperson—Mr. Kuo
(E-mail: [email protected]), and stock affairs—
Ms. Liu (E-mail: [email protected])		 ‧Total 36 announcemtnts of
material information in Chinese
and English.
‧Held an investor conference.
‧Received over 20 analysts from
domestic institution.
Community
resident		 ‧Economy performance
‧Market image
‧Waste water and waste
‧Employer-employee
relations
‧Work health and safety		 ‧Communicate via telephone (irregularly)
‧Annouce on the Company’s external website
(irregularly)
‧Compile corporate social responsibility report (yearly)
‧Contact person: Admistration Dept.—Mr. Tan
(E-mail: [email protected])		 ‧A blood donation event and a
charitable event on Moon Festival
Holiday were held. There were
total 96 employees participated
and NT$100 thousand and 407
gifts donated.
‧Sponsored the Eden Social
Welfare Foundation’s 2021
“Believe in Love, Fly Slowly”
charity concert, and donated
NT$50 thousand.

Note 4: Continuing education of directors and managerial officers (including Corporate Governance Officer):

Job title Name Time of
education		 Sponsoring organization Name of course Hours
Director /
President &
CEO		 Wang,
Tai-Kuang		 Sep. 1, 2021
Financial Supervisory
Commission		 The 13rdTaipei Corporate Governance Forum 6
Independent
Director		 Li,
Chi-Cheng		 Sep. 1, 2021
Financial Supervisory
Commission		 The 13rdTaipei Corporate Governance Forum 6
Independent
Director		 Huang, Fu-Di Sep. 1, 2021
Financial Supervisory
Commission		 The 13rdTaipei Corporate Governance Forum 6
Independent
Director		 Huang,
Hui-Ling		 Oct. 19~20,
2021		 Securities and Futures
Institute		 Forum of practices of directors (independent directors
included), supervisors and corporate governance officers		 12
Representative
of Director /
Vice President
& Chairman’s
Special
Assistant /
Corporate
Governance
Officer
Hsieh,
Wen-Hsiung
(Note)		 Sep. 1, 2021
Financial Supervisory
Commission		 The 13rdTaipei Corporate Governance Forum 6
Sep. 15, 2021
Taiwan Digital
Governance Association		 Directors and supervisors responsibility and risk
management seminar		 3
Sep. 28, 2021 The Institute of Internal
Auditors		 How auditors detect financial statement frauds 6
Representative
of Director /
Financial
Executive
Huang,
Hsiu-Wen		 Nov. 12, 2021 Securities and Futures
Institute		 Propaganda for preventing insider trading 2021 3
Dec. 7, 2021 Taiwan Stock Exchange 2021 Cathay Sustainable Finance and Climate Change
SummitForum		 6
Accounting
Supervisor		 Kuo, Kun-He Dec. 20~21,
2021		 Accounting Research and
Development Foundation
Accounting supervisors’ continuing study and
professional training course for issuer, securities firms,
and securities exchanges.		 12

Note: In compliance with the regulation of “corporate governance office” that must attend at least 12 hours of advanced study per year.

  • 32 -

3.4.4 Composition, responsibilities and operations of the Compensation Committee

  • A. Approved by the Company’s Board of Directors on August 4, 2021, independent directors Mr. Li, Chi-Cheng, Ms. Huang, Hui-Ling, and Mr. Hung, Kuang-Te were appointed as members of the 5[th] Compensation Committee. After the board meeting on that day, Mr. Li, Chi-Cheng was mutually recommended by the members as the convener of the committee.

  • B. The responsibility of the Compensation Committee is to evaluate the payment policies and systems of the Company’s directors and managerial officers in a professional and objective position, and makes recommendations to the Board of Directors for its decision making references.

C. Information on Compensation Committee members


references.
C. Information on Compensation Committee members
references.
C. Information on Compensation Committee members
references.
C. Information on Compensation Committee members
references.
C. Information on Compensation Committee members
As of April 19,2022
Position Qualifications
Name
Professional qualifications
and experience		 Independence analysis Number of other
public companies at
which the person
concurrently serves
as compensation
committee member
Independent
Director
(Convener)		 Li, Chi-Cheng Please refer to “Disclosure
of information regarding the
professional qualifications
and experience of directors
and the independence of
independent directors”(page
13 in this report).		 The independent director or their spouse or any relative within the
second degree did not serve as a director, supervisor, or employee
of the Company or any of its affiliates.
The independent director or their spouse or any relative within the
second degree (or through nominees) did not held any share of
the Company.
The independent director or their spouse or any relative within the
second degree did not serve as a director, supervisor, or employee
of any company having a specified relationship with the Company
(see Article 6, paragraph 1, subparagraphs 5 to 8 of the
Regulations Governing the Appointment and Exercise of Powers
by the Remuneration Committee of a Company Whose Stock is
Listed on the Taiwan Stock Exchange or the Taipei Exchange).
Not a professional individual, sole proprietor, partner, owner of a
company or institution, director, supervisor, manager or a spouse
thereof of a sole proprietorship, partnership, company, or institution
providing auditing or services including commercial, legal,
financial, accounting or consultation services to the Company or its
related companies, so did not receive any pay from the Company
or its related companies.		 0
Independent
Director		 Huang, Hui-Ling 0
Other Hung, Kuang-Te Once worked at Calderys
Taiwan Co., Ltd. as factory
manager and manager of
export dept. more than 15
years, and has experience
required for the Company’s
business.

0

D. Operation of the Compensation Committee

  • (1) The Company’s Compensation Committee has a total of 3 members.

  • (2) The term of the current members is from July 26, 2021 to July 25, 2024. The number of Compensation Committee meetings held in the most recent fiscal year was: 3 (A). The attendance by the members was as follows:


follows:
Title Name No. of
meetings
attended in
person(B)		 No. of
meetings
attended by
proxy		 In-person
attendance
rate (%)
【B/A】		 Remarks
Convener Li,Chi-Cheng 4 0 100% Re-elected on August 4,2021
Member Hung,Kuang-Te 4 0 100% Re-elected on August 4,2021
Member Huang,Fu-Di 2 0 100% Resigned on August 4,2021
Member Huang,Hui-Ling 2 0 100% Newlyelected on August 4,2021
Other information required to be disclosed:
1. If the board of directors does not accept, or amends, any recommendation of the Compensation Committee,
specify the board meeting date, meeting session number, content of the recommendation(s), the outcome of
the resolution(s) of the board of directors, and the measures taken by the Company with respect to the
opinions given by of the Compensation Committee (e.g., if the salary/compensation approved by the board is
higher than the recommendation of the Compensation Committee, specify the difference(s) and the reasons):
None.
2. With respect to any matter for resolution by the Compensation Committee, if there is any dissenting or
qualified opinion of a committee member that is on record or stated in writing, specify the Compensation
Committee meeting date, meeting session number, content of the motion, the opinions of all members, and
the measures taken by the Company with respect to the members’ opinion: None.

  • 33 -

  • The contents of motion, resolutions, and the Company’s responses to Compensation Committee were listed as below:

as below:
The dates of the
meetings and sessions		 Contents of motion Resolutions The Company’s responses
March 10, 2021
9thof 4thsession		 To discuss the distribution of 2020
employees’ compensation and
remuneration for directors and supervisors.		 Passed unchanged by
all members present.		 Submitted to the Board meeting and
passed unchanged by all directors
present.
To discuss remuneration adjustments of
2021 for the Chairman and managerial
officers.		 Passed unchanged by
all members present.		 Submitted to the Board meeting and
passed unchanged by all directors
present excluding 4 directors
avoiding of motions in conflict of
interest.
May 4, 2021
10thof 4thsession		 To start the “Employee Stock Ownership
Trust”.		 Passed unchanged by
all members present.		 Submitted to the Board meeting and
passed unchanged by all directors
present.
August 12, 2021
1thof 5thsession		 To discuss the distribution details of 2020
employees’ compensation and
remuneration for directors and supervisors.		 Passed unchanged by
all members present.		 Submitted to the Board meeting and
passed unchanged by all directors
present.
November 4, 2021
2thof 5thsession		 To review of all remunerations of 2022 for
directors and managerial officers.		 Passed unchanged by
all members present.		 Submitted to the Board meeting and
passed unchanged by all directors
present excluding 3 directors
avoiding of motions in conflict of
interest.
To discuss year-end remunerations and
bonuses to the Chairman and managerial
officers for 2021.		 Passed unchanged by
all members present.		 Submitted to the Board meeting and
passed unchanged by all directors
present excluding 3 directors
avoiding of motions in conflict of
interest.

3.4.5 Promotion of sustainable development – implementation status and deviations from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and the reasons

Item Implementation status Implementation status Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
1. Has the Company established a
governance framework for
promoting sustainable
development, and established
an exclusively (or concurrently)
dedicated unit to be in charge of
promoting sustainable
development? Has the board of
directors authorized senior
management to handle related
matters under the supervision of
the board?		 The Company’s “CSR Committee” was
established in 2015 and renamed to the
“Sustainable Development Committee”
in 2022 with President & CEO serving as
the highest principal to irregularly hold
meetings with ranking executives of
different fields from several departments,
including Finance, Administration,
Industrial Safety & Business Planning,
Procurement, and the Staff Benefits
Committee so as to integrate resources
of each department, promote various
sustainable development operations,
and map out a medium and long-term
sustainable development plan
accordingly. The duties of the Committee
are as following:
A. Set the goal and plan for sustainable
development of the Company.
B. In the beginning of every year,
propose the execution plan of the
year on sustainable development and
the execution result of the previous
year to the Board of Directors.
C. Identify the sustainable issues need
to be concerned, then set the
adaptive strategies.
D. Consolidate comments of the
stakeholders and assist in
communication with them.		 None.
  • 34 -
Item Implementation status Implementation status Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
E. Compile the “Sustainability Report”
(Before 2020, it was called the
“Corporate Social Responsibility
Report” and was made public on the
Company’s website. The
Sustainability Report for 2021 is
expected to complete in the third
quarter of 2022.)
At the beginning of each year, the
Sustainable Development Committee
holds a meeting to discuss and proposes
the implementation plan for the current
year. It then summarizes the
implementation results after the end of
the year, and reports the implementation
results of sustainable development and
future work plans to the Board of
Directors at least once per year. The
most recent report to the Board of
Directors was made on March 10, 2022.
Directors offered suggestions and
guidance on the implementation of the
Company’s sustainable development
and future strategies, cared about the
implementation progress, and urged the
management team to make adjustments,
if needed.
2. Does the Company conduct risk
assessments of environmental,
social and corporate
governance (ESG) issues
related to the Company’s
operations in accordance with
the materiality principle, and
formulate relevant risk
management policies or
strategies?		 The information disclosed by the
Company has covered the performance
of sustainable development in the main
operating bases for the whole year of
2021. The risk assessment boundary
was mainly based on the Company,
including all existing bases in Taiwan,
mainland China, other parts of Asia, the
Americas and Europe, and based on the
relevance to the operation of the industry
and the degree of influence on major
issues. Thus, the subsidiary “Dong Guan
Emerging Display Ltd.” was included in
the category.
According to the materiality principle of
the “Sustainability Report”, the
Company’s Sustainable Development
Committee conducts analyses and
communicates with internal and external
stakeholders. Through the review of
domestic and foreign research reports,
literature and the integration of
evaluation data from various
departments and subsidiaries, it
evaluates the material ESG issues and
formulates effective identifications,
measurement, evaluation, supervision,
and control of risk management policies.
It also takes specific action plans in
order to reduce the impact of related
risks. The detailswerelisted asNote1.		 None.
  • 35 -
Item Implementation status Implementation status Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
3. Environmental issues
(1) Has the Company set an
environmental management
system designed to industry
characteristics?
(2) Does the Company
endeavor to use energy
more efficiently and to use
renewable materials with low
environmental impact?
(3) Has the Company evaluated
the potential risks and
opportunities posed by
climate change for its
business now and in the
future and adopted relevant
measures to address them?
(4) Did the Company collect
data for the past two years
on greenhouse gas
emissions, volume of water
consumption, and the total
weight of waste, and
establish policies for
greenhouse gas reduction,
reduction of water
consumption, or
management of other
wastes?


To do the best of corporation
responsibilities for the environmental
protection and caring for employee’s
safety and health, the Company has set
up an environmental management
system on 2004 in accordance with
requirements in ISO14001. The
Company was certified by the ISO14001
on November 4, 2005, then certified by
the ISO14001 2015 revision on 2017
(validity period is from October 22, 2020
to October 21, 2023). Includes RoHS
cleaner production in IECQ QC080000
system on 2006, so it can set up goals
for sustainable environment and review
regularly.
The Company has introduced energy-
saving equipment in the office, used LED
lighting fixtures with power-saving
marks, and specified upper temperature
limits for air-conditioning equipment. The
detailed information about energy usage
status and efficiency improving plan will
be disclosed on the Company’s “2021
Sustainability Report”.
Ranked as the Company’s highest
organization for climate change
management, the Sustainable
Development Committee entitles
President & CEO as the top leader.
According to the framework of the TCFD
proposal published by the Financial
Stability Board, the committee assesses
the risks and opportunities of climate
change to the Company, and takes
measures to respond to related issues. It
also reviews the Company’s climate
change strategies and goals, manages
climate change risks/opportunities/
actions, and reviews the implementation
status and discusses future plans every
year, and a full assessment is restarted
every three years thereafter. Details are
disclosed in the Company’s
Sustainability Report 2021.
The Company has collected statistics on
the greenhouse gas emission, water
consumption and total waste weight of
the main operating bases - Taiwan
headquarter and Dong Guan factory in
the past two years, and formulated
relevant management policies. Details
are disclosed in the Company’s
Sustainability Report 2021. An overview
is as follows:
None.
None.
None.
None.
  • 36 -
Item Implementation status Implementation status Implementation status Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
A. Greenhouse gas: The greenhouse gas
emissions of Scope 1 and Scope 2 in
2021 and 2020 are shown in the table
below. Most of the emissions come
from electricity emissions in Scope 2,
accounting for over 99% of the
emissions. Statistics of Scope 3 is not
yet available for the moment.
Item/Year
2021
2020
Scope 1(MT)
86
48
Scope2(MT)
13,819
13,967
Total
13,905
14,015
KgCO2e/pcs
1.17
1.29
The average annual carbon saving
rate of the Taiwan headquarter and
Dong Guan factory in the last three
years was 4.28% and 0.69%,
respectively. In 2021, the targets were
set at over 2.2% and 0.55%, and all
were achieved. Specific measures
taken for the reduction include closing
the exhaust circulating water motor on
holidays, replacing and updating air
compressors and vacuum machines,
replacing LED lamps in warehouse
lighting, and adding timers to toilet
exhaust windmills. Its electricity
consumption totaled 22,580 kilowatt-
hours in 2021, and 1,292 kilowatt-
hours of electricity were saved after
the implementation of the above
measures, representing a power
saving rate of 5.41%. However, due to
different sales portfolio, the total
electricity consumption in 2021 was
only a little bit lower than 22,823
kilowatt-hours in 2020.
Based on 2019, both of Taiwan
headquarter and Dong Guan factory
set targets to achieve an average
annual electricity saving rate and an
average carbon saving rate of over
2.5% and 0.65% by 2024. (The
average annual carbon saving rate is
expected to increase by 0.5% and
0.15%).
B. Water consumption: The statistical
water consumption in 2021 and 2020
is shown as follows.
Item / Year
2021
2020
Total water consumption
(MT)
301,220 328,327
The water consumption per
thousand units of output
(MT/Kpcs)
25.37
30.14

Item / Year 2021 2020
Total water consumption
(MT)		 301,220 328,327
The water consumption per
thousand units of output
(MT/Kpcs)
25.37		 30.14
  • 37 -
Item Implementation status Implementation status Implementation status Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
The average water saving rate of
Taiwan headquarter and Dong Guan
factory was 1.24% and 0.27% in the
last three years, respectively. The
targets set in 2021 were over 0.36%
and 0.22%, and all were achieved.
Specific reduction measures taken
were replacement of the membrane
tube of the pure water system,
installation of water savers in the
dormitory toilets, and replacement of
energy-saving faucets. The total water
consumption was 301,220 metric tons
in 2021, and the water consumption
per thousand units of output was
25.37 metric tons/Kpcs. After the
implementation of the above
measures, 1,708 metric tons of water
was saved, with a water saving rate of
1.14%. Due to different sales portfolio,
the water consumption in 2021 and
the water consumption per thousand
units of output was much lower than
2020.
Based on 2019, Taiwan headquarter
and Dong Guan factory set targets to
hit an average annual water saving
rate of over 0.4% and 0.25%,
respectively by 2024. (The average
annual water saving rate target is
expected to increase by 0.05%).
C. Wastes: The statistical wastes in 2021
and 2020 are shown as follows.
Item/Year
2021
2020
Hazardouswaste (MT)
32
31
Non-hazardouswaste (MT)
192
194
Total
224
225
Kg/perstandardworkinghour
0.23
0.26
Taiwan headquarter and Dong Guan
factory turned out 0.22 kilograms and
0.29 kilograms of wastes per standard
working hour, respectively in 2021.
The set targets were 0.44 kilograms
and 0.34 kilograms or below, and all
were achieved. Specific measures
taken for the reduction include a
continuous improvement of production
processes, the conversion of products
from traditional LCD modules to touch
screens, the reduction of raw material
uses, thus relatively reducing the
amount of wastes. In 2021, the wastes
totaled 224 metric tons, or an
equivalent of 0.23 kilograms per
standard working hour. After measures
above were adopted, the waste
turnout per standard working hour
lessened by 11.54%, compared with
that of 2020. Thus, the total wastes
and each standard working hour
lowered in 2021, compared with a
yearearlier.





Item/Year 2021 2020
Hazardouswaste (MT) 32 31
Non-hazardouswaste (MT) 192 194
Total 224 225
Kg/perstandardworkinghour
0.23		 0.26
Taiwan headquarter and Dong Guan
factory turned out 0.22 kilograms and
0.29 kilograms of wastes per standard
working hour, respectively in 2021.
The set targets were 0.44 kilograms
and 0.34 kilograms or below, and all
were achieved. Specific measures
taken for the reduction include a
continuous improvement of production
processes, the conversion of products
from traditional LCD modules to touch
screens, the reduction of raw material
uses, thus relatively reducing the
amount of wastes. In 2021, the wastes
totaled 224 metric tons, or an
equivalent of 0.23 kilograms per
standard working hour. After measures
above were adopted, the waste
turnout per standard working hour
lessened by 11.54%, compared with
that of 2020. Thus, the total wastes
and each standard working hour
lowered in 2021, compared with a
yearearlier.
  • 38 -
Item Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
Based on 2019, Taiwan headquarter
and Dong Guan factory set targets to
reach 0.42 kilograms and 0.33
kilograms or below of wastes per
standard working hour by 2024. (The
waste output target for each standard
working hour is reduced by 0.03% and
0.02%,respectively).
4. Social issues
(1) Has the Company
formulated relevant
management policies and
procedures in accordance
with relevant laws and
regulations and international
human rights conventions?
(2) Has the Company
established and
implemented reasonable
employee welfare measures
(include salary/
compensation, leave, and
other benefits), and are
business performance or
results appropriately
reflected in employee
salary/compensation?
The Company strictly observes all local
laws and regulations in each global
location, and sets up human rights policy
in reference to the recognized standards
such as Universal Declaration of Human
Rights (UDHR), International Labour
Organization (ILO), and Ethical Trading
Initiative (ETI). This policy applies to all
labors including temporary workers,
immigrated workers, students,
contractors, direct hired and any other
types of labors. It covers seven sections:
freedom of job choosing, young workers,
working hour, wages and benefits,
humane treatment, non-
discrimination/non-harassment, and
freedom of association. The Company
has minutely disclosed the human-rights
policy, human-rights assessment, human
rights risk mitigating measures and other
related educational training on the
Company’s website.
The Company has complied with the
“Labor Standards Act” and the relevant
laws and regulations to establish and
implement the provisions such as the
Codes for Salary, Codes for
Performance Assessment, and Codes
for Work Attendance. There is an
Employee Welfare Committee with an
annual expenditure of more than NT$5
million to provide employees with various
welfare measures that are reasonable or
even better than those stipulated by laws
and regulations, including employee
travel subsidies, cultural appreciation
subsidies, birthday gift coupons,
marriage allowances, maternity
allowances, and funeral allowances, etc.
In addition, there is a free health check
program to take care of the health of
employees. Details are disclosed in the
Company’s Sustainability Report 2021.
The Company pays attention to
workplace diversity and equality, insists
on equal pay and equal promotion for
men and women, and maintains more
than 15% of female supervisor positions.
In 2021, the average proportion of
female employees was 64.12%, and the
average proportion of female supervisors
was15.79%.



None.
None.
  • 39 -
Item Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
(3) Does the Company provide
employees with a safe and
healthy working
environment, and implement
regular safety and health
education for employees?		 In an attempt to attract and keep
outstanding talented employees to share
the operating results, the Company has
combined with various business
objectives and personal performances
and reflected the achievement of actual
operating results in the remuneration of
employees through a comprehensive
salary structure, including a fixed
monthly salary and performance bonus,
KPI quarterly bonus, year-end bonus,
and other variable salaries. Among this,
the monthly salary is mainly awarded by
the past experience of employees,
abilities possessed, and job values. The
performance bonus is granted according
to the work contribution and absence
status of individuals in each month. KPI
quarterly bonus is awarded according to
the achievement of department goals,
and year-end bonus is awarded
according to the Company’s operating
performances and individual annual
assessment performance of employees.
In addition, pursuant to Article 22-1 of
the Company’s “Articles of
Incorporation”, the Company shall
allocate 5 percent or more as
employees’ compensation to share the
profit results with the employees when
there is profit for the current year.
Meanwhile, the salary is adjusted every
year according to the profit level. As far
as the Taiwan region is concerned, the
average salary increase for both
supervisory and non-supervisory
positions ranged between 3% and 4% in
2021, with the highest individual salary
increase standing at 15.7% during the
same year.
The Company has established the
“Industrial Safety and Business Planning
Department” to regularly review the
implementation of environmental, safety,
and fire prevention of all internal
divisions. Please refer to “5.5.4
Protection measures for the work
environment and personal safety of
employees” in this report. “Regulations
on Employee Physical Examination
Management” and “Regulations for
Emergency Response Procedures” have
been adopted to regularly holds physical
examinations for employees and to
minimize damage in the event of an
emergency situation. The Company
infirmary is equipped with on-site nurses
and occupational doctors to provide the
appropriatemedicalassistance.		 None.
  • 40 -
Item Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
(4) Has the Company
established effective career
development training
programs for employees?
(5) Does the Company comply
with the relevant laws and
international standards with
regards to customer health
and safety, customer privacy,
and marketing and labeling
of products and services,
and implement consumer
protection and grievance
policies?

The work safety education, training, and
publicity for employees were 954 people
/2,002 hours and 848 people/1,753
hours in 2021 and 2020, respectively.
In 2021, there were three occupational
accidents, involving three employees or
accounting for 0.35% of the total number
of employees at the end of same year.
The frequency of incapacitating injuries
was 0.41, up from 0.27 in 2020. After a
thorough review, a number of
improvement measures were formulated,
including installing anti-slip stickers on
the stairs to prevent people from
slipping, adjusting the angle and
direction of the air shower door to avoid
collisions, and using trolleys to carry
heavy objects to avoid crushing by falling
objects, etc. so as to ensure the safety of
colleagues during work.
The Company’s Taiwan factory has
obtained ISO45001:2018 certification for
occupational safety and health. The
latest certificate is valid from February
23, 2021 to February 22, 2024.
The “Codes for Employee Education and
Training” have been adopted to offer
complete functional training for
supervisors and employees at all levels,
including new employee training,
management training, professional
functional training, and quality promotion
training, etc. Internal speeches lectured
by senior staff are irregularly held to
share experiences and elevate
knowledge. Employees are encouraged
to participate in education and training
courses organized by external
institutions to gain new knowledge,
enhance skills, and continue to grow
through multiple learning methods. In
2021, a total of 865 people underwent
career training, with a total of 2,923
hours.
The Company complies with related laws
and regulations as well as quality
certifications such as ISO9001 and IECQ
QC080000. The use of environmentally
hazardous substances is prohibited in all
company products. Restrictions of
dangerous substances and other
hazardous substances follow EU
standards for product regulation to
suppress the environmental and social
harm caused in the product life cycle. To
ensure the consumer rights of clients,
company products are all passed by
quality inspection before being shipped
to clients.




None.
None.
  • 41 -
Item Implementation status Deviations from the
Sustainable Development
Best Practice Principles
for TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
(6) Has the Company
formulated supplier
management policies
requiring suppliers to comply
with relevant regulations on
issues such as
environmental protection,
occupational safety and
health, or labor rights, and
what is the status of their
implementation?		 The Company has signed employment
contracts with all employees, the
contents of which include the employee’s
confidentiality agreement at work in
order to protect customer privacy and
intellectual property rights.
“Codes for the Management of External
Communication” have been adopted to
improve customer service satisfaction
levels and regulate the procedures of
product complaint, suggestions or
dissatisfaction from clients and take care
of the problems encountered by clients.
In addition, a customer satisfaction
survey is conducted annually to
understand the level of affirmation for the
Company from clients as well as to
receive opinions and issues from clients
to understand the gap between customer
needs and expectations. This is used as
the basis for improving the quality
system, thus achieving a more
harmonious relation between the
Company and its client and a win-win
situation.
The Company has adopted “Codes for
Management of Contractors” and “edt
Social and Environmental Responsibility
(SER) Code of Conduct”, which contains
labor rights, occupational safety and
health, environment, corporate ethics,
prohibitions of conflict minerals, anti-
corruption, etc.
Before interacting with suppliers, the
Company will conduct evaluations based
on “Codes for Management of
Contractors” and assess the
environmental and social impact of the
supplier. Once qualified, the materials
supplier must sign a “edtSupplier
Quality and Transportation Agreement”
and commit to strictly follow request from
“edtSocial and Environmental
Responsibility (SER) Code of Conduct” /
Responsible Business Alliance(RBA)
Code of Conduct / Responsible Minerals
Initiative(RMI) to jointly preserve human
rights and protect the environment. Total
245 suppliers (including 97.2% of main
suppliers) has signed “edtSupplier
Quality and Transportation Agreement”
as of December 31,2021.



None.
  • 42 -
Deviations from the
Implementation status Sustainable Development
Item Best Practice Principles
for TWSE/TPEx Listed
Yes No Summary description Companies and the
reasons
5. Does the Company refer to The Company’s “Sustainability Report” None.
international reporting standards (Before 2020, it was called the
or guidelines when preparing its “Corporate Social Responsibility Report”)
sustainability report and other was compiled in accordance with GRI
reports disclosing non-financial Standards set up by Global Reporting
information? Does the company Initiative(GRI), but was not verified by
obtain third party assurance or external certification institutions yet.
certification for the reports
above?
6. If the Company has adopted its own sustainable development best practice principles based on the
Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies, please describe any
deviation from the principles in the Company’s operations: “Sustainable Development Practice Principles” has
been adopted and continuously revised. There is no significant departure between implementation and the
principles.

  1. Other important information to facilitate better understanding of the Company’s promotion of sustainable development: In response to environmental protection and reduce the waste of resources, the Company requests employees to use digital documents whenever possible, use tablets instead of paper in the cleanroom, reuse the blank backside of obsolete documents, and also encourages employees to bring their own tableware. The Company regularly gives back to the public. Activities in 2021 were as follows:

  2. (1) The Company was actively involved and provided free gifts in a blood donation event initiated by neighborhood companies. 21 employees had participated in blood donation and 407 gifts were sponsored. By paying it forward, the Company expect to attract more people sharing great love to help others.

  3. (2) Sponsored the Eden Social Welfare Foundation’s 2021 “Believe in Love, Fly Slowly” charity concert, and donated NT$50 thousand to help raise funds for disadvantaged children’s services.

  4. (3) The Company held the “Love in Mid-autumn Festival, Work together for epidemic prevention” public welfare activity, calling on 75 colleagues to raise a total of NT$100 thousand. The donation was granted to the Social Affairs Bureau of Kaohsiung City Government under the designation of “Special Fund of Covid-19 Epidemic Prevention”, looking forward to help Kaohsiung City promoting the work of epidemic prevention.

  5. (4) Participated in the “Thank You Japan”, a benevolence campaign organized by the Taiwan Heritage Foundation, and donated NT$50 thousand to express gratitude to the Japanese government for its decisive donation of vaccines.

Note 1: The Company set up the related risk management policies according to those assessed risks. The details were listed as below:

Major issues Risk
assessment
items		 Risk
management
department		 Risk description Risk management policies
Environment Climate
change and
environment		 Industrial Safety
& Business
Planning /
Procurement		 Environmental
pollution or
energy waste		 Reduce greenhouses gas and lower energy usage continuously.
Has set up the IECQ QC080000 hazardous substance management
system, thus complying with laws and international specifications.
Use low-toxicitymaterials so as to meet RoHS standards.
Industrial Safety
& Business
Planning		 Occurrence of
climate disasters		 Both “Emergency Response Management Measures” and “Disaster
Recovery Plan Management Measures” are available to quickly respond
to emergencies and effectively perform after-treatments. This move
expects to minimize personnel injuries, finance, and equipment losses at
a lowest level.
An all-round emergency escape drill in each factory area is held once
per year. Many occupational safety and health education trainings are
also implemented to make employees becoming more familiar with
emergencyresponses and enhance theirpost-disaster capabilities.
  • 43 -
Major issues Risk
assessment
items		 Risk
management
department		 Risk description Risk management policies
Society Occupational
safety		 Industrial Safety
& Business
Planning /
Administration /
Procurement		 Unsafe working
conditions or
endangered
employee health		 Certified for ISO45001: 2018 Occupational Safety and Health
Management System.
The “Occupational Safety and Health Committee” is established with
President & CEO serving as its chairman. At least one time per quarter,
this committee will discuss on environmental safety and health issues,
and map out relevant projects considerably.
Promote the “Responsible Business Alliance (RBA) Code of Conduct”
and entrust professional third-parties for verification and auditing to
commit to the health and safety of employees.
Arrange safety and health training courses for both new staff and in-
service employees, an effort to increase the awareness of hazard
prevention and bring down the occurrence of industrial safety accidents.
In addition to the regular employee health check every year, irregular
trainings, and/or announcements are implemented to promote the
awareness of employee health. On a regular basis, expertise doctors are
stationed at the factoryto offer health consultancies.
Corporate
governance		 Legal risk Audit Office /
Finance / Legal
Affairs & Market
/ Administration /
Industrial Safety
& Business
Planning /
Employee
Welfare
Committee		 Illegal
punishment		 Legal personnel to provide legal consultation and handling advices on
internal systems, compliances with laws/regulations, commercial
disputes, and intellectual property rights management.
A “Codes for Compliance with Laws/Regulations” is implemented so that
the Company’s three business fields in production, sales, and
management is complied with the Company’s operation-related laws and
regulations.
Both “Antitrust and Fair Competition Principles” and “Procedures for
Preventing Insider Trading” are formulated for employees to specifically
regulate precautions in performing business and trading stocks of the
Company.
Legal Affairs &
Market		 Transaction risk The “Codes for the Use of Seals” is made to control the signing of
various types of contracts and related risks, and stipulate the application,
use, storage, and cancellation of seals to reduce overall legal risks of the
Company.
Administration Personal
information
leakage		 The “Codes for Personal Data Protection” is formulated aiming to
standardize the planning, implementation, operation, supervision,
inspection, maintenance, and improvement of the personal information
management system.
Audit Office Improper
employee
behaviors		 Both “Ethical Management Principles” and “Codes for Ethical
Management” are implemented to ensure the values of ethical corporate
management, and prevent employees from engaging in improper
behaviors,thus improvingthe entire corporategovernance.
Company
image		 Chairman’s
Office		 Bad company
image		 Build up a good crisis management and response mechanism during the
ordinary days, and in the very first time activate the response system
needed to cope with any operational risks that may affect the Company’s
image. The spokesperson speaks to the outside world in an unified
manner, or clarifies false information through significant information
platforms, as well as to maintain the Company’s image and
communicate well with all stakeholders.
  • 44 -

3.4.6 Ethical corporate management – implementation status and deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons

Evaluation item Implementation status Implementation status Implementation status Deviations from the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
1. Establishment of ethical
corporate management policies
and programs
(1) Does the Company have an
ethical corporate
management policy
approved by its Board of
Directors, and bylaws and
publicly available documents
addressing its corporate
conduct and ethics policy
and measures, and
commitment regarding
implementation of such
policy from the Board of
Directors and the top
management team?
(2) Whether the Company has
established an assessment
mechanism for the risk of
unethical conduct; regularly
analyzes and evaluates,
within a business context,
the business activities with a
higher risk of unethical
conduct; has formulated a
program to prevent unethical
conduct with a scope no less
than the activities prescribed
in Article 7, paragraph 2 of
the Ethical Corporate
Management Best Practice
Principles for TWSE/TPE
Listed Companies?
(3) Does the company clearly
establish and implement
operating procedures, code
of conduct, penalties for
violation and complaint
system in the prevention
programs against unethical
behaviors as well as
reviewed and revised the
aforementioned programs
regularly?

The Company has adopted “Ethical
Management Principles” and “Codes for
Ethical Management” which were
passed by the Board of Directors, and
disclosed those via the Market
Observation Post System and the
Company’s website. In addition, the
Company has compiled the
“Sustainability Report” (Before 2020, it
was called the “Corporate Social
Responsibility Report”) each year since
2014 to highlight the Company’s ethical
corporate management and contribution
efforts for the stakeholders. The
Company’s business philosophy is
“quality, honor, sincerity, creativity”. All
members of the Board of Directors and
senior management are honest and
responsible for supervision to create a
sustainable business environment.
The Company has established the
assessment system for the risks of
unethical behaviors, and adopted
“Codes for Ethical Management” to
prohibit those behaviors in Article 7,
Paragraph 2 of “Ethical Corporate
Management Best Practice Principles
for TWSE/TPEx Listed Companies”.
Both a concrete reporting and rewards
system has been regulated in above
codes. In addition, the Company has
established an effective accounting
system and internal control system with
internal auditors periodically verifying
the compliance of the aforementioned
systems for implementing ethical
management.
The Company has established the
“Codes for Ethical Management” and
disclosed it on the Company’s website.
The codes provide the operating
procedures, code of conduct, penalties
for violation, and whistleblowing
methods; fully regulated employee
business operation precautionary items;
and strengthened education, training,
and guidance for new employees. In
addition, the need for revision is
regularly reviewed based on the actual
company operation status and the
revision of the “Ethical Corporate
Management Best Practice Principles
for TWSE/TPEx Listed Companies”.		 None.
None.
None.
  • 45 -
Evaluation item Implementation status Deviations from the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
2. Ethical Management Practice
(1) Does the Company assess
the ethics records of those it
has business relationships
with and include ethical
conduct related clauses in
the business contracts?
(2) Has the Company set up a
dedicated unit to promote
ethical corporate
management under the
Board of Directors, and does
it regularly (at least once a
year) report to the Board of
Directors on its ethical
corporate management
policy and program to
prevent unethical conduct
and monitor their
implementation?
The Company embraces the principle of
integrity in trading with a business
partner. The Company will look into the
integrity status of the partner and
include the compliance of ethical
corporate management in a contract,
which will include the following:
A. If either party involves with any
unethical behaviors in business
activity, the other party may
unconditionally terminate the contract
at anytime.
B. If either party discovers any
personnel violating contract articles
about prohibitions of commission,
brokerage, or any other benefit, it
shall inform the other party of the
personnel’s identification, methods of
offer, promise, request or receive,
and the amount or other benefit.
Relevant evidence shall be provided
and cooperate on the investigation. If
it causes damage in one party, the
other party shall request for
compensation for the damage.
The Company has established the
concurrent unit - “Business Integrity
Promotion Team” responsible for
promoting of ethical corporate
management affiliated to the Board of
Directors, which should help directors
and management level to set up the
ethical corporate management policy
and prevention plan, and monitor their
implementation. This unit should also
report the implementation status to the
Board of Directors at least once a year.
The recent proposal to the Board
meeting was on March 10, 2022. The
implementation status of ethical
corporate management policies are
listed in Note 1 and disclosed on the
Company’s website.
None.
None.
  • 46 -
Evaluation item Implementation status Deviations from the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
(3) Has the Company
established policies to
prevent conflict of interests,
provided appropriate
communication and
complaint channels, and
properly implemented such
policies?
(4) Does the Company have
effective accounting and
internal control systems in
place to enforce ethical
corporate management?
Does the internal audit unit
follow the results of unethical
conduct risk assessments
and devise audit plans to
audit compliance with the
systems to prevent unethical
conduct or hire outside
accountants to perform the
audits?
(5) Does the company provide
internal and external ethical
corporate management
training programs on a
regular basis?


Mutual reviews between departments
and multi-layered decision approval is
used in the internal control system to
avoid malpractice and intentional
manipulation. The Company has
adopted “Codes for Ethical
Management” to regulate the methods
of informing unethical behaviors and
related handling procedures. To prevent
interest conflict, the Company has
established the channel of “improper
conduct complaint” on the official
website externally for the manu-
facturers, customers and employees.
Internally, the Administration Dept. and
Audit Office of the Company provided
hotline, e-mail and special mailbox as
the statement channels for the
employees. However, no event of
improper conduct was complained in
2021.
The Company has established a
complete and effective control
mechanism for the accounting and
internal control systems to target
business activities and operating
procedures with high potential risks of
unethical behaviors. The internal
auditors shall list high-risk operations as
the top audit items in the annual audit
plan according to the risk assessment in
order to strengthen preventive
measures, and regularly report the
implementation status of audit plan to
the Board of Directors. In addition, the
Company and our key subsidiaries must
perform internal control self-assessment
each year to examine the internal
control system design and
implementation effectiveness.
To implement ethical corporate
management, the Company has held
“Responsible Business Alliance (RBA)
Code of Conduct” training internally. The
content includes ethical management,
no dishonest profit, identification
protection, retaliation preventing, and so
on. In 2021, 929 trainees participated
the training with 1,858 training hours in
total. In the part of law safety, it opened
a total of 47 classes.
None.
None.
None.
  • 47 -
Evaluation item Implementation status Implementation status Implementation status Deviations from the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
3. Implementation of complaint
procedures
(1) Has the Company
established specific whistle-
blowing and reward
procedures, set up
conveniently accessible
whistle-blowing channels,
and appointed appropriate
personnel
specificallyresponsible for
handling complaints received
from whistle-blowers?
(2) Has the Company
established standard
operation procedures for
investigating the complaints
received, follow-up
measures taken after
investigation, and
mechanisms ensuring such
complaints are handled in a
confidential manner?
(3) Has the Company adopted
proper measures to protect
whistle-blowers from
retaliation for filing
complaints?


The Company has adopted
“Regulations on Reflecting Employee
Complaint and Opinion” and placed a
comment box in the cafeteria.
Employees may fill a complaint via the
comment box, e-mail to the
Administration Dept. or directly notify
the Audit Office, and provide supporting
information. Besides, the Company has
established the channel of “improper
conduct complaint” on the official
website externally for the manu-
facturers, customers and employees.
“Codes for Ethical Management”
regulate the methods of informing
unethical behaviors and related
handling procedures. Investigations will
be carried out after notification is
received by the Audit Office. If unethical
behaviors have been verified, the matter
will be reported to the Chairman to
decide on the appropriate measures.
Penalties for violation of ethical
management have been stated in the
“Codes for Ethical Management” and
“Employee Handbook”.
In the “Codes for Ethical Management”,
the Company has regulated all records
about the reception of whistleblowing,
investigation process, investigation
results, and related documentations
shall be kept by the Audit Office. If a
whistleblowing case has been verified,
the relevant units of the Company will
review the relevant internal control
system and operating procedures, and
propose improvement measures to
prevent the same behaviors from
reoccurring. Moreover, the Audit Office
shall report the whistleblowing cases, its
handling methods, and the subsequent
review and improvement measures to
the Board of Directors. In addition, all
participating personnel must sign a
“Declaration of Confidentiality” to keep
confidential the whistleblowers and their
reports.
The Company has adopted a zero
tolerance policy for retaliation. The
whistleblowers and their reports will be
kept confidential to protect the
whistleblowers from any retaliation due
to reporting unethical behaviors. The
Company will follow-up regularly with
whistleblowers whose identities have
been disclosed and respond to situation
that are reasonably suspected to be
retaliation.		 None.
None.
None.
  • 48 -
Evaluation item Implementation status Implementation status Implementation status Deviations from the Ethical
Corporate Management
Best Practice Principles for
TWSE/TPEx Listed
Companies and the
reasons
Yes No Summary description
4. Strengthening information
disclosure
Does the Company disclose its
ethical corporate management
policies and the results of their
implementation on its website
and the Market Observation Post
System (MOPS)?
“Ethical Management Principles” and
“Codes for Ethical Management” have
been disclosed on the Company’s
website and the MOPS. Also, the
implementation status of Business
Integrity Promotion Team has been
disclosed onthe Company’swebsite.		 None.
5. If the Company has adopted its own ethical corporate management best practice principles based on the
Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, please describe
any deviations between the principles and their implementation: “Ethical Management Principles” and “Codes
for Ethical Management” have been adopted and continuously revised. There is no significant deviation
between implementationand the principles.
6. Other important information to facilitate a better understanding of the status of operation of the company’s
ethical corporate management policies (e.g., the company’s reviewing and amending of its ethical corporate
management best practice principles): The Company irregularly revises related ethical management
regulations according to the latest laws and regulations as well as the state of implementation. The recent
revision was “Ethical Management Principles” revised on November 4,2021.
  1. Other important information to facilitate a better understanding of the status of operation of the company’s ethical corporate management policies (e.g., the company’s reviewing and amending of its ethical corporate management best practice principles): The Company irregularly revises related ethical management regulations according to the latest laws and regulations as well as the state of implementation. The recent revision was “Ethical Management Principles” revised on November 4, 2021.

Note 1: The implementation status of ethical corporate management policies were listed as below:

Items Theimplementationstatus
Educational
trainings		 The Company has held “Responsible Business Alliance (RBA) Code of Conduct” training for all
employees. The content includes ethical management, no dishonest profit, identification protection,
retaliation preventing, and so on. In 2021, 929 trainees participated the training with 1,858 training
hoursintotal. Inthe part of lawsafety,it opened a totalof 47classes.
Annual test The Company has administered the annual test to all employees, and the range of the tests
includes “Ethical Management Principles” and “Codes for Ethical Management”. The key point of the
annual test in 2021 was to keep integrity in operation, prohibit dishonest profit and damage to the
interests of stakeholders, respect to intellectual property rights of the Company and secure the
customer’s datainbusiness activities.
Compliance
propaganda		 The Company has set up a “legal compliance zone” on internal website to integrate the laws related
to business activities. Also, the Company has promoted advocacy education for ethical
management to remind new employees and active employees of precautions when they are doing
the business throughteachingmaterials.
Regular
check		 The Company has assessed the risk of corruption to the operational activities of important operating
bases. The internal audit and the compliance-based self-evaluation were leaded by the Audit Office
every year to achieve effective control and implementation, jointly manage and prevent the
occurrence ofunethicalbehaviors. Thereisno corruptionand anti-competitionactivityin 2021.
Communica-
tion channel		 The employees may respond to the Administration Dept. via multiple and smooth channels. The
Company has also actively announced the ethical corporate management policies and
implementation status of that by the external documents or activities such as the Company’s
website, annual report andinvestorconference. Thereisnoresponsefromemployeesin 2021.
Reporting
system /
whistleblower
protection
The Company has adopted “Codes for Ethical Management” which regulate the whistleblowing
methods to prevent unethical behaviors actively and to encourage internal and external persons to
report unethical behaviors or improper conduct. Also, the Audit Office is appointed to accept the
report. The Company has established the channel of “improper conduct complaint” on the official
website externally for the manufacturers, customers and employees. Internally, the Administration
Dept. and Audit Office has provided hotline, e-mail and special mailbox as the statement channels
for employees. The Company has established a whistleblower protection system to keep
confidential the whistleblowers and their reports, and promise to protect the whistleblowers from any
retaliation due to reporting unethical behaviors. However, no improper conduct was reported in
2021.

3.4.7 If the company has adopted corporate governance best-practice principles or related bylaws, disclose how these are to be searched Please refer to the Company’s website at https://www.edtc.com/

  • 3.4.8 Other significant information that will provide a better understanding of the state of the company’s implementation of corporate governance: None.

  • 49 -

3.4.9 Internal control system 3.4.9.1 Statement on internal control

Emerging Display Technologies Corp. Statement on Internal Control

Date: March 10, 2022

Based on the findings of a self-assessment, Emerging Display Technologies Corp. (edt) states the following with regard to its internal control system during the year 2021:

  1. edt’s Board of Directors and Management are responsible for establishing, implementing, and maintaining an adequate internal control system. Our internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance, and safeguarding of assets), reliability of our financial reporting, and compliance with applicable laws and regulations.

  2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and edt takes immediate remedial actions in response to any identified deficiencies.

  3. edt evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the Regulations). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring.

  4. edt has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.

  5. Based on the findings of such evaluation, edt believes that on December 31, 2021, it has maintained, in all material respects an effective internal control system (that includes the supervision and management of our subsidiaries) to provide reasonable assurance over our operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws and regulations.

  6. This Statement will be an integral part of edt’s Annual Report for the year 2020 and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

  7. This Statement has been passed by the Board of Directors in their meeting held on March 10, 2022, with none of the nine attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Emerging Display Technologies Corp.

Chairman

President & CEO

==> picture [69 x 47] intentionally omitted <==

==> picture [88 x 48] intentionally omitted <==

  • 3.4.9.2 Where a CPA has been hired to carry out a special audit of the internal control system, furnish the CPA audit report: The Company did not hire a CPA to carry out a special audit of the internal control system.

  • 50 -

3.4.10 If there has been any legal penalty against the company or its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system where the result of such penalty could have a material effect on shareholder equity or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement: None.

3.4.11 Material resolutions of a shareholders’ meeting or a board of directors meeting:

3.4.11 Material resolutions of a shareholders’ meeting or a board of directors
**meeting: **		 3.4.11 Material resolutions of a shareholders’ meeting or a board of directors
**meeting: **		 3.4.11 Material resolutions of a shareholders’ meeting or a board of directors
**meeting: **
Shareholders’ meeting
Date Description Resolutions Implementation
Jul. 26,
2021		 1. Adoption of the Business Report and
Financial Statements of 2020.		 Passed without objection by
all shareholders present.		 Not applicable.
2. Adoption of the proposal for distribution of
2020 profits.		 Passed without objection by
all shareholders present.		 The profit to be distributed among shareholders shall
be NT$188,889,124 in cash dividends. The ex-
dividend date was July 20, 2021 resoluted by the
Chairman. The cash dividend was NT$1.2 per share
and fully paid on July 30, 2021.
3. Amendment to the Company’s “Articles of
Incorporation”.		 Passed without objection by
all shareholders present.		 Approved by Ministry of Economic Affairs on August
5, 2021 and announced on the Company’s website.
4. Adoption of the Company’s “Procedures
for Election of Directors” and repeal of
“Directors and Supervisors Election Rule”		 Passed without objection by
all shareholders present.		 Implemented henceforth.
5. Amendment to the Company’s “Procedures
for Loaning Funds to Others”.		 Passed without objection by
all shareholders present.		 Announced on the Company’s website on July 26,
2021 and implemented henceforth.
6. Election of all directors the Company. Passed without objection by
all shareholders present.		 Approved by Ministry of Economic Affairs on August
5, 2021 and announced on the Company’s website.
Newly elected directorswerelisted asNote1.
7. Dismissal of the prohibition of non-
competition obligation of the new directors
anditsrepresentatives.		 Passed without objection by
all shareholders present.		 Not applicable.
Board of Directors meeting
Date Description Resolution
Mar. 10,
2021
17thof 9th
session		 1. To discuss business plan for 2021. Passed unchanged by all directors present.
2. To discuss business report, financial statements, and consolidated
financial statements for 2020.		 Passed unchanged by all directors present.
3. To discuss the distribution of 2020 employees’ compensation and
remuneration for directors and supervisors.		 Planned compensation for employees totals
NT$14,683,111 and remuneration for directors and
supervisors totals NT$8,809,867. Total amounts will
be paid in cash.
4. To discuss the proposal for distribution of 2020 profits. The profit to be distributed among shareholders shall
be NT$188,889,124 in cash dividends (NT$1.2 per
share).
5. To discuss the amendment of“Articles of Incorporation”. Passed unchanged by all directors present.
6. To discuss the adoption of “Procedures for Election of Directors” and
repeal of“Directors and Supervisors Election Rule”.		 Passed unchanged by all directors present.
7. To discuss the adoption of“Audit Committee Charter”. Passed unchanged by all directors present.
8. To discuss the amendment of“Procedures for Loaning Funds to Others”. Passed unchanged by all directors present.
9. Election of all directors the Company. Nine directors (including three independent directors)
shall be elected this time. Newly elected directors will
take office from the election date, the term of office
from June 15, 2021 to June 14, 2024 for a term of
three years. The Company will repeal the setup of
supervisors at the same time.
10. To dismiss the non-competition obligation of the newly elected directors
and its representatives.		 Passed unchanged by all directors present.
11. To discuss time, date, location and agenda of shareholders’ meeting for
2021, submission period of proposals and nominations from
shareholders with 1% or more shares, and related matters.		 Shareholders’ meeting is set to be held on June 15,
2021 at 9amin the 1F conference hall. Submission of
proposals from shareholders with 1% or more shares
will be accepted from April 9 to April 19.
12. To discuss self-assessment and statement on internal control for 2020. Passed unchanged by all directors present.
13. To discuss the amendment of internal control system, version 19, and
internal audit system with its implementing regulations, version 8.		 Passed unchanged by all directors present.
14. To discuss the re-adoption of“Corporate Governance Principles”. Passed unchanged by all directors present.
15. To discuss the independence and suitability assessment of 2021 for CPA. The audit partner Yang, Po-Jen and Su, Yen-Ta have
achieved the Company’s standards of the
independence and suitability after evaluation.
16. To discuss remuneration adjustments of 2021 for the Chairman and
managerial employees.		 Passed unchanged by directors present excluding
four directors avoiding vote in conflict of interest.
17. To discuss additional amounts and annual renewal of financing from
financial institutions.		 Passed unchanged by all directors present.
May 4,
2021
~~1~~8thof 9th
session		 1. To nominate candidates of directors and independent directors, and
review those nominees.		 All directors present passed that all nominees were
eligible and will be submitted to the Shareholders’
meeting for election.
2. To start the“Employee Stock Ownership Trust”. Passed unchanged by alldirectors present.
3. To discuss additional amounts and annual renewal of financing from
financial institutions.		 Passed unchanged by all directors present.
Jul. 2,
2021
19thof 9th
session		 1. To postpone the date of Shareholders’ meeting and determine the
meeting place.		 Shareholders’ meeting was postponed to be
physically held on July 26, 2021 at 9amin No. 5,
Central 1st Road, Cianjhen Dist., Kaohsiung.
  • 51 -
Jul. 26,
2021
1thof 10th
session		 1. To elect the Chairman of the 10thsession. All directors present passed that Tseng, Jui-Ming
continued to serve as the Chairman.
Aug. 4,
2021
2thof 10th
session		 1. To discuss the consolidated financial statements for 2ndquarter of 2021. Passed unchanged by all directors present.
2. To engage the Compensation Committee members, Excluding two directors avoiding vote in conflict of
interest, directors present passed unchanged that the
Company engaged Li, Chi-Cheng, Huang, Hui-Ling
and Hung, Kuang-Te to serve as the Compensation
Committee members of the 5thsession. The term was
same as theBoard ofthe10th session.
3. To revise the audit plan for 2021 Passed unchanged by all directors present.
4. To discuss additional amounts and annual renewal of financing from
financial institutions.		 Passed unchanged by all directors present.
Aug. 12,
2021
3thof 10th
session

1. To discuss the distribution details of 2020 employees’ compensation and
remuneration for directors and supervisors.		 The compensation for employees totals
NT$14,683,111 and remuneration for directors and
supervisors totals NT$8,809,867. The distribution
details were passed unchanged by all directors
present.
Nov. 4,
2021
4thof 10th
session		 1. To discuss the consolidated financial statements for 3rdquarter of 2021. Passed unchanged by all directors present.
2. To discuss and review of all remunerations of 2022 for directors and
managerial officers.		 Passed unchanged by directors present excluding
three directors avoiding vote in conflict of interest.
3. To discuss year-end remunerations and bonuses to the Chairman and
managerial officers for 2021.		 Passed unchanged by directors present excluding
three directors avoiding vote in conflict of interest.
4. To discuss the amendment of “Ethical Management Principles” and
“Codes for Ethical Management”.		 Passed unchanged by all directors present.
5. To discuss the amendment of “Evaluation Regulations of the Board’s
Performance”.		 Passed unchanged by all directors present.
6. To discuss the amendment of“Compensation Committee Charter” Passed unchanged by all directors present.
7. To discuss the proposed audit plan for 2022 in accordance with Article 13
of “Regulations Governing Establishment of Internal Control Systems by
Public Companies”.		 Passed unchanged by all directors present.
8. To discuss additional amounts and annual renewal of financing from
financial institutions.		 Passed unchanged by all directors present.
Jan. 12,
2022
5thof 10th
session		 1. To discuss the capital reduction date to retire treasure stock (19thtime
buy back).		 The capital reduction date to retire treasury stocks
was February 11, 2022 and approved by Ministry of
Economic Affairs on February 18, 2022.
Mar. 10,
2022
6thof 10th
session		 1. To discuss business plan for 2022. Passed unchanged by all directors present.
2. To discuss business report, financial statements, and consolidated
financial statements for 2021.		 Passed unchanged by all directors present.
3. To discuss the distribution of 2021 employees’ compensation and
remuneration for directors.		 Planned compensation for employees totals
NT$14,485,611 and remuneration for directors totals
NT$8,691,367. Totalamountswillbe paidincash.
4. To discuss the proposal for distribution of 2021 profits. Net profit of 2021 was NT$237,280,142. By adding
previous years’ retained earnings of NT$177,570,397,
proceeds from disposal of equity instruments at fair
value through other comprehensive income of
NT$34,238,450, reversal of special reserve for equity
deduction of NT$13,324,968, and deducting changes
of remeasurement from defined benefit plans of
NT$18,937,000, total distributable earnings for year
amounted to NT$443,476,957. After setting aside
10% of net profit as legal reserve of NT$25,258,159,
the Board of Directors has determined the profit to be
distributed among shareholders shall be
NT$188,889,124 in cash dividends (NT$1.2 per
share).
5. To discuss the amendment of“Articles of Incorporation”. Passed unchanged by all directors present.
6. To discuss the amendment of “Rules of Procedures for Shareholders’
Meeting”.		 Passed unchanged by all directors present.
7. To discuss the amendment of “Regulations Governing the Acquisition and
Disposal of Assets”.
Passed unchanged by all directors present.
8. To discuss time, date, location and agenda of shareholders’ meeting for
2022, submission period of proposals from shareholders with 1% or more
shares, and related matters.
Shareholders’ meeting is set to be held on June 17,
2022 at 9amin the 1F conference hall. Submission of
proposals from shareholders with 1% or more shares
willbe acceptedfrom April9 toApril 19.
9. To discuss self-assessment and statement on internal control for 2021. Passed unchanged by all directors present.
10. To discuss the amendment of internal control system, version 20, and
internal audit system with its implementing regulations, version 9.		 Passed unchanged by all directors present.
11. To discuss the adjustment of the attesting CPAs as well as the
assessment of their independence and suitability.		 Due to internal job rotation, KPMG changed audit
partner in 2022. The audit partner adjusted from
preivous Yang, Po-Jen and Su, Yen-Ta to Chen,
Yung-Hsiang and Su, Yen-Ta. The successor CPAs
have achieved the Company’s standards of the
independence and suitability after evaluation.
12. To discuss the amendment of“Corporate Governance Principles”. Passed unchanged by all directors present.
13. To discuss the amendment of “Corporate Social Responsibility Practice
Principles”.		 Passed unchanged by all directors present.
14. To amend all remunerations of 2022 for directors and managerial officers. Passed unchanged by directors present excluding
fourdirectors avoidingvoteinconflict of interest.
15. To discuss remuneration adjustments of 2022 for the Chairman and
managerialofficers.		 Passed unchanged by directors present excluding
fourdirectors avoidingvoteinconflict of interest.
16. To discuss additional amounts and annual renewal of financing from
financial institutions.		 Passed unchanged by all directors present.
  • 52 -

Note 1: Newly elected directors were listed as below:

Title Name The elected votingrights
Director Tseng,Jui-Ming 116,967,853
Director Hsieh,Hui-Tai 97,013,000
Director Wang,Tai-Kuang 95,961,912
Director Yu,Cheng-Chung 94,013,482
Director Ying Dar Investment Development Corp.
Representative: Huang,Hsiu-Wen		 93,001,508
Director Bae Haw Investment Development Corp.
Representative: Hsieh,Wen-Hsiung		 92,302,960
Independent Director Huang,Hui-Ling 84,757,579
Independent Director Li,Chi-Cheng 84,627,223
Independent Director Huang,Fu-Di 84,423,346

  • 3.4.12 A director or supervisor has expressed a dissenting opinion with respect to a material resolution passed by the board of directors, and said dissenting opinion has been recorded or prepared as a written declaration, disclose the principal content thereof: None.

  • 3.4.13 A summary of resignations and dismissals of the company’s chairperson, general manager, chief Accounting Supervisor, chief Financial Executive, chief internal auditor, chief corporate governance officer, and chief research and development officer: None.

  • 3.4.14 Certification of employees whose jobs are related to the release of the company’s financial information: Certified Public Accountants(CPA) – Audit Office: 1 person.

3.5 Information on CPA (external auditor) professional fees

Unit: NT$Thousands Unit: NT$Thousands Unit: NT$Thousands Unit: NT$Thousands Unit: NT$Thousands Unit: NT$Thousands
Name of
accountingfirm		 Name of
CPAs		 Period covered
by the CPAaudit		 Audit
fees		 Non-audit
fees
Total		 Remarks
KPMG Yang, Po-Jen Year 2021 3,710 1,540 5,250 Non-audit fees included:
Transfer pricing report NT$720
Tax certification NT$670
Inventory bonded items NT$120
Non-supervisory full-time employee
salary check NT$30
Su, Yen-Ta
KPMG Yang, Po-Jen Year 2020 3,710 1,540 5,250 Non-audit fees included:
Transfer pricing report NT$720
Tax certification NT$670
Inventory bonded items NT$120
Non-supervisory full-time employee
salarycheck NT$30
Su, Yen-Ta

3.5.1 The company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year: Not applicable.

3.5.2 The audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 10 percent or more: Not applicable.

3.6 Information on replacement of CPA: Not applicable.

  • 3.7 The company’s chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm: Not applicable.

  • 53 -

3.8 Changes in shareholding of directors, supervisors, managerial officers, and major shareholders

shareholders shareholders
Unit: Shares
Job title Name Year 2021 As of April 19,2022
Shareholding
increase
(or decrease)		 Pledged
shareholding
increase
(or decrease)		 Shareholding
increase
(or decrease)		 Pledged
shareholding
increase
(or decrease)
Chairman Tseng,Jui-Ming 0 0 0 0
Director Hsieh,Hui-Tai (185,000) 0 0 0
Director Huang,Mao-Hsiung (Note 1) - - - -
Director Wang,Tai-Kuang (Note 2) 0 0 0 0
Director Yu,Cheng-Chung (Note 2) 0 0 0 0
Director Ying Dar Investment Development Corp.
Representative: Huang,Hsiu-Wen(Note 2)		 0 0 0 0
Director Bae Haw Investment Development Corp.
Representative: Hsieh,Wen-Hsiung		 0 0 0 0
Independent Director Huang,Hui-Ling (Note 2) 0 0 0 0
Independent Director Li,Chi-Cheng 0 0 0 0
Independent Director Huang,Fu-Di 0 0 0 0
Supervisor Lin,Yu-Fen(Note 1) - - - -
Supervisor Tseng,Shu-Ling (Note 1) - - - -
Supervisor Ting,Hung-Hsun(Note 1) - - - -
President & CEO Wang,Tai-Kuang 0 0 0 0
Executive Vice
President		 Huang, Mao-Hsiung (Note 3) 0 0 0 0
Vice President Yu,Cheng-Chung 0 0 0 0
Vice Presidnet &
Chairman’s Special
Assistant & Corporate
Governance Officer		 Hsieh, Wen-Hsiung 0 0 0 0
Vice President Kao,Neng-Sen 0 0 0 0
Vice President Huang,Shih-Pin(Note 4) - - 0 0
Financial Executive Huang,Hsiu-Wen 0 0 0 0
AccountingSupervisor Kuo,Kun-He 0 0 0 0

Note 1: Resigned on July 26, 2021.

Note 2: Director Yu, Cheng-Chung and Independent Director Huang, Hui-Ling took office on July 26, 2021. Wang, Tai-Kuang, former representative of Ying Dar Investment Development Corp. was re-appointed as general director, and Huang, Hsiu-We was the new representative, effective immediately since July 26, 2021.

Note 3: Retired on March 31, 2022.

Note 4: Was promoted to the Vice President on March 1, 2022.

3.8.1 Information on transfers of shareholding

Name Reason for
transfer		 Date of
transaction		 Counterparty Relationship between the counterparty
and the Company, directors,
supervisors, managerial officers, and
major shareholders		 No. of
shares		 Transaction price
None

3.8.2 Information on pledges of shareholding

Name Reason for
change in
pledge
status
Date of
change		 Counterparty Relationship between the
counterparty and the Company,
directors, supervisors, managerial
officers,and major shareholders		 Shares Share-
holding
ratio		 Pledge
ratio		 Amount
borrowed
under pledges
(or redeemed)
None
  • 54 -

3.9 Relationship among the top 10 shareholders

As of April 19, 2022

Name Shareholding Shareholding Shareholding of
spouse and minor
children		 Shareholding of
spouse and minor
children		 Total
shareholding by
nominee
arrangements		 Total
shareholding by
nominee
arrangements
Specify the name of the entity or person
and their relationship to any of the other top
10 shareholders with which the person is a
related party or has a relationship of
spouse or relative within the 2nd degree
Specify the name of the entity or person
and their relationship to any of the other top
10 shareholders with which the person is a
related party or has a relationship of
spouse or relative within the 2nd degree		 Remarks
Shares % Shares % Shares % Name of entity or
individual		 Relationship
Tseng, Jui-Ming 11,043,723 7.02%
256,759		 0.16% 0 0.00% Hsieh,Hui-Tai In-law siblings None

Ying Dar Investment
Development Corp.		 Responsible person None
Bae Haw Investment
Development Corp.		 Responsible person None
Hsieh,Hui-Tai 6,301,867 4.00% 0 0.00% 0 0.00% Tseng, Jui-Ming In-lawsiblings None
Ying Dar Investment
Development Corp.		 5,346,672 3.40%
0		 0.00% 0 0.00% Tseng, Jui-Ming Responsible person
of the company		 None

Wang, Tai-Kuang		 Representative of
corporate director of
the company
None
Representative of Ying
Dar Investment
Development Corp.:
Huang,Hsiu-Wen		 220,862 0.14% 17,404 0.01% 0 0.00% Ying Dar Investment
Development Corp.		 Representative of
corporate supervisor
None
Bae Haw Investment
Development Corp.		 Representative of
corporate supervisor
None
Bae Haw Investment
Development Corp.		 3,447,716 2.19%
0		 0.00% 0 0.00% Tseng, Jui-Ming Responsible person
ofthe company		 None

Wang, Tai-Kuang		 Representative of
corporate director of
the company
None
Representative of Bae
Haw Investment
Development Corp.:
Hsieh,Wen-Hsiung		 261,253 0.17%
0		 0.00% 0 0.00% Bae Haw Investment
Development Corp.		 Representative of
corporate director		 None
Chang,Chih-Feng 2,645,000 1.68%
0		 0.00% 0 0.00%
None		 None None
Lin,Yu-Fen 1,802,813 1.15% 1,666,487 1.06% 0 0.00% Wang,Tai-Kuang Spouse None
Huang,Mao-Hsiung 1,693,659 1.08%
0		 0.00% 0 0.00%
None		 None None
Wang, Tai-Kuang 1,666,487 1.06%
1,802,813		 1.15% 0 0.00% Lin,Yu-Fen Spouse None

Ying Dar Investment
Development Corp.		 Representative of
corporate director		 None
Bae Haw Investment
Development Corp.		 Representative of
corporate director		 None
Employee Stock
Ownership Trust
Account of Taishin
International Bank
Entrusted by edt		 1,465,218 0.93%
0		 0.00% 0 0.00%
None		 None None
Kao,Jui-Li 1,209,000 0.77%
0		 0.00% 0 0.00%
None		 None None

3.10 Total ownership of shares in investee enterprises

Unit: Shares; %

Unit: Shares; % Unit: Shares; %
Investee enterprise
(Note)		 Investment by the Company Investment by the directors,
supervisors, managerial
officers and directly or
indirectly controlled entities
of the Company		 Total investment
Shares Shareholding
ratio		 Shares Shareholding
ratio		 Shares Shareholding
ratio
EmergingDisplayTechnologies Corp.,U.S.A. 3,500,000
100.00%
0
0.00%
3,500,000
100.00%
EmergingDisplayInternational(Samoa)Corp. 5,984,071
78.49%
1,320,000
17.31%
7,304,071
95.80%
EDT-Europe ApS 125,000
100.00%
0
0.00%
125,000
100.00%
EmergingDisplayTechnologies Korea 58,212,500
100.00%
0
0.00%
58,212,500
100.00%
EDT-Japan Corp. 5,000
100.00%
0
0.00%
5,000
100.00%
YingDar Investment Development Corp. 8,900,000
100.00%
0
0.00%
8,900,000
100.00%
Bae Haw Investment Development Corp. 8,900,000
100.00%
0
0.00%
8,900,000
100.00%
YingChengInvestment Corp. 8,400,000
52.50%
0
0.00%
8,400,000
52.50%

Note : This refers to investee enterprises in which the Company makes long-term investment calculated according to the equity method.

  • 55 -

IV. Capital Overview 4.1 Capital and shares

4.1.1 Source of capital

Month/
Year		 Issued
price
(NT$)		 Authorized capital Authorized capital Paid-in capital Paid-in capital Remarks Remarks Remarks
Shares
(Thousand)		 Amount
(NT$ thousand)		 Shares
(Thousand)		 Amount
(NT$ thousand)		 Sources of capital
(NT$ thousand)		 Capital paid in by assets
other than cash		 Other
09/1994 10 1,800
18,000
1,800
18,000		 Set upinitial cash capital injection None None
12/1996 10 2,573
25,725
2,573
25,725		 Cash capital injection NT$7,725 None None
11/1997 10 4,579
45,791
4,579
45,791		 Cash capital injection NT$20,066 None None
03/1998 10 19,990
199,896
19,990
199,896		 Cash capital injection NT$142,200
Retained earnings capital injection NT$11,905		 None None
07/1998 10 60,000
600,000
30,000
300,000		 Cash capital injection NT$100,104 None Approval No. 58863 issued byFSC on 23/07/1998
07/1999 10 60,000
600,000
43,500
435,000
Retained earnings capital injection NT$60,000
Employee bonus capital injection NT$15,000
Capital surplus injection NT$60,000		 None Approval No. 59752 issued by FSC on 01/07/1999
07/2000 10 80,000
800,000
65,000
650,000
Retained earnings capital injection NT$61,770
Employee bonus capital injection NT$15,442.5
Capital surplus injection NT$60,030
Cash capital increased NT$77,757.5		 None Approval No. 59505 issued by FSC on 12/07/2000
11/2000 10 80,000
800,000
80,000
800,000		 Cash capital increased NT$150,000 None Approval No. 95331 issued byFSC on 21/11/2000
07/2001 10 200,000
2,000,000
98,200
982,000
Retained earnings capital injection NT$88,000
Employee bonus capital injection NT$14,000
Capital surplus injection NT$80,000		 None Approval No. 144159 issued by FSC on 12/07/2001
07/2002 10 200,000
2,000,000
114,000
1,140,000
Retained earnings capital injection NT$49,100
Employee bonus capital injection NT$10,700
Capital surplus injection NT$98,200		 None Approval No. 0910141489 issued by FSC on 25/07/2002
10/2003 10 200,000
2,000,000
131,520
1,315,198
Employee bonus capital injection NT$900
Capital surplus injection NT$109,100
Capital injection byCB NT$65,198		 None Approval No. 0920130747 issued by FSC on 09/07/2003
12/2003 10 200,000
2,000,000
143,870
1,438,700		 Capital injection byCB NT$123,502 None Approval No. 09300300090 issued byK.E.P.Z.
04/2004 10 200,000
2,000,000
147,704
1,477,044		 Capital injection byCB NT$38,343 None Approval No. 09300300660 issued byK.E.P.Z.
07/2004 10 200,000
2,000,000
148,825
1,488,246		 Capital injection byCB NT$11,201 None Approval No. 09300301350 issued byK.E.P.Z.
09/2004 10 200,000
2,000,000
175,004
1,750,036
Retained earnings capital injection NT$74,410
Employee bonus capital injection NT$38,560
Capital surplus injection NT$148,820		 None Approval No. 0930132882 issued by FSC on 22/07/2004
10/2004 10 200,000
2,000,000
175,433
1,754,329		 Capital injection byCB NT$4,293 None Approval No. 09300302220 issued byK.E.P.Z.
01/2005 10 200,000
2,000,000
175,490
1,754,900		 Capital injection byCB NT$571 None Approval No. 09400300130 issued byK.E.P.Z.
04/2005 10 200,000
2,000,000
175,501
1,755,014		 Capital injection byCB NT$114 None Approval No. 09400300660 issued byK.E.P.Z.
  • 56 -
Month/
Year		 Issued
price
(NT$)		 Authorized capital Authorized capital Authorized capital Paid-in capital Paid-in capital Paid-in capital Remarks Remarks Remarks Remarks Remarks
Shares
(Thousand)		 Amount
(NT$ thousand)		 Shares
(Thousand)		 Amount
(NT$ thousand)		 Sources of capital
(NT$ thousand)		 Capital paid in by assets
other than cash		 Other
07/2005 10 260,000
2,600,000
175,507
1,755,072		 Capital injection byCB NT$58 None Approval No. 09400301470 issued byK.E.P.Z.
08/2005 10 260,000
2,600,000
193,910
1,939,096
Retained earnings capital injection NT $84,587
Employee bonus capital injection NT $14,850
Capital surplus injection NT$84,587		 None Approval No. 0940126503 issued by FSC on 01/07/2005
10/2005 10 260,000
2,600,000
194,131
1,941,313		 Capital injection byCB NT$2,217 None Approval No. 09400302240 issued byK.E.P.Z.
07/2006 10 260,000
2,600,000
199,701
1,997,008		 Capital injection byCB NT$55,695 None Approval No. 09500301880 issued byK.E.P.Z.
08/2006 10 350,000
3,500,000
220,282
2,202,822
Retained earnings capital injection NT$93,907
Employee bonus capital injection NT$18,000
Capital surplus injection NT$93,907		 None Approval No. 0950128449 issued by FSC on 05/07/2006
07/2007 10 350,000
3,500,000
220,632
2,206,319		 Capital injection byCB NT$3,497 None Approval No. 09600301980 issued byK.E.P.Z.
08/2007 10 350,000
3,500,000
214,315
2,143,149		 Treasurystocks cancellation NT$63,170 None Approval No. 09600302080 issued byK.E.P.Z.
08/2007 10 350,000
3,500,000
225,013
2,250,132		 Capital surplus injection NT$106,983 None Approval No. 0960036230 issued byFSC on 12/07/2007
11/2007 10 350,000
3,500,000
225,157
2,251,569		 Capital injection byCB NT$1,437 None Approval No. 09600303090issued byK.E.P.Z.
01/2008 10 350,000
3,500,000
225,214
2,252,144		 Capital injection byCB NT$575 None Approval No. 09700300130 issued byK.E.P.Z.
08/2008 10 350,000
3,500,000
225,249
2,252,489		 Capital injection byCB NT$345 None Approval No. 09700302030 issued byK.E.P.Z.
08/2008 10 350,000
3,500,000
217,749
2,177,489		 Treasurystocks cancellation NT$75,000 None Approval No. 09700301230 issued byK.E.P.Z.
01/2009 10 350,000
3,500,000
211,108
2,111,076		 Capital injection by CB NT$517
Treasurystocks cancellation NT$66,930		 None Approval No. 09800300100 issued by K.E.P.Z.
10/2010 10 350,000
3,500,000
241,108
2,411,076		 Cash capital injection NT$300,000 None Approval No. 0990047548issued byFSC on 28/09/2010
12/2010 10 350,000
3,500,000
234,108
2,341,076		 Treasurystocks cancellation NT$70,000 None Approval No. 09900303390 issued byK.E.P.Z.
02/2011 10 350,000
3,500,000
226,108
2,261,076		 Treasurystocks cancellation NT$80,000 None Approval No. 10000300470 issued byK.E.P.Z.
08/2015 10 350,000
3,500,000
221,108
2,211,076		 Treasurystocks cancellation NT$50,000 None Approval No. 10400301780 issued byK.E.P.Z.
10/2015 10 350,000
3,500,000
214,908
2,149,076		 Treasurystocks cancellation NT$62,000 None Approval No. 10400302130 issued byK.E.P.Z.
01/2016 10 350,000
3,500,000
200,908
2,009,076		 Treasurystocks cancellation NT$140,000 None Approval No. 10540010110 issued byK.E.P.Z.
12/2016 10 350,000
3,500,000
194,908
1,949,076		 Treasurystocks cancellation NT$60,000 None Approval No. 10540013030 issued byK.E.P.Z.
02/2017 10 350,000
3,500,000
189,408
1,894,076		 Treasurystocks cancellation NT$55,000 None Approval No. 10640010260 issued byK.E.P.Z.
05/2017 10 350,000
3,500,000
183,408
1,834,076		 Treasurystocks cancellation NT$60,000 None Approval No. 10640010950 issued byK.E.P.Z.
06/2018 10 350,000
3,500,000
179,408
1,794,076		 Treasurystocks cancellation NT$40,000 None Approval No. 10740011280 issued byK.E.P.Z.
11/2018 10 350,000
3,500,000
174,408
1,744,076		 Treasurystocks cancellation NT$50,000 None Approval No. 1074001202 issued byK.E.P.Z.
04/2019 10 350,000
3,500,000
162,408
1,624,076		 Treasurystocks cancellation NT$120,000 None Approval No. 1084100047 issued byK.E.P.Z.
02/2022 10 350,000
3,500,000
157,408
1,574,076		 Treasurystocks cancellation NT$50,000 None Approval No. 1114100026 issued byK.E.P.Z.
Authorized capital
Remarks
Outstandingshares(Note)
Unissued shares
Total
157,407,603
192,592,397
350,000,000
TWSE Listed Company
Type of stock Authorized capital Remarks
Outstandingshares(Note) Unissued shares Total
Common Stock 157,407,603 192,592,397 350,000,000 TWSE Listed Company

Note: Buyback shares are deducted.

  • 57 -

4.1.2 Shareholder composition

As of April 19,2022 As of April 19,2022 As of April 19,2022 As of April 19,2022 As of April 19,2022
Shareholder
composition
Quantity

Government
agencies
Financial
institutions		 Other legal
entities		 Individuals Foreign
institutions
and foreign
individuals		 Total
No. of
shareholders		 0
0
233
35,782
53
36,068
No. of shares
held		 0
0		 12,226,563
141,729,203
3,451,837
157,407,603
Shareholding
ratio		 0.00%
0.00%
7.77%
90.04%
2.19%
100.00%

4.1.3 Distribution of shareholding

4.1.3 Distribution of shareholding 4.1.3 Distribution of shareholding 4.1.3 Distribution of shareholding 4.1.3 Distribution of shareholding
As of April 19,2022
Range of no. of shares held No. of
shareholders		 Shareholding
(shares)		 Shareholding (%)
1 to 999 20,635 743,543 0.47%
1,000 to 5,000 11,389 25,385,445 16.13%
5,001 to 10,000 2,136 17,582,331 11.17%
10,001 to 15,000 564 7,212,861 4.58%
15,001 to 20,000 479 9,045,236 5.75%
20,001 to 30,000 334 8,727,078 5.54%
30,001 to 40,000 140 5,073,663 3.22%
40,001 to 50,000 112 5,297,962 3.37%
50,001 to 100,000 167 12,146,743 7.72%
100,001 to 200,000 59 8,436,551 5.36%
200,001 to 400,000 22 5,821,295 3.70%
400,001 to 600,000 8 4,210,470 2.67%
600,001 to 800,000 5 3,463,211 2.20%
800,001 to 1,000,000 5 4,321,850 2.75%
Above 1,000,001 13 39,939,364 25.37%
Total 36,068 157,407,603 100.00%

4.1.4 List of major shareholders

4.1.4 List of major shareholders 4.1.4 List of major shareholders 4.1.4 List of major shareholders
As of April 19,2022
Shares
Names of
major shareholders
Shareholding (shares)		 Shareholding (%)
Tseng,Jui-Ming 11,043,723 7.02%
Hsieh,Hui-Tai 6,301,867 4.00%
YingDar Investment Development Corp. 5,346,672 3.40%
Bae Haw Investment Development Corp. 3,447,716 2.19%
Chang,Chih-Feng 2,645,000 1.68%
Lin,Yu-Fen 1,802,813 1.15%
Huang,Mao-Hsiung 1,693,659 1.08%
Wang,Tai-Kuang 1,666,487 1.06%
Employee Stock Ownership Trust Account of
Taishin International Bank Entrusted by edt		 1,465,218 0.93%
Kao,Jui-Li 1,209,000 0.77%
  • 58 -

4.1.5 Market price, net worth, earnings, and dividends per share

Item Fiscal year Fiscal year Year 2021 Year 2020 Jan. 1, 2022~
Apr. 25,2022
Market price
per share		 Highes 26.30 25.50 19.90
Lowest 16.60 11.70 17.85
Average 21.29 19.37 18.95
Net worth
per share		 Before distribution 13.64 13.05 (Note 4)
After distribution 12.37 11.46
Earnings per
share		 Weighted average shares
(thousand shares)		 148,613 148,613 (Note 4)
Earnings
per share		 Before adjustment 1.60 1.57 (Note 4)
After adjustment 1.60 1.57
Dividends
per share		 Cash dividends 1.20 1.20
Stock
dividends		 Dividends from
retained earnings		 0 0
Dividends from
capital surplus		 0 0
Accumulated undistributed dividends
0		 0
Return on
investment
analysis		 Price / earnings ratio(Note 1) 12.09 11.52 (Note 4)
Price / dividend ratio(Note 2) 16.13 15.07
Cash dividendyield(Note 3) 6.20% 6.64%

Note 1: Price / earnings ratio = average closing price per share for the year / earnings per share. Note 2: Price / dividend ratio = average closing price per share for the year / cash dividends per share. Note 3: Cash dividend yield = cash dividend per share / average closing price per share for the year. Note 4: The financial statement of 1[st] quarter of 2022 was not reviewed by Certified Public Accountant yet.

4.1.6 Dividend policy and implementation status

4.1.6.1 Dividend policy

The Company, when allocating its surplus profits after having paid all taxes and dues and covered accumulated losses, shall first set aside legal reserve and special reserve in accordance with relevant laws, rules and regulations. The said special reserve shall require to be reversed before distribution of earnings. If there is a remaining balance, the Board of Directors shall propose an earning distribution plan which distribution amount is no more than 80 percent of retained earnings available for distribution for the current year, then summit it to the shareholders ’ meeting for concurrence.

The Company, in accordance with paragraph 5 of Article 240 of the Company Act, authorizes the distributable dividends and bonuses or legal reserve and special reserve stipulated in paragraph 1 of Article 241 of the Company Act in whole or in part may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the Shareholders’ Meeting.

  • 59 -

The Company is at the steady growth stage of its business development. Residual dividend policy shall be adopted for dividend distribution of the Company, taking into consideration the future capital budget plans and operational capital needs of the Company, as well as the extent of dilution on earnings per share and influence upon return on equity. Hence, future distribution of earnings shall be made priority by way of cash dividend over stock dividend, provided the ratio for cash dividend shall be fifty percent or more of the total annual distribution.

4.1.6.2 Proposed distribution of dividend

  • A. In Fiscal Year 2021, the Company made a net profit of NT$237,280,142. By adding previous years’ retained earnings of NT$177,570,397, proceeds from disposal of equity instruments at fair value through other comprehensive income of NT$34,238,450, reversal of special reserve for equity deduction of NT$13,324,968, and deducting changes of remeasurement from defined benefit plans of NT$18,937,000, total distributable earnings for year amounted to NT$443,476,957. After setting aside 10% of net profit as legal reserve of NT$25,258,159, the Board of Directors has determined the profit to be distributed among shareholders shall be NT$188,889,124 in cash dividends (NT$1.2 per share). The cash dividends will be distributed according to the percent of shareholding on ex-dividend date and fully distributed until last integer and preclude fraction of dollar. The remainder of undistributed net earnings will be recorded as the Company’s other income.

  • B. In the event that, the proposed dividend distribution ratio is affected due to share buyback program, transfer of treasury stocks to employees, reduction of shares or any other reasons affecting the number of outstanding shares, it is proposed that the Chairman be fully authorized to handle such distribution.

  • C. Upon reporting to the 2022 shareholders’ meeting, it is proposed that the Chairman be authorized to resolve the ex-dividend date and payment date.

4.1.7 Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders’ meeting: None.

4.1.8 Employee bonus and directors’ and supervisors’ remuneration

  • 4.1.8.1 Information relating to employee bonus and directors’ and supervisors’ remuneration in the articles of incorporation: In accordance with Article 22-1 of the Articles of Incorporation, the Company shall allocate 5 percent or more as employees’ compensation and 3 percent or less as remuneration for directors and supervisors when there is profit for the current year. By Articles 16 and 20 of Articles of Incorporation, the remuneration of the directors, supervisors, and managers are referred to the level of the related public companies, the Company’s operation status, and their value of contribution.

  • 60 -

4.1.8.2 The basis for estimating the amount of employee, director, and supervisor compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period: The Company has determined to allocate 3 percent as remuneration for directors and supervisors and 5 percent as employees’ bonus. The amount will be fully paid in cash. There is no difference between the amount proposed to be distributed and estimated figure.

4.1.8.3 Profit distribution for employee bonus and directors’ and supervisors’ remuneration for 2020 approved in board of directors meeting:

  • A. The amount of any employee compensation distributed in cash or stocks and compensation for directors and supervisors. If there is any discrepancy between that amount and the estimated figure for the fiscal year these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed.

Unit: NT$ thousands

Item Item Amount Approved
in BOD Meeting		 Estimated Figure
For TheFiscal Year		 Discrepancy Cause Treatment
Employee
Bonus		 Cash 14,486 14,486 0 － －
Stock 0 0 0 － －
Directors’ and Supervisors’
Remuneration		 8,691 8,691 0 － －
Total 23,177 23,177 0 － －
  • B. The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation:

Unit: NT$ thousands Percentage of The Sum of The After-tax Net Income Stated in The Item Amount Parent Company Only Financial Reports or Individual Financial Reports For The Current Period And Total Employee Compensation Employee Bonus - Stock 0 0%

4.1.8.4 The actual distribution of employee, director, and supervisor compensation for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee, director, or supervisor compensation, additionally the discrepancy, cause, and how it is treated:

Unit: NT$ thousands

treated: treated: Unit: NT$ thousands
Item Actual Distribution
Estimated Figure
For The Fiscal Year		 Discrepancy Cause Treatment
Employee
Bonus		 Cash 14,683 14,683 0 － －
Stock 0
0		 0 － －
Directors’ and Supervisors’
Remuneration		 8,810
8,810		 0 － －
Total 23,493
23,493		 0 － －
  • 61 -

4.1.9 Buyback of treasury stock: None.

4.2 Issuance of corporate bonds: None.

4.3 Preferred shares: None.

4.4 Global depository receipts: None.

4.5 Status of employee stock options: None.

  • 4.6 Status of employee retricted stock: None.

  • 4.7 Status of new shares issuance in connection with mergers and acquisitions: None.

4.8 Financing plans and implementation: None.

  • 62 -

V. Operational Highlights

5.1 Business activities

5.1.1 Business scope

  • A. Main areas of business operations

  • a. Manufacturer of electronic components

  • b. Manufacturer of computer and related equipment

  • c. Distributor of electronic materials

  • B. Revenue distribution

Liquid crystal displays, capacitive touch panels and modules make up 100% of business operations.

  • C. Main products

The design, manufacturing, and application of liquid crystal displays and capacitive touch panels.

  • D. New products development

  • a. One glass capacitive touch panels (OGS and TOL)

  • b. TFT-LCD Backend products

  • c. Full lamination products of TFT modules, sensor and cover lens

5.1.2 Industry overview

  • A. Current status and future development of industry of the Company

  • Key products of the Company are the domains of liquid crystal displays (LCD) and capacitive touch panels (CTP). Respective illustrations are as follows:

  • a. LCD

LCD have different applied use for different specification requirements. With the advances in technology and consumer stimulated demand, display panels have gradually evolved, from the early monochrome TN/STN technology displays gradually to TFT-LCD technology. Industry sources at TrendForce said that the COVID-19 epidemic has driven the demand for both work/class from home with sales growth of LCD monitors exceeding more than 5% for two straight years since 2020. Following the substantial increase of vaccinated rate, the long-distance demand reduced, and orders of LCD monitors shrank dramatically, however. The LCD industry is expected to face a fierce competition in 2022 and the price of panels is more likely to decline year by year in the years to come. Even so, the impact of the epidemic on human living habits will not disappear quickly, and the online demand will still exist for a long time. According to Sigmaintell forecasts, although the growth rate of LCD and notebook shipments have sharply slowed down in 2021, but still enjoyed a considerable increase compared to the level before the epidemic. In the meantime, there is a trend of large-size display panels. DIGITIMES said that the capacity compound annual growth rate of large-size LCD panels is estimated to reach 2.2% during the period of 2020 to 2025. Of this, the expansion of average-sized TV panels is expected to increase the demand of large-sized LCD panels, and bring a compound annual growth rate of 3% or up.

Mainland China panel manufacturers began expanding their production capacities and acquisitions and merges in recent years. It is anticipated that the global LCD panel production capacity will continue to focus on mainland China in the foreseeable future. According to DIGITIMES estimates, mainland China expects to account for 71.6% of the global LCD panel production capacity by 2025, while Taiwan’s share will slowly drop to 22.6%. The share of South Korea and Japan will rapidly shrink to be less than 10%. Korean panel makers lost the competition in production capacity with their

  • 63 -

Chinese counterparts, and will withdraw from the large-size LCD market and focus on the small and medium-size AMOLED market. This gradually forms a dominant situation for Chinese panel manufacturers.

b. CTP

Due to the consumer preference and formed habits for the intuitive operation of touch interface, smartphones and tablets not only have become the main operating interface, but they have also experienced rapid growth. The product development combined with the touch technique and panels has been over 10 years. The development of touch market is tending towards maturity, but with the changes in the communication mode between the new application market and the Internet of Things(IoT), artificial intelligence(AI), and smart home, the development of human-machine interface tends to be diverse. For example: the water tolerance touch could be applied in the field of medical institution, nautical ship or bathroom; while the 3D gesture recognition technology could be applied in automobile market, smart window with adaptive high-beam system, panels for vending machine and medical appliance based on the rules of public health. In conclusion, the touch technique is a basic for human-machine interface. With the continuous integration of technologies, a brand new humanmachine communicating interface has been developed, and the assistance and mechanical learning of various AI algorithms have enabled the development of the overall human-machine communicating interface to present an infinite vision.

  • B. Relationship with up-, middle- and downstream companies a. LCD
a. LCD
Upstream Midstream Downstream
Glass substrate Video products
Conductive glass TN-LCD Consumer products
Color filter STN-LCD Information technology products
Polarizer TFT-LCD Communication products
Backlight module T/P Instrumentation products
Liquid crystal Electronic products
Driver IC Commercial products
Automotive products

b. CTP

Upstream Midstream Downstream Adhesive (liquid adhesive, Video products optical adhesive) Consumer products ITO target material Capacitive touch Information technology products ITO film panel / module Communication products ITO glass Instrumentation products PET film Electronic products Surface glass Commercial products Flexible print circuit (FPC) Automotive products Driver IC

  • 64 -

C. Product trends

  • a. Small and medium size of LCD

Small and medium size of consumer displays are mainly applying for smart phones, tablets, NBs, smart home devices and screens of automobiles, etc. Niche non-consumer displays are applying for industrial equipment, instrument, medicine, etc. The Company focuses on customized niche displays, and the characteristic of the product’s size, weight, function, and even the brand all presents quite different customization features. The description as below:

  •  High resolution and wide viewing angle

Due to the technical demand of large size and high fidelity visual effects stimulated by LCD TVs, TFT panel prices have gradually come down with the large scale investments by several liquid crystal panel manufacturers. Owing to this, the development of small and medium size display panels is also in the direction of high resolution and wide viewing angle and shall lead to new end use application.

  •  High brightness and wide color gamut

React to the high-brightness demand of industrial control display and color accuracy of medical display, the industry has dispersed or coated fluorescent quantum dots in polymers to form film which so called “Quantum Dot Enhancement Film”(QDEF). The color accuracy of quantum dot could filter blue light into pure white light, and overcome the congenital defect of LCD to effectively reduce the dependence on color compensation to the filter layer. Thus, the luminance and color gamut all get an effective promotion. The actual performance is even comparable to OLED panels.

  •  Touch screen replace conventional keypad

  • As the smartphone market become mainstream for mobile phones, the conventional keypad has been gradually replaced by touch screen to make full use of the space on the phone. Recent launches of iPad seem to be on the trend of replacing small-size NB and prompt medium size LCD to become touch screen. Because of the popularization of the internet, networking has become more diverse and complex. The structure of resistive touch mode is no longer compatible with the demands of future development and the capacitive touch screen, with multi-touch function and high transmittance, gradually becomes the mainstream in the next wave of innovation.

b. CTP

Although projected CTP has already become mainstream, manufacturers continue to research and develop the technology to make touch panel lighter, thinner, cheaper, and less power consuming. With expectations to meet consumer preferences with product specifications and widen the gap with competitors, touch panel manufacturers must accelerate the pace of new generation material or structure to meet the rapidly growing demand of mobile devices. Key directions of research and development are as follows:

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 Water tolerance touch

The applied field of water tolerance touch is considerably extensive. For example: the outdoor access security system, the garage switch, the bathroom, kitchen and medical equipment. When the screen accumulates a certain area of water drops, it will seriously interfere with the touch signal, and the correction and adjustment of the algorithm can effectively reduce the situation of touch misjudgment.

  •  Capacitive 3D gesture recognition technology

  • With the change between new application market and in the Internet of Things(IoT), artificial intelligence(AI), and visual communication modes, the development of human-machine interface tends to be diverse. The evolution of 2D touch turned into 3D gesture will become a trend. The 3D gesture technique is similar to capacitive touch technique, which detects gestures by electric field sensing to detect gesture move in three dimensional space. The electrode of capacitive sensing technique covers in the incrustation of equipment, compared with infrared sensing technique, the electrode of capacitive sensing technique could make a beautiful industrial design without additional cutouts.

D. Product competition

Global supply and demand and product structure of small and medium size LCD have stabilized. Quality and prices of upstream and downstream critical components are integrated and transparent. Competitiveness lies the product design, marketing channels, cost control, production yield rates, and equipment utilization rate of manufacturers. Generally speaking, Taiwanese manufacturers still have a competitive advantage in automotive, industrial equipment, medical equipment, high-end communication products, and special niche products. Large scale standard consumer electronics markets and Chinese markets are less suitable for development of Taiwanese manufacturers, as they are primarily dominated by Hong Kong and Chinese manufacturers.

The OLED panel in consumer market especially the mobile phone panel will gradually replace LCD panel. Thus, many panel factories abandoned the attitude of massing capital in expanding of production in the past, and turned to make a technology investment which is more progressive than OLED, such as Mini LED and Micro LED. Especially the Micro LED are integrated the technical advantage of the existing semiconductor, LED and display by Taiwan factories. Once the mass production of Micro LED is successful, it will form the situation of industrial competition with OLED. The Company will intently pay attention to its long-term development, and would equip the module products with display technology required by the market. However, the major needs of industrial control and medical market are still LCD.

  • 66 -

Besides, many traditional display-related companies gradually abandon the thought of component suppliers in the past on market positioning, turn to emphasize multicultural concordance in the field of electron, electrical engineering, optics, mechanism, communication, software and artificial intelligence(AI), and provide high value added product and service, even become the provider of “solution”. In addition to making the display presents more diversification and differentiation, it also enables customers to save resources and shorten development time to create a win-win situation. Depending on customer needs, some component suppliers sell not only hardware applications, but turn to provide the integration of software and hardware in overall units or some stages to increase gross profit and sales unit price by solving more needs of customers. Through value transformation, technological innovation and smart manufacturing, the Company fits the industrial tendency of smart life, Internet of Things(IoT) and Internet of Vehicle (loV) in the future.

5.1.3 Research and development

A. The Company has invested NT$116,966 thousand into research and development for 2021, and planned to invest NT$135,600 thousand for 2022.

B. Successfully developed technologies or products:

Item R&D Results Description of Benefits
1 CTP Water Tolerance
Improvement with AI		 We have designed a water-tolerance algorithm in the MCU
through self-capacitance sensing technology to achieve a
single-finger click function at the center of the display during
the flushing process of the shower head. However, the
surrounding area will be false touch due to the capacitive
coupling effect caused by the flowing water. We hope to
solve this problem through AI algorithms, and make this
technologycommerciallyavailable.
2 SpaceGesture Technology
Development		 Develop a touchless human-machine interface interactive
gesture sensing function through self-capacitance sensing
technologyto fulfill customer’s needs for touchless solution.
3 Capacitive Touch Panel
with Pressure Sensing
Function		 The water-tolerance algorithm developed by us is currently
limited to tap water and rainwater. Through capacitive
pressure sensing technology, we hope to solve the problem
of unstable control in the case of salt water with high
conductivity.
4 Microchip maXTouch
Solution Development		 Build CTP technology related OS integration through the
realproject with Microchip.
5 AIoT+Audio Recognition
Technology Application
Development		 Develop the AIoT technology to control white goods.
6 Floating Imaging with Air
Touch Technology
Development		 The floating image display allows users to click on the
screen by touching the floating screen instead of the
physical buttons. It can be applied to elevators, restaurant
POS(point of sale) machines, medical devices, public
signage information machines,etc.
7 Light Field Floating Image
Technology Development		 It is new image display and interaction technology, different
from the traditional direct-view 2D screen/image and 2D
touch, to provide a more humane, more natural, more
intuitive image visual and interactive experience for people.
It also changes the interaction interface and promotes a
deeper integration between the real world and the virtual
world. Thus it will bring new business opportunities for us in
smart medical care, smart entertainment, smart retail, and
smart mobility.
  • 67 -
Item R&D Results Description of Benefits
8 Flexible Liquid Crystal
Device Technology
Development		 While the development of liquid crystal displays in the
direction of ultra-thin and light-weight, and the trend of
curved wearable products, we use a soft plastic substrate to
create a flexible liquid crystal display with additional
advantages such as bendability, drop resistance, shatter
resistance,and light-weight.
9 Embedded Solution
Platform		 Finish 3 types Embedded Solution Platform including
STM32F750, STM32H750 and STM32H7B0. The
STM32H7B0 platform supports 4 product sizes of 3.5
inches, 4.3 inches, 5 inches, and 7 inches. As the LCD
connect interface of these 4 sizes are all the same, they can
use the same platform by simply selecting the corresponding
size inside theprogram.
10 Add-On Board for
Embedded Product		 The Add-On Board developed by us has a variety of serial
ports and can assist customers in pre-development testing
and product integration application through the combination
with various types of environment sensing sensors or
situation sensingsensors.
11 Intellectual Property Rights
(include Patents and Trade
Secret)		 Number of intellectual property right proposals totaled 25,
which include 15 patent proposals and 10 trade secret
proposals. Number of intellectual property rights granted
totaled 15(proposals accumulated in thepreviousyears).

5.1.4 Long-term and Short-term Development

  • A. Short-term development

  • a. Provide variation design of TFT-LCD module to satisfy different customized needs from customers, increase the proportion of niche-type display products in pan-industrial control and medical to diversify product types, and maintain the growth and earning power of the Company in the future.

  • b. Develop solutions of embedded system to help customers integrate development needs such as software, firmware, and hardware design, further to make it differentiate and high-added valuing. Increase gross profit and sale price through technical integration.

  • c. Import advanced engineering technology and new featured material, change product module configuration and enhance production technology to allow product design abilities of the Company to correspond with the trends of light, thin, short, small, and refined, as well as meet the standards of design required for the harsh operating environment of the pan-industrial control market.

  • d. Enhance function of technical services in overseas stronghold and increase business ratio of “total solution” to satisfy the quality of prompt service required by customers.

  • B. Long-term development

  • a. Enhance the Company’s R&D energy, cultivate developing potential of industries, build the R&D center of somatosensory technology, establish self-application capabilities of software and firmware development, and lock prospective advanced human-machine interaction technology for doing research and development.

  • b. Optimize the cost of optical bonding process and display technology such as surface treatment and free form laser cutting, strength the existing capacitive touch technique, develop water tolerance touch to utilize it in the outdoor access security system, the device in parking lot, the bathroom, kitchen and medical equipment.

  • c. Develop 3D gesture, intelligent algorithms and expand diversified technology of interactive human-machine interface display. Realize a smart home and take the preemptive opportunities of high gross profit market in the future.

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5.2 Market and sales overview

5.2.1 Market analysis

A. Sales region

End customers of the Company are mainly located in North America and Europe. Geographic areas of ordering clients and the percentages are: Asia 10.30%, Europe 56.38%, Americas 22.01%, other areas and domestic sales 11.31%.

B. Market share

Small and medium-sized liquid crystal displays, capacitive touch panels, and modules are main product of the Company and components for liquid crystal display product. According to Photonics Industry & Technology Development Association(PIDA) statistics, gross output value of Taiwan’s display industry for 2021 was US$38.4 billion. The operating revenue of the Company for that year was US$149 million, accounting for about 0.39% of Taiwan’s panel output value. Additionally, according to Sigmailtell statistics, gross output of the global display industry for 2021 was US$121.8 billion. The operating revenue of the Company was accounting for about 0.12% of the total global panel output value.

C. Future demand, supply, and growth potential of the market In a report issued by Nomura Securities noted that the global LCD market will be in a state of dynamic balance from 2021 to 2023. The effect of home economy under the Covid-19 epidemic have stimulated the shipments of laptops and tablets to increase by 23% and 13% in 2021, respectively. However, as the epidemic eases, it is estimated that the shipments of laptops will maintain a flat level in 2022 and decrease by 7% in 2023. Tablet shipments are estimated to drop by 7% and 2% within the two years, respectively. Fortunately, according to DIGITIMES research, telecom providers in mature markets such as the United States, Japan, and Western Europe are expected to resume large-scale deployment and commercial uses of 5G networks after the world gradually gets rid of the haze of the epidemic, and then start the wave of 5G replacement. It is estimated that the rebound of global smartphone shipments is expected to reach double digits, and such shipments will exceed 1.5 billion and 1.7 billion units in 2023 and 2025, respectively.

By ushering in new business models and vertical applications, the Internet of Things (IoT) is driving the industrial ecosystem transformation. Related applications of IoT are including industrial control, automotive, smart speaker, smart home appliances, and so on. The IoT technology started from improving user experiences to gradually developing new solutions such as thin and light designs, flexible displays, and transparent screens to redefine the humanmachine interface. The focus of the industry will also move from the previous scale competition to value competition. Because the mainstream size of tablets accelerates to large-scaled models, the demand for digital cameras continues to shrink, and smart phone panels continue to switch to AMOLED, enabling the automotive applications and IoT to become a main growth driver behind the global shipment of small and medium-sized TFT-LCDs beginning in 2022.

  • 69 -

In terms of medical device products, the medical-related market will maintain long-term and continuous growth as the global population grows, the aging population increases, the economy for developing countries strengthens, and the influence of infectious diseases magnifies under the globalization trend. The outbreak of the COVID-19 epidemic helps to drive the structural transformation of global medical device and relevant medical device demands. According to a report of IEK Consulting, the global medical device market will reach US$437.7 billion in 2021 and is expected to grow at a compound annual growth rate of 4.8% to US$491.4 billion in 2023. The Company has carefully cultivated the medical industry for many years, and is cautiously optimistic that the ratio of applications for medical products is expected to grow annually.

With the explosive growth of the electric vehicle industry and the rise of automotive intelligence and autonomous driving trends, the demand in automotive industry will continue to remain strong, and automotive panels have the potential to become the sixth largest application in the display market. In addition, the rise of Mini-LED and QD-OLED technologies, together with the evolution of Metaverse technology and the maturity of 5G networks, expects to drive the growth of display market eventually.

  • D. Competitive niche, advantages and disadvantages for future development, and corresponding policies

  • a. Competitive niche

    •  Strong management team

      • With over 25 years of experience in LCD related industries, the business team of the Company has seasoned technical and managerial personnel whom are highly sensitive to technology and market demands, and can therefore fully grasp LCD market trends. The Company not only values product research and development as well as quality improvement, but also innovates and expands into upstream and high added value products. Company employees have a strong sense of unity and stability. After the experience of recent financial turmoil, company policies have further foresight. The Company has successfully crossed into touch panel domain following existing pace of research and development, and become one of the leading manufacturers in the domestic LCD industry.

    •  Completed production and distribution system with major international company creating stable supply source and product channel In aspect of quality, international quality certifications ISO 9001 and ISO 9002 have already been achieved in the early years. The Company is also the first manufacturer in the domestic LCD industry to achieve quality certification QS 9000 of the three major car manufacturers. In addition, upstream suppliers undergo strict selections to ensure the excellent quality of products.

In aspect of order delivery date, the Company has overcome LCD, LCM industry characteristics of numerous product range and specifications as well as short delivery date by relying flexible production process and good cooperating relations with critical material suppliers obtained over the years. Accurate delivery dates and stable quality from production lines has allowed the Company to obtain orders from major international companies and even become a long term cooperating strategic partner of these companies.

  • 70 -

  •  Development towards vertical integration of applications, increase product added value, and enhance competitiveness The Company has always expanded market and clients via quality, technology, and service and has very competitive performance in “Interactive Display Solution”, which derives from the integration of display and touch panel functions. Whether it is the optical bonding production capability and yield rate, which the product itself is high demanding, or the technical support of client application software compatibility testing, the Company performs far beyond average industry standards.

  •  Excellent quality and stable orders

    • In addition to company managerial personnel, who are all from well-known international and domestic manufacturers with years of technology experience, use of technically advanced equipment and strict control of product flow to improve yield rate from the very beginning has allowed the quality of company products to remain stable and achieve certification from international companies for niche products such as the internet phone, mobile clinic, high end servers, industrial human-machine interface, and home automated security systems. Once certified, entry to their long-term supplier system is allowed and along with opportunities for stable orders. Hence, performance of the Company is supported by a long term and stable client basis.

  • b. Advantages for future development

  •  Steady growth in demand for touch panel and modules

    • Driven by the emerging application products such as 2-in-1 tablet, onvehicle and wearable devices, plus the increasing demands for automotive touch panels, it is estimated that the scale of touch panel market would keep stable growth. Moreover, applications of capacitive touch panels continue to increase, covering game machines, educational tablets, white goods, GPS, public information inquiry system (KIOSK), ATM, POS system, vending machines, and so on. Extensive use of capacitive touch panels shows that there is considerable growth potential in the panindustrial control market for the touch panel industry.

  •  Rise of the Internet of Things(IoT) boosts development of smart wearable devices

With the rapid developments of the IoT and big data analysis technology, the demand for the smart wearable devices that are able to sense and collect data is getting obvious. Whether it is retail business, transportation and logistics, agricultural and stock farming, smart city developing, or medical service, they all need this data collecting and analysing process in order to make the best decision from the latest update. However, the smart wearable devices such as smart glasses, smart watch, and smart bracelet, are unable to go viral in the consumption market like smart phone did. Try to make its way into other niche markets is an important way out for the smart wearable devices in the future.

  • 71 -

With the improving internet medical technology, the wearable devices with sensors for collecting human body related information make personalized accurate treatment achievable. In the aspects of disease prevention and care management, it enables long distance and home care services to improve life quality for the patient and lower medical burden, therefore found the blue ocean for the wearable devices. Smart wearable devices work effectively in medical appliance, and make the associated technology such as sensor and AMOLED panel develop rapidly. Mainly aided by the development of AI and 5G innovative technologies, the IoT will be booming in the next ten years and becomes its “golden decade”. Statistics from the Institute of Industrial Technology International Strategy Development (ITRI) show that the global IoT output is estimated to stand at US$1.7 trillion in 2024, while the domestic IoT output value reached NT$1 trillion for the first time in 2018, and has the opportunity to exceed NT$2 trillion in 2023. Its goal is to represent 5% of the global IoT market share by 2024. Therefore, the IoT is considered the biggest business opportunity followed by the mobile device, and will drive the continuing growth of small and medium-sized display market as well as broaden future development.

  •  Establishment and formation of upstream critical components and materials industry supply system

    • The key upstream components include chemicals (photoresist, ITO targets, etc.), backlight sources (light-emitting diodes, cold cathode tubes, etc.), backlight modules (referring to integrated modules comprised of backlight source, prismatic lens, brightness enhancement film, diffusion film, light guide plate, etc.), photomask, ITO conductive substrate, plastic frame, prismatic lens, diffusion film, brightness enhancement film, light guide plate, driver IC, and so on. At present, Taiwanese manufacturers have gained a place in the industrial supply chain for some components such as backlight modules, color filters, prismatic lens, brightness enhancement films, diffusion films, polarizers, and driver ICs. However, TFT-LCD industry upstream materials such as glass substrates, ITO targets, and PVA polarizer films still rely mainly on Japanese manufacturer supply.

  • c. Disadvantages for future development and corresponding policies

  •  Touch panel industry gradually enters the highly mature stage. Due to good prospects on applications, competitors continue expansion of new production lines and increasing the risk of imbalance between production and distribution

Diverse development of application product market stimulates continued growth in touch panel market demand. However, market competition has become increasingly fierce, especially over markets with lower technical threshold. Overall market price for products is pressured to go down.

  • 72 -

Corresponding policies:

Actively improve and change the production process and design to increase the value of product portfolio and satisfy the diverse needs of clients. Also, enhance flexibility and efficiency of product assembly to shorten production schedule and enhance product competiveness. In addition, import of automated production equipment and improvement of production process as well as implementation of lean management and production division to fully achieve the complementary effect of compared interests, lower production costs and enhance company competiveness.

  •  Supply of critical materials is periodic unbalance

The supply of upstream materials such as the control IC and ITO conductive glass cannot meet the growth of the LCD and CTP industries, leading to tight supply of upstream materials and affecting the production and delivery time.

Corresponding policies:

Maintain at least two or more main material suppliers and establish close partnerships within the critical upstream supply chain.

5.2.2 Main uses and production processes of main products

  • A. Main uses of products

  • (1) Industrial equipment application

  • (2) Smart home device application

  • (3) Automotive related application

  • (4) Medical equipment application

  • (5) Commercial equipment & OA application

  • B. Production processes

LCD, LCM, and T/P are the Company’s main products. The manufacturing processes are as follows:

a. LCD

  •  Front-end engineering

LCD Photo process → Insulator coating → PI coating → PI rubbing →

Seal printing → Spacer spread → Assembly → Hard press → Curing inspection

  •  Back-end engineering

LCD cutting → LC sealing → Function inspection → Polarizer attachment → Cosmetic inspection → Warehousing

  • 73 -

b. LCM

 Assembly

SMT process → LCM assembly process → Final inspection → OQC → Packing SMT process → COB process → LCM assembly process → Final inspection → OQC → Packing

 COG

SMT process → COG process → LCM assembly process → Final inspection → OQC → Packing

 TAB

SMT process → TAB process → LCM assembly process → Final inspection → OQC → Packing

c. T/P

ITO Sputtering → Photo etching → OC coating → ITO Sputtering → Photo etching → Metal Sputtering → Metal etching → OC coating → ITO Sputtering → Sensor cutting → FPC bonding → C/L+Sensor lamination → Inspection → Warehousing

d. T/P+LCM

T/P+LCM lamination → Final inspection → OQC → Packing

5.2.3 Supply status of main materials

Main Materials Source of Supply
Backlight Module Taiwan / China
Driver IC & Touch IC Taiwan
ITO Glass Taiwan
Liquid Crystal Japan / China
Polarizer Taiwan / China
Panel Taiwan / China
Cover Lens Taiwan / China
TFT Module Taiwan / China
  • 74 -

5.2.4 Major suppliers and customers

A. Major suppliers for the most recent 2 fiscal years

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year 2021 Year 2020
Item Name Amount Percentage of
annual net
purchases(%)		 Relationship
with the
issuer
Name		 Amount Percentage of
annual net
purchases(%)		 Relationship
with the
issuer
1 AAA 600,744
21.20
None		 AAA 415,295
18.46
None
Others 2,233,585
78.80		 Others 1,834,494
81.54
Net
purchases		 2,834,329
100.00		 Net
purchases		 2,249,789
100.00

Purchased amount from supplier AAA increased due to total purchased amount increased in 2021 caused by the growth of sales.

B. Major customers for the most recent 2 fiscal years

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year 2021 Year 2020
Item Name Amount Percentage of
annual net
sales(%)		 Relationship
with the
issuer		 Name Amount Percentage of
annual net
sales(%)		 Relationship
with the
issuer
1 BBB 1,240,044
29.64
None		 BBB 1,032,571
27.63		 None
2 CCC 509,045
12.17
None		 CCC 360,162
9.64		 None
3 DDD 363,875
8.70
None		 DDD 399,887
10.70		 None
Others 2,070,439
49.49		 Others 1,944,679
52.03
Net sales 4,183,403
100.00		 Net sales 3,737,299
100.00

The sales to client BBB and CCC increased but DDD decreased due to the demand from end customers.

5.2.5 Production volume and value in the most recent 2 fiscal years

Unit: NT$ thousands / thousand pcs

Year
Majorproducts		 Year 2021 Year 2021 Year 2020 Year 2020
Production
capacity		 Production
volume		 Production
value		 Production
capacity		 Production
volume		 Production
value
LCM Module 30,480
2,571
917,856		 30,480
4,100
1,158,600
T/P Sensor & Module 7,524
6,383
3,252,950		 7,524
5,378
2,633,776
Total (Note) (Note) 4,170,806 (Note) (Note) 3,792,376

Note: Can not be added up due to different kinds of units.

5.2.6 Sales volume and value in the most recent 2 fiscal years

Unit: NT$ thousands / thousand pcs

Unit: NT$ thousands / thousandpcs Unit: NT$ thousands / thousandpcs Unit: NT$ thousands / thousandpcs Unit: NT$ thousands / thousandpcs
Year
Major Products
Year 2021		 Year 2020
Local Export Local Export
Volume Amount Volume Amount Volume Amount Volume Amount
T/P & LCD Module 202
401,782
4,590
3,660,110
178		 249,250
4,306
3,413,628
Others — 4,372
—		 117,139
—		 8,815
—		 65,606
Total 202
406,154
4,590
3,777,249
178		 258,065
4,306
3,479,234
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5.3 Employee statistics

Dec. 31,2021 Dec. 31,2020 Mar. 31,2022
Number of
employees		 Management Employee 75 73 78
Indirect Employee 287 293 293
R&D Employee 130 128 129
Operator 569 536 660
Total 1,061 1,030 1,160
Average age 43.22 42.86 42.53
Averageyears of service 13.30 13.14 12.42
Education
distribution
percentage
(%)		 Ph.D. 0.10% 0.10% 0.09%
Master’s degree 5.56% 5.53% 5.08%
College 34.40% 34.66% 32.76%
Senior high school 42.32% 42.91% 40.69%
Below senior high school 17.62% 16.80% 21.38%

5.4 Disbursements for environmental protection:

The Company produces and sales liquid crystal display panels, capacitive touch panels, and its modules. The waste and other hazardous materials generated during the production process are handled in accordance with related air pollution prevention and environmental protection laws and regulations. There is no issue of industrial pollution. Furthermore, there is no loss (including no compensation paid and no violation of environmental protection laws or regulations found in environmental inspection) suffered by the Company in the most recent fiscal year and up to the annual report publication date due to environmental pollution incidents.

5.5 Labor relations

5.5.1 Employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees’ rights and interests A. Employee benefits

A. Employee benefits
Bonus / Subsidy Insurance Leave
Year-end bonus
Employee bonus
Employee stock options
KPI performance bonus
Subsidy for marriage / childbirth
Subsidy for hospitalization /
funeral
Gift for holiday and birthday
Scholarship for employee /
offspring of employee
Subsidy for cafeteria meals
Company-paid regular physical
examination
Subsidy for leisure travel
Subsidy for enjoying artistic and
cultural activities
Bonus of employee stock
ownershiptrust		 Labor insurance
National health insurance
Appropriated labor pension
Group insurance for
employees and their
dependents
Endowment insurance
Medical insurance
Unemployment insurance
Work injury insurance
Maternity insurance
Housing provident fund		 Paid annual leave
Personal leave with pay
Sick leave
Menstrual leave
Marriage leave
Maternity leave
Leave for prenatal visits
Accompanying maternity
leave
Parental leave
Bereavement leave
  • 76 -

B. Education and training

  • a. Expenses for education and training of 2021 were NT$31 thousand. Education and training focused on course regarding financial accounting, environment / safety / health and specific equipment operation.

  • b. Human resources are the greatest asset in the sustainable company. The Company implements training for all employees and provides long term training of personnel to allow for continuous improvements and innovation. The main purpose of education and training is to enhance managerial ability and share professional skills. The most effective use of themed planning of education and training each year will cultivate employees more compatible with the corporate culture.

  • c. In addition to general professional training for new employees, managerial training for management of all levels, and professional training within departments, implementation of key courses planned in accordance with annual company strategies will enhance the abilities of employees and also achieve the annual goal.

C. Retirement system

  • a. The Company follow the government’s related regulations to monthly allocate retirement preparation funds based on 2% of the total salary to a saving account in the Bank of Taiwan as retirement payment for the employee’s seniority in old pension system of the Labor Standard Laws. For employee (including informal employee) with the Labor Pension Act in new pension system, 6% of the total salary will be allocated monthly to a personal account of retirement fund in the Bureau of Labor Insurance.

  • b. Labor pension supervisory committee has been established and government organizations notified in accordance with regulations. The committee is responsible for matters related to allocations of the employee retirement reserve funds.

  • c. The Company has adopted codes for employee retirement and full-time employees are all applicable from their date of employment. The conditions and procedures for employees applying for retirement are as follows:

  •  An employee may apply for voluntary retirement under any of the following conditions:

    • ‧ An employee attains the age of 55 and has worked for 15 years.

    • ‧ An employee has worked for more than 25 years.

    • ‧ An employee attains the age of 60 and has worked for 10 years.

  •  An employer shall not force a worker to retire unless any of the following situations has occurred:

    • ‧ An employee attains the age of 65. The Company may request the central competent authority to adjust the age prescribed if the specific job entails risk, requires substantial physical strength or otherwise of a special nature; provided, that the age shall not be reduced below 55.

    • ‧ An employee who is unable to perform his/her duties due to disability.

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  •  The criteria for payment of employee pensions:

    • ‧ According to old pension system of the Labor Standard Laws, two bases are given for each full year of service rendered. But for the rest of the years over 15 years, one base is given for each full year of service rendered. The total number of bases shall be no more than 45. The length of service is calculated as half year when it is less than six months and as one year when it is more than six months, however, an additional 20% on top of the amount calculated according to the preceding subparagraph shall be given to workers forced to retire due to disability incurred from the execution of their duties.

    • ‧ According to new pension system of the Labor Pension Act, the Company allocates 6% of the monthly salary which according to Salary Grading Table as retirement benefit and this amount shall be deposited to the employee’s pension account. An employee shall contribute voluntarily no more than 6% of his/her monthly salary to above account as retirement pension.

  •  The procedure of pension payment:

    • The Company shall pay the pensions within 30 days from the day of retirement according to old pension system of the Labor Standard Laws. Employees claiming retirement benefits shall open a specific account with necessary documents at a financial institution for the deposit of retirement benefits.

  • d. Pension for overseas subsidiaries are of defined contribution plan and social security payments for pension and health care are made each month in accordance with local government regulations.

  • e. For the labors who are adapting to old pension system of the Labor Standard Laws, the Company has accumulated NT$127,903 thousand as retirement preparation funds by the end of 2021; while the Company totally allocates NT$25,688 thousand for the labors who are adapting to new pension system of the Labor Pension Act in 2021.

  • f. In 2021, two persons have retired and departed according to relevant retirement regulations.

  • g. Other important agreements: None.

5.5.2 List any losses suffered by the Company in the most recent 2 fiscal years and up to the annual report publication date due to labor disputes (including any violations of the Labor Standards Act found in labor inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, the substance of the legal violations, and the content of the dispositions), and disclosing an estimate of possible expenses that could be incurred currently and in the future and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided:

  • 78 -

  • A. The Company pays close attention to the welfare of employees and emphasizes two-way communication between employers and employees to promote harmonious labor relations. There are no labor disputes during the most recent year or during the current fiscal year up to the date of printing of the annual report and no losses suffered from disputes. As the Company believes in mutual benefits for both parties, possibility of future labor disputes and losses are minute.

  • B. Estimated amount and corresponding measures for current and future possibilities: None.

5.5.3 Employee behavior or ethnic codes

The Company has adopted several codes and regulations regarding employee behavior and ethnics to allow employees to follow on for their ethnics, rights, obligations, and behaviors. The regulations are summarized as follows:

  • A. Codes of authorization: To improve work efficiency, strengthen level responsibility management, and effectively regulate the rights of all employees.

  • B. Job description of departments: Clear specification of the job description and organization function of each unit.

  • C. Rules of work: Reward or punishment based on employee behavior or action resulting in company gains or losses.

  • D. Regulations for new employee education and training: Arrangements for new employees will be made as soon as possible to eliminate the anxiety of an new environment and allow the new employees to become familiar with the work environment and colleagues as well as fulfill their productivity and lower departure rate of new employees.

  • E. Codes for attendance: Reference to follow for employee leave and absence.

  • F. Codes for assessment: To improve the assessment system and establish employee discipline. Annual assessment of employee performance will be used as basis for raise, promotion, bonuses, and the arrangement of education and training.

  • G. Sexual harassment prevention and measures: To prevent sexual harassment in the workplace and maintain gender equality as well as human dignity, the speech and behavior of employees are regulated.

  • H. Codes for intellectual property rights: To protect trade secrets, commercial interests and competitiveness of the Company as well as to prevent losses caused by leaks.

  • I. Codes for Ethical Management: To implement ethnical management policy and actively prevent misconduct, the code specifies and regulates employees when performing their duties.

  • 79 -

5.5.4 Protection measures for the work environment and personal safety of employees

  • A. Adopt codes for environmental safety management.

  • B. Establish managerial unit and personal for safety and hygiene:

  • a. Establish safety and hygiene managerial unit in accordance with the Occupational Safety and Health Act.

  • b. Equip operating site with emergency personnel and arrange refresher training in accordance with the Occupational Safety and Health Act.

  • c. Operators of organic solvents, specific chemicals, dangerous machinery and equipment, and high pressure gas equipment must be trained and has licensed certificate. Refresher training is to be arranged in accordance with the Occupational Safety and Health Act.

  • d. Hold monthly environment safety meetings and discuss issues related to environment safety.

  • e. Arrange fire and safely audit every month.

  • C. Fire prevention and facility safety

  • a. Monthly maintenance and inspection of lift by commissioned maintenance company, annual review by qualified inspection agency.

  • b. Fire equipment inspection by faculty division, annual review by qualified inspection agency.

  • c. High pressure gas equipment inspection by faculty division, annual review by qualified inspection agency.

  • D. Health and hygiene

  • a. Biannual operations environment check.

  • b. Annual physical examinations and particular physical checkups for employees.

  • c. Infirmary equipped with on-site nurses and occupational doctors to provide the appropriate medical assistance.

  • E. Achieved ISO45001: 2018 Certification for labor safety and health on February 23, 2021.

5.6 Cyber security management

5.6.1 Cyber security risk management framework

The “Cyber Security Committee” and “Cyber Security Implementation Team” were established in December of 2019 as an effort to maintain and strengthen the Company’s cyber security. Its cyber security policy is formulated by the “Cyber Security Implementation Team” and is approved by the “Cyber Security Committee”, and management review meetings are held regularly or the applicability of policies are re-evaluated when there are major changes in the organization (such as organizational adjustments, major business changes, etc.) Appropriate revisions of the cyber security policy will be made in accordance with latest assessment results, relevant laws, technologies, and business developments so as to be in compliance with actual needs. Meanwhile, the “Cyber Security Committee” makes regular reports of the cyber security risk management to the Board of Directors each year, thus strengthening supervision and management of directors to operations of the Company.

  • 80 -

5.6.2 Cyber security policies

  • A. The Company shall implement the compliance of relevant laws and regulations, including intellectual property protection law, personal data protection law, and agreements and contracts signed with external units.

  • B. Both the Management Information System and Administration Department are responsible for promoting the planning, implementation, communication and coordination of relevant management systems, and actively handling education, training and publicity on cyber security and personal data protection to ensure that personnel are familiar with the security responsibilities of business execution.

  • C. The information assets held by employees for the execution of the Company’s business are based on the principle of public ownership, and are classified, graded, and risk assessed according to their needs to achieve effective controls. Information operations are planned according to the actual needs of business execution for continuous management of operations so as to ensure the availability of information operations.

  • D. The physical office environment and important information equipment rooms are subject to access control to maintain the safety of the environment.

  • E. To prevent computer viruses and malware affecting operations, except for legally authorized systems and application software, the use of other unauthorized software is prohibited.

  • F. To ensure the effectiveness of the management system, those who violate the relevant procedures and norms of the management system shall be reviewed and punished in accordance with relevant regulations.

5.6.3 Concrete management programs

The Company considers that cyber security insurance is still an emerging type of insurance, involving cyber security level testing agencies, claims identification agencies, and non-claim conditions and other related supporting facilities. Therefore, after the evaluation by the Cyber Security Committee, the purchase of cyber security insurance is temporarily not recommended. At present, the main measures for cyber security risk management are able to effectively protect cyber security. The latest report was submitted to the Board of Directors on November 4, 2021. Details are disclosed in “Cyber Information Security Management” on the Company’s website.

5.6.4 Investments in resources for cyber security management

  • A. The Management Information System Department set up a total of 3 people responsible for the management of cyber security.

  • 81 -

  • B. Assisted by professional information security vendors to provide firewall connection rules backup and management consulting, anti-virus and backup system authorization and management consulting, and advanced integrated endpoint protection services, etc. The monthly expenditure is NT$48 thousand, and the amount totals NT$582 thousand each year.

  • C. Relevant “information security education and training” is implemented to all employees for two hours each year, totaling 929 people and 1,858 training hours. The completion rate was 100% in 2021.

  • 5.6.5 List any losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to significant cyber security incidents, the possible impacts therefrom, and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided: None.

5.7 Important contracts

Nature of contract Parties Beginning and end
dates of contract		 Major content Restrictive
clauses
Syndicated loan 7 banks,
including
E.SUN Bank		 May 15, 2020 ~
May 14, 2025		 Syndicated loan
totaling NT$800 million
Maintenance of
specific financial
ratio
Liability insurance
for directors		 Fubon
Insurance		 January 18, 2022 ~
January18,2023		 Liability insurance for
directors		 None
Liability insurance of
technology
Hotai
Insurance		 November 1, 2021~
November 1,2022		 Errors & omissions
insurance		 None
Commercial general
liabilityinsurance		 Hotai
Insurance		 November 1, 2021~
November 1,2022		 Product liability
insurance		 None
Transportation
cargo insurance		 Hotai
Insurance		 November 1, 2021~
November 1, 2022		 Transportation
insurance		 None
  • 82 -

VI. Financial Information

6.1 Five-year financial summary

6.1.1 Consolidated condensed balance sheet

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Item
Financial information for most recent 5 fiscalyears
2021 2020 2019 2018 2017
Current assets 2,979,118 3,010,069 2,950,694 2,744,601 2,906,821
Property, plant and
equipment		 332,762 331,314 365,955 455,838 391,411
Intangible assets 3,685 4,111 3,777 2,471 3,540
Other assets 273,878 263,695 316,440 191,158 233,351
Total assets 3,589,443 3,609,189 3,636,866 3,394,068 3,535,123
Current
liabilities		 Before
distribution		 947,700 1,478,103 1,528,241 1,096,599 1,136,283
After distribution 1,136,589 1,666,992 1,717,130 1,175,303 1,204,632
Non-current liabilities 569,360 150,521 156,644 488,310 481,278
Total
liabilities		 Before
distribution		 1,517,060 1,628,624 1,684,885 1,584,909 1,617,561
After distribution 1,705,949 1,817,513 1,873,774 1,663,613 1,685,910
Equity attributable to
shareholders of theparent		 2,027,331 1,939,757 1,892,106 1,742,230 1,835,532
Capital stock 1,624,076 1,624,076 1,624,076 1,744,076 1,834,076
Capital surplus 25,980 15,423 4,397 28,226 23,873
Retained
earnings		 Before
distribution		 654,787 591,094 539,266 355,707 325,664
After
distribution		 465,898 402,205 350,377 277,003 257,315
Other equityinterest (104,491) (117,815) (102,612) (112,570) (74,872)
Treasurystock (173,021) (173,021) (173,021) (273,209) (273,209)
Non-controllinginterest 45,052 40,808 59,875 66,929 82,030
Total equity Before
distribution		 2,072,383 1,980,565 1,951,981 1,809,159 1,917,562
After
distribution		 1,883,494 1,791,676 1,763,092 1,730,455 1,849,213

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed.

Note 2: The “after distribution” figures above were based on the amount resolved by the board of directors or resolved in the next year’s shareholders’ meeting.

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6.1.2 Consolidated condensed statement of comprehensive income

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Item		 Financial information for most recent 5 fiscalyears
2021 2020 2019 2018 2017
Operatingrevenue 4,183,403 3,737,299 4,107,559 2,818,735 3,005,136
Grossprofit 713,185 785,867 801,020 479,351 510,662
Income from operations 266,855 333,952 314,590 60,968 104,516
Non-operating income
and expenses		 1,069 (59,843) (10,690) 65,661 (37,308)
Income before tax 267,924 274,109 303,900 126,629 67,208
Net income 236,535 232,996 257,047 112,163 55,571
Other comprehensive
income (loss)
(after tax)		 33,615 (26,549) 10,820 (29,069) 16,137
Total comprehensive
income		 270,150 206,447 267,867 83,094 71,708
Net income attributable to
shareholders of the
parent
237,280		 233,466 257,325 111,926 54,314
Net income (loss)
attributable to non-
controllinginterest		 (745) (470) (278) 237 1,257
Comprehensive income
attributable to
Shareholders of the
parent		 265,906 225,514 274,921 82,274 70,045
Comprehensive income
(loss) attributable to non-
controllinginterest
4,244		 (19,067) (7,054) 820 1,663
Earningsper share(NT$) 1.60 1.57 1.73 0.71 0.33

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed.

  • 84 -

6.1.3 Parent-company-only condensed balance sheet

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Item		 Financial information for most recent 5 fiscalyears
2021 2020 2019 2018 2017
Current assets 2,791,982 2,891,257 2,852,695 2,651,613 2,762,047
Property, plant and
equipment		 266,891 278,747 309,051 340,513 324,512
Intangible assets 3,666 4,091 3,760 2,448 3,425
Other assets 392,155 403,771 423,352 352,910 375,943
Total assets 3,454,694 3,577,866 3,588,858 3,347,484 3,465,927
Current
liabilities		 Before
distribution		 868,603 1,489,274 1,543,804 1,117,174 1,149,117
After
distribution		 1,057,492 1,678,163 1,732,693 1,195,878 1,217,466
Non-current liabilities 558,760 148,835 152,948 488,080 481,278
Total
liabilities		 Before
distribution		 1,427,363 1,638,109 1,696,752 1,605,254 1,630,395
After
distribution		 1,616,252 1,826,998 1,885,641 1,683,958 1,698,744
Capital stock 1,624,076 1,624,076 1,624,076 1,744,076 1,834,076
Capital surplus 25,980 15,423 4,397 28,226 23,873
Retained
earnings		 Before
distribution		 654,787 591,094 539,266 355,707 325,664
After
distribution		 465,898 402,205 350,377 277,003 257,315
Other equityinterest (104,491) (117,815) (102,612) (112,570) (74,872)
Treasurystock (173,021) (173,021) (173,021) (273,209) (273,209)
Total equity Before
distribution		 2,027,331 1,939,757 1,892,106 1,742,230 1,835,532
After
distribution		 1,838,442 1,750,868 1,703,217 1,663,526 1,767,183

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed. Note 2: The “after distribution” figures above were based on the amount resolved by the board of directors or resolved in the next year’s shareholders’ meeting.

  • 85 -

6.1.4 Parent-company-only condensed statement of comprehensive income

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Item		 Financial information for most recent 5 fiscalyears
2021 2020 2019 2018 2017
Operatingrevenue 4,085,202 3,642,433 3,991,472 2,708,895 2,934,938
Grossprofit 619,107 681,192 674,877 364,548 399,068
Income from operations 264,308 323,241 298,793 50,932 102,666
Non-operating income and
expenses		 2,227 (53,072) 2,259 72,426 (38,700)
Income before tax 266,535 270,169 301,052 123,358 63,966
Net income 237,280 233,466 257,325 111,926 54,314
Other comprehensive income
(loss) (after tax)		 28,626 (7,952) 17,596 (29,652) 15,731
Total comprehensive income 265,906 225,514 274,921 82,274 70,045
Earningsper share(NT$) 1.60 1.57 1.73 0.71 0.33

Note: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed.

6.1.5 Auditors’ opinions for most recent 5 fiscal years

Year AccountingFirm CPA Audit Opinion
2017 KPMG Po Jen, Yang/ Kuo Tsung, Chen Unqualified
2018 KPMG Po Jen, Yang / Kuo Tsung, Chen Unmodified opinion plus an
emphasis of matterparagraph
2019 KPMG Po Jen, Yang/ Yen Ta, Su Unqualified
2020 KPMG Po Jen, Yang/ Yen Ta, Su Unqualified
2021 KPMG Po Jen, Yang / Yen Ta, Su Unqualified
  • 86 -

6.2 Five-year financial analysis

6.2.1 Consolidated financial analysis

Item Year Financial information for most recent 5 fiscalyears Financial information for most recent 5 fiscalyears Financial information for most recent 5 fiscalyears Financial information for most recent 5 fiscalyears Financial information for most recent 5 fiscalyears
2021 2020 2019 2018 2017
Financial
structure
(%)		 Debt to assets ratio 42.26 45.12 46.32 46.70 45.76
Ratio of long-term capital to property, plant and
equipment		 793.88 643.22 576.19 504.01 612.87
Solvency (%) Current ratio 314.35 203.64 193.07 250.28 255.82
Quick ratio 197.62 139.26 136.81 168.37 183.01
Times interest earned 3019.51 2512.29 2231.88 1132.36 719.14
Operating
performance		 Accounts receivable turnover(times) 6.19 6.49 7.85 5.62 6.58
Average collection days 58.96 56.24 46.49 64.94 55.47
Inventoryturnover(times) 3.44 3.31 3.74 2.65 2.93
Accountspayable turnover(times) 7.22 7.08 7.41 5.81 7.21
Average days in sales 106.10 110.27 97.59 137.73 124.57
Property, plant and equipment turnover(times) 12.59 10.71 9.99 6.65 7.07
Total assets turnover(times) 1.16 1.03 1.16 0.81 0.86
Profitability Return on total assets(%) 6.77 6.68 7.63 3.52 1.85
Return on equity (%) 11.67 11.84 13.66 6.02 2.81
Ratio of income before tax topaid-in capital(%) 16.49 16.87 18.71 7.26 3.66
Netprofit margin(%) 5.65 6.23 6.25 3.98 1.85
Earningsper share(NT$) 1.60 1.57 1.73 0.71 0.33
Cash flow Cash flow ratio(%) 15.82 11.08 25.91 26.44 (8.64)
Cash flow adequacyratio(%) 75.58 133.30 215.11 251.01 321.24
Cash reinvestment ratio(%) (Note 2) (Note 2) 6.16 4.06 (Note 2)
Leverage Operatingleverage 1.24 1.23 1.27 2.11 1.83
Financial leverage 1.04 1.04 1.05 1.25 1.12
Analysis of financial ratio differences for the last two years: (Not required if the difference does not exceed 20%)
1. Ratio of long-term capital to property, plant and equipment was higher due to using syndicated loans to repay short-term
borrowings, non-current liabilities inceased by 278.26% to NT$418,839 than 2020.
2. Current ratio, quick ration and cash flow ratio were higher due to the aforementioned reason, current liabilities deceased
by 35.88% to NT$530,403 than 2020.
3. Times interest earned was higher due to a decrease in long-term and short-term borrowings amounted to NT$301,651,
interest expenses decreased by 19.24% to NT$2,186 than 2020.
4. Cash flow adequacy ratio was lower due to the continuing growth of the Company’s operation, the 5-year sum of capital
expenditures, increases in inventoryand cash dividends increased by42.78% to NT$370,001 than 2020.

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed.

Note 2: It is not applicable because net cash flows from operating activities minus cash dividends is negative.

  • 87 -

6.2.2 Parent-company-only financial analysis

Item Year Financial information for most recent 5 fiscalyears Financial information for most recent 5 fiscalyears Financial information for most recent 5 fiscalyears Financial information for most recent 5 fiscalyears Financial information for most recent 5 fiscalyears
2021 2020 2019 2018 2017
Financial
structure
(%)		 Debt to assets ratio 41.31 45.78 47.27 47.95 46.85
Ratio of long-term capital to property, plant and
equipment		 968.96 749.27 661.72 654.99 713.94
Solvency (%) Current ratio 321.43 194.13 184.78 237.35 241.89
Quick ratio 207.24 135.87 135.50 168.78 183.68
Times interest earned 3438.36 2589.34 2374.66 1106.26 690.20
Operating
performance		 Accounts receivable turnover(times) 5.54 5.62 6.68 4.61 5.30
Average collection days 65.88 64.94 54.64 79.35 68.87
Inventoryturnover(times) 3.75 3.68 4.27 3.10 3.50
Accountspayable turnover(times) 8.04 7.97 8.41 6.79 8.71
Average days in sales 97.33 99.18 85.48 116.99 104.29
Property, plant and equipment turnover(times) 14.97 12.39 12.28 8.15 8.30
Total assets turnover(times) 1.16 1.01 1.15 0.80 0.86
Profitability Return on total assets(%) 6.92 6.75 7.72 3.57 1.85
Return on equity (%) 11.96 12.18 14.16 6.26 2.86
Ratio of income before tax topaid-in capital(%) 16.41 16.63 18.53 7.07 3.49
Netprofit margin(%) 5.80 6.40 6.44 4.13 1.85
Earningsper share(NT$) 1.60 1.57 1.73 0.71 0.33
Cash flow Cash flow ratio(%) 10.65 8.88 22.43 23.61 (5.49)
Cash flow adequacyratio(%) 68.10 129.18 226.85 281.72 317.74
Cash reinvestment ratio(%) (Note 2) (Note 2) 5.67 3.79 (Note 2)
Leverage Operatingleverage 1.18 1.19 1.23 2.24 1.72
Financial leverage 1.03 1.03 1.05 1.32 1.12
Analysis of financial ratio differences for the last two years: (Not required if the difference does not exceed 20%)
1. Ratio of long-term capital to property, plant and equipment was higher due to using syndicated loans to repay short-term
borrowings, non-current liabilities inceased by 275.42% to NT$409,925 than 2020.
2. Current ratio, quick ration and cash flow ratio were higher due to the aforementioned reason, current liabilities deceased
by 41.68% to NT$620,671 than 2020.
3. Times interest earned was higher due to a decrease in long-term and short-term borrowings amounted to NT$301,651,
interest expenses decreased by 26.44% to NT$2,869 than 2020.
4. Property, plant and equipment turnover was higher due to the optimized product portfolio, operating revenue increased
by 12.16% to NT$442,769 than 2020.
5. Cash flow adequacy ratio was lower due to the continuing growth of the Company’s operation, the 5-year sum of capital
expenditures, increases in inventoryand cash dividends increased by37.29% to NT$308,035 than 2020.

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed. Note 2: It is not applicable because net cash flows from operating activities minus cash dividends is negative.

  • 88 -

6.3 Audit committee’s review report for the most recent year

Emerging Display Technologies Corp. Audit Committee’s Review Report

The Board of Directors report the business report, consolidated financial statements, parent-company-only financial statements and profit allocation proposal of 2021. Of the said documents, the financial statements have been duly audited by Certified Public Accountants Po Jen, Yang and Yen Ta, Su of KPMG Taiwan.

The above business report, consolidated financial statements, parent-company-only financial statements and profit allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of the Company. According to relevant requirements of the Securities and Exchange Act and the Company Law, we hereby submit this report.

Emerging Display Technologies Corp.

==> picture [36 x 37] intentionally omitted <==

Chairman of the Audit Committee: Huang, Hui-Ling

March 10, 2022

  • 89 -

6.4 Consolidated financial statements for the years ended December 31, 2021 and 2020, and independent auditors’ report

Representation Letter

The entities that are required to be included in the combined financial statements of Emerging Display Technologies Corp.as of and for the year ended December 31, 2021, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10, “Consolidated Financial Statements.”

In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Emerging Display Technologies Corp. and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

Emerging Display Technologies Corp.

By Ray Tseng Chairman March 10, 2022

  • 90 -

Independent Auditors’ Report

To the Board of Directors of Emerging Display Technologies Corp.:

Opinion

We have audited the accompanying consolidated financial statements of Emerging Display Technologies Corp. and subsidiaries (the Group), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2021 and 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the Group’s 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 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(IFRS), International Accounting Standards(IAS), IFRIC Interpretations(IFRIC), and SIC Interpretations(SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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 consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters we judged shall be presented in the consolidated financial report as follows:

1. Valuation of accounts receivable

Please refer to Note 4(g) for accounting policy of accounts receivable valuation and Note 5(a) for accounting assumption and estimation uncertainty of impairment of accounts receivable. Information regarding accounts receivable is shown in Note 6 (d) of the consolidated financial statements.

Description of key audit matters:

The Group’s customers are the manufacturers of industrial equipment, smart home devices, handheld devices, and information appliance products. The customers’ delayed payments were due to the need to clarify the responsibility of problematic products resulted from failure of process or usage of end products, and global economic turmoil. Because of the inherent credit risk of receivables, the financial statements users value the collection results. Since the accounts receivable is significant to the financial statements, they are one of the key areas our audit focused on.

  • 91 -

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding the process of account checking and collection with customers; analyzing the receivable aging report; reviewing the historical receipt and bad debt records; and understanding the forward-looking industrial economic status and concentration of credit risk of the customers. In addition, we also evaluated the appropriateness of related disclosures in the consolidated financial statements.

2. Valuation of obsolete inventory

Please refer to Note 4(g) for accounting policy of obsolete inventory and Note 5(b) for accounting assumption and estimation uncertainty of obsolete inventory valuation. Information regarding obsolete inventory valuation is shown in Note 6(f) of the consolidated financial statements.

Description of key audit matters:

Obsolete inventory is carried at 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 costs of completion and selling expenses. The Group is engaged in the manufacture and sale of liquid crystal displays and capacity touch panels. It focuses on the small and medium sized niche markets of non-consumable area. The products are used in industrial equipment, smart home devices, handheld devices, and information appliance products. The development strategy of the Group is diversifying and customizing its products which may result in having an impact on its obsolete inventory cost. As a consequence, there is a risk that the net realizable value of obsolete inventory may turn out to be lower than its carrying value. Therefore, the valuation of obsolete inventory is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included selecting samples to test the accuracy of inventory aging report; analyzing the changes of inventory aging, and examining the provision of inventory by reviewing the historical accuracy on provision. We assessed the changes of obsolescence inventory in the subsequent events and the basis of net realizable value to evaluate the accuracy of the Group’s provisions. In addition, we also assessed the appropriateness of the provisions and disclosures made by the management.

Other Matters

We have also audited the parent company only financial statements of Emerging Display Technologies Corp. as of and for the year ended December 31, 2021 and 2020, on which we have issued an unmodified opinion.

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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the 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 the management either intends to liquidate the Group or to cease its operations, there is no realistic alternative but to do so.

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

  • 92 -

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

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

  1. 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.

  2. 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.

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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, we have 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.

  5. 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.

  6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on this consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

  7. 93 -

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 determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Po Jen, Yang and Yen Ta, Su.

KPMG

Taipei, Taiwan (Republic of China) March 10, 2022

Notes to Readers

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

The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ review report and consolidated financial statements, the Chinese version shall prevail.

  • 94 -

(English Translation of Financial Statements and Report Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES

Consolidated Balance Sheets December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Assets
Current assets:
1100
Cash and cash equivalents ((Note 6(a))
1110
Financial assets at fair value through profit or loss, current ((Note 6(b))
1120
Financial assets at fair value through other comprehensive income, current
(Note 6(c))
1170
Accounts receivable, net (Note 6(d) and 6 (v))
1200
Other receivables (Note 6(e))
1220
Income tax assets
130X
Inventories (Note 6(f))
1470
Other current assets (Note 6(g) and 8)
Total current assets
Non-current assets:
1517
Financial assets at fair value through other comprehensive income, non-current
(Note 6(c))
1600
Property, plant and equipment (Notes 6(i) ,8 and 9)
1755
Right-of-use assets (Notes 6(j)
1760
Investment property (Notes 6(k)
1780
Intangible assets (Note 6(l))
1840
Deferred income tax assets (Note 6(s))
1980
Other non-current financial assets (Notes 6(g) and 8)
Total non-current assets
TOTAL		 **December 31, ** 2021 December 31, 2020
Amount
％

1,242,331
34
58,817
2

159,760
5

589,550
16
6,090
-
18
-

870,501
24
83,002
2
3,010,069
83

98,691
3

331,314
9

67,228
2

55,158
2
4,111
-

31,928
1
10,690
-

599,120
17
3,609,189
100
Liabilities and Equity
Current liabilities:
2100
Short-term loans (Notes 6(m))
2120
Financial liabilities at fair value through profit or loss, current (Notes 6(b))
2150
Notes payable
2170
Accounts payable
2200
Other payables (Notes 6(n))
2230
Income tax liabilities
2280
Lease liabilities, current (Notes 6(p))
2300
Other current liabilities (Notes 6(v))
Total current liabilities
Non-current liabilities:
2540
Long-term loans (Notes 6(o) and 8)
2570
Deferred income tax liabilities (Note 6(s))
2580
Lease liabilities, non-current (Notes 6(p))
2640
Net defined benefit liabilities, non-current (Note 6(r))
2645
Guarantee deposits received
2670
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity attributable to shareholders of the parent(Note 6 (t) and 11:
3100
Capital stock
3200
Capital surplus
3300
Retained earnings
3400
Other equity interest
3500
Treasury stock
Total equity attributable to shareholders of the parent
36XX
Non-controlling interests (Note 6(h))
Total equity
TOTAL		 **December 31, ** 2021
％		 **December 31, ** 2020
％
Amount
$ 816,356
42
302,101
749,530
2,823
104
1,056,165
51,997		 ％ Amount Amount
700,000
195
1,234

400,068

274,518

51,559
7,325
43,204

23

-

8

21

-

-

29

2		 $ -
-
86
559,800
290,708
29,744
11,644
55,718		 -
-

-

16

8

1

-
2
19

-

-

11

8

2

-
1

947,700		 27
1,478,103		 41

2,979,118

83
3,010,069		 398,349
240
68,730
100,977
544
520
11

-

2

3

-
-
-
354

61,833

87,048
558
728		 -

-

2

2

-
-

113,460
332,762
77,475
52,967
3,685
21,737
8,239

3

9

2

2

-

1

-

98,691

331,314

67,228

55,158
4,111

31,928
10,690
569,360 16 150,521 4

1,517,060		 43
1,628,624		 45

1,624,076
25,980
654,787
(104,491)
(173,021)
45

1

18

(3)
(5)

1,624,076

15,423

591,094

(117,815)
(173,021)
45

-

17

(3)
(5)

610,325
$
3,589,443

17
100

599,120
3,609,189

2,027,331
45,052

56
1

1,939,757
40,808

54
1

2,072,383		 57
1,980,565		 55

$
3,589,443		 100
3,609,189		 100

See accompanying notes to consolidated financial statements.

  • 95 -

(English Translation of Financial Statements and Report Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

4000
Operating revenue (Note 6(v))
5000
Operating cost (Note 6(f, l, r & w) and 12)
Gross profit
Operating expenses (Note 6(l, r & w) 7 and 12):
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Expected credit impairment loss(gain) (Note 6(d))
Total operating expenses
6500
Net other income (expenses) (Note 6(q, x))
Operating profit
Non-operating income and expenses (Note 6(c, p & x)):
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance cost
Total non-operating income and expenses
7900
Profit before income tax
7950
Income tax expense (Note 6(s))
Profit
8300
Other comprehensive income:
8310
Items that will not be reclassified subsequently to profit or loss:
8311
Remeasurement of defined benefit obligation
8316
Unrealized losses on investments in equity instruments at fair value
through other comprehensive income (Note 6(t))
8349
Less: Income tax related to items that will not be reclassified
subsequently (Note 6(s))
8360
Items that may be reclassified subsequently to profit or loss:
8361
Exchange differences on translation (Note 6(t))
8399
Less: Income tax related to items that will be reclassified
subsequently (Note 6(s))
8300
Other comprehensive income, net
8500
Comprehensive income
Profit (loss) attributable to
8610
Shareholders of the parent
8620
Non-controlling interests
Net profit (loss)
Comprehensive income attributable to
8710
Shareholders of the parent
8720
Non-controlling interests
Total comprehensive income
Earnings per share (Note 6(u)) (expressed in New Taiwan Dollars)
9750
Basic earnings per share
9850
Diluted earnings per share		 2021 2020
Amount ％ Amount ％
$ 4,183,403
3,470,218
100
83
3,737,299
2,951,432
100

79

713,185		 17
785,867

21

204,557
128,504
116,966
164
5

3

3
-

200,931

133,865

115,565
5,618

5

4

3

-
450,191 11
455,979

12

3,861		 -
4,064

-

266,855		 6
333,952

9

1,244
28,239
(19,237)
(9,177)
-

1

-
-
9,699

15,496
(73,675)
(11,363)

-

-

(2)

-

1,069		 1
(59,843)

(2)

267,924
31,389
7
1

274,109
41,113


7

1

236,535		 6
232,996

6

(18,937)

64,472
(66)
(1)

1
-

(1,286)
(20,822)
298

-

(1)

-

45,601		 - (22,406)
(1)

(11,986)
-
-
-
(4,143)
-


-
-
(11,986) - (4,143)
-

33,615		 -
(26,549)

(1)

270,150		 6
206,447


5

237,280
(745)
6
-

233,466
(470)

6

-

236,535		 6
232,996

6

265,906
4,244
6
-

225,514
(19,067)

6

(1)

$
270,150		 6
206,447


5


$		 1.60
1.57

$		 1.59 1.56

See accompanying notes to consolidated financial statements.

  • 96 -

(English Translation of Financial Statements and Report Originally Issued in Chinese)

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2020
Profit
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve
Cash dividends of common stock
Reversal of special reserve
Exercise of disgorgement
Cash dividends to subsidiaries
Disposal of investments in equity instruments
designated at fair value through other
comprehensive income
Balance on December 31, 2020
Profit
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve
Cash dividends of common stock
Special reserve
Cash dividends to subsidiaries
Disposal of investments in equity instruments
designated at fair value through other
comprehensive income
Return of employee stock ownership trust
Balance on December 31, 2021		 Equityattributable to shareholders ofparent Equityattributable to shareholders ofparent Equityattributable to shareholders ofparent Equityattributable to shareholders ofparent Equityattributable to shareholders ofparent Non-controlling
interests		 Total Equity
Common
stock
$
1,624,076		 Capital
surplus		 Retained earnings
Legal capital
reserve
Special capital
reserve
Unappropriated
earnings		 Other equityinterest Treasurystock Total equity
attributable to
shareholders of
parent
Exchange
differences on
translation of
foreign financial
statements		 Unrealized gains
(losses) on financial
assets measured at fair
value through other
comprehensive income
Special capital
reserve		 Unappropriated
earnings
4,397
57,015		 151,307
330,944
(14,111)
(88,501)		 (173,021)
1,892,106
59,875
1,951,981

-
-
-
-

-
-
-
-

233,466
(1,286)


-

(4,185)

-

(2,481)
-
-

233,466
(7,952)


(470)

(18,597)


232,996

(26,549)
- - - -
232,180


(4,185)


(2,481)		 -
225,514


(19,067)


206,447

-
-
-
-
-
-		 -
-
-
473
10,553
-		 25,733
-
-

-

-
-
-
-
(48,695)
-
-
-
(25,733)
(188,889)

48,695
-
-
8,537


-

-

-
-
-

-

-
-
-
-
-
(8,537)		 -
-
-
-
-
-
-
(188,889)
-
473
10,553
-

-

-
-

-

-
-

-
(188,889)
-
473
10,553
-
1,624,076 15,423
82,748		 102,612

405,734

(18,296)

(99,519)		 (173,021)
1,939,757
40,808
1,980,565

-
-
-
-

-
-
-
-

237,280
(18,937)


-

(11,702)

-

59,265
-
-

237,280
28,626


(745)

4,989


236,535

33,615
- - - -
218,343


(11,702)


59,265		 -
265,906


4,244


270,150

-
-
-
-
-
-		 -
-
-
10,553
-
4		 24,072
-
-

-
-

-
-
-
15,203
-
-
-
(24,072)
(188,889)

(15,203)
-
34,239
-


-

-

-
-

-
-

-
-
-
-
(34,239)
-		 -
-
-
-

-
-
-
(188,889)
-
10,553
-
4

-

-
-

-
-

-

-
(188,889)
-
10,553
-
4
$
1,624,076		 25,980 106,820 117,815 430,152 (29,998)
(74,493)		 (173,021) 2,027,331 45,052 2,072,383

See accompanying notes to consolidated financial statements.

  • 97 -

(English Translation of Financial Statements and Report Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Consolidated Statements of Cash Flows For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense
Amortization expense
Expected credit impairment loss (gain)
Net gain on financial assets or liabilities at fair value through profit or loss
Interest expense
Interest income
Dividend income
Gain on disposal of property, plant, equipment
Unrealized foreign exchange loss
Others
Total adjustments to reconcile profit
Changes in operating assets and liabilities:
Changes in operating assets:
Accounts receivable
Other accounts receivable
Inventories
Other current assets
Total net changes in operating assets
Net changes in operating liabilities:
Notes payable
Accounts payable
Other payables
Other current liabilities
Net defined benefit liability
Other non-current liabilities
Total net change in operating liabilities
Total net change in operating assets and liabilities
Total adjustments
Cash inflow generated from (used in) operating activities
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through other comprehensive income
Proceeds from disposal of financial assets at fair value through other comprehensive income
Acquisition of financial assets at fair value through profit or loss
Proceeds from disposal of financial assets at fair value through profit or loss
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant, equipment
Acquisition of intangible assets
Acquisition of investment property
Other financial assets
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities:
Short-term loans
Increase in long-term borrowings
Repayments of long-term loans
Disgorgement received
Cash dividends paid
Repayments of lease liabilities
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 2021 2020
$ 267,924 274,109

63,675
1,249
164
(5,736)
9,177
(1,218)
(27,447)
(1,292)
2,156
4

74,705

1,447

5,618

(7,336)

11,363

(9,611)

(9,320)

-

33,909
-
40,732 100,775

(167,269)
3,695
(187,001)
31,135

(68,996)

3,688

(71,387)
(22,263)

(319,440)
(158,958)

(1,148)
162,309
17,082
12,697
(5,008)
(208)

927

(28,037)

(4,896)

18,739

(2,784)
(208)

185,724
(16,259)

(133,716)
(175,217)

(92,984)
(74,442)

174,940
1,525
27,447
(10,791)
(43,117)

199,667

11,303

9,287

(10,908)
(45,463)

150,004
163,886

(339,254)
246,616
(30,135)
94,451
(52,607)
3,057
(824)
-
951

(101,773)

80,033

(60,350)

62,165

(32,763)

-

(1,780)
(886)
(3,006)
(77,745)
(58,360)

(700,000)
400,000
-
-
(178,342)
(13,985)

300,000

-
(320,000)
591

(178,330)
(11,616)

(492,327)
(209,355)

(5,907)
(22,092)

(425,975)
1,242,331

(125,921)
1,368,252

$
816,356
1,242,331

See accompanying notes to consolidated financial statements.

  • 98 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements For the years ended December 31, 2021 and 2020

(All amounts expressed in thousands of New Taiwan Dollars, unless otherwise specified)

(1) Organization and Business Scope

Emerging Display Technologies Corp. (the Company) and its subsidiaries was incorporated as a limited liability Group under the laws of the Republic of China (ROC) on September 23, 1994. The address of its registered office and principal place of business is No.5, Central 1st Rd, Kaohsiung Economic Processing Zone, Kaohsiung City, Taiwan. The Consolidated financial statements comprise Emerging Display Technologies Corp. and its subsidiaries (jointly referred to as the Group). The Group is engaged in the manufacture and sale of Capacity Touch Panel and liquid crystal displays (LCDs).

(2) Financial Statements Authorization Date and Authorization Process

The consolidated financial statements were authorized for issuance by the Board of Directors on March 10, 2022

(3) New standards, amendments and interpretations adopted:

  • (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on the consolidated financial statements, from January 1, 2021:

  • ‧ Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

  • ‧ Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

  • ‧ Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

  • (b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on the consolidated financial statements:

  • ‧ 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

  • ‧ Amendments to IFRS 3 “Reference to the Conceptual Framework”

The aforementioned assessment about the adoption of the new amendments would be modified as the environments or conditions change.

  • (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Group does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on the consolidated financial statements:

  • ‧ Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

  • ‧ IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

  • ‧ Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

  • ‧ Amendments to IAS 1 “Disclosure of Accounting Policies”

  • ‧ Amendments to IAS 8 “Definition of Accounting Estimates”

  • 99 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

  • ‧ Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Summary of significant accounting policies:

The accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language consolidated financial statements, the Chinese version shall prevail.

The significant accounting policies presented in the financial statements are summarized as follows. Except for those specifically indicated in Note 3 and Note 4(k), the following accounting policies were applied consistently throughout the presented periods in the financial statements.

  • (a) Statement of compliance

These consolidated annual financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter, referred to as the Regulations) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (hereinafter, referred to as the IFRS endorsed by the FSC).

  • (b) Basis of preparation

  • (i) Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis except for the following significant items:

  • 1) Financial instruments measured at fair value through profit or loss are measured at fair value;

  • 2) Fair value through other comprehensive income are measured at fair value;

  • 3) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 4(q).

  • (ii) Functional and presentation currency

The functional currency of each entity is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan dollars, which is the Group’s functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

  • (c) Basis of consolidation

  • (i) Principle of preparation of the consolidated financial statements

The Group consolidated financial statements include the accounts of the Company and all directly owned subsidiaries of the Company. The investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those return through its power over the investee.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that the Group’s control commences until the date that control ceases. Intergroup balances and transactions, and any unrealized income and expenses arising from intergroup transactions are eliminated in preparing the consolidated financial statements. Subsidiaries contribute total comprehensive income to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interest having a deficit balance.

Financial statements of subsidiaries had been adjusted to use uniform accounting policies as the Group.

  • 100 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. 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 and attributed to the owners of the parent.

  • (ii) Subsidiaries included in the consolidated financial statements are as follows:
**Name of investor ** Name of the subsidiaries Business Activity
Sale of CTP and
LCDs
Investment holding
Customer service and
business support
Sale of CTP and
LCDs
Customer service and
business support
Sale of CTP and
LCDs
Investment
Investment
Investment
Investment holding
Manufacturing of CTP
and LCDs
Trading		 **Percentage ** ownership Remarks
December
31, 2021
100.00%
78.49%
100.00%
100.00%
100.00%
100.00%
100.00%
52.50%
5.90%
11.41%
100.00%
(Note)		 December
31, 2020
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
Ying Dar Investment
Development
Corp.
Bae Haw Investment
Development
Corp.
Emerging Display
International
(Samoa) Corp.
The Company		 Emerging Display Technologies
Corp., U.S.A
Emerging Display International
(Samoa) Corp.
EDT-Europe ApS

Emerging Display Technologies
Korea
EDT-Japan Corp.

Ying Dar Investment
Development Corp.
Bae Haw Investment
Development Corp.
Ying Cheng Investment Corp.

Emerging Display International
(Samoa) Corp.
Emerging Display International
(Samoa) Corp.
Dong Guan Emerging Display
Limited
Tremendous Explore Corp.
 100.00%
78.49%
100.00%
100.00%
100.00%
100.00%
100.00%
52.50%
5.90%
11.41%
100.00%
(Note)		 Major
Subsidiary

Note: Tremendous Explore Corp. was liquidated in July, 2020. The related liquidation procedures had been completed.

(iii) Subsidiaries which are not included in the consolidated financial statements: None.

  • (d) Foreign currency

  • (i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the exchange rate at that date. Nonmonetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation.

Exchange differences are generally recognized in profit or loss, except for the following accounts which are recognized in other comprehensive income:

  • 101 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

  • 1) an investment in equity securities designated as at fair value through other comprehensive income;

  • 2) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

  • 3) qualifying cash flow hedges to the extent that the hedges are effective.

  • (ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustment arising on acquisition, are translated to New Taiwan dollar at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to New Taiwan dollar at the average rate. Foreign currency differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of any part of its interest in a subsidiary, association or join venture that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign currency gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income.

  • (e) Classification of current and non-current assets and liabilities

  • An asset is classified as current under one of the following criteria, and all other assets are classified as non-current:

  • (i) The asset is expected to be realized or is intended to be sold or consumed in the normal operating cycle;

  • (ii) The asset is held primarily for the purpose of trading;

  • (iii) The asset is expected to be realized within twelve months after the reporting period; or

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

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current:

  • (i) The liability is expected to be settled in the normal operating cycle;

  • (ii) The liability is held primarily for the purpose of trading;

  • (iii) The liability is due to be settled within twelve months after the reporting period;

  • (iv) The entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issuance of equity instruments do not affect its classification.

  • (f) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and demand deposits that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. The time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations rather than for investment or other purposes should be recognized as cash equivalents.

  • 102 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

  • (g) Financial instrument

Account receivable and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is an accounts receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. An accounts receivable without a significant financing component is initially measured at the transaction price.

  • (i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost-equity investment; Fair value through other comprehensive income (FVOCI) - debt investment; FVOCI equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

  • 1) Financial assets measured at amortized cost

  • A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

  • ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

  • ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal amount and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

  • 2) Fair value through other comprehensive income (FVOCI)

  • A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

  • ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

  • ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal amount and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an investment-by-investment basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

  • 103 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Dividend income derived from equity investments is recognized on the date that the Group’s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date.

  • 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset, which otherwise meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

  • 4) Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

  • ‧ the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

  • ‧ how the performance of the portfolio is evaluated and reported to the Group’s management;

  • ‧ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

  • ‧ how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

  • ‧ the frequency, amount and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Group's continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

  • 5) Assessment whether contractual cash flows are solely payments of principal and interest For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

  • 104 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers that:

  • ‧ contingent events that would change the amount or timing of cash flows;

  • ‧ terms that may adjust the contractual coupon rate, including variable rate features;

  • ‧ prepayment and extension features; and

  • ‧ terms that limit the Group’s claim to cash flows from specified assets (e.g. nonrecourse features)

  • 6) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on its financial assets measured at amortized cost (including cash and cash equivalents, notes receivable and accounts receivable, other receivables, refundable deposits and other financial assets) and debt investment measured at fair value through other comprehensive income (FVOCI).

The Group measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

  • ‧ debt instruments that are determined to have low credit risk at the reporting date; and

  • ‧ other debt instruments and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivables and contract assets is always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition, the Group considers reasonable and supportable information that is relevant and available (without undue cost or effort). This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience, informed credit assessment and including forward-looking information.

If there is a low risk of default on financial asset, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations, the financial asset would be considered low credit risk.

When the contract amount is past due or the borrower is unlikely to pay its credit obligations to the Group in full, the Group considers the credit risk on a financial asset has increased significantly or a financial asset to be in default.

Lifetime ECL is the ECL that results from all possible default events over the expected life of a financial instrument.

12-month ECL is the portion of ECL that results from default events that is possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECL is the maximum contractual period over which the Group is exposed to credit risk.

  • 105 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

ECLs are a probability-weighted estimate of the expected lifetime credit losses on financial assets. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flow due to the Group in accordance with the contracts and the cash flow the Group expects to receive). ECLs are discounted based on the effective rate of financial assets.

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit impaired includes the following observable data:

  • ‧ significant financial difficulty of the borrower or issuer;

  • ‧ a breach of contract such as a default or being overdue;

  • ‧ the lender of the borrower, for economic or contractual reasons relating to the borrower’ s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

  • ‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

‧ the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charge to profit or loss and is recognized in other comprehensive income.

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amount due.

  • 7) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

  • (ii) Financial liabilities and equity instruments

  • 1) Classification of debt or equity

Debt and equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

  • 106 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

3) Treasury stock

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury stocks. When treasury stocks are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital surplus is not sufficient to be written down).

  • 4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

  • 5) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

  • 6) Offsetting of financial assets and liabilities

Financial assets and liabilities are presented on a net basis when the Group has the legally enforceable rights to offset, and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

  • (iii) Derivative financial instruments

The Group to held derivative financial instruments is held to hedge its foreign currency and interest rate exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

  • (h) Inventories

Inventories are measured individually at the lower of cost and net realizable value. The cost of inventories includes all necessary costs of purchase, costs of conversion, and other costs in bringing the inventories to a salable and useable location and condition. The production overhead is allocated to the finished goods and work in progress based on the normal capacity of production facilities.

Net realizable value is determined based on the estimated selling price in the ordinary course of business, less, the estimated costs of completion and selling expenses at the end of the period.

  • 107 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(i) Investment property

Investment property is a property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at cost less accumulated depreciation and accumulated impairment loss.

Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

  • (j) Property, plant and equipment

  • (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

  • (iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land has an unlimited useful life, and therefore, is not depreciated.

The estimated useful lives, for the current and comparative years, of significant items of property, plant and equipment are as follows:

Buildings 2 ～ 50 years Machinery and equipment 2 ～ 10 years Furniture and fixtures 3 ～ 5 years Other equipment 1 ～ 10 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

  • (iv) Reclassification to investment property

The property is reclassified to investment property at its carrying amount when the use of the property changes from private to investment property.

  • 108 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(k) Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

(i) As a lessee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate, Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

  • 1) Fixed payments, including in-substance fixed payments;

  • 2) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

  • 3) Amounts expected to be payable under a residual value guarantee; and

  • 4) Payments or penalties for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

  • 1) there is a change in future lease payments arising from the change in an index or rate;

  • 2) there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee;

  • 3) there is a change in the assessment regarding the purchase options;

  • 4) there is a change of its assessment on whether it will exercise an extension or termination option;

  • 5) there is any lease modifications in lease subject, scope of the lease or other terms.

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of there right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets and lease liabilities that do not meet the definition of investment as a separate line item respectively in the balance sheets.

  • 109 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

For short-term lease of office equipment and low-value underlying asset lease, the Group chooses not to recognize the right-of-use asset and lease liability, and the related lease payments are recognized as expenses on a straight-line method over the lease term.

As a practical expedient, the Group elects not to assess whether property, plant and equipment rents that meets all the following conditions are lease modifications or not:

  • 1) the rent concessions occurring as a direct consequence of the COVID 19 pandemic;

  • 2) the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

  • 3) any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2022; and

  • 4) there is no substantive change in other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

  • (ii) As a lessor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS15 to allocate the consideration in the contract.

  • (l) Intangible assets

  • (i) Recognition and measurement

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets that are acquired by the Group include patents and computer software costs are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

  • 110 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful life of intangible assets for the current and comparative periods is as follows:

Patents 9 ～ 20 years Computer software cost 3 months ～ 4 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if it’s necessary.

  • (m) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amount of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties and biological assets, measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

  • (n) Provision

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

  • (o) Revenue

  • (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

  • 111 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

1) Sale of good

The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’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, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

The Group provides standard warranties for goods sold and has obligation to replace or maintain for the defective goods, in which the Group has recognized provisions for warranties to fulfill the obligation.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

Contract liability is primarily generated from advanced receipts of commodity sales contract. The Group will recognize revenue when deliver commodity to customers.

  • 2) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

  • (ii) Contract cost with customers

  • 1) Incremental cost of obtaining a contract

The Group recognizes as an asset the incremental costs of obtaining a contract with a customer if the Group expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

The Group applies the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

  • 2) Costs to fulfil a contract

If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets), the Group recognizes an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

  • ‧ the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify;

  • ‧ the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and

  • ‧ the costs are expected to be recovered.

General and administrative costs, costs of wasted materials, labor or other resources to fulfil the contract that were not reflected in the price of the contract, costs that relate to satisfied performance obligations (or partially satisfied performance obligations), and costs for which the Group cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations (or partially satisfied performance obligations), the Group recognizes these costs as expenses when incurred.

  • 112 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(p) Government grants

The Group recognizes an unconditional government grant as other income when the grant becomes receivable. Other government grants related to assets are initially recognized as deferred income at fair value if there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant; they are then recognized in profit or loss as other income on a systematic basis over the useful life of the asset. Grants that compensate the Group for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(q) Employee benefits

  • (i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are expensed as the related service is provided. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

(ii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the g in or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gams and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

  • (iv) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be pain under short-term cash bonus or profit-sharing plans if the Consolidated Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(r) Share-based payment

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

  • 113 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is re-measured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any change in the liability is recognized in profit or loss.

  • (s) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

The Group has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

  • (i) The initial recognition of an asset or liability in a transaction which is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); or

  • (ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(iii) Taxable temporary differences arising on the initial recognition of goodwill.

A deferred tax asset shall be recognized for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. At the end of each reporting period, an entity reassesses unrecognized deferred tax assets; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

The Group shall offset deferred tax assets and deferred tax liabilities if, and only if:

  • (i) The Group has a legally enforceable right to set off current tax assets against current tax liabilities; and

  • (ii) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either;

  • 1) The same taxable entity; or

  • 2) Different taxable entities, but where each such entity intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or to realize the assets and settle the liabilities simultaneously.

  • 114 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(t) Earnings per share

The Group discloses the basic and diluted earnings per share attributable to common equity holders of the Company. The calculation of basic earnings per share is based on the profit attributable to the common shareholders of the Company divided by the weighted-average number of common stocks outstanding. The calculation of diluted earnings per share is based on the profit attributable to common shareholders of the Company, divided by the weightedaverage number of common shares outstanding after adjustment for the effects of all dilutive potential common stock, such as convertible bonds.

  • (u) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses relating to transactions with other components of the Group. Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

(5) Significant accounting assumptions and judgments, and major sources of estimates uncertainty

The preparation of the consolidated financial statements in accordance with the IFRSs endorsed by the FSC requires management to make judgments, estimates and assumptions that may affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Management is required to constantly examine the fairness of those estimates and assumptions. The effect of change in accounting estimate shall be recognized prospectively by including it the profit or loss in the current period or future periods.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID 19 pandemic:

  • (a) Impairment of accounts receivables

The Group has estimated the loss allowance of accounts receivable that is based on the risk of a default occurring and the rate of expected credit loss. The Group has considered historical experience, current economic conditions and forward looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs. Please refer to note 6(d) for relevant assumptions and input values.

  • (b) Valuation of obsolete inventories

As obsolete inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the obsolete inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of obsolete inventories. Please refer to note 6(f) for further description of the valuation of inventories.

(6) Explanation of significant accounts

  • (a) Cash and cash equivalents
Cash and cash equivalents
Demand deposits
Check deposits
Time deposits
Repurchase agreement
Total		 December 31,
2021
$ 304
720,318
31
95,703
-

$
816,356
 December 31,
2020

328

565,624

82

273,962

402,335

1,242,331
  • 115 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Please refer to Note 6(z) for the analysis of sensitivity and interest rate risk of the financial assets.

(b) Financial assets and liabilities at fair value through profit or loss

Financial assets mandatorily measured at fair
value through profit or loss－current:
Open-end mutual funds
Forward exchange contracts
Financial liabilities measured at fair value through
profit or loss－current:
Swap contract		 December 31,
2021		 December 31,
2020
58,817
-
58,817
195
$ -
42
$
42
$
-

Please refer to Note 6(y) for the recognition of gain or loss at fair.

The abovementioned financial assets were not pledged as collateral.

The Group entered into derivative instruments to manage exposure to currency risk arising from operating activities and doesn’t applicable to hedge accounting. The Group’s derivative instruments were as follows presented under financial assets mandatorily measured at FVTPL and financial liabilities measured at FVTPL; presented under financial assets held for trading:

Forward exchange contracts
Sell
Swap contract		 December 31, 2021 December 31, 2021

Contract amount
(in thousands)
Currency		 Maturity Date
2022.01.14

Contract amount
(in thousands)
Currency		 Maturity Date
USD 1,000 NTD to USD 2021.01.07

Please refer to note (z) for the market risk and credit risk.

(c) Financial assets at fair value through other comprehensive income


Equity investments at fair value through other
comprehensive income－current:
Common stocks listed on domestic markets－current
Innolux Corp.
Fubon Financial Holding Co., Ltd.
Nan Ya Plastics Corporation		 December 31,
2021		 December 31,
2020
$ 22,483
-
-
16,174
14,025
15,099
  • 116 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements


Pegatron Co., Ltd.
CoAsia Electronics Corp.
E.SUN Financial Holding Co., Ltd.
Far Eastern New Century Corp.
Quanta Computer Inc.
Shian Yih Electronic Co., Ltd.
AGV Products Corporation
Chicony Electronics Co., Ltd.
Lite-On Technology Corp.
Mega Financial Holding Co., Ltd.
Taiwan Cement Corp., Ltd.
Total
Common stocks listed on foreign markets－current:
Becton, Dickinson and Company
Total
Equity investments at fair value through other
comprehensive income－noncurrent:
Common stocks unlisted on domestic markets－
noncurrent:
Ascendax Venture Capital Corp.
Chenfeng Optronics Corp.
Total
Preference stocks listed on domestic markets－
noncurrent:
Fubon Financial Holding Co., Ltd
Total		 December 31,
2021		 December 31,
2020

14,537

5,764
19,310
28,950

-

30,637
1,011

-

-

-
-
145,507
14,253
159,760

19,566
78,260
97,826
865
98,691
$ 14,925
7,120
-
-
66,195
31,350
-
24,690
39,556
43,940
37,920

288,179

13,922

$
302,101

$ 21,376
91,210

112,586

874
$
113,460

The purpose that the Group invests in the abovementioned equity instruments is for strategic purpose, but rather for trading purpose, and therefore, is accounted for as FVOCI.

For the years ended December 31, 2021 and 2020, the Group has recognized the dividend income of $27,447 and $9,320 from equity instruments designated at fair value through other comprehensive income, respectively.

For the years ended December 31, 2021 and 2020, the Group with the objective of investment and financial management had sold financial assets at fair value of $246,616 and $72,815, and accumulated gain on disposal of investments were $34,239 and $8,537, which had been reclassified from other equity interest to retained earnings, respectively

Please refer to Note 6(z) for market risk.

The abovementioned financial assets were not pledged as collateral.

  • 117 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

For the purpose of increasing investment profits, the Group entrusts partial listed companies as the beneficiary. According to the terms of the contract, the Group does not transfer risk and remuneration of these financial assets, and they had not been derecognized. As of December 31, 2021, and 2020, the carrying amount of the listed stocks which were entrusted to financial institutions for security lending amounted to $22,483 and $16,174, respectively.

(d) Accounts receivable

Accounts receivable-measured at amortized cost
Allowance for impairment
 December 31,
2021
$ 755,372
(5,842)

$
749,530
 December 31,
2020

595,163

(5,613)

589,550

The Group applies the simplified approach to provide for the loss allowance used for expected credit losses, which permit the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, accounts receivables have been grouped based on past default experience of the customers and shared credit risk characteristics, as well as incorporate forward looking information, including macroeconomic and relevant industry information. The loss allowance provision was determined as follows:

Not overdue
Overdue 1~90 days
Overdue 91~180 days
Overdue 181~270 days
Overdue 271~365 days
Overdue 365 days

Not overdue
Overdue 1~90 days
Overdue 91~180 days
Overdue 181days
 December 31, 2021 December 31, 2021 December 31, 2021 Loss allowance
provision
686
334
-
-
-
4,822
5,842
Gross carrying
amount
Weighted-
average loss
rate
$ 604,526
0.11%
146,013
0.23%
9
0.10%
-
-
%
2
21.39%
4,822
100%
$
755,372

December 31, 2020
Gross carrying
amount
Weighted-
average loss
rate
$ 495,965
0.12%
95,060
0.96%
4,138
100%
-
-
$
595,163




Weighted-
average loss
rate


Loss allowance
provision

0.12%

0.96%

100%
-		 574
908
4,131
-

5,613
  • 118 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The movement in the provision for impairment loss with respect to trade receivables was as follows:

Balance at January 1
Impairment losses recognized (reversed)
Amounts written off
Collection of previously written off accounts
Effect of changes in foreign currency exchange rates
Balance on December 31		 2021
$ 5,613
164
-
70
(5)
$
5,842		 2020

18,771

5,618
(18,771)

-
(5)
5,613

The abovementioned financial assets were not pledged as collateral.

Please refer to Note 6(z) for credit risk.

  • (e) Other receivables
Loans to employee
Others
Allowance for impairment
 December 31,
2021		 December 31,
2020
$ 1,475
1,348
-

$
2,823
5,154

936

-

6,090

Please refer to note 6(z) for other credit risk information.

  • (f) Inventories
Raw materials and supplies
Work in process
Finished goods
Inventories in transit
Total
The details of cost of sales are as follows:
Reclassification to cost of sales and expenses
Inventory loss of write-down (gain on reversal of
inventory)
Unamortized manufacturing expenses
Loss on scrap
Others
Total		 December 31,
2021		 December 31,
2020
$ 525,651
303,876
220,020
6,618

$
1,056,165

2021
$ 3,404,512
(7,393)
14,973
58,335
(209)
$
3,470,218
346,225

299,441

215,535

9,300

870,501
2020

2,866,527

(8,532)

19,392

74,194
(149)
2,951,432
  • 119 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The above gain from price recovery of inventory was due to the previous write-down inventories had been sold, therefore, the net realizable value of inventories lowered than cost was no longer existed, the reversal was recorded as operating costs.

Inventories were not pledged as collaterals.

  • (g) Other assets

The details of other current assets are as follows:

Tax refund receivables
Prepayment for purchases
Prepaid expenses
Input VAT
Restricted time deposits
Refundable deposits
Others

Recognized in:
Other current assets
Other financial assets－non-current		 December 31,
2021
$ 2,067
12,968
5,111
24,547
3,050
7,988
4,505

$
60,236

$ 51,997
8,239

$
60,236
 December 31,
2020

1,954

63,725

6,757

5,496

2,051

10,164
3,545
93,692

83,002

10,690

93,692

The above-mentioned restricted time deposits had been pledged as collateral. Please refer to note 8.

  • (h) Major non-controlling interests’ share of subsidiaries

Significant to the Group of the non-controlling interest subsidiaries are as follows:

Name of subsidiaries Principal place
of business		 Proportion of non-controlling
interest voting equity		 Proportion of non-controlling
interest voting equity
Ying Cheng Investment Corp.
Emerging Display International
(Samoa) Corp.		 Taiwan
Samoa		 December 31,
2021		 December 31,
2020

47.5%

4.2%
47.5%
4.2%

Summarize above subsidiaries financial information as below which had prepared based on International Financial Reporting Standards endorsed by FSC. The below financial information was prior to the offset amount with the Group.

  • 120 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Summarized financial information for Ying Cheng Investment Corp. is as follows:

Current asset
Non-current asset
Current liability
Net asset
Non-controlling equity closing book amount
Operating revenue
Net profit (loss)
Other comprehensive income
Comprehensive income
Profit attributable to non-controlling interest
Comprehensive income attributable to non-controlling
interest
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net increase(decrease) in cash and cash equivalents		 December 31,
2021
$ 9,902
78,180
(50)

$
88,032

$
41,815

2021
$
-

$ (100)
11,100

$
11,000

$
(48)

$
5,225

2021
$ (100)
-
-

$
(100)
 December 31,
2020

10,002

67,080

(50)

77,032

36,591
2020
3

(100)
(39,240)
(39,340)
(48)
(18,686)
2020

(100)
-
-
(100)

Summarized financial information for Emerging Display International (Samoa) Corp. is as follows:

Current asset
Non-current asset
Current liability
Non-current liabilities
Net asset
Non-controlling equity closing book amount		 December 31,
2021
$ 119,265
39,522
(72,464)
(9,274)

$
77,049

$
3,237
 December 31,
2020

138,640

15,264

(53,503)

-

100,401

4,217
  • 121 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Operating revenue
Net profit(loss)
Other comprehensive income
Comprehensive income
Profit attributable to non-controlling interest
Comprehensive income attributable to non-controlling
interest
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Effects of changes in foreign exchange rates
Net increase(decrease) in cash and cash equivalents		 2021 2020
179,986
$
200,113

$ (16,595)
(6,758)

(10,058)
983

$
(23,353)		 (9,075)

$
(697)
(422)

$
(981)
(381)

2021
2020
$ 32,250
(12,460)
(6,907)
(75)
5,990

(1,854)

(5,070)
172

$
12,808		 (762)

(i) Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Group were as follows:

Cost or deemed cost:
Balance at January 1, 2021
Additions
Reclassification
Disposals
Effect of movements in
exchange rates
Balance at December 31, 2021
Balance at January 1, 2020
Additions
Reclassification
Disposals
Effect of movements in
exchange rates
Balance at December 31, 2020
Depreciation:
Balance at January 1, 2021
Depreciation
Disposals
Effect of movements in
exchange rates
Balance at December 31, 2021		 Land Building and
construction		 Machinery
and
equipment		 Office
equipment		 Other Total

3,649,342

53,344

-

(61,262)

(3,581)
3,637,843

3,618,755

29,085

-

(281)

1,783
3,649,342

3,318,028

48,066

(58,746)

(2,267)
3,305,081
$ 23,940
-
-
-
(672)
1,048,089
8,653
-
(65)

(1,003)
2,402,579

10,242
14,966

(53,289)

(1,495)
28,273

517

-

(134)

(268)
146,461

33,932
(14,966)

(7,774)
(143)

$
23,268

1,055,674

2,373,003

28,388
157,510


$ 25,201
-
-
-
(1,261)

1,047,550
462
274
-

(197)

2,384,197

5,403

9,717
-

3,262

28,331

168

-
(107)

(119)

133,476

23,052
(9,991)

(174)
98

$
23,940

1,048,089

2,402,579

28,273		 146,461


$ -
-
-
-
817,727
13,597
(65)
(448)

2,355,670

18,473

(53,279)

(1,455)

27,246

325

(134)

(244)

117,385

15,671

(5,268)
(120)
$
-
830,811

2,319,409

27,193
127,668
  • 122 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Balance at January 1, 2020
Depreciation
Disposals
Effect of movements in
exchange rates
Balance at December 31, 2020
Carrying amount：
Balance at December 31,2021
Balance at January 1, 2020
Balance at December 31,2020		 Land Building and
construction		 Machinery
and
equipment		 Office
equipment		 Other Total
$ -
-
-
-		 800,136
17,021
-
570
2,330,684

21,815
-

3,171
2,355,670
53,594
53,513
46,909
26,927

509
(107)
(83)
95,053

22,423

(174)
83
3,252,800

61,768

(281)

3,741
$
-		 817,727
27,246		 117,385
3,318,028

$
23,268
224,863
1,195
29,842
332,762


$
25,201
247,414
1,404
38,423
365,955


$
23,940
230,362
1,027
29,076
331,314

Please refer to Note 6(y) for detail of disposal gain and loss.

Property, plant and equipment pledged as collateral for long-term loans and finance were disclosed in Note 8.

  • (j) Right-of-use assets

The movements in the cost and depreciation of the leased land, buildings, transportation equipment were as follows:

Right-of-use assets cost:
Balance at January 1, 2021
Additions
Effect of changes in foreign
exchange rates
Balance at December 31, 2021
Balance at January 1, 2020
Additions
Disposals
Other
Effect of changes in foreign
exchange rates
Balance at December 31, 2020
Depreciation:
Balance at January 1, 2021
Depreciation
Effect of changes in foreign
exchange rates
Balance at December 31, 2021
Balance at January 1, 2020
Depreciation
Disposals
Effect of changes in foreign
exchange rates
Balance at December 31, 2020
Carrying amount:
Balance at December 31, 2021
Balance at January 1, 2020
Balance at December 31, 2020		 Land Building and
construction		 Transportation
equipment		 Total

94,639

25,618
(1,506)
118,751

90,949

4,661

(211)
(817)
57
94,639

27,411

14,960
(1,095)
41,276

13,742

13,695

(211)
185
27,411
77,475
77,207
67,228
$ 66,409
-
-
27,904
25,272
(1,492)
326

346

(14)
$
66,409
51,684

658

$ 67,226
-
-
(817)
-

23,509
4,323
-

-
72
214

338
(211)
-

(15)
$
66,409		 27,904
326

$ 5,482
2,722
-

21,893

11,958
(1,090)
36

280

(5)
$
8,204
32,761

311

$ 2,757
2,725
-
-

10,857

10,848
-
188
128

122
(211)

(3)
$
5,482		 21,893
36

$
58,205
18,923		 347

$
64,469
12,652		 86

$
60,927
6,011		 290
  • 123 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(k) Investment property

Investment property includes assets owned by the Group such as office buildings leased to third party. Based on original lease terms of investment property, non-cancellable lease term is four years and the lessee has the right to upon expiry. Subsequent lease term will consult with the lessee and didn’t charge contingent rental. Please refer to Note 6(w) for information of the rental income.

Rental income of leased investment property has a fixed amount.

Investment property cost and depreciation of the Group were as follows:

Cost or deemed cost:
Balance at January 1, 2021
Effect of changes in foreign exchange rates
Balance at December 31, 2021
Balance at January 1, 2020
Additions
Effect of changes in foreign exchange rates
Balance at December 31, 2020
Depreciation:
Balance at January 1, 2021
Depreciation
Effect of changes in foreign exchange rates
Balance at December 31, 2021
Balance at January 1, 2020
Depreciation
Effect of changes in foreign exchange rates
Balance at December 31, 2020
Carrying amount:
Balance at December 31, 2021
Balance at January 1, 2020
Balance at December 31, 2020
Fair value:
Balance at December 31, 2021
Balance at December 31, 2020		 Land Building and
construction		 Total

60,833
(1,709)
59,124

63,138

886
(3,191)
60,833

5,675

649
(167)
6,157

5,304

660
(289)
5,675
52,967
57,834
55,158
$
58,427
$
63,485
$ 45,333

(1,274)
15,500

(435)


$
44,059

15,065


$ 47,720
-

(2,387)

15,418
886

(804)


$
45,333

15,500


$ -
-

-
5,675
649
(167)

$
-
6,157

$ -
-

-
5,304
660
(289)

$
-
5,675

$
44,059
8,908


$
47,720
10,114


$
45,333
9,825



  • 124 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

When measuring the fair value of investment property, the Group considered the present value of net cash flows to be generated from leasing the property. The expected net cash flows were discounted using the yield to reflect the inherent risk of the net cash flows. As of December 31, 2021 and 2020, the yields applied to the net annual rentals to determine the fair value of investment property were both 5.5%, its fair value evaluation technology makes the input value belong level 3.

The investment property were not pledged as collateral.

(l) Intangible assets

Initial cost and accumulated amortization for intangible assets were as follows:

Initial cost:
Balance as of January 1, 2021
Individual acquisition
Disposals
Effects of changes in foreign
exchange rates
Balance as of December 31, 2021
Balance as of January 1, 2020
Individual acquisition
Disposals
Effects of changes in foreign
exchange rates
Balance as of December 31, 2020
Amortization:
Balance as of January 1, 2021
Amortization
Disposals
Effects of changes in foreign
exchange rates
Balance as of December 31, 2021
Balance as of January 1, 2020
Amortization
Disposals
Effects of changes in foreign
exchange rates
Balance as of December 31, 2020
Book value:
Balance as of December 31, 2021
Balance as of January 1, 2020
Balance as of December 31, 2020		 Patent and other
$ 2,888
339
(198)
-		 Computer software
cost		 Total amount

9,477

485

(953)
(18)
12,365

824

(1,151)
(18)
$
3,029
8,991
12,020


$ 3,557
296
(965)
-

8,018

1,484

-
(25)

11,575

1,780
(965)
(25)
$
2,888
9,477
12,365


$ 1,433
259
(198)
-

6,821

990

(953)
(17)

8,254

1,249

(1,151)
(17)
$
1,494
6,841
8,335


$ 2,137
261
(965)
-

5,661

1,186

-
(26)

7,798

1,447
(965)
(26)
$
1,433
6,821
8,254


$
1,535
2,150
3,685


$
1,420
2,357
3,777


$
1,455
2,656
4,111
  • 125 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The amortization expenses of intangible assets included in statement of comprehensive income were as follows:

Operating cost
Operating expense		 2021
$ 284
965
$
1,249		 2020

308
1,139
1,447

Intangible assets were not pledged as collateral.

  • (m) Short-term loans

The details of short-term loans were as follows:

Unsecured bank loans
Total
Unused lines of credit
Range of interest rates		 December 31,
2021
$ -
$
-

$
1,979,365
-		 December 31,
2020
700,000

700,000
1,173,097
0.80%~0.85%

Please refer to Note 8 for assets pledged as collateral for short-term loans.

Please refer to Note 6(y) for the interest rate risk, currency risk and sensitivity analysis of the financial liabilities of the Group.

  • (n) Other payables
Salaries and wages payables
Year-end bonus payables
Employee remuneration payables
Directors’ and supervisors’ remuneration payables
Employee benefits liabilities
Others		 December 31,
2021
$ 48,584
67,000
14,486
6,727
29,329
124,582
$
290,708		 December 31,
2020

47,042

68,000

14,683

7,010

34,270
103,513
274,518
  • (o) Long-term loans

The details of long-term loans were as follows:

Commercial paper payable
Less: discount on long-term borrowings
Total
Unused long-term credit lines
Range of interest rates		 December 31,
2021
$ 400,000
1,651

$
398,349

$
400,000

1.1610%		 December 31,
2020

-

-

-

800,000
-
  • 126 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The Group signed a 5-year syndicated loan contract with E-SUN bank and six other banks on May 15, 2020, with a revolving credit line of $800,000 from the first appropriation date to maturity date, wherein $800,000 can be appropriated by using the banks’ own fund and $600,000 by using Group-issued commercial paper guaranteed by the banks, and the combined credit line should not exceed $800,000. According to the loan contract, 9 months after the date the contract was signed will be considered as the first appropriation date to calculate the revolving credit even if the credit line is unused after 9 months. The credit line, with a total of five phases, decreases every 6 months, beginning the 36th month after the first appropriation date. The first to fourth phases of the total credit line amounting to $800,000 will decrease by 12.5%, and the fifth phase will decrease by 50%. As the credit line decreases, the residual of the excess credit line will be repaid upon maturity. The Group issued a total of $400,000 commercial paper on February 5, 2021, with restrictions related to the contract are as follows:

Pursuant to the loan contract, for the duration of the loan, the Group must conform to the predetermined financial covenants involving special financial ratios calculated based on the annual consolidated financial statements. If the special financial ratios cannot meet the requirement, the Group should improve within nine months after the end of the fiscal year. If the adjusted financial ratios reviewed by the certified accountant meet the requirements, it will not be regarded as breach of the contract. During the period for adjustment, unused lines of credit, excluding the revolving credit extension, will be suspended until such ratios are in compliance with the contract requirement. However, during the said period, the interest rate and the commercial paper guaranty fee would increase to 1.25% unless the majority of the consortium agreed the exemption. Before the final agreement is made by the majority of the consortium, the violation of financial ratios would not be viewed as breach. The financial covenants were as follows:

  • (i) A minimum current ratio of 100% should be maintained.

  • (ii) A maximum debt ratio of 150% should be maintained.

  • (iii) A minimum times interest earned ratio of 2.5 should be maintained.

  • (iv) Minimum net tangible assets of 140,000 should be maintained.

Assets pledged as collateral for long-term borrowings are disclosed in note 8.

  • (p) Lease liabilities

The details of lease liabilities were as follows:

The details of lease liabilities were as follows:
Current
Non-Current		 December 31,
2021		 December 31,
2020
7,325
61,833
$
11,644
$
68,730

For maturity analysis, please refer to Note 6(z) Financial Instruments. The amounts recognized in profit or loss were as follows:

Interest on lease liabilities
Expenses relating to short-term leases
Expenses relating to leases of low-value assets,
excluding short-term leases of low-value assets
COVID-19-related rent concessions (recognized as
deduction of depreciation expenses of right-of-use
assets)		 2021
$
3,136		 2020
2,581
1,915
243
1,418

$
1,491

$ 240
$
-
  • 127 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The amounts recognized in the statement of cash flows for the Group were as follow:

Total cash outflow for leases 2021
$
18,778		 2020
16,413

(i) Lease of land, building and construction

The Group leases land and buildings for its office use. The leases of land and buildings run for approximately 2 to 10 years, and the lease period of office premises is usually 2 to 3 years.

Lease payments for certain contracts are subject to changes in the local price index, which usually occur once a year.

Part of the lease includes an option to extend the same period of the original contract at the end of the lease term. The lease agreements for some of the equipment include the option to extend the lease or terminate the lease, which are managed separately by each region, and therefore the individual terms and conditions agreed upon are different within the Group. These options are only for the Group to have enforceable rights and the lessor does not have this right. In the event that it is not possible to reasonably determined the period of the extended lease that will be exercisable, the related payments over the period covered by the option are not included in the lease liability.

(ii) Other leases

The lease period for the Group leased transportation equipment is two to three years.

The Group supervises the use of such transportation equipment and re-measures the lease liability and right-of-use assets on the reporting date.

In addition, the lease term of the Group leased machinery and equipment is one to three years. These leases are short-term or low-value leases. The Group chooses to apply the exemption recognition requirement without recognizing its related right-of-use assets and lease liabilities.

(q) Operating lease

The Group rent its investment property. Since almost all the risks associated with the ownership of the underlying assets are not transferred, this lease contract was classified as an operating lease. Please refer to Note 6(k) Investment property.

The maturity analysis of lease payments was the total undiscounted lease payments to be received in the future disclosed as of December 31, 2021, as below:


Less than one year
Between one and two years
Between two and four years
Undiscounted total lease payments		 December 31,
2021		 December 31,
2020
$ 3,601
2,761
-
$
6,362
3,689

3,799
2,913
10,401

For the years ended December 31, 2021 and 2020, the investment property rental income recognized in other income amounting to $3,384 and $3,570 respectively. No significant maintenance and repair costs for investment property.

  • 128 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(r) Employee benefits

(i) Defined benefit plan

The defined benefit obligation was as follows:

Defined benefit plan
The defined benefit obligation was as follows:
Present value of defined benefit obligations
Fair value of plan assets
Net liabilities of defined benefit obligations		 December 31,
2021		 December 31,
2020
$ 228,880
(127,903)

$
100,977
209,209

(122,161)

87,048

The Group makes defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pensions for employees upon retirement. The plan (covered by the Labor Standards Law) entitles a retired employee to receive a lump-sum payment based on years of service and average salary for the six months prior to retirement.

1) Composition of plan assets

The Group set aside pension funds in accordance with the legislation from the Ministry of Labor and managed by the Bureau of Labor Funds. The annual budget for the allocation of the minimum income cannot be lower than the income calculated based on the interest rate of the banks’ two-year time deposit in accordance with the legislation “Management and Utilization of the Labor Pension Funds”.

The Group’s labor pension reserve account balance in Bank of Taiwan amounted to $127,903 as of December 31, 2021. The utilization of the labor pension fund assets includes the asset allocation and yield of the fund. Please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

  • 2) Movements in present value of the defined benefit obligations

Changes in present value of the defined benefit obligation were as follows:

Balance at January 1
Current service and interest cost
Remeasurement of the net defined benefit liability
－Actuarial loss (gain) on financial assumptions
change
－Experience
Employee benefits paid
Balance at December 31		 2021
$ 209,209
2,148

(1,957)
22,126
(2,646)
$
228,880		 2020

202,792

2,834

(3,486)

8,013
(944)
209,209
  • 129 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Group were as follows:

Balance at January 1
Plan expected return
Remeasurement of net defined benefit liability
(assets)
－Return on plan assets (excluding current
interest cost)
Contributions made by employer
Employee benefit paid
Balance at December 31		 2021 2020
$ 122,161
929
1,232
4,462
(881)
114,246

1,305

3,241

4,313
(944)
122,161

$
127,903

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group were as follows:

Current service costs
Net interest costs on net defined benefit liabilities
(assets)
Operating cost
Selling expenses
General and administrative expenses
Research and development expenses
Actual return on assets		 2021 2020

556
973
1,529

1,156

58

180
135
1,529
4,546
$ 582
637
$
1,219

$ 912
50
148
109
$
1,219

$
2,161

5) Actuarial assumptions

The following are the Group’s principal actuarial assumptions ：

Discount rate
Future salary increases		 December 31,
2021
0.750%
1.750%		 December 31,
2020

0.750%

2.000%

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date is $4,326.

The weighted-average lifetime of the defined benefits plans is 16.54 years.

  • 130 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

6) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

benefit obligation shall be as follows:
December 31, 2021
Discount rate (change of 0.25%)
Change in future salary (change of 0.25%)
December 31, 2020
Discount rate (change of 0.25%)
Change in future salary (change of 0.25%)		 Present value of defined benefit
obligation
Increased
Decreased
$ (7,763)
8,144
$ 7,901
(7,578)
$ (7,562)
7,907
$ 7,692
(7,388)
Increased
$ (7,763)
$ 7,901
$ (7,562)
$ 7,692

8,144

(7,578)

7,907

(7,388)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of the pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020.

(ii) Defined contribution plan

The Group allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Group allocates a fixed amount to the Bureau of the Labor Insurance without additional legal or constructive obligations.

The pension benefit of Dong Guan Emerging Display Limited, Emerging Display Technologies Corp., U.S.A., EDT-Europe Aps, Emerging Display Korea and EDT-Japan Corp. are based on their respective local regulation of defined contribution plan. The accrued expenses should be recognized as current expenses. Besides, Ying Dar Investment Development Corp., Bae Haw Investment Development Corp., Ying Cheng Investment Corp., Emerging Display International (Samoa) Corp. and Tremendous Explore Corp. (Tremendous Explore Corp. was liquidated in July, 2020) do not have any employee and pension plan. Therefore, there is no pension benefit obligation required.

Details of the Group’s pension costs under the defined contribution method were as follows:

Operating Cost
Selling expenses
General and administrative expenses
Research and development expenses		 2021 2020
$ 24,594
5,425
2,270
2,772
19,576

5,215

1,689
2,784
29,264

$
35,061
  • 131 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(s) Income tax

  • (i) The amounts of income tax expense (benefit) were as follows:
Current tax expense
Current
Adjust previous current tax
Deferred tax expense
Origination and reversal of temporary differences
Change in unrecognized deductible temporary
differences
Income tax expense		 2021
$ 28,390
(7,124)
21,266
11,326
(1,203)
10,123
$
31,389

No income tax was recognized directly in equity in 2021. The amount of income tax recognized directly in equity for 2020 was as follows:

recognized directly in equity for 2020 was as follows:
Amount
Capital surplus - disgorgement $
118
The amount of income tax recognized in other comprehensive income for 2021 and 2020
was as follows:
Items that will not be reclassified subsequently to
profit or loss:
Unrealized gains (losses) from investment in
equity instruments measured at fair value
through other comprehensive income		 2021
$ (66)		 2020
298

Reconciliation of income tax and profit before tax is as follows:

Income before income tax
Income tax calculated based on the Group’s tax rate
Effect of overseas income tax differences
Tax-exempt income for dividend income
Tax-exempt income for gains derived from the securities
transactions
Change in unrecognized temporary differences
Investment tax credits
Additional tax on undistributed earnings
Adjustment for prior periods
Others
Income tax expenses		 2021
$
267,924
$ 53,585
3,607
(5,445)

(339)
(1,203)
(10,475)
-
(7,124)
(1,217)
$
31,389		 2020

274,109

54,822

2,051

(1,862)

(1,295)

(556)

(10,900)
1,894

(2,818)

(223)

41,113
  • 132 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

  • (ii) Deferred tax assets and liabilities

  • 1) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:


Pension expense
Temporary variances related to invest subsidiaries		 December 31,
2021
$ 84,764
164,835

$
249,599
 December 31,
2020

73,130
157,380

230,510

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom.

  • 2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities were as follows:

Deferred tax liabilities:

Balance at January 1, 2021

Recognized in profit or loss
Recognized in other comprehensive
income
Balance at December 31, 2021

Balance at January 1, 2020

Recognized in profit or loss
Recognized in other comprehensive
income
Balance at December 31, 2020
 Unrealized gains
(losses) from
financial
assets measured at
fair value through
other comprehensive
income
$ 298
-
(66)		 Other Total

354

(48)
(66)
240
-

56
298
354

56
(48)

-

$
232
8
$ -
-
298		 -
56

-
$
298		 56

Deferred tax assets:

Balance at January 1, 2021
Recognized in profit or loss
Effect of exchange rate changes
Balance at December 31, 2021
Balance at January 1, 2020
Recognized in profit or loss
Effect of exchange rate changes
Balance at December 31, 2020		 Inventory
valuation loss
Unrealized
salesprofit		 Unrealized
foreign
exchange
loss

6,314

(5,702)
-		 Employee
benefits
liabilities		 Other Total
$ 9,290
(1,496)
-
3,062

(1,101)
-

1,961

2,713

349
-

3,062
4,682

465
-
8,580

(2,337)
(20)
31,928

(10,171)
(20)
$
7,794		 612 5,147
6,223
21,737


$ 11,046
(1,756)
-
6,076

238
-

4,346

336
-

8,822

(235)
(7)

33,003

(1,068)
(7)
$
9,290		 6,314 4,682
8,580
31,928

(iii) Assessment of tax

The Group’s tax returns for the years through 2019 were assessed by the R.O.C tax authority.

  • 133 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(t) Share capital and other equities

(i) Ordinary shares

As of December 31, 2021 and 2020, the authorized share capital of the Group amounted to$3,500,000, comprising 350,000 thousand shares with a par value of New Taiwan dollars (TWD) 10 per share. Issued shares were both 162,408 thousand shares. The weightedaverage numbers of shares of common stock outstanding excluded treasury stock and the common stock held by the Group’s subsidiaries were both 148,613 thousand shares.

(ii) Capital surplus

The balances of capital surplus were as follows ：

Capital surplus
The balances of capital surplus were as follows：

Treasury share transactions
Disgorgement
Return of employee stock ownership trust
Total		 December 31,
2021
$ 25,503
473
4
$
25,980
 December 31,
2020

14,950

473
-

15,423

According to the Group Act, any realized capital surplus is initially used to cover any deficit, and the balance, if any, could be transferred to common stock as stock dividend or distributed as cash based on a resolution approved by the stockholders. Realized capital surplus includes the premium derived from the issuance of shares of stock in excess of par value and endowments received by the Group. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the combined amount of any portions capitalized in any one year may not exceed 10% of paid-in capital.

(iii) Retained Earning

The Company’s article of incorporation stipulate that Company’s net earnings, after paying any taxes, should first be used to offset the prior years’ deficits, if any. Of the remaining balance, 10% is to be appropriated as legal reserve. Only if the legal reserve has attained to the paid-in capital could be the exception, besides, special reserves are supposed to set aside or reversed in accordance with the needs of the Company’ s operations or the relevant regulations of the government. And then any remaining profit together with any undistributed retained earnings will be distributable earnings. No more than 80% of current year’s distributable earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval. But cash-based dividends, including cash distribution from legal reserve and capital surplus, will first have to be approved by the Board of Directors and be reported at the shareholders’ meeting.

The Company’s industry is currently in a steady growth phase. The Company’s dividend policy is to pay dividends from surplus considering the future capital budget requirement and cash requirements and taking into the account of dilution on earnings per share and influence upon returns on equity. Therefore, the future distribution of earnings shall be distributed in cash dividends and/or stock dividends. The ratio of cash dividends shall not be less than 50% of the Company’s total dividends for the year.

1) Legal reserve

When a Group incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

  • 134 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

2) Special reserve

In accordance with the regulation of the FSC, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as a special earnings reserve during earnings distribution. The amount to be reclassified should equal to the currentperiod total net reduction of other shareholders’ equity. (Current-period earnings and undistributed prior-period earnings were reclassified as a special earnings reserve during the earnings distribution in 2020. Current-period net income after tax plus those undistributed current-period earnings and undistributed prior-period earnings were reclassified as a special earnings reserve during the earnings distribution in 2021.) Similarly, a portion of undistributed prior-period earnings shall be reclassified as a special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. As of December 31, 2021 and 2020, resolutions were passed during the board meeting for the Group to reclassify $117,815 and $102,612, respectively, as a special earnings reserve.

3) Earnings distribution

According to the resolutions of the Board of Directors held on March 10, 2021 and the resolutions of the annual shareholders’ meeting held on June 12, 2020, the appropriations of dividend from the distributable retained earnings of 2019 were as follows ：

Dividends distributed to ordinary shareholders (New
Taiwan Dollar)
Cash		 2020 2019

$
1.2		 1.2

The amount of cash dividends on the appropriations of earnings for 2021 has been approved during the board meeting on March 10, 2022. The relevant dividend distributions to shareholders is $1.2 per share.

(iv) Other equity (net of tax)

Balance at January 1, 2021
－Changes of the Group
－Disposal of investments in equity instrument
designated at FVOCI
Balance at December 31, 2021
Balance at January 1, 2020
－Changes of the Group
－Disposal of investments in equity instrument
designated at FVOCI
Balance at December 31, 2020		 Foreign exchange
differences
arising from
foreign operation		 Unrealized gains
(losses)
from financial assets
measured at fair
value
through other
comprehensive
income		 Total

(117,815)

47,563
(34,239)
$ (18,296)
(11,702)

-
(99,519)

59,265
(34,239)
$
(29,998)

(74,493)
(104,491)


$ (14,111)
(4,185)

-


(88,501)

(2,481)
(8,537)

(102,612)

(6,666)
(8,537)
$
(18,296)
(99,519)
(117,815)
  • 135 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(v) Treasury stock

The changes of treasury stocks were as follows:

Reason to repurchase
January to December, 2021
To transfer shares to the
Group’s employee
January to December, 2020
To transfer shares to the
Group’s employee		 January 1 Shares
repurchase
-

-
 (Unit: thousands)
Shares
retired
December
31

-

5,000

-

5,000		 (Unit: thousands)
Shares
retired
December
31

-

5,000

-

5,000
5,000
5,000

5,000

5,000

In accordance with Article 28-2 of the Securities and Exchange Act requirements as stated above, the number of shares repurchased should not exceed 10 percent of all shares outstanding. Also, the value of the repurchased shares should not exceed the sum of the Group’s retained earnings, share premium, and realized capital reserves. The aforementioned repurchased shares and amount did not exceed statutory limit.

As of December 31, 2021 and 2020, the costs of treasury shares both amounted to $50,739.

In accordance with the requirements of Securities and Exchange Act, treasury shares held by the Group should not be pledged, and do not hold any shareholder rights before their transfer.

Ying Dar Corp. and Bae Haw Corp., subsidiaries of the Group, held the Group’s common stock. In 2021 and 2020, Ying Dar Corp. and Bae Haw Corp. did not purchase or dispose of any of the Group’s shares. As of December 31, 2021 and 2020, Ying Dar Corp. and Bae Haw Corp. together held 8,794 thousand shares of the Group’s common stock. The cost was $122,282 which was recognized in treasury shares. As of December 31, 2021 and 2020, their market values amounted to $171,051 and $169,292, respectively.

(u) Earnings per share

The calculation of basic earnings per share and diluted earnings per share were as follows:

Basic earnings per share
Profit attributable to ordinary shareholders of the Group
Weighted-average number of ordinary shares (expressed
in thousands of shares)
Expressed in New Taiwan dollars
Diluted earnings per share
Profit attributable to ordinary shareholders of the Group
Weighted-average number of ordinary shares (expressed
in thousands of shares)
Effect of potentially dilutive ordinary stock－
Employeeshare bonus (expressed in thousands of
shares)
Weighted-average number of ordinary shares－diluted
(expressed in thousands of shares)
Expressed in New Taiwan dollars		 2021 2020
233,466
148,613
1.57
233,466

148,613
962
149,575
1.56
$
237,280

148,613

$
1.60
$
237,280

148,613
886
149,499

$
1.59
  • 136 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

In computing above earnings per share of ordinary shares, the weighted-average numbers of shares of ordinary shares outstanding excluded 8,794 thousand shares of ordinary shares held by the Group’s subsidiaries as treasury shares.

  • (v) Revenue from Contracts with Customers

  • (i) Disaggregation of revenue


Primary geographical markets:
Europe
USA
Others
Total
Major products:
Liquid crystal display modules
Capacitive touch panel and
capacitive touch panel
module
Others
Total		 For theyears ended December 31, 2021
Domestic
North
America
Other
operating
department
Total
$ 2,357,946
-
820
2,358,766
576
920,310
-
920,886
689,306
214,086
359
903,751
$
3,047,828
1,134,396
1,179
4,183,403
$ 735,636
460,837
-
1,196,473
2,238,348
627,071
-
2,865,419
73,844
46,488
1,179
121,511
$
3,047,828
1,134,396
1,179
4,183,403		 For theyears ended December 31, 2021
Domestic
North
America
Other
operating
department
Total
$ 2,357,946
-
820
2,358,766
576
920,310
-
920,886
689,306
214,086
359
903,751
$
3,047,828
1,134,396
1,179
4,183,403
$ 735,636
460,837
-
1,196,473
2,238,348
627,071
-
2,865,419
73,844
46,488
1,179
121,511
$
3,047,828
1,134,396
1,179
4,183,403		 For theyears ended December 31, 2021
Domestic
North
America
Other
operating
department
Total
$ 2,357,946
-
820
2,358,766
576
920,310
-
920,886
689,306
214,086
359
903,751
$
3,047,828
1,134,396
1,179
4,183,403
$ 735,636
460,837
-
1,196,473
2,238,348
627,071
-
2,865,419
73,844
46,488
1,179
121,511
$
3,047,828
1,134,396
1,179
4,183,403
Domestic North
America		 Other
operating
department
$ 2,357,946
576
689,306
-

920,310

214,086		 820

-
359

$
3,047,828


1,134,396		 1,179


$ 735,636
2,238,348
73,844


460,837

627,071

46,488

-

-
1,179

$
3,047,828


1,134,396
1,179
Primary geographical markets:
Europe
USA
Others
Total
Major products:
Liquid crystal display modules
Capacitive touch panel and
capacitive touch panel
module
Others
Total		 **For theyears ended December 31, ** **For theyears ended December 31, ** **For theyears ended December 31, ** 2020
Total
Domestic North
America		 Other
operating
department

437

-
445
$ 2,091,963
536
482,622
1,724

889,092

270,480
2,094,124
889,628

753,547

3,737,299
1,245,598
2,417,280

74,421

3,737,299

$
2,575,121


1,161,296		 882


$ 731,741
1,814,737
28,643


513,857

602,543

44,896
-

-
882

$
2,575,121


1,161,296		 882
  • 137 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(ii) Contract balance


Accounts receivable (including related parties)
Less: Allowance for impairment
Total
Contract liability－unearned revenue(recognized
in other current liabilities)		 December 31, 2021
$ 755,372
(5,842)		 December 31, 2020 January 1,2020

556,362
(18,771)
537,591
13,031


595,163

(5,613)

$
749,530


589,550


$ 40,390

33,286

Please refer to Note 6(d) for accounts receivables and impairment.

The amount of revenue recognized for the year ended December 31, 2021 and 2020, that was included in the contract liability balance at the beginning of the period were $10,784 and $5,031, respectively.

(w) Employee remuneration and directors’ and supervisors’ remuneration

In accordance with the Articles of incorporation, the Group should contribute no less than 5% of the profit as employee remuneration and less than 3% as directors’ and supervisors’ remuneration when there is profit for the year. However, if the Group has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Group’s affiliated companies who meet certain conditions.

For the year ended December 31, 2021 and 2020, the Group estimated its employee remuneration amounting to $14,486 and $14,683, and directors’ and supervisors’ remuneration amounting to $8,691 and $8,810, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Group’s articles. These remunerations were expensed under operating costs or operating expenses during 2021 and 2020. The aforementioned amounts, as stated in the parent-Group-only financial statements, are identical to those of the actual distributions approved by Board of Directors for 2021 and 2020. Related information would be available at the Market Observation Post System website.

  • (x) Net other income (expenses)

Net other income (expenses) consists of rental income from investment property and lending space.

  • (y) Non-operating income and expenses

  • (i) Interest income

The details of interest income were as follows:

Interest income from bank deposits
Other
Other income
The details of other income were as follows:
Dividend income
Other		 2021 2020

9,611
88
9,699
2020

9,320
6,176
15,496
$ 1,218
26
$
1,244

2021
$ 27,447
792
$
28,239

(ii) Other income

  • 138 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(iii) Other gains and losses

Details of other gains and losses were as follows:

i) Other gains and losses
Details of other gains and losses were as follows:
Foreign exchange gains (losses)
Net gains (losses) on disposal of financial assets
(liabilities) measured at fair value through profit or
loss
Net gains on disposal of property, plant and equipment
Others
 2021 2020
$ (24,402)
6,227

1,292
(2,354)
(75,156)

1,818

-

(337)

$
(19,237)


(73,675)

(iv) Finance costs

Details of finance costs were as follows:

Interest expenses
Bank loans
Lease liabilities
Management fee of syndicated loan
 2021 2020

8,482

2,581
300
11,363
$ 5,841
3,136
200
$
9,177

  • (z) Financial instruments

  • (i) Credit risk

    • 1) Exposure to credit risk

The Group’s maximum exposure to credit risk was the carrying amount of financial assets.

  • 2) Concentration of credit risk

As of December 31, 2021 and 2020, two customers accounted for 46.31% and one customer accounted for 45.56% of total accounts receivable, respectively.

  • 3) Credit risk of accounts receivable

For credit risk exposure of accounts receivable, please refer to note 6(d).

Other financial assets at amortized cost include other receivables, refundable deposits, and restricted time deposits. All of these financial assets are considered to have low risk, and thus, the credit loss allowance recognized during the period was limited to 12 months expected credit losses. There was no loss allowance recognized. Please refer to notes 6(e) and 6(g).

  • 139 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2021
Non-derivative financial liabilities
Secured Long-term loans(including
long term loans, current
portion)(floating rate)
Accounts payable (no interest)
Notes payable (no interest)
Other payable (no interest)
Lease liability (fixed interest)
Guarantee deposits received (no
interest)
December 31, 2020
Non-derivative financial liabilities
Secured loans (floating rate)
Accounts payable (no interest)
Notes payable (no interest)
Other payable (no interest)
Lease liability (fixed interest)
Guarantee deposits received (no
interest)
Derivative financial liabilities
Swap Contract:
Cash in
Cash out		 Carrying
amount		 Contracted
cash flows		 Due within
6 months
(2,290)

(559,800)

(86)

(290,708)

(7,810)
-		 Due in
6-12
months		 Due in
1-2years		 Due in
2-5year		 Due in
over 5years
$ 398,349
559,800
86
290,708
80,374
544
(419,034)

(559,800)

(86)

(290,708)

(112,713)
(544)		 (2,341)

-

-

-

(6,683)
-
(4,644)
-
-
-

(12,752)
(510)
(409,759)
-
-
-

(13,622)

(34)		 -
-
-
-

(71,846)
-
$ 1,329,861
(1,382,885)		 (860,694) (9,024)
(17,906)

(423,415)		 (71,846)

$ 700,000
400,068
1,234
274,518
69,158
558
195

(700,756)

(400,068)

(1,234)

(274,518)

(102,319)

(558)

28,480
(28,703)

(700,756)

(400,068)

(1,234)

(274,518)

(5,700)

-

28,480
(28,703)

-

-

-

-

(3,737)
-

-
-
-
-
-
-

(5,068)
-
-
-
-
-
-
-

(11,996)
(558)
-
-
-
-
-
-

(75,818)

-
-
-
$ 1,445,731
(1,479,676)
(1,382,499)		 (3,737) (5,068) (12,554) (75,818)

The Group does not expect that the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Foreign currency risk

1) Exposure to foreign currency risk

Significant financial assets and liabilities exposed to foreign currency risk were as follows:

December 31, 2021
Foreign
currency
Exchange
rate
TWD
amount
Financial assets
Monetary items
USD
$ 55,966
27.68
1,549,141
JPY
18,516
0.2405
4,453
CNY
1,061
4.344
4,610
EUR
61
31.32
1,911
Non-monetary items
USD
503
27.68
13,922
Financial liabilities
Monetary items
USD
19,232
27.68
532,329
JPY
15,651
0.2405
3,764
EUR
-
31.32
-
Non-monetary items
USD
800
27.68
22,144		 December 31, 2021 December 31, 2021 December 31, 2021 December 31, 2020

Foreign
currency
Exchange
rate
TWD
amount

62,555
28.48
1,781,570

52,538
0.2763
14,516

4,021
4.377
17,601

75
35.02
2,627

2,566
28.48
73,070

14,997
28.48
427,119

16,437
0.2763
4,541
72
35.02
2,534

1,000
28.48
28,480		 December 31, 2020

Foreign
currency
Exchange
rate
TWD
amount

62,555
28.48
1,781,570

52,538
0.2763
14,516

4,021
4.377
17,601

75
35.02
2,627

2,566
28.48
73,070

14,997
28.48
427,119

16,437
0.2763
4,541
72
35.02
2,534

1,000
28.48
28,480
Foreign
currency		 Exchange
rate		 TWD
amount
Foreign
currency		 Exchange
rate

27.68

0.2405

4.344

31.32

27.68

27.68

0.2405
31.32

27.68		 1,549,141
4,453
4,610
1,911
13,922
532,329
3,764
-
22,144
62,555

52,538

4,021

75

2,566

14,997

16,437
72

1,000
28.48

0.2763

4.377

35.02

28.48

28.48

0.2763

35.02

28.48
  • 140 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the cash and cash equivalents, accounts receivables, other receivables, financial assets and liabilities measured at fair value through profit or loss, financial assets measured at fair value through other comprehensive income, loan, accounts payables, and other payables. As of December 31, 2021 and 2020, if the exchange rate of the TWD versus the USD, CNY, JPY, and EUR have increased or decreased by 1%, given no changes in other factors, profit after tax would have increased or decreased by $7,482 and $9,710, and other comprehensive income after tax would have increased or decreased by $111 and $114, respectively. The analysis is performed on the same basis of prior year.

3) Exchange gains and losses on monetary items

The Group has variety kinds of functional currencies, hence we use summarized method to disclose exchange gain (loss) of monetary items. For year 2021 and 2020, foreign exchange loss (including realized and unrealized) amounted to gain (loss) $(24,402) and $(75,156), respectively.

(iv) Interest rate analysis

Please refer to liquidity risk management for the detail of the Group’s financial assets and financial liabilities’ interest exposure.

The sensitivity analysis of interest was made based on the interest rate of derivative and non-derivative instruments at the reporting date. The analysis of liabilities bearing floating interest rates was prepared based on the assumption that the outstanding amount at the reporting date had existed for the whole year. The rate of change used by the Group as interest to report to the management lever is ±0.25% of the interest rate. This also represents the management’s assessment of the reasonable scope of change.

If interest rates on loans had increased or decreased by 0.25% with all other variables held constant. Profit after tax for the years 2021 and 2020 would have been decreased or increased by $800 and $1,400, respectively, mainly as a result of liabilities bearing floating interest rates.

(v) Other price risk

If the prices of equity securities change at reporting date, with all other variables held constant, the influences were as follows:

Price of
securities at
reporting date
Increase 3%
Decrease 3%		 2021
Other
comprehensive
income after tax
Net income
after tax
$ 12,384
-
$ (12,384)
-		 2020
Other
comprehensive
income after tax
Net income
after tax
7,668
1,412
(7,668)
(1,412)		 2020
Other
comprehensive
income after tax
Net income
after tax
7,668
1,412
(7,668)
(1,412)
Net income
after tax
1,412
(1,412)

$ (12,384)
  • 141 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(vi) Fair value

1) Categories and fair values of financial instruments

The fair value of financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income, are measured on a recurring basis. The carrying amount and fair value of the Group’s financial assets and liabilities, including the information on fair value hierarchy are stated below; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

Financial assets at fair value through profit or less
Forward exchange contracts
Financial assets at fair value through other
comprehensive income
Equity instrument with quoted market prices
Equity instrument at fair value without quoted market
prices
Subtotal
Financial assets at amortized cost
Cash and cash equivalents
Accounts receivable
Other receivable
Restricted time deposits
Refundable deposits (recognized in other non-current
financial assets)
Subtotal
Total financial assets
Financial liabilities at amortized cost
Bank loans
Notes payable
Accounts payable
Other payable
Lease liabilities
Guarantee deposits
Total financial liabilities
Financial assets at fair value through profit or less
Debt investment with quoted market price
Financial assets at fair value through other
comprehensive income
Equity instrument with quoted market prices
Equity instrument at fair value without quoted market
prices
Subtotal		 December 31, 2021 December 31, 2021 December 31, 2021
Carrying
amount		 Fair value
Level 1
Level 2
Level 3

-
42
-

302,975
-
-

-
-
112,586


-
-
-

-
-
-

-
-
-

-
-
-

-
-
-


-
-
-

-
-
-

-
-
-

-
-
-

-
-
-

-
-
-
December 31, 2020		 Total
$ 42 42
302,975
112,586
-
-
-
-
-
-
-
-
-
-
-
302,975
112,586

415,561

816,356
749,530
2,823
3,050
7,988

1,579,747

$
1,995,350


$ 398,349
86
559,800
290,708
80,374
544
$
1,329,861

Carrying
amount		 Fair value
Level 1

58,817

160,625

-
 Level 2

-

-
-		 Level 3
-
-
97,826		 Total
$ 58,817 58,817
160,625
97,826

160,625
97,826

258,451
  • 142 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Financial assets at amortized cost
Cash and cash equivalents
Accounts receivable
Other receivable
Restricted time deposits
Refundable deposits (recognized in other non-current
financial assets)
Subtotal
Total financial assets
Financial liabilities at fair value through profit or less
Derivative financial liabilities
Financial liabilities at amortized cost
Bank loans
Notes payable
Accounts payable
Other payable
Lease liabilities
Guarantee deposits
Subtotal
Total financial liabilities		 December 31, 2020 December 31, 2020 December 31, 2020
Carrying
amount		 Fair Value
Level 1

-

-

-

-
-
-

-

-

-

-

-
-		 Level 2
-
-
-
-
-
195
-
-
-
-
-
-		 Level 3
-
-
-
-
-

-
-
-
-
-
-
-		 Total
$ 1,242,331
589,550
6,090
2,051
10,164		 -
-
-
-
-
195
-
-
-
-
-
-

1,850,186

$
2,167,454


$ 195
700,000
1,234
400,068
274,518
69,158
558
1,445,536

$
1,445,731

The Group measures its assets and liabilities use input observable market data. The fair value hierarchy categorizes the inputs used in valuation techniques are as follows:

  • Level 1: quoted prices (unadjusted) in the active markets for identified assets or liabilities.

  • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

  • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

  • 2) Valuation techniques for financial instruments measured at fair value

Non-derivative financial instruments

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. Quoted prices of major stock exchanges and quoted prices of government bonds are the basis for measuring the fair value of stocks listed on an exchange, stocks listed on the OTC, and debt instruments with quoted prices in an active market.

The fair values of the Group’s listed stocks and open-end funds with standard terms and conditions traded in an active markets were determined by the quoted market prices.

  • 143 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Measurements of fair value of financial instruments without an active market are based on a valuation technique. Fair value measured by a valuation technique can be extrapolated from similar financial instruments using the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date. Using discounted cash flow method to calculate fair value, the main assumption is to reflect monetary time value and return of invest risk to discount and measure based on investee’s estimated future cash flow.

Derivative financial instruments

The fair value of swap contracts and forward exchange contracts is based on quoted prices from the counterparty.

  • 3) Transfer between Level 1 to Level 2

There was no transfer between the fair value hierarchy levels for the years ended December 31, 2021 and 2020.

  • 4) Movement of financial assets measured at fair value through other comprehensive income categorized as Level 3
Balance on January 1, 2021
Recognized in other comprehensive income
Balance on December 31, 2021
Balance on January 1, 2020
Recognized in other comprehensive income
Balance on December 31, 2020		 Financial assets measured at
FVOCI
Unquoted equity instruments
$ 97,826
14,760
$
112,586
$ 139,872
(42,046)
$
97,826
  • 5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Group’s financial instruments that use Level 3 inputs to measure fair value include － fair value through other comprehensive income equity investments.

The Group’s equity investments without active market in Level 3 have more than one significant unobservable inputs. The significant unobservable inputs of equity investments without active market are individually independent, and there is no correlation between them.

Quantified information of significant unobservable inputs was as follows:

  • 144 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Item
Financial assets at fair
value through other
comprehensive income-
equity investments
without an active market
Financial assets at fair
value through other
comprehensive income-
equity investments
without an active market		 Valuation
technique
Discounted Cash
Flow Method
Net Asset Value
Method		 Significant
unobservable inputs		 Inter-relationship
between significant
unobservable inputs and
fair value measurement
‧ Continuing growth rate
(1.44% and 0.48%,
respectively, as of
December 31, 2021 and
2020)
‧ Weighted average cost
of capital (9.75% and
10.52%, respectively, as
of December 31, 2021
and 2020)
‧ Market illiquidity
discount rate (58.64%
and 60.73%,
respectively, as of
December 31, 2021 and
2020)
‧ Non-controlling
interests discount rate
(29.48% and 29.87%,
respectively, as of
December 31, 2021 and
2020)
‧ Net Asset Value



‧ The higher the
continuing growth rate
is, the higher the
estimated fair value
would be.
‧ The higher the weighted
average cost of capital
is, the lower the
estimated fair value
would be.
‧ The higher the market
illiquidity discount rate
is, the lower the
estimated fair value
would be.
‧ The higher the
noncontrolling interests
discount is, the lower
the estimated fair value
would be.
N/A
  • 6) Fair value measurements in Level 3 – sensitivity analysis of reasonably possible alternative assumptions

For fair value measurements in Level 3, changing one or more of the assumptions to reflect reasonably possible alternative assumptions would have the following effects on other comprehensive income:




Inputs
December 31,2021
Continuing growth rate 1.44%
Weighted average cost of capital 9.75%
Market illiquidity discount rate 58.64%
Non-controlling interests discount rate
29.48%		 Changes in fair value reflected
in OCI
Fluctuation
in inputs
Favorable
Unfavorable
0.1%
$ 1,050
1,050
0.1%
1,400
1,400
1%
2,240
2,170
1%
1,260
1,260
  • 145 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements




 Inputs
December 31,2020
Continuing growth rate 0.48%
Weighted average cost of capital 10.52%
Market illiquidity discount rate 60.73%
Non-controlling interests discount rate
29.87%		 Fluctuation
in inputs
0.1%
0.1%
1%
1%		 Changes in fair value reflected in
OCI		 Changes in fair value reflected in
OCI
Favorable
$ 700
350
1,960
1,120		 Unfavorable

700

350

1,960
1,120

The favorable and unfavorable effects represent the changes in fair value, which is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

  • (aa) Financial risk management

  • (i) Overview

The Group has exposures to the following risks arising from its financial instruments:

  • 1) Credit risk

  • 2) Liquidity risk

  • 3) Market risk

In this note expressed the information of risk exposure and objectives, policies and process of risk measurement and management. For detailed information, please refer to the related notes of each risk.

  • (ii) Structure of risk management

The Board of Directors has the overall responsibility for the establishment and oversight of the Group’s risk management framework. Every department is responsible for planning and controlling the risk management of the Group’s operation and reports it to the Board regularly.

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and services offered. The Group, through its training and management standards and procedures, aim to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations.

The supervisor of the Group oversees how the management complies in monitoring the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The supervisor is assisted in its oversight role by an internal Audit. An Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Board of Directors.

(iii) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers, bank deposits, derivative financial instruments, and investment securities.

  • 146 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

1) Accounts receivable

The credit risk is impacted by the individual situation of each client. The Group continuously monitors the information concerning client credit risk factors, such as the default risk of the industries and countries in which the customers operate.

According to the credit policy, the Group has to evaluate the credit of each new customer before setting the payment and delivery terms. The evaluations include external credit ratings, if available, and bank references. The Group reviews credit limits periodically and requires customers to pay in advance when the customers’ credit ratings did not meet the benchmark.

2) Investments

The credit risk exposure in the bank deposits and derivative financial instruments are measured and monitored by the finance department. Since the Group’s transactions were with financial institutions with good credit ratings, there were no noncompliance issues, and therefore, there is no significant credit risk. Investments in other financial instruments are measured and monitored by the finance department with the instruction from the chairman to ensure each risk of investment target is under the Group’s affordable level.

(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liability when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group reputation.

As of December 31, 2021 and 2020, the Group has unused credit facilities for short-term loan amounting to $2,379,365 and $1,973,097, respectively.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, which will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control the market risk exposures within acceptable parameters, while optimizing the return.

The Group engages in derivative financial instruments trading in order to manage the market risk, thus, generating financial liabilities or financial assets, all the execution of those transactions were under the Board’s instruction.

1) Currency risk

The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan dollar TWD), US dollar (USD), Japan Yen (JPY), Danish Krone (DKK), China Yuan (CNY) and Korean Won (KRW). The currencies used in these transactions are the TWD, USD, JPY, EUR and CNY.

  • 147 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

At any point of time, the Group’s principle is to hedge using the net values after offsetting payables and receivables or assets and liabilities which are generated by business operation. The Group mainly hedges its currency risk using the foreign exchange agreements wherein the maturity date is less than 6 months.

2) Interest risk

The Group adopts a policy to ensure the exposure of changes in interest rates on borrowings is evaluated by the trend in market interest rates. The Group can manage its interest risk through maintaining an appropriate portfolio of floating interest rate and fixed interest rate.

3) Other market price risk

The Group is exposed to equity price risk due to the investments in equity instruments and mutual funds that contain uncertainty of future prices risk. Therefore, the Group monitors and manages the equity investments by holding different investment portfolio and regularly updating the information of equity instruments and mutual funds investment.

(ab) Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of common stocks, non-redeemable preference stocks, retained earnings and non-controlling interests of the Group. The Board of Directors monitors the return on capital as well as the level of dividends to common shareholders.

The Group meets its objectives in managing its capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders and interest of other related parties 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 dividend payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares or sell assets to settle any liabilities.

The Group and other entities in the same industry use the debt-to-equity ratio to manage their capital. This ratio is the total net debt divided by the total capital. The net debts from the balance sheet are derived from the total liabilities, less cash and cash equivalents. The total capital and equity include stock capital, capital surplus, retained earnings, other equity, and non-controlling interest. In 2021, the Group’s capital management strategy is consistent with the prior year. The Group’s debt-to-equity ratio at the end of the reporting period as at December 31, 2021 and 2020, is as follows:

December 31, 2021 and 2020, is as follows:
Net debt
Total equity
Debt-to-equity ratio		 December 31,
2021		 December 31,
2020
$
700,704
$
2,072,383
33.81%		 386,293
1,980,565
19.50%

(ac) Investing and financing activities not affecting current cash flow

The Group’s investing and financing activities which did not affect the current cash flow were as follows:

(i) Please refer to Note 6(j) for right of use assets.

  • 148 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(ii) Reconciliation of liabilities arising from financing activities were as follows:

January 1,
2021
Short-term loans
$ 700,000
Long-term loans
(including long term
loans, current portion)
(1,600)(Note1)
Lease liabilities
69,158
Guarantee deposits
558
Total liabilities from
financing activities
$
768,116
January 1,
2020
Short-term loans
$ 400,000
Long-term loans
(including long term
loans, current portion)
319,555
Lease liabilities
78,482
Guarantee deposits
587
Total liabilities from
financing activities
$
798,624		 Cash flows Non-cash changes Non-cash changes Changes in
lease
payments
-
-

-
-
-		 December
31, 2021
-
398,349
80,374
544
479,267
December
31, 2021
700,000
-

69,158
558
769,716
Foreign
exchange
movement		 Amortization Other
(Note 2)

(700,000)

400,000

(13,985)
-
-

-

(417)
(14)
(431)		 -
(51)

-
-
(51)
Non-cash		 -
-
25,618
-
25,618
changes
(313,985)

Cash flows
Foreign
exchange
movement

-

-

(134)
(29)
(163)		 Amortization Other
(Note 2)		 Changes in
lease
payments
-
-

(1,418)
-

(1,418)

300,000
(320,000)

(11,616)
-		 -
445

-
-
445		 -
-
3,844
-
(31,616) 3,844

Note 1: Prepaid expense related to syndicated loan Note 2: Reduction of right-of-use assets

(7) Related-party transactions

Key management personnel compensation

  • 1) Key management personnel compensation comprised:
Short-term employee benefits
Post-employment benefits
Termination benefits
Other long-term benefits
Share-based payments		 2021 2020
$ 32,313
489
-
-
-
27,401

415
-
-
-
$
32,802		 27,816
  • 2) In 2020, according to the requirement under Section 157 Short-swing Trading of the Securities and Exchange Act, the amount arising from the exercise of disgorgement after tax was $473, which was recognized as capital surplus.

(8) Pledged assets

The carrying values of pledged assets were as follows:

Pledged assets
Restricted time deposits－current
Restricted time deposits－non-
current
Property, plant and equipment－
buildings		 Purpose
Guarantee for customs
Performance guarantee
Guarantee for long-term
borrowings		 December 31,
2021
$ 2,538
512
173,195
$
176,245		 December 31,
2020

1,525
526
-
2,051
  • 149 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(9) Commitments and contingencies

  • (a) As of December 31, 2021 and 2020, the Group’s unused letters of credit for purchases of raw materials and equipment amounted to $2,075 and $4,422, respectively.

  • (b) As of December 31, 2021 and 2020, the Group has signed contracts for the purchase of equipment. The unrecognized contingencies of those contracts amounted to $4,154 and $1,995, respectively.

(10) Losses due to major disasters: None.

(11) Subsequent events

The Group’s Board of Directors approved resolutions to retire treasury stocks amounting to 5,000 thousand shares on January 12, 2022. As of March 10, 2022, the related registration procedures had been completed.

(12) Other

The followings were the summary statement of current period employee benefits, depreciation and amortization expenses by function:

By function
By item
2021
2021
2021		 2020 2020 2020
Cost of
sales		 Operating
expenses		 Total Cost of
sales		 Operating
expenses		 Total
Employee benefits (Note)
Salary
Labor and health insurance
Pension expense
Remuneration of directors
Others
Depreciation
Amortization		 454,583
47,131
25,506
-
5,412
49,629
284
212,032

15,360

10,774
13,532

1,590

14,046

965
666,615

62,491

36,280

13,532

7,002

63,675

1,249
413,701

41,950

20,732

-

4,513

61,536

308
219,648

15,422

10,061
11,540

1,481

13,169

1,139
633,349

57,372

30,793

11,540

5,994

74,705

1,447

Note: The Government subsidy related to COVID-19 for December 31, 2021 and 2020 amounted to $7,832 and $4,511, was recognized in decrease of Employee benefits.

(13) Supplementary disclosure requirements

  • (a) Information on significant transactions:

In accordance with the ROC “Guidelines Governing the Preparation of Financial Reports by Securities Issuers”, the required disclosures for the year ended December 31, 2021 were as follows:

  • (i) Loans extended to other parties: None.

  • (ii) Guarantees provided to other parties: None.

  • (iii) Securities owned as of December 31, 2021 (subsidiaries, associates and joint ventures not included):

Name of
**security holder **		 Name of security
and type		 Relationship
between issuer
of security and
the security
**holder **

Financial statement
account		 **December ** **December ** 31, 2021 31, 2021 Highest
percentage
of ownership
during the
**year **
Remarks
Units
(shares)		 Carrying
value		 Percentage
of
ownership
Fair
value
The Group
The Group		 Ascendax Venture Capital
Corp. stock
Chenfeng Optronics Corp.
stock
-

-		 Financial assets at fair value
through other comprehensive
income-noncurrent
Financial assets at fair value
through other comprehensive
income-noncurrent		 1,749,300
1,000,000		 21,376
13,030		 5.25%
1.37%
21,376

13,030		 5.25%
1.37%		 -
-
  • 150 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Name of
**security holder **		 Name of security
and type		 Relationship
between issuer
of security and
the security
**holder **
Financial statement
account		 **December ** 31, 2021 Highest
percentage
of ownership
during the
**year **
Remarks
Units
(shares)		 Carrying
value		 Percentage
of
ownership		 Fair
value
The Group
The Group
The Group
The Group
The Group
The Group
The Group
The Group
The Group
The Group
The Group
Ying Dar Investment
Development Corp.
Ying Dar Investment
Development Corp.
Bae Haw Investment
Development Corp.
Bae Haw Investment
Development Corp.
Bae Haw Investment
Development Corp.
Ying Cheng
Investment Corp.		 Fubon Financial Holding
Co., Ltd. preference stock
Innolux Corp. stock
Quanta Computer Inc.
stock
Pegatron Co., Ltd. stock
Chicony Electronics Co.,
Ltd. stock
Lite-On Technology Corp.
stock
Mega Financial Holding
Co., Ltd. stock
Taiwan Cement Corp.,
Ltd. stock
Coasia Microelectronics
Corp., stock
Shian Yih Electronic Co.,
Ltd. stock
Becton, Dickinson and
Group stock
Shian Yih Electronic Co.,
Ltd. stock
The Group’s stock

Everest Technology Inc.

Shian Yih Electronic Co.,
Ltd. stock

The Group’s stock
Chenfeng Optronics Corp.
stock		 -
-
-
-
-
-
-
-
-
-
-
-
Parent Group
-
-
Parent Group

-		 Financial assets at fair value
through other comprehensive
income-noncurrent
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-noncurrent
Financial assets at fair value
through other comprehensive
income-noncurrent
Financial assets at fair value
through other comprehensive
income-current
Financial assets at fair value
through other comprehensive
income-noncurrent
Financial assets at fair value
through other comprehensive
income-noncurrent		 13,845
1,147,089
699,000
216,000
300,000
620,000
1,236,000
790,000
459,344
480,000
2,000
550,000
5,346,672
1,000,000
395,000
3,447,716
6,000,000
874

22,483

66,195

14,925

24,690

39,556

43,940

37,920

7,120

10,560

13,922

12,100
103,993

-

8,690

67,058

78,180
-

0.01%

0.02%

0.01%

0.04%

0.03%

0.01%

0.01%

0.32%

0.78%

0.01%

0.90%

3.29%
1.47%

0.65%

2.12%

8.22%		 874

22,483

66,195

14,925

24,690

39,556

43,940

37,920

7,120

10,560

13,922

12,100
103,993

-

8,690

67,058

78,180		 -
0.01%
0.02%
0.01%
0.04%
0.03%
0.01%
0.01%
0.32%
0.78%
0.01%
0.90%
3.29%
1.47%
0.65%
2.12%
8.22%		 -
-
-
-
-
-
-
-
-
-
-
-
(Note)
-
(Note)
-

Note: It was eliminated in the consolidation.

  • (iv) Accumulated trading amount of a single security in excess of $300 million or 20% of the Group’s issued stock capital: None.

  • (v) Acquisition of property, plant and equipment in excess of $300 million or 20% of issued stock capital: None.

  • (vi) Disposal of property, plant and equipment in excess of $300 million or 20% of issued stock capital: None.

  • (vii) Sales to and purchases from related parties in excess of $100 million or 20% of issued stock capital was as follows:

Purchasing
(selling)
company		 Related party Nature of
Relationship		 Details of t ransaction Circumstances of and reasons for
deviation from regular trading
conditions		 Circumstances of and reasons for
deviation from regular trading
conditions		 Resulting receivables
(payables)		 Resulting receivables
(payables)		 Remarks
Purchase
(sale)		 Amount Percentage
of net
Purchases
(sales)		 Credit
line
Unit price		 Payment terms Balance Percentage
of notes and
accounts
receivable
(payable)
The Group Emerging
Display
Technologies
Corp., U.S.A.		 Subsidiary of the
Group		 Sale 1,038,132 25.41%
3
months
Sales prices
offered to
Emerging Display
Technologies
Corp., U.S.A. were
not significantly
different from those
offered to other
customers.		 Considering the
special trading
practices in
North American
market, the
Group set credit
duration as three
months for North
American
market, which is
slightly longer
than one to three
months set in
other markets.		 310,944 38.44% (Note)
  • 151 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Purchasing
(selling)
company		 Relatedparty Nature of
relationship		 Details of transaction Details of transaction Details of transaction Details of transaction Circumstances of and reasons for
deviation from regular trading
conditions		 Circumstances of and reasons for
deviation from regular trading
conditions		 Resulting receivables
(payables)		 Resulting receivables
(payables)		 Remarks
Purchase
(sale)		 Amount Percentage
of net
purchases
(sales)		 Credit
line		 Unitprice Payment terms Balance Percentage
of notes and
accounts
receivable
(payable)
Emerging
Display
Technologies
Corp., U.S.A.
The Group
Dong Guan
Emerging
Display
Limited		 The Group
Dong Guan
Emerging
Display Limited
The Group		 Subsidiary of the
Group
Sub-subsidiary
of the Group
Sub-subsidiary
of the Group		 Purchase
Purchase
(processing
expense)
Sale
(processing
revenue)		 1,038,132
200,133
200,133		 100.00%
7.31%
100.00%		 3 months
1~3
months
1~3
months		 The Group is the
major supplier for
Emerging Display
Technologies Corp.,
U.S.A. There is no
comparable
transaction.
The Group is the
only entity the
sub-subsidiary
provides
processing service
to. There is no
comparable
transaction.
The Group is the
only entity the
sub-subsidiary
provides
processing service
to. There is no
comparable
transaction.		 The Group is the
major supplier
for Emerging
Display
Technologies
Corp., U.S.A.
The Group is the
only entity the
sub-subsidiary
provides
processing
service to.
The Group is the
only entity the
sub-subsidiary
provides
processing
service to.		 310,944
27,082
27,082		 100.00%
5.09%
100.00%		 (Note)
(Note)
(Note)

Note: It was eliminated in the consolidation.

(viii) Receivables from related parties in excess of $100 million or 20% of issued stock capital were as follows:

Name of Group
the has the
receivables		 Counterparty Relationship Balance of amount Turnover
ratio		 Overdue Overdue Amount collected in the
subsequentperiod		 Allowance for
doubtful accounts		 Remarks
Amount Status
The Group Emerging Display
Technologies
Corp.,U.S.A.		 Subsidiary of the Group Accounts receivable of
$310,944		 4.05
-		 - 238,996 - (Note)

Note: It was eliminated in the consolidation.

(ix) Derivative financial instrument transactions: Please refer to Note 6(b).

  • (x) Significant inter-Group transactions:
No. Name Counterparty Relationship
(Note)		 Details of transaction Details of transaction Details of transaction Details of transaction
Subject
Amount		 Term of trading % of total
consolidated
revenue or
total asset
0 The Group Emerging Display
Technologies Corp.,
U.S.A.
1		 Sales revenue
Accounts receivable		 1,038,132
310,944

Considering the trading practices in North
American market, the Group set credit duration as
three months for North American market, which is
slightly longer than one to three months set in other
markets. The price in North American market is not
significantlydifferent from that ingeneral market.




24.82%
8.66%
0 The Group Emerging Display
Technologies Corp.,
U.S.A.		 1 Selling expenses -
Commission
Otherpayable		 42
21

No non-related-party transaction to compare to.		 -
0 The Group EDT-Europe ApS 1 Selling expenses -
Commission
Other payable		 58,210
9,434

No non-related-party transaction to compare to.		 1.39%
0.26%
0 The Group Emerging Display
TechnologiesKorea		 1 Selling expenses -
Commission		 3,862
No non-related-party transaction to compare to.		 0.09%
0 The Group EDT-Japan Corp. 1 Selling expenses -
Commission		 13,368
No non-related-party transaction to compare to.		 0.32%
0 The Group Dong Guan
Emerging
Display Limited		 1 Processing cost
Accounts payable		 200,113
27,082

No non-related-party transaction to compare to.		 4.78%
0.75%

Note: Relationship notes as follows,

  • 1) Parent Group to subsidiary

  • 2) Subsidiary to parent Group

  • 3) Subsidiary to subsidiary

  • 152 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(b) Information on investees:

Relevant information about investees is as follows: (excluding information on investees in Mainland China):

Name of
investor		 Name of investee Location Business
Scope		 Original cost of
investment		 Original cost of
investment		 Held at the end of term Held at the end of term Held at the end of term Highest
percentage
owned during
theyear
Net income
(loss) of the
investee		 Investment
income
(loss)
recognized		 Remarks
December
31, 2021		 December
31, 2020		 Shares
owned		 Percentage
owned
Carrying value
The Group Emerging Display
Technologies Corp.,
U.S.A.
USA		 Trading 121,656
121,656		 3,500,000
100.00%
92,754
(Note 1)		 100.00%
12,616		 12,646 Subsidiary
(Note 3)
The Group
 Emerging Display
International
(Samoa)
Corp.		 Samoa Investment
holding		 180,503
180,503		 5,984,071
78.49%
60,475		 78.49%
(16,595)		 (13,025) Subsidiary
(Note 3)
The Group
 EDT-Europe
ApS		 Denmark Customer
service and
business
support		 2,077
2,077		 125,000
100.00%
2,715		 100.00%
1,333		 1,333 Subsidiary
(Note 3)
The Group
 Emerging Display
Technologies Korea
Korea		 Customer
service and
business
support		 1,677
1,677		 58,212,500
100.00%
1,524		 100.00%
242		 242 Subsidiary
(Note 3)
The Group
 EDT-Japan
Corp.		 Japan Customer
service and
business
support		 17,401
17,401		 5,000
100.00%
6,299		 100.00%
1,842		 1,842 Subsidiary
(Note 3)
The Group
 Ying Dar
Investment
Development
Corp.		 Taiwan Investment 89,000
89,000		 8,900,000
100.00%
26,100		 100.00%
6,577		 161
(Note 2)		 Subsidiary
(Note 3)
The Group
 Bae Haw
Investment
Development
Corp.		 Taiwan Investment 89,000
89,000		 8,900,000
100.00%
38,569		 100.00%
3,247		 (890)
(Note 2)		 Subsidiary
(Note 3)
The Group
 Ying cheng
Investment
Corp.		 Taiwan Investment 84,000
84,000		 8,400,000
52.50%
46,217		 52.50%
(100)		 (53) Subsidiary
(Note 3)
Ying Dar
Investment
Development
Corp		 Emerging Display
International
(Samoa)
Corp.		 Samoa Investment
holding		 13,234
13,234		 450,000
5.90%
4,546		 5.90%
(16,595)		 (979) Subsidiary
(Note 3)
Bae Haw
Investment
Development
Corp		 Emerging Display
International
(Samoa)
Corp.		 Samoa Investment
holding		 25,488
25,488		 870,000
11.41%
8,791		 11.41%
(16,595)		 (1,893) Subsidiary
(Note 3)

Note 1: It was deducted unrealized profit from sales $9,804.

Note 2: Cash dividends to subsidiaries, which were reclassified as capital surplus, were deducted. Note 3: It was eliminated in the consolidation.

(c) Information on investments in Mainland China:

(i) Information on investments in Mainland China:

Investee
group		 Main
businesses
and products		 Received
capital		 Investment
method
A


 ccumulated
amount
invested
in Mainland
China as of
Jan. 1, 2021		 Invested capital remitted
from or repatriated to
Taiwan		 Invested capital remitted
from or repatriated to
Taiwan		 Accumulated
amount
invested
in Mainland
China as of
Dec. 31, 2021
Net
income of
investee
The
Group’s
direct or
indirect
investment
ratio
Highest
ratio
during
the year

Investment
gain (loss)
recognized
by the
Group		 Book
value of
the
investment
as of Dec.
31, 2021
Accumulated
investment
income
repatriated to
Taiwan as of
Dec. 31, 2021
Remittance Repatriation
Dong
Guan
Emerging
Display
Limited		 Manufacturing
of LCDs and
Touch panel

248,516
(US$ 7,625,300)		 Investing
through a third
country by
establishing a
holding Group
in a third
country.
(
6		 219,225
US$ ,746,936)
(Note 1)		 - - 219,225
(US$ 6,746,936)		 (16,324) 95.80%
(Note 2)
95.80%		 (15,639)
Based on the
investee’s
financial
statements
audited by the
same auditor
as the Group
(Note 3)
65,412
(Note 4)
-

(ii) Limitation on investment in Mainland China:

Accumulated investment amount
remitted from Taiwan to Mainland
China as of December 31, 2021		 Investment amount approved by the
Investment Commission, Ministry of
Economic Affairs		 Limit on investment in Mainland China
set by the Investment Commission,
Ministry of Economic Affairs
191,952 (Note 8)
(US$6,934,668) (Note 5)		 386,184 (Note 8)
(US$13,951,732) (Note 6)		 1,357,830 (Note 7)
  • 153 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

  • Note 1: The amount includes $13,234 which was invested by Ying Dar Investment Development Corp. and $25,488 which was invested by Bae Haw Investment Development Corp.

  • Note 2: The ratio includes 5.90% which was held by Ying Dar Investment Development Corp. and 11.41% which was held by Bae Haw Investment Development Corp.

  • Note 3: The amount includes a loss of $963 which was recognized by Ying Dar Investment Development Corp. and a loss of $1,863 which was recognized by Bae Haw Investment Development Corp.

  • Note 4: The amount includes $4,029 which was invested by Ying Dar Investment Development Corp. and $7,791 which was invested by Bae Haw Investment 。

  • Development Corp

  • Note 5: The amount includes the remaining capital amounting to US$188,732 of Emerging Technologies Int’l Trading (Shanghai) Co., Ltd. didn’t remit back after it had completed liquidation in 2009 due to net loss.

  • Note 6: The approved amount includes US$637,732 obtained from Ying Dar Investment Development Corp. and US$870,000 obtained from Bae Haw Investment Development Corp. The amount obtained from Ying Dar Investment Development Corp. includes the remaining capital amounting to US$187,732 of Emerging Technologies Int’l Trading (Shanghai) Co., Ltd. didn’t remit back after it had completed liquidation in 2009 due to net loss.

  • Note 7: The amount includes $78,055 for Ying Dar Investment Development Corp. and $63,376 for Bae Haw Investment Development Corp.

  • Note 8: Transactions denominated in foreign currencies were recorded using the rate of exchange at December 31, 2021.

  • (iii) Significant transactions:

The significant inter-Group transactions with the subsidiary in Mainland China, which were eliminated in the preparation of the consolidated financial statements, are disclosed in “Information on significant transactions”.

  • (d) Major shareholders:
“Information on significant transactions”.
Major shareholders:
Shareholding
Shareholder’s name		 Shares Percentage
Tseng, Jui-Ming 11,043,723 6.8%

  • Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Group as of the last business day for the current quarter. The share capital in the financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

  • Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, refer to Market Observation Post System.

  • 154 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(14) Segment information

(a) General information

The Group has three reportable segments: the domestic segment, the North America segment and the mainland China segment. The domestic segment includes sales division, research develop division and manufacturing division. It engages in designing, manufacturing and selling of liquid crystal displays modules and capacitive touch panel, and functions as operating headquarters of the Group. The North America segment engages mainly in expanding the North American trading business and implements marketing function in North America. The North America segment engages in the sale of liquid crystal displays provided by the domestic segment. The mainland China segment engages in the manufacture of processing raw materials and supplies provided by the domestic segment and it deals mainly in the business of manufacturing liquid crystal display modules and capacitive touch panel.

  • (b) Information which should be reported includes the segment income, segment assets, and segment liabilities, and their measurement basis and reconciliation information

The reported amounts are consistent with the management reports adopted by decision makers. There was no material inconsistency between the accounting policies of reportable segments and the accounting policies described in Note 4. The reportable segments’ income was measured using the operating income before tax, which was also used as the basis for performance evaluation.

Sales and other transactions among consolidated entities were considered as transactions with third parties and they are measured based on the market value. Reportable segment information is as follows:

Revenue
Sales to customers other
than consolidated entities
Sales among consolidated
entities
Interest revenue
Total revenue
Interest expenses
Depreciation and
amortization
Segment income
Segment assets
Segment liabilities
Revenue
Sales to customers other
than consolidated entities
Sales among consolidated
entities
Interest revenue
Total revenue
Interest expenses
Depreciation and
amortization
Segment income
Segment assets
Segment liabilities		 **For theyears ended December 31, ** **For theyears ended December 31, ** **For theyears ended December 31, ** 2021
Domestic North
America		 Mainland
China		 Other
operating
department		 Adjustments
and
elimination		 Total
$ 3,047,828
1,037,374
1,184
1,134,396

42

1
-

200,113

59		 1,179

75,440
-
-

(1,312,969)
-		 4,183,403

-
1,244

$
4,086,386
1,134,439
200,172		 76,619 (1,312,969)
4,184,647


$
7,984
60


1,000
133
-
9,177


$
47,854		 3,072

10,609		 3,389 -
64,924


$
272,192

13,913


(16,424)
3,717		 (5,474)

267,924


$
3,328,326


444,707


150,018
27,009
(360,617)


3,589,443


$
1,427,514


342,284


81,739
16,470
(350,947)


1,517,060


2020
Domestic North
America		 Mainland
China		 Other
operating
department		 Adjustments
and
elimination

-

(1,322,172)
(103)		 Total
$ 2,575,121
1,067,312
9,764
1,161,296

157

1
-

179,987

37		 882

74,716
-		 3,737,299
-
9,699

$
3,652,197
1,161,454
180,024		 75,598
(1,322,275)
3,746,998


$
10,853
221


282
110
(103)
11,363


$
61,469		 2,983
8,185		 3,515
-
76,152


$
285,731

10,430


(9,028)
2,416		 (15,440)
274,109


$
3,441,342


310,291


144,865
31,559
(318,868)
3,609,189


$
1,639,092


217,736


53,503
21,956
(303,663)
1,628,624
  • 155 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The following is the explanation of material reconciliation item:

  • (i) For the years ended December 31, 2021 and 2020, the operating segments revenue eliminated from the consolidated entities were $1,312,969 and $1,322,275, respectively.

  • (ii) For the years ended December 31, 2021 and 2020 the operating segments profit and loss eliminated from the consolidated entities were $5,474 and $15,440, respectively.

  • (iii) For the years ended December 31, 2021 and 2020, the operating segments assets eliminated from the consolidated entities were $360,617 and $318,868, respectively.

  • (iv) For the years ended December 31, 2021 and 2020, the operating segments liabilities eliminated from the consolidated entities were $350,947 and $303,663, respectively.

  • (c) Products and services information

Sales to customers other than consolidated entities, classified by products and services, were as follows:

Production
Liquid crystal display modules
Capacitive touch panel and capacitive touch panel
module
Others
Total		 2021 2020

1,245,598

2,417,280
74,421
3,737,299
$ 1,196,473
2,865,419
121,511

$
4,183,403
  • (d) Geographic information

Sales to customers other than consolidated entities, classified by location of customers, were as follows:

Geographic area
Sales to customers other than consolidated entities:
Mainland China
Europe
USA
Japan
Taiwan
Korea
Others
Total		 2021 2020

257,393

2,094,124

889,628

77,541

319,368

65,791
33,454
3,737,299

$ 306,743
2,358,766
920,886
91,184
405,948
33,108
66,768

$
4,183,403
  • 156 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Geographic area
Non-current assets, classified by location of assets,
were as follows:
Taiwan
Mainland China
USA
Europe
Others
Total		 December 31,
2021		 December 31,
2020
$ 328,762
35,970
99,461
736
1,960
343,765

12,724

97,604

966
2,752
457,811

$
466,889

Non-current assets included in property, plant and equipment, investment property, intangible assets and other assets, excluding financial instrument and deferred income tax assets.

(e) Major customers’ information

Major customers’ information
A customer from domestic segment
B customer from North America segment		 2021 2020

1,032,571
360,162
1,392,733
$ 1,240,044
509,045

$
1,749,089
  • 157 -

6.5 Parent-company-only financial statements for the years ended December 31, 2021 and 2020, and independent auditors’ report

Independent Auditors’ Report

To the Board of Directors of Emerging Display Technologies Corp.:

Opinion

We have audited the financial statements of Emerging Display Technologies Corp. (“the Company”), which comprise the balance sheets as of December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended December 31, 2021 and 2020, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters we judged shall be presented in the financial report as follows:

1. Valuation of accounts receivable

Please refer to Note 4(f) for accounting policy of accounts receivable valuation and Note 5(a) for accounting assumption and estimation uncertainty of impairment of accounts receivable. Information regarding accounts receivable is shown in Note 6 (d) of the parent company only financial statements.

Description of key audit matters:

The Company’s customers are the manufacturers of industrial equipment, smart home control devices, healthcare equipment, handheld devices, and information appliance products. The customers’ delayed payments were due to the need to clarify the responsibility of problematic products resulted from failure of process or usage of end products, and global economic turmoil. Because of the inherent credit risk of receivables, the financial statements users value the collection results. Since the accounts receivable is significant to the financial statements, they are one of the key areas our audit focused on.

  • 158 -

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding the process of account checking and collection with customers; analyzing the receivable aging report; reviewing the historical receipt and bad debt records; and understanding the forward looking industrial economy status and concentration of credit risk of the customers. In addition, we also evaluated the appropriateness of related disclosures in the parent company only financial statements.

2. Valuation of obsolete inventory

Please refer to Note 4(g) for accounting policy of obsolete inventory and Note 5(b) for accounting assumption and estimation uncertainty of obsolete inventory valuation. Information regarding obsolete inventory valuation is shown in Note 6(f) of the parent company only financial statements.

Description of key audit matters:

Obsolete inventory is carried at 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 costs of completion and selling expenses. The Company is engaged in the manufacture and sale of liquid crystal displays and capacity touch panels. It focuses on the small and medium sized niche markets of non consumable area. The products are used in industrial equipment, smart home control devices, healthcare equipment, handheld devices, and information appliance products. The development strategy of the Company is diversifying and customizing its products which may result in having an impact on its obsolete inventory cost. As a consequence, there is a risk that the net realizable value of obsolete inventory may turn out to be lower than its carrying value. Therefore, the valuation of obsolete inventory is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included selecting samples to test the accuracy of inventory aging report; analyzing the changes of inventory aging, and examining the provision of inventory by reviewing the historical accuracy on provision. We assessed the changes of obsolescence inventory in the subsequent events and the basis of net realizable value to evaluate the accuracy of the Company’s provisions. In addition, we also assessed the appropriateness of the provisions and disclosures made by the management.

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

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

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

Those charged with governance (including the Audit Committee or the Supervisors) are responsible for overseeing the Company’s financial reporting process.

  • 159 -

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

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

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

  6. Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on these parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

  7. 160 -

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Po Jen, Yang and Yen Ta, Su.

KPMG

Taipei, Taiwan (Republic of China) March 10, 2022

Notes to Readers

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

The independent auditors’report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’report and parent company only financial statements, the Chinese version shall prevail.

  • 161 -

(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. Balance Sheets

December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Assets
Current assets:
1100
Cash and cash equivalents (note 6(a))
1110
Financial assets at fair value through profit or loss, current (note 6(b))
1120
Financial assets at fair value through other comprehensive income, current
(note 6(c))
1170
Accounts receivable, net (notes 6(d) and (v))
1180
Accounts receivable—related parties, net (notes 6(d), (v), and 7)
1200
Other receivables (note 6(e))
130X
Inventories (note 6(f))
1470
Other current assets (notes 6(g) and 8)
Total current assets
Non-current assets:
1517
Financial assets at fair value through other comprehensive income,
non-current (note 6(c))
1550
Investments accounted for using equity method (note 6(h))
1600
Property, plant and equipment (notes 6(j), 8 and 9)
1755
Rights-of-use assets (note 6(k))
1780
Intangible assets (note 6(l))
1840
Deferred income tax assets (note 6(r))
1980
Other non-current financial assets (note 6(g))
Total non-current assets
Total assets		 **December 31, ** 2021 December 31,
Amount

1,159,414
58,817

138,432

457,575

202,276
5,510

794,173

75,060		 2020
%

32

2

4

13

6

-

22

2

81

1

7

8

2

-

1

-

19

100
Liabilities and Equity
Current liabilities:
2100 Short-term borrowings (note 6(m))
2120 Financial liabilities at fair value through profit or loss, current (note 6(b))
2150 Notes payable
2170 Accounts payable
2180 Accounts payable—related parties (note 7)
2200 Other payables (note 6(n))
2220 Other payables—related parties (note 7)
2230 Income tax liabilities
2280 Lease liabilities, current (note 6(p))
2300 Other current liabilities (note 6(v))
Total current liabilities
Non-current liabilities:
2540 Long-term borrowings (notes 6(o) and 8)
2570 Deferred income tax liabilities (note 6(r))
2580 Lease liabilities, non-current (note 6(p))
2640 Net defined benefit liability, non-current (note 6(q))
2645 Guarantee deposits received
2670 Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity attributable to owners of parent (notes 6(s) and 11):
3100 Ordinary shares
3200 Capital surplus
3300 Retained earnings
3400 Other equity interest
3500 Treasury shares
Total equity
Total liabilities and equity		 **December 31, ** **December 31, ** 2021 **December 31, ** **December 31, ** 2020
Amount % Amount % Amount %
$ 711,866
42
281,311
492,468
310,944
1,621
968,367
25,363
21

-

8

14

9

-

28
1		 $ -

-
86
505,207
27,082
240,693
11,420
28,647
2,031
53,437		 -
-

-

15

1

7

-

1

-

2		 700,000
195
1,234

355,622

90,862

238,554
9,784

49,083
1,966
41,974
20

-

-

10

3

7

-

1

-
1

2,791,982		 81

2,891,257

35,280
274,653
266,891
58,205
3,666
21,451
2,566
1

8

8

1

-

1
-

31,611

273,765

278,747

60,927
4,091

31,634
5,834
868,603

26
1,489,274		 42

398,349
240
58,640
100,977
34
520

12

-

1

3

-

-

-
354

60,671

87,048
34
728		 -

-

2

2

-
-
558,760
16		 148,835 4

662,712
19

686,609
1,427,363

42
1,638,109		 46

1,624,076
25,980
654,787
(104,491)
(173,021)

47

1

19

(3)

(6)

1,624,076

15,423

591,094

(117,815)
(173,021)
45

-

17

(3)
(5)

2,027,331


58
1,939,757
54
$
3,454,694		 100
3,577,866		 $
3,454,694
100		 3,577,866 100

See accompanying notes to financial statements.

  • 162 -

(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. Statements of Comprehensive Income For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

4000
Operating revenue (notes 6(v) and 7)
5000
Operating costs (notes 6(f), (l), (q), (w), 7 and 12)
Gross profit
5910
Less: Unrealized profit (loss) from sales (note 7)
5920
Add: Realized profit (loss) from sales (note 7)
Gross profit
Operating expenses (notes 6(l), (q), (w), 7 and 12):
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Expected credit impairment loss (gain) (note 6(d))
Net operating income
6500
Net other income (expenses) (note 6(x))
Net operating income
Non-operating income and expenses (notes 6(c), (p), (y) and 7):
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of profit (loss) of associates and joint ventures accounted for using equity method
Total non-operating income and expenses
7900
Profit from continuing operations before tax
7950
Less: Income tax expenses (note 6(r))
Profit
8300
Other comprehensive income:
8310
Components of other comprehensive income that will not be reclassified to profit or
loss
8311
Gains (losses) on remeasurements of defined benefit plans
8316
Unrealized gains (losses) from investments in equity instruments measured at fair value
through other comprehensive income (note 6(s))
8330
Share of other comprehensive income of subsidiaries, associates and joint ventures
accounted for using equity method, components of other comprehensive income that
will not be reclassified to profit or loss (note 6(s))
8349
Income tax related to components of other comprehensive income that will not be
reclassified to profit or loss (note 6(r))
8360
Components of other comprehensive income (loss) that will be reclassified to profit
or loss
8361
Exchange differences on translation of foreign financial statements (note 6(s))
8380
Share of other comprehensive income of subsidiaries, associates and joint ventures
accounted for using equity method, components of other comprehensive income that
will be reclassified to profit or loss (note 6(s))
8399
Income tax related to components of other comprehensive income that will be
reclassified to profit or loss (note 6(r))
8300
Other comprehensive income
8500
Comprehensive income
Earnings per share (New Taiwan Dollars) (note 6(u)):
9750
Basic net income per share (New Taiwan Dollars)
9850
Diluted net income per share (New Taiwan Dollars)		 2021 2020
Amount %

100

85

15

-

-		 Amount %
$ 4,085,202
3,471,600
3,642,433
2,959,499
100

81

19

-

-

19

4

3

3

-

10

-

9

-

-

(2)

-

-

613,602
9,804
15,309

682,934
15,309
13,567

619,107

15

4

2

3

-
681,192

143,369
94,943
116,966
33

137,735

99,698

115,565
5,481
355,311
9

-

6

-

1

(1)

-

-
358,479

512
528
264,308 323,241

1,159
27,294
(20,498)
(7,984)
2,256
9,663

11,190

(68,680)
(10,853)
5,608

2,227

-
(53,072)

(2)

266,535
29,255

6

1

270,169
36,703


7

1

237,280

5
233,466

6

(18,937)
52,573
6,626
(66)

-

1

-

-
(1,286)

19,932
(22,115)
298

-

1

(1)

-

40,328

1		 (3,767)
-

(10,533)
(1,169)
-

-

-
-
(4,355)
170
-

-

-
-
(11,702)
-		 (4,185)
-

28,626

1
(7,952)

-

$
265,906

6
225,514

6


$
1.60

1.57

$		 1.59 1.56

See accompanying notes to financial statements.

  • 163 -

(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. Statements of Changes in Equity For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2020
Profit
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve
Cash dividends on ordinary shares
Reversal of special reserve
Exercise of disgorgement
Cash dividends to subsidiaries
Disposal of investments in equity instruments designated at fair value
through other comprehensive income
Balance on December 31, 2020
Profit
Other comprehensive income
Total comprehensive income
Appropriation and distribution of retained earnings:
Legal reserve
Cash dividends on ordinary shares
Special reserve
Cash dividends to subsidiaries
Disposal of investments in equity instruments designated at fair value
through other comprehensive income
Disposal of investments in equity instruments designated at fair value
through other comprehensive income in subsidiaries
Return of employee stock ownership trust
Balance on December 31, 2021		 Ordinary
shares		 Capital
surplus		 Retained earnings Retained earnings Retained earnings Total other equityinterest Treasury
shares		 Total
equity
Exchange
differences on
translation of
foreign financial
statements		 Unrealized gains
(losses) from
financial assets
measured at fair
value through other
comprehensive
income
Legal
reserve		 Special
reserve		 Unappropriated
retained
earnings
$
1,624,076
-
-
-
-
-
-
-
-
-
1,624,076
-
-
-
-
-
-
-
-
-
-
$
1,624,076		 4,397
57,015
151,307
-
-
-

-
-
(48,695)
-
-
-

102,612
-
-
-

-
-
15,203
-
-
-
-
117,815		 330,944
233,466
(1,286)
232,180
(25,733)
(188,889)
48,695
-
-
8,537
405,734
237,280
(18,937)
218,343
(24,072)
(188,889)
(15,203)
-
34,101
138
-
430,152		 (14,111)
-
(4,185)
(4,185)
-
-
-
-
-
-
(18,296)
-
(11,702)
(11,702)
-
-
-
-

-
-
-
(29,998)		 (88,501) (173,021)
1,892,106

-
-

-
-
-
(2,481)
-
-

233,466
(7,952)
- -
(2,481)		 -
225,514
-
-
-
473
10,553
-		 25,733
-
-

-

-
-
-
-
-
-
-
(8,537)		 -
-
-
-
-
-
-
(188,889)
-
473
10,553
-
15,423
82,748
(99,519)		 (173,021)
1,939,757

-
-

-
-
-
59,265
-
-

237,280
28,626
- -
59,265		 -
265,906
-
-
-
10,553
-
-
4		 24,072
-
-

-
-
-

-
-
-
-
-
(34,101)
(138)
-		 -
-
-
-
-

-
-
-
(188,889)
-
10,553
-
-
4
25,980 106,820 (74,493) (173,021) 2,027,331

See accompanying notes to financial statements.

  • 164 -

(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. Statements of Cash Flows For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense
Amortization expense
Expected credit impairment loss
Net gain on financial assets or liabilities at fair value through profit or loss
Interest expense
Interest income
Dividend income
Share of profit of subsidiaries, associates and joint ventures accounted for using equity method
Gain on disposal of property, plant and equipment
Unrealized profit from sales
Realized profit from sales
Unrealized foreign exchange loss
Others
Total adjustments to reconcile profit
Changes in operating assets and liabilities:
Changes in operating assets:
Increase in accounts receivable
(Increase) decrease in accounts receivable－related parties
Decrease in other receivable
Increase in inventories
Decrease (increase) in other current assets
Total changes in operating assets
Changes in operating liabilities:
(Decrease) increase in notes payable
Increase (decrease) in accounts payable
Decrease in accounts payable－related parties
Increase (decrease) in other payable
Increase in other payable－related parties
Increase in other current liabilities
Decrease in net defined benefit liability
Decrease in other non-current liabilities
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities
Cash flows from investing activities:
Acquisition of financial assets at fair value through other comprehensive income
Proceeds from disposal of financial assets at fair value through other comprehensive income
Acquisition of financial assets at fair value through profit or loss
Proceeds from disposal of financial assets at fair value through profit or loss
Proceeds from residuals of long-term investments under equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Decrease in other receivables due from related parties
Decrease (increase) in other financial assets
Dividends received
Net cash flows used in investing activities
Cash flows from (used in) financing activities:
(Decrease) increase in short-term borrowings
Increase in long-term borrowings
Repayments of long-term borrowings
Disgorgement received
Cash dividends paid
Repayments of lease liabilities
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 2021
$ 266,535
46,660
1,194
33
(5,736)
7,984
(1,133)
(26,502)
(2,256)
(436)
9,804
(15,309)
3,058
4
17,365
(36,807)
(110,471)
3,582
(174,194)
50,510
(267,380)
(1,148)
151,707
(63,143)
1,772
1,796
11,462
(5,008)
(208)
97,230
(170,150)
(152,785)
113,750
1,441
26,501
(9,598)
(39,556)
92,538
(339,254)
245,279
(30,135)
94,451
-
(33,998)
2,942
(769)
-
2,255
12,351
(46,878)
(700,000)
400,000
-
-
(188,895)
(1,966)
(490,861)
(2,347)
(447,548)
1,159,414
$
711,866		 2020
270,169

60,103
1,365
5,481
(7,336)
10,853
(9,575)
(7,646)
(5,608)
-
15,309
(13,567)
31,606
-
80,985

(145,315)
82,869
3,679
(81,879)
(24,543)

(165,189)

927
(25,713)
(3,020)
(11,403)
2,618
19,675
(2,784)
(208)

(19,908)

(185,097)

(104,112)

166,057
11,266
7,613
(10,398)
(42,218)

132,320

(101,460)
80,033
(60,350)
62,165
194
(30,825)
-
(1,696)
20,951
(2,950)
3,006

(30,932)

300,000
-
(320,000)
591
(188,883)
(1,558)

(209,850)

(30,659)

(139,121)
1,298,535

1,159,414

See accompanying notes to financial statements.

  • 165 -

(English Translation of Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Emerging Display Technologies Corp. (the “Company”) was incorporated as a limited liability company under the laws of the Republic of China (R.O.C.) on September 23, 1994. The address of its registered office and principal place of business is No. 5, Central 1st Rd, Qianzhen District, Kaohsiung City, Taiwan. The Company is engaged in the manufacture and sale of capacity touch panels and liquid crystal displays (LCDs).

(2) Approval date and procedures of the financial statements

These parent-company-only financial statements were authorized for issuance by the Board of Directors on March 10, 2022.

(3) New standards, amendments and interpretations adopted

  • (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its parent-company-only financial statements, from January 1, 2021:

  • Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

  • Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform—Phase 2”

  • Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

  • (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

  • －

  • ● 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

  • Amendments to IFRS 3 “Reference to the Conceptual Framework”

The aforementioned assessment about the adoption of the new amendments would be modified as the environments or conditions change.

  • (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Company does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its parent-company-only financial statements:

  • 166 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

  • IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “Insurance Contracts”

  • Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

  • Amendments to IAS 1 “Disclosure of Accounting Policies”

  • Amendments to IAS 8 “Definition of Accounting Estimates”

  • Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Summary of significant accounting policies

The accompanying parent-company-only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language parent-company-only financial statements, the Chinese version shall prevail.

The significant accounting policies presented in the parent-company-only financial statements are summarized as follows. Except for those specifically indicated in note 3, the following accounting policies were applied consistently throughout the periods presented in the parent-company-only financial statements.

  • (a) Statement of compliance

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

  • (b) Basis of preparation

  • (i) Basis of measurement

Except for the following significant accounts, the parent-company-only financial statements have been prepared on a historical cost basis:

  • 1) Financial instruments at fair value through profit or loss are measured at fair value; 2) Financial assets at fair value through other comprehensive income are measured at fair value;

  • 3) The defined benefit liabilities (assets) are measured at the present value of the defined benefit obligation less fair value of the plan assets, limited as explained in note 4(p).

  • (ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the entities operate. The parent-company-only financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

  • 167 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(c) Foreign currencies

(i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

  • 1) an investment in equity securities designated as at fair value through other comprehensive income;

  • 2) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

  • 3) qualifying cash flow hedges to the extent that the hedges are effective.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economics, are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

  • (d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

  • 168 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (i) It is expected to be realized, or intended to be sold or consumed in the normal operating cycle;

  • (ii) It is held primarily for the purpose of trading;

  • (iii) It is expected to be realized within twelve months after the reporting period; or

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

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current. An entity shall classify a liability as current when:

  • (i) It is expected to be settled in the normal operating cycle;

  • (ii) It is held primarily for the purpose of trading;

  • (iii) It is due to be settled within twelve months after the reporting period; or

  • (iv) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

  • (e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits which meet the definition above and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes are reclassified as cash equivalents.

  • (f) Financial Instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

  • (i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

  • 169 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • 1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

  • ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

  • ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

  • 2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

  • ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

  • ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income derived from equity investments is recognized on the date on which the Company’s right to receive payment is established, which in the case of quoted securities, is normally the ex-dividend date.

  • 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, or at FVTPL, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

  • 170 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

  • 4) Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes ：

  • ‧ the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

  • ‧ how the performance of the portfolio is evaluated and reported to the Company’s management;

  • ‧ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

  • ‧ how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

  • ‧ the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

  • 5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

  • ‧ contingent events that would change the amount or timing of cash flows;

  • 171 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • ‧ terms that may adjust the contractual coupon rate, including variable rate features;

  • ‧ prepayment and extension features; and

  • ‧ terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse features).

  • 6) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on its financial assets measured at amortized cost (including cash and cash equivalents, accounts receivable, other receivables, refundable deposits and other financial assets) and debt investments measured at FVOCI.

The Company measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:

  • ‧ debt securities that are determined to have low credit risk at the reporting date; and

  • ‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables is always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information, as well as analysis, based on the Company’s historical experience, informed credit assessment, and forward-looking information.

If there is a low risk of default on financial asset, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term, and the adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations, the financial asset would be considered low credit risk.

When the contract amount is past due or the borrower is unlikely to pay its credit obligations to the Company in full, the Company considers the credit risk on a financial asset has increased significantly or a financial asset to be in default.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

  • 172 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

  • ‧ significant financial difficulty of the borrower or issuer;

  • ‧ a breach of contract such as a default or being overdue;

  • ‧ the lender of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

  • ‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

  • ‧ the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

  • 7) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

  • 173 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (ii) Financial liabilities and equity instruments

  • 1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

  • 2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

  • 3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital surplus is not sufficient to be written down).

  • 4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

  • 5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

  • 6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

  • 174 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (iii) Derivative financial instruments

The Company holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on weighted average costing principle and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Investment in subsidiaries

The Company evaluates a controlled investee company under the equity method when preparing its parent-company-only financial statements. Under the equity method, the profit and other comprehensive income in the parent-company-only financial statements are the same as the profit and other comprehensive income belonging to the parent company in the consolidated financial statements. Also, the equity in the parent-company-only financial statements is the same as equity belonging to parent company in the financial statements on a consolidated basis.

Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity.

  • (i) Property, plant and equipment

  • (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent Expenditure

Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company.

  • 175 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives for current and comparative years are as follows:

The estimated useful lives for current and comparative years are as fol
Buildings and construction 2～50 years
Machinery and equipment 2～10 years
Office equipment 3～5 years
Other equipment 1～10 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(j) Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

  • (i) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

  • 1) fixed payments, including in-substance fixed payments;

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

  • 176 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • 3) amounts expected to be payable under a residual value guarantee; and

  • 4) payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

  • 1) there is a change in future lease payments arising from the change in an index or rate; or

  • 2) there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

  • 3) there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or

  • 4) there is a change of its assessment on whether it will exercise a extension or termination option; or

  • 5) there are any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases of office equipment that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a practical expedient, the Company elects not to assess whether property, plant and equipment rents that meets all the following conditions are lease modifications or not:

  • 1) the rent concessions occurring as a direct consequence of the COVID-19 pandemic;

  • 2) the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

  • 3) any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2022; and

  • 4) there is no substantive change in other terms and conditions of the lease.

  • 177 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

(ii) As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

(k) Intangible assets

  • (i) Recognition and measurement

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets, including patent and computer software, that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

  • (iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

  • 178 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The estimated useful lives for current and comparative periods are as follows:

1) Patents

1) Patents 9 ～ 20 years 2) Computer software cost 3 months ～ 4 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(l) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

  • (m) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost, except when the recognition of finance cost for a short-term provision is insignificant.

  • (n) Revenue

  • (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

  • 179 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

1) Sale of goods

The Company recognizes revenue when control of the products has been transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’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, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

The Company’s obligation to provide a refund for faulty products under the standard warranty terms is recognized as a provision for warranty.

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

The contract liabilities primarily relate to the advance consideration received from customers, for which revenue is recognized when products are delivered to customers.

2) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(ii) Contract costs

  • 1) Incremental costs of obtaining a contract

The Company recognizes as an asset the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

The Company applies the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

  • 2) Costs to fulfil a contract

If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets), the Company recognizes an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

  • 180 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • ‧ the costs relate directly to a contract or to an anticipated contract that the Company can specifically identify;

  • ‧ the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and

  • ‧ the costs are expected to be recovered.

General and administrative costs, costs of wasted materials, labor or other resources to fulfil the contract that were not reflected in the price of the contract, costs that relate to satisfied performance obligations (or partially satisfied performance obligations), and costs for which the Company cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations(or partially satisfied performance obligations), the Company recognizes these costs as expenses when incurred.

(o) Government grants

The Company recognizes an unconditional government grant as other income when the grant becomes receivable. Other government grants related to assets are initially recognized as deferred income at fair value if there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant; they are then recognized in profit or loss as other income on a systematic basis over the useful life of the asset. Grants that compensate the Company for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(p) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling

  • 181 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

(iv) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(q) Share-based payment

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period during which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the liability are recognized in profit or loss.

(r) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

  • 182 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The Company has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

  • (i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

  • (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

  • (iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset if the following criteria are met:

  • (i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

  • (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

  • 1) the same taxable entity; or

  • 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

  • 183 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(s) Earnings per share

The Company discloses the basic and diluted earnings per share attributable to ordinary equity holders of the Company. Basic earnings per share is calculated as the profit attributable to the ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

  • (t) Operating segments

The Company discloses the operating segment information in the consolidated financial statements. Therefore, the Company does not disclose the operating segment information in the parent-company-only financial statement.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty

In preparing the parent-company-only financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

(a) Impairment of accounts receivable

The Company has estimated the loss allowance of accounts receivable that is based on the risk of a default occurring and the rate of expected credit loss. The Company has considered historical experience, current economic conditions and forward-looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs. Please refer to note 6(d) for relevant assumptions and input values.

(b) Valuation of obsolete inventories

As obsolete inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the obsolete inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of obsolete inventories. Please refer to note 6(f) for further description of the valuation of inventories.

  • 184 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(6) Explanation of significant accounts

  • (a) Cash and cash equivalents
Cash
Demand deposits
Checking accounts
Time deposits
Notes under repurchase agreement
Cash and cash equivalents in the statement of cash
flows		 December 31,
2021		 December 31,
2020

231

491,843

82

264,923
402,335
1,159,414
$ 245
624,655
31
86,935
-

$
711,866

Please refer to note 6(z) for the exchange rate risk and sensitivity analysis of the financial assets of the Company.

  • (b) Financial assets and liabilities at fair value through profit or loss

Financial assets mandatorily measured at fair
value through profit or loss－current:
Open-end mutual funds
Forward exchange contracts

Financial liabilities measured at fair value
through profit or loss－current:
Swap contract		 December 31,
2021		 December 31,
2020
58,817
-
58,817
195
$ -
42
$
42
$
-

Please refer to note 6(y) for the recognition of gain or loss at fair value.

The aforementioned financial assets were not pledged as collaterals.

The Company uses the derivative instruments to hedge the certain currency the Company is exposed to, arising from its operating activities. The following derivative instruments, without the application of hedge accounting, were classified as financial assets mandatorily measured at fair value through profit or loss and held-for-trading financial liabilities:

Forward exchange contracts
Sell
Swap contract
 December 31, 2021
Currency
Maturity Date
USD to CNY
2022.01.14
December 31, 2020
Currency
Maturity Date
NTD to USD
2021.01.07		 December 31, 2021
Currency
Maturity Date
USD to CNY
2022.01.14
December 31, 2020
Currency
Maturity Date
NTD to USD
2021.01.07

Contract amount
(in housands)
USD 800

Contract amount
(in housands)
USD 1,000
Currency
NTD to USD 2021.01.07
  • 185 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Please refer to note (z) for the market risk and credit risk.

(c) Financial assets at fair value through other comprehensive income


Equity investments at fair value through other
comprehensive income－current:
Common stocks listed on domestic markets－
current
Innolux Corp.
Fubon Financial Holding Co., Ltd.
Nan Ya Plastics Corp.
Pegatron Co., Ltd.
CoAsia Electronics Corp.
E.SUN Financial Holding Co., Ltd.
Far Eastern New Century Corp.
Quanta Computer Inc.
Shian Yih Electronic Co., Ltd.
Chicony Electronics Co., Ltd.
Lite-On Technology Corp.
Mega Financial Holding Co., Ltd.
Taiwan Cement Corp., Ltd.
Total
Common stocks listed on foreign markets－
current:
Becton, Dickinson and Company
Total
Equity investments at fair value through other
comprehensive income－noncurrent:
Common stocks unlisted on domestic markets－
noncurrent
Ascendax Venture Capital Corp.
Chenfeng Optronics Corp.
Total
Preference stocks listed on domestic markets－
noncurrent:
Fubon Financial Holding Co., Ltd.
Total		 December 31,
2021		 December 31,
2020

16,174
14,025
15,099

14,537

5,764
19,310
28,950

-

10,320

-

-

-
-
124,179
14,253
138,432

19,566
11,180
30,746
865
31,611
$ 22,483
-
-
14,925
7,120
-
-
66,195
10,560
24,690
39,556
43,940
37,920

$
267,389

13,922

$
281,311

$ 21,376
13,030

34,406

874
$
35,280
  • 186 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The Company designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for strategic purposes.

During the years ended December 31, 2021 and 2020, the dividends of $26,502 and $7,646, respectively, related to equity investments at fair value through other comprehensive income held on the years then ended, were recognized.

During the years ended December 31, 2021 and 2020, the Company has sold part of equity investments at fair value through other comprehensive income as a result of financial management purpose. The shares were sold at fair value of $245,279 and $72,815, respectively; and the Company realized a gain of $34,101 and $8,537, respectively. The gain has been transferred from other equity interest to retained earnings.

Please refer to note 6(z) for the market risk.

The aforementioned financial assets were not pledged as collaterals.

For the purpose of increasing investment benefits, the Company entrusted part of the listed stocks to banks. In accordance with the contract, the Company did not lose control of those financial assets. Therefore, those financial assets had not been derecognized. As of December 31, 2021 and 2020, the carrying amount of the listed stocks which were entrusted to financial institutions for security lending amounted to $22,483 and $16,174, respectively.

(d) Accounts receivable

Accounts receivable－measured as amortized
cost
Accounts receivable－subsidiaries－measured as
amortized cost
Loss allowance

Recognized in:
Accounts receivable, net
Accounts receivable－related parties		 December 31,
2021		 December 31,
2020

463,056

202,276
(5,481)
659,851

457,575
202,276
659,851
$ 498,052
310,944
(5,584)

$
803,412

$ 492,468
310,944

$
803,412

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward-looking information, including macroeconomic and relevant industry information. The loss allowance provision was determined as follows:

Not overdue
Overdue 1~90 days
Overdue 91~180 days
Overdue 181~270 days
Overdue 271 days
 December 31, 2021 December 31, 2021

Loss allowance
provision

473

289
-
-

4,822

5,584
Gross carrying
amount		 Weighted-average
loss rate
$ 697,071
107,103
-
-
4,822
0.07%

0.27%
-
-

100%

$
808,996
  • 187 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Not overdue
Overdue 1~90 days
Overdue 91~180 days
Overdue 181 days		 December 31, 2020 December 31, 2020
Gross carrying
amount		 Weighted-average
loss rate
Loss allowance
**provision **
$ 521,255
139,946
4,131
-
0.09%

0.64%

100%
-
452

898

4,131
-
$
665,332		 5,481

The movement in the allowance for accounts receivable was as follows:

Balance on January 1
Impairment losses recognized (reversed)
Amounts written off
Collection of previously written off accounts
Balance on December 31		 2021 2020

18,771

5,481
(18,771)

-

5,481
$ 5,481
33
-
70
$
5,584

The aforementioned financial assets were not pledged as collaterals.

Please refer to note 6(z) for other credit risk information.

  • (e) Other receivables
Loans to employee
Others
Loss allowance
 December 31,
2021		 December 31,
2020

5,154

356
-

5,510
$ 1,475
146
-
$
1,621

Please refer to note 6(z) for other credit risk information.

  • (f) Inventories
Raw materials and supplies
Work in process
Finished goods
Inventories in transit
 December 31,
2021		 December 31,
2020

340,560

293,269

151,044

9,300

794,173
$ 512,874
293,133
155,742
6,618

$
968,367
  • 188 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The details of the cost of sales were as follows:

Inventory that has been sold
Reversal of write-downs
Unallocated production overheads
Scrap loss
Others		 2021 2020

2,887,905

(8,781)

13,792

66,725
(142)
2,959,499
$ 3,420,010
(7,480)
8,707
50,557
(194)

$
3,471,600

The previous write-down inventories were sold, therefore, the net realizable value of inventories lowered than cost no longer existed. The reversal of write-down was recognized as a reduction of operating costs.

The inventories of the Company were not pledged as collaterals.

(g) Other assets

The details of other assets were as follows:

Tax refund receivables
Prepayment for purchases
Prepaid expenses
Restricted time deposits
Refundable deposits
Others
Recognized in:
Other current assets
Other non-current financial assets		 December 31,
2021		 December 31,
2020

1,562

63,424

5,198

1,525

5,834
3,351
80,894

75,060
5,834
80,894
$ 1,904
12,968
3,604
2,538
2,566
4,349

$
27,929

$ 25,363
2,566

$
27,929

The above-mentioned restricted time deposits had been pledged as collateral. Please refer to note 8.

(h) Investments accounted for using equity method

A summary of the Company’s financial information for equity-accounted investees at the reporting date is as follows:

  • 189 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Subsidiaries December 31,
2021		 December 31,
2020
273,765
$
274,653

During the years ended December 31, 2021 and 2020, cash dividends from above-mentioned subsidiaries were $12,351 and $3,006, respectively.

For the related information, please refer to the consolidated financial statements for the year ended December 31, 2021.

The investments accounted for using equity method of the Company were not pledged as collaterals.

(i) Non-controlling interests’ share of subsidiaries

Please refer to the consolidated financial statements for the year ended December 31, 2021.

(j)

Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Company were as follows:

Cost or deemed cost:
Balance on January 1, 2021
Additions
Reclassification
Disposals
Balance on December 31, 2021
Balance on January 1, 2020
Additions
Reclassification
Disposals
Balance on December 31, 2020
Depreciation:
Balance on January 1, 2021
Depreciation
Disposals
Balance on December 31, 2021
Balance on January 1, 2020
Depreciation
Disposals
Balance on December 31, 2020
Carrying amounts:
Balance on December 31, 2021
Balance on January 1, 2020
Balance on December 31, 2020		 Buildings and
construction		 Machinery and
equipment		 Office
equipment		 Other Total
$ 978,660
1,689
-
-
2,225,110

7,986
7,602
(41,871)
19,667

-

-
-
140,049
24,913
(7,602)
(7,712)
3,363,486

34,588

-
(49,583)
3,348,491

3,336,124

27,422

-
(60)
3,363,486

3,084,739

43,938
(47,077)
3,081,600

3,027,073

57,726
(60)
3,084,739
266,891
309,051
278,747
$
980,349
2,198,827		 19,667
149,648


$ 978,660
-
-
-

2,210,574
5,097
9,439
-

19,727

-

-
(60)

127,163
22,325
(9,439)
-
$
978,660		 2,225,110
19,667		 140,049


$ 768,676
12,036
-

2,184,084

16,692
(41,871)

19,399

106
-

112,580

15,104
(5,206)
$
780,712
2,158,905		 19,505
122,478


$ 753,186
15,490
-

2,163,941

20,143
-

19,154

305
(60)

90,792

21,788
-
$
768,676		 2,184,084
19,399		 112,580


$
199,637
39,922
162
27,170


$
225,474
46,633		 573
36,371


$
209,984
41,026		 268
27,469

Please refer to note 6(y) for gain (loss) on disposal of property, plant and equipment.

Property, plant and equipment pledged as collateral for long-term borrowings and finance as of December 31, 2021 and 2020, are disclosed in note 8.

  • 190 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(k) Right-of-use assets

The Company leases land. Information about leases for which the Company as a lessee was presented below:

Cost:
Balance on January 1, 2021
Balance on December 31, 2021
Balance on January 1, 2020
Other reduction
Balance on December 31, 2020
Accumulated depreciation:
Balance on January 1, 2021
Depreciation
Balance on December 31, 2021
Balance on January 1, 2020
Depreciation
Balance on December 31, 2020
Carrying amounts:
Balance on December 31, 2021
Balance on January 1, 2020
Balance on December 31, 2020		 Amount
$ 66,409
$
66,409
$ 67,226
(817)
$
66,409
$ 5,482
2,722
$
8,204
$ 2,757
2,725
$
5,482
$
58,205
$
64,469
$
60,927

(l) Intangible assets

The cost and accumulated amortization for intangible assets were as follows:

Cost:
Balance on January 1, 2021
Individual acquisition
Disposals
Balance on December 31, 2021
Balance on January 1, 2020
Individual acquisition
Disposals
Balance on December 31, 2020		 Patent Computer
software cost		 Total
amount

11,470

769
(1,151)
11,088

10,739

1,696
(965)
11,470
$ 2,888
339
(198)
8,582

430

(953)

$
3,029

8,059

$ 3,557
296
(965)

7,182

1,400

-

$
2,888
8,582
  • 191 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Amortization:
Balance on January 1, 2021
Amortization
Disposals
Balance on December 31, 2021
Balance on January 1, 2020
Amortization
Disposals
Balance on December 31, 2020
Carrying amounts:
Balance on December 31, 2021
Balance on January 1, 2020
Balance on December 31, 2020		 Patent Computer
software cost		 Total
amount

7,379

1,194
(1,151)
7,422

6,979

1,365
(965)
7,379
3,666
3,760
4,091
$ 1,433
259
(198)
5,946

935

(953)

$
1,494

5,928

$ 2,137
261
(965)

4,842

1,104

-

$
1,433
5,946

$
1,535
2,131

$
1,420
2,340

$
1,455
2,636

The amortization expenses of intangible assets included in the statement of comprehensive income were as follows:

Operating costs
Operating expenses
Total		 2021 2020

308
1,057
1,365
$ 284
910
$
1,194

The intangible assets of the Company were not pledged as collaterals.

  • (m) Short-term borrowings

The short-term borrowings were summarized as follows:

Unsecured bank loans
Unused short-term credit lines
Range of interest rates		 December 31, 2021
$
-		 December 31, 2020
700,000
1,173,097
0.80%~0.85%
$
1,979,365

-

There were no collaterals for the short-term borrowings of the Company.

Please refer to note 6(z) for the interest rate risk, currency risk and sensitivity analysis of the financial liabilities of the Company.

  • (n) Other payables
Salaries and wages payables
Year-end bonus payables
Employee remuneration payables
Directors’ and supervisors’ remuneration payables
Employee benefits liabilities
Others		 December 31,
2021		 December 31,
2020

34,458

68,000

14,683

7,010

23,409
90,994
238,554
$ 34,736
67,000
14,486

6,727
25,733
92,011

$
240,693
  • 192 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(o) Long-term borrowings

The long-term borrowings were summarized as follows:

Commercial paper payable
Less: discount on long-term borrowings
Total
Unused long-term credit lines
Range of interest rates		 December 31, 2021 December 31, 2020
$ 400,000
1,651
-
-

$
398,349		 -

$
400,000		 800,000

1.1610%
-

The Company signed a 5-year syndicated loan contract with E-SUN bank and six other banks on May 15, 2020, with a revolving credit line of $800,000 from the first appropriation date to maturity date, wherein $800,000 can be appropriated by using the banks’ own fund and $600,000 by using company-issued commercial paper guaranteed by the banks, and the combined credit line should not exceed $800,000. According to the loan contract, 9 months after the date the contract was signed will be considered as the first appropriation date to calculate the revolving credit even if the credit line is unused after 9 months. The credit line, with a total of five phases, decreases every 6 months, beginning the 36[th] month after the first appropriation date. The first to fourth phases of the total credit line amounting to $800,000 will decrease by 12.5%, and the fifth phase will decrease by 50%. As the credit line decreases, the residual of the excess credit line will be repaid upon maturity. The Company issued a total of $400,000 commercial paper on February 5, 2021, with restrictions related to the contract are as follows:

Pursuant to the loan contract, for the duration of the loan, the Company must conform to the predetermined financial covenants involving special financial ratios calculated based on the annual consolidated financial statements. If the special financial ratios cannot meet the requirement, the Company should improve within nine months after the end of the fiscal year. If the adjusted financial ratios reviewed by the certified accountant meet the requirements, it will not be regarded as breach of the contract. During the period for adjustment, unused lines of credit, excluding the revolving credit extension, will be suspended until such ratios are in compliance with the contract requirement. However, during the said period, the interest rate and the commercial paper guaranteed rate would increase to 1.25% unless the majority of the consortium agreed the exemption. Before the final agreement is made by the majority of the consortium, the violation of financial ratios would not be viewed as breach. The financial covenants were as follows:

  • (i) A minimum current ratio of 100% should be maintained.

  • (ii) A maximum debt ratio of 150% should be maintained.

  • (iii) A minimum times interest earned ratio of 2.5 should be maintained.

  • (iv) Minimum net tangible assets of 140,000 should be maintained.

Assets pledged as collateral for long-term borrowings are disclosed in note 8.

  • 193 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(p) Lease liabilities

December 31,
2021
Current
$
2,031
Non-current
$
58,640
For the maturity analysis, please refer to note 6(z).
The amounts recognized in profit or loss were as follows:
2021
Interest on lease liabilities
$
2,007
Expenses relating to short-term leases
$
300
Expenses relating to leases of low-value assets,
excluding short-term leases of low-value
assets
$ 144
COVID-19-related rent concessions (recognized
as deduction of depreciation expenses of
right-of-use assets)
$-
The amounts recognized in the statement of cash flows for the Company
2021
Total cash outflow for leases
$
4,417		 December 31,
2021		 December 31,
2020

1,966

60,671
2020
2,071
300
144
348
were as follows:
2020
4,073
$
2,031

$
58,640
$
4,417

1. Lease of land

The Company leases land for its office space and factory. The leases of land typically run for a period of 10 years.

Lease payments for certain contracts are subject to changes in the local price index, which usually occur once a year.

The lease agreements of the Company include the options to extend the lease or terminate the lease. These options are only for the Company to have enforceable rights and the lessor does not have these rights. In the event that it is not possible to reasonably determined the period of the extended lease that will be exercisable, the related payments over the period covered by the option are not included in the lease liability.

2. Other leases

The Company leases office supplies and other equipment with lease terms of one to three years. These leases are short-term or leases of low-value items. The Company has elected not to recognize right-of-use assets and lease liabilities for these leases.

  • 194 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(q) Employee benefits

  • (i) Defined benefit plans

Reconciliation of defined benefit obligations at present value and plan asset at fair value are as follows:

Present value of defined benefit obligations
Fair value of plan assets
Net defined benefit liabilities		 December 31,
2021		 December 31,
2020

209,209
(122,161)
$ 228,880
(127,903)

$
100,977
87,048

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for its employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive an annual payment based on the years of service and average salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’s Bank of Taiwan labor pension reserve account balance amounted to $127,903 as of December 31, 2021. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

  • 2) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the Company were as follows:

Defined benefit obligations at January 1
Current service and interest cost
Remeasurement of the net defined benefit
liabilities (assets)
－Actuarial gain on financial assumptions
change
－Experience adjustment
Employee benefits paid
Defined benefit obligations at December 31		 2021 2020

202,792

2,834

(3,486)

8,013
(944)
209,209
$ 209,209
2,148
(1,957)
22,126
(2,646)
$
228,880
  • 195 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • 3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets at January 1
Interest income
Remeasurement of the net defined
benefit liabilities (assets)
－Return on plan assets (excluding
current interest cost)
Contributions made by employer
Employee pensions paid
Fair value of plan assets at December 31		 2021 2020

114,246

1,305

3,241

4,313

(944)
$ 122,161
929
1,232
4,462
(881)
$
127,903



122,161
  • 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Current service costs
Net interest costs on net defined benefit
liabilities (assets)
Operating costs
Selling expenses
General and administrative expenses
Research and development expenses
Actual return on assets		 2021 2020
$ 582
637
$
1,219
556
973
1,529

1,156

58

180
135
1,529
4,546

$ 912
50
148
109
$
1,219

$
2,161
  • 5) Actuarial assumptions

The following are the Company’s principal actuarial assumptions:

Discount rate
Future salary increases		 December 31,
2021
0.750%
1.750%		 December 31,
2020

0.750%

2.000%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $4,326.

  • 196 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The weighted-average lifetime of the defined benefits plans is 16.54 years.

  • 6) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

As of December 31, 2021
Discount rate (changed 0.25%)
Future salary increasing rate (changed
0.25%)
As of December 31, 2020
Discount rate (changed 0.25%)
Future salary increasing rate (changed
0.25%)		 Influences of defined benefit
obligations
Increased
Decreased
$ (7,763)
8,144
$ 7,901
(7,578)
$ (7,562)
7,907
$ 7,692
(7,388)		 Influences of defined benefit
obligations
Increased
Decreased
$ (7,763)
8,144
$ 7,901
(7,578)
$ (7,562)
7,907
$ 7,692
(7,388)
Increased
$ (7,763)
$ 7,901
$ (7,562)
$ 7,692

8,144

(7,578)

7,907

(7,388)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of the pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020.

(ii) Defined contribution plans

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligations.

Details of the Company’s pension costs under the defined contribution method were as follows:

Operating cost
Selling expenses
General and administrative expenses
Research and development expenses		 2021 2020

19,215

1,350

1,471
2,784
24,820
$ 20,173
1,386
1,357
2,772

$
25,688
  • 197 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(r) Income taxes

(i) Income tax expenses

The amount of income tax expenses was as follows:

Current tax expense (benefit)
Current period
Adjustment for prior periods
Deferred tax expense (benefit)
Origination and reversal of temporary
differences
Change in unrecognized deductible
temporary differences
Income tax expenses		 2021 2020
$ 25,998
(6,878)
39,130

(3,578)

19,120


35,552

11,947
(1,812)


2,149
(998)

1,151

10,135

$
29,255


36,703

No income tax was recognized directly in equity in 2021. The amount of income tax recognized directly in equity for 2020 was as follows:

Capital surplus－disgorgement
 Amount
$
118

The amount of income tax recognized in other comprehensive income for 2021 and 2020 was as follows:

2021
Items that will not be reclassified
subsequently to profit or loss:
Unrealized gains (losses) from investment in
equity instruments measured at fair value
through other comprehensive income
$ (66)
Reconciliation of income tax and profit before tax was as follows:
2021
Income before income tax
$
266,535
Income tax calculated based on the
Company’s domestic tax rate
$ 53,307
Domestic investment gain under the equity
method
156
Tax-exempt income－dividend income
(5,263)
Tax-exempt income－gains derived from the
securities transactions
(340)
Change in unrecognized temporary
differences
(1,812)
Investment tax credit
(10,475)
Additional tax on undistributed earnings
-
Adjustment for prior periods
(6,878)
Others
560
Income tax expenses
$
29,255		 2021
Items that will not be reclassified
subsequently to profit or loss:
Unrealized gains (losses) from investment in
equity instruments measured at fair value
through other comprehensive income
$ (66)
Reconciliation of income tax and profit before tax was as follows:
2021
Income before income tax
$
266,535
Income tax calculated based on the
Company’s domestic tax rate
$ 53,307
Domestic investment gain under the equity
method
156
Tax-exempt income－dividend income
(5,263)
Tax-exempt income－gains derived from the
securities transactions
(340)
Change in unrecognized temporary
differences
(1,812)
Investment tax credit
(10,475)
Additional tax on undistributed earnings
-
Adjustment for prior periods
(6,878)
Others
560
Income tax expenses
$
29,255		 2020
298
2020
$
266,535
270,169

$ 53,307
156
(5,263)
(340)
(1,812)
(10,475)
-
(6,878)
560


54,034

(641)

(1,501)

(1,295)

(998)

(10,900)
1,894

(3,578)

(312)
$
29,255

36,703
  • 198 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (ii) Deferred tax assets and liabilities

  • 1) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:


Pension expense
Temporary differences related to
investment in subsidiaries		 December 31,
2021		 December 31,
2020

73,130
157,380
230,510
$ 84,764
164,835

$
249,599

As of December 31, 2021 and 2020, deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.

  • 2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities were as follows:

Deferred tax liabilities:

Balance on January 1, 2021
Recognized in profit or loss
Recognized in other
comprehensive income
Balance on December 31, 2021
Balance on January 1, 2020
Recognized in profit or loss
Recognized in other
comprehensive income
Balance on December 31, 2020		 Unrealized gains
(losses) from
financial assets
measured at fair
value through other
comprehensive
income
Others

56
(48)
-
8		 Total
$ 298
-
(66)
$
232
354

(48)
(66)
240

$ -
-
298		 -
56

-
56		 -

56
298
$
298		 354
  • 199 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Deferred tax assets:

Balance on January 1, 2021
Recognized in profit or loss
Balance on December 31, 2021
Balance on January 1, 2020
Recognized in profit or loss
Balance on December 31, 2020		 Inventory
valuation
loss		 Unrealized
salesprofit		 Unrealized
exchange
loss		 Employee
benefits
liabilities		 Others Total
$ 9,290
(1,496)
3,062

(1,101)
6,314

(5,702)
4,682
465
8,286

(2,349)
31,634

(10,183)
21,451

32,729

(1,095)
31,634

$
7,794


1,961


612		 5,147
5,937


$ 11,046
(1,756)


2,713

349

6,076

238

4,346
336

8,548

(262)

$
9,290

3,062
6,314		 4,682
8,286
  • (iii) Assessment of tax

The Company’s tax returns for the years through 2019 were assessed by the R.O.C tax authority.

(s) Capital and other equities

(i) Ordinary shares

As of December 31, 2021 and 2020, the authorized share capital of the Company amounted to $3,500,000, comprising 350,000 thousand shares with a par value of New Taiwan dollars (TWD) 10 per share. Issued shares were both 162,408 thousand shares. The weighted-average numbers of shares of common stock outstanding excluded treasury stock and the common stock held by the Company’s subsidiaries were both 148,613 thousand shares.

(ii) Capital surplus

The balances of capital surplus were as follows:

Treasury share transactions
Disgorgement
Return of employee stock ownership trust
Total		 December 31,
2021		 December 31,
2020

14,950

473
-
15,423
$ 25,503
473
4
$
25,980

According to the Company Act, any realized capital surplus is initially used to cover any deficit, and the balance, if any, could be transferred to common stock as stock dividend or distributed as cash based on a resolution approved by the stockholders. Realized capital surplus includes the premium derived from the issuance of shares of stock in excess of par value and endowments received by the Company. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the combined amount of any portions capitalized in any one year may not exceed 10% of paid-in capital.

(iii) Retained Earning

The Company’s article of incorporation stipulate that Company’s net earnings, after paying any taxes, should first be used to offset the prior years’ deficits, if any. Of the remaining balance, 10% is to be appropriated as legal reserve. Only if the legal reserve

  • 200 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

has attained to the paid-in capital could be the exception, besides, special reserves are supposed to set aside or reversed in accordance with the needs of the Company’s operations or the relevant regulations of the government. And then any remaining profit together with any undistributed retained earnings will be distributable earnings. No more than 80% of current year’s distributable earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval. But cash-based dividends, including cash distribution from legal reserve and capital surplus, will first have to be approved by the Board of Directors and be reported at the shareholders’ meeting.

The Company’s industry is currently in a steady growth phase. The Company’s dividend policy is to pay dividends from surplus considering the future capital budget requirement and cash requirements, and taking into the account of dilution on earnings per share and influence upon returns on equity. Therefore, the future distribution of earnings shall be distributed in cash dividends and/or stock dividends. The ratio of cash dividends shall not be less than 50% of the Company’s total dividends for the year.

  • 1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

In accordance with the regulation of the FSC, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as a special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period net reduction of other shareholders’ equity. (For 2020, current-period net income after tax and undistributed prior-period earnings were reclassified as a special earnings reserve during the earnings distribution. For 2021, current-period net income after tax, including those other items directly charged or credited to current-period earnings and undistributed prior-period earnings, were reclassified as a special earnings reserve during the earnings distribution.) Similarly, a portion of undistributed prior-period earnings shall be reclassified as a special earnings reserve (and does not qualify for earnings distribution) to account for cumulative reduction to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. As of December 31, 2021 and 2020, the balance reclassified as a special earnings reserve through the resolutions passed by the shareholders’ meeting were $117,815 and $102,612, respectively.

  • 3) Earnings distribution

The amounts of cash dividends on the appropriations of earnings for 2020 had been approved during the board meeting on March 10, 2021. The amounts of cash dividends on the appropriations of earnings for 2019 had been approved during the shareholders’ meeting on June 12, 2020. The relevant dividend distributions to shareholders were as follows:

  • 201 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Dividends distributed to ordinary
shareholders (New Taiwan Dollar)
Cash		 2020

$
1.2		 2019
1.2

The amount of cash dividends on the appropriations of earnings for 2021 had been approved during the board meeting on March 10, 2022. The relevant dividend distributions to shareholders is $1.2 per share.

(iv) Other equity (net of tax)

Balance on January 1, 2021
The Company
Subsidiaries
The company－disposal of investments in
equity instruments designated at fair value
through other comprehensive income
Subsidiaries－disposal of investments in
equity instruments designated at fair value
through other comprehensive income
Balance on December 31, 2021
Balance on January 1, 2020
The Company
Subsidiaries
The company－disposal of investments in
equity instruments designated at fair value
through other comprehensive income
Balance on December 31, 2020		 Foreign exchange
differences
arising from
foreign operation		 Unrealized gains (losses)
from financial assets
measured at fair value
through other
comprehensive income

(99,519)

52,639

6,626
(34,101)
(138)
 Total
$ (18,296)
(10,533)
(1,169)
-
-
(117,815)

42,106

5,457
(34,101)
(138)
(104,491)
$
(29,998)


(74,493)

(88,501)

19,634

(22,115)
(8,537)
(99,519)


$ (14,111)
(4,355)
170
-

(102,612)

15,279

(21,945)
(8,537)
(117,815)
$
(18,296)

(t) Treasury shares

The movements of treasury shares of the Company were as follows:

(Unit: thousand shares)

Reason to repurchase
2021
To transfer shares to the
Company’s employee
2020		 January 1
5,000		 Shares
repurchase		 Shares
retired		 December 31
- - 5,000
To transfer shares to the
Company’s employee		 5,000 - - 5,000
  • 202 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

In accordance with Article 28-2 of the Securities and Exchange Act requirements as stated above, the number of shares repurchased should not exceed 10 percent of all shares outstanding. Also, the value of the repurchased shares should not exceed the sum of the Company’s retained earnings, share premium, and realized capital reserves. The aforementioned repurchased shares and amount did not exceed statutory limit.

As of December 31, 2021 and 2020, the costs of treasury shares both amounted to $50,739.

In accordance with the requirements of Securities and Exchange Act, treasury shares held by the Company should not be pledged, and do not hold any shareholder rights before their transfer.

Ying Dar Corp. and Bae Haw Corp., subsidiaries of the Company, held the Company’s common stock. In 2021 and 2020, Ying Dar Corp. and Bae Haw Corp. did not purchase or dispose of any of the Company’s shares. As of December 31, 2021 and 2020, Ying Dar Corp. and Bae Haw Corp. together held 8,794 thousand shares of the Company’s common stock. The cost was $122,282 which was recognized in treasury shares. As of December 31, 2021 and 2020, their market values amounted to $171,051 and $169,292, respectively.

(u) Earnings per share

The calculation of basic earnings per share and diluted earnings per share were as follows:

Basic earnings per share
Profit attributable to ordinary shareholders of the
Company
Weighted-average number of ordinary shares
(expressed in thousands of shares)
Expressed in New Taiwan dollars
Diluted earnings per share
Profit attributable to ordinary shareholders of the
Company
Weighted-average number of ordinary shares
(expressed in thousands of shares)
Effect of potentially dilutive ordinary stock－
Employee share bonus (expressed in thousands
of shares)
Weighted-average number of ordinary shares－
diluted (expressed in thousands of shares)
Expressed in New Taiwan dollars		 2021 2020
233,466
148,613
1.57
233,466

148,613
962
149,575
1.56
$ 237,280
148,613

$
1.60
$ 237,280

148,613
886
149,499

$
1.59

In computing above earnings per share of ordinary shares, the weighted-average numbers of shares of ordinary shares outstanding excluded 8,794 thousand shares of ordinary shares held by the Company’s subsidiaries as treasury shares.

  • 203 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (v) Revenue from contracts with customers

  • (i) Disaggregation of revenue


Primary geographical markets:
Europe
America
Others
Total
Major products:
Liquid crystal display modules
Capacitive touch panel and capacitive
touch panel module
Others
Total		 2021 2020
$ 2,357,723
1,037,966
689,513
2,092,088

1,067,849
482,496
3,642,433

1,189,224

2,379,730
73,479
3,642,433

$
4,085,202

$ 1,141,419
2,824,588
119,195

$
4,085,202

(ii) Contract balances


Accounts receivable (including
related parties)
Less: allowance for impairment
Total
Contract liabilities－unearned
revenue (recognized in other
current liabilities)		 December 31,
2021		 December 31,
2020		 January 1,
2020

629,633
(18,771)
610,862
12,942
$ 808,996
(5,584)
665,332

(5,481)

$
803,412


659,851

$
40,390

33,286

For details on accounts receivable and allowance for impairment, please refer to note 6 (d).

The amounts of revenue recognized for the years ended December 31, 2021 and 2020 that were included in the contract liability balance at the beginning of the period were $10,784 and $4,942, respectively.

(w) Employee remuneration and directors’ and supervisors’ remuneration

In accordance with the Articles of incorporation, the Company should contribute no less than 5% of the profit as employee remuneration and less than 3% as directors’ and supervisors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

  • 204 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

For the year ended December 31, 2021 and 2020, the Company estimated its employee remuneration amounting to $14,486 and $14,683, and directors’ and supervisors’ remuneration amounting to $8,691 and $8,810, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company’s articles. These remunerations were expensed under operating costs or operating expenses during 2021 and 2020. The aforementioned amounts, as stated in the parent-company-only financial statements, are identical to those of the actual distributions approved by Board of Directors for 2021 and 2020. Related information would be available at the Market Observation Post System website.

  • (x) Net other income (expenses)

Net other income (expenses) consists of income from lending space.

  • (y) Non-operating income and expenses

  • (i) Interest income

The details of interest income were as follows:

Interest income from bank deposits
Interest income from loans to subsidiaries
Others		 2021 2020
$ 1,133
-
26
9,472
103
88
9,663
$
1,159
  • (ii) Other income

The details of other income were as follows:

Dividend income
Others		 2021 2020

7,646
3,544
11,190
$ 26,502
792
$
27,294

(iii) Other gains and losses

The details of other gains and losses were as follows:

Foreign exchange losses
Net gains on financial assets (liabilities)
measured at fair value through profit or loss
Gains on disposal of property, plant and
equipment
Others
 2021 2020

(70,170)

1,818

-
(328)
(68,680)
$ (24,811)
6,227
436
(2,350)

$
(20,498)
  • 205 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (iv) Finance costs

The details of finance costs were as follows:

Interest expenses
Bank loans
Lease liabilities
Management fee of syndicated loan		 2021 2020

8,482

2,071

300

10,853
$ 5,777
2,007
200
$
7,984

  • (z) Financial Instruments

  • (i) Credit risk

    • 1) Credit risk exposure

The Company’s maximum amount exposed to credit risk was the carrying amount of financial assets and contract assets.

  • 2) Concentration of credit risk

As of December 31, 2021 and 2020, two customers accounted for 66% and 71% of total accounts receivable, respectively.

  • 3) Credit risk of accounts receivable

For credit risk exposure of accounts receivable, please refer to note 6(d).

Other financial assets at amortized cost include other receivables, refundable deposits, and restricted time deposits. All of these financial assets are considered to have low risk, and thus, the credit loss allowance recognized during the period was limited to 12 months expected credit losses. There was no loss allowance recognized. Please refer to notes 6(e) and 6(g).

(ii) Liquidity Risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2021
Non-derivative financial liabilities
Secured long-term borrowings
(floating rate)
Accounts payable (no interest)
Accounts payable－related
parties
Notes payable (no interest)
Other payables (no interest)
Other payables－related parties
(no interest)
Lease liabilities (fixed interest)
Guarantee deposits (no interest)		 Carrying
amount		 Contractual
cash flows		 Within 6
months		 6-12
months		 1-2
years		 2-5
years		 Over
5years
$ 398,349
505,207
27,082
86
240,693
11,420
60,671
34
(419,034)

(505,207)

(27,082)

(86)

(240,693)
(11,420)

(91,710)
(34)		 (2,290)

(505,207)

(27,082)

(86)

(240,693)
(11,420)

(1,986)		 (2,341)

-

-

-

-
-

(1,986)
 (4,644)
-
-
-
-
-

(3,973)
 (409,759)
-
-
-
-
-

(11,919)
(34)		 -
-
-
-
-
-

(71,846)

(71,846)
$
1,243,542
(1,295,266)		 (788,764) (4,327) (8,617)
(421,712)
  • 206 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

December 31, 2020
Non-derivative financial liabilities
Unsecured short-term
borrowings (floating rate)
Accounts payable (no interest)
Accounts payable－related
parties
Notes payable (no interest)
Other payables (no interest)
Other payables－related parties
(no interest)
Lease liabilities (fixed interest)
Guarantee deposits (no interest)
Derivative financial liabilities
Swap Contract:
Cash in
Cash out		 Carrying
amount		 Contractual
cash flows		 Within 6
months		 6-12
months		 1-2
years		 2-5
years		 Over
5years
-
-
-
-
-
-

(75,818)

-
-
-
$ 700,000
355,622
90,862
1,234
238,554
9,784
62,637

34
195
-		 (700,756)

(355,622)

(90,862)

(1,234)

(238,554)
(9,784)

(95,682)

(34)

28,480
(28,703)		 (700,756)

(355,622)

(90,862)

(1,234)

(238,554)
(9,784)

(1,986)

-

28,480
(28,703)		 -

-

-

-

-
-

(1,986)
-

-
-		 -
-
-
-
-
-

(3,973)
-
-
-		 -
-
-
-
-
-

(11,919)
(34)
-
-
$
1,458,922
(1,492,751)
(1,399,021)		 (1,986) (3,973) (11,953) (75,818)

The Company does not expect that the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Currency risk

1) Exposure to foreign currency risk

The Company’s significant exposure to foreign currency risk was as follows:

December 31, 2021
Foreign
currency
Exchange
rate
TWD
Financial assets
Monetary items
USD
$ 51,820
27.68
1,434,370
JPY
18,516
0.2405
4,453
CNY
1,061
4.344
4,609
EUR
61
31.32
1,911
Non-Monetary items
USD
503
27.68
13,922
Financial liabilities
Monetary items
USD
13,565
27.68
375,489
JPY
15,651
0.2405
3,764
EUR
-
31.32
-
Non-Monetary items
USD
800
27.68
22,144		 December 31, 2021 December 31, 2021 December 31, 2021 December 31, 2020 December 31, 2020 December 31, 2020
Foreign
currency		 Exchange
rate		 TWD Foreign
currency		 Exchange
rate		 TWD

27.68

0.2405

4.344

31.32

27.68

27.68

0.2405
31.32

27.68
1,434,370

4,453

4,609

1,911

13,922

375,489

3,764

-

22,144
57,282

52,538

4,021

75

2,566

11,735

15,991
72

1,000
28.48

0.2763

4.377

35.02

28.48

28.48

0.2763

35.02

28.48
1,631,396

14,516

17,601

2,627

73,070

334,207

4,418

2,534

28,480

2) Sensitivity analysis

The Company’s exposure to foreign currency risk arises from the translation of the cash and cash equivalents, accounts receivable, other receivables, financial assets and liabilities measured at fair value through profit or loss, financial assets measured at fair value through other comprehensive income, accounts payable, and other payables. As of December 31, 2021 and 2020, if the exchange rate of the TWD versus the USD, CNY, JPY, and EUR have increased or decreased by 1%, given no changes in other factors, profit after tax would have increased or decreased by $8,352 and $10,843, and other comprehensive income after tax would have increased or decreased by $111 and $114, respectively. The analysis is performed on the same basis of prior year.

  • 207 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • 3) Exchange gains and losses on monetary items

For the years 2021 and 2020, foreign exchange gains (losses) (including realized and unrealized portions) amounted to $(24,811) and $(70,170), respectively.

  • (iv) Interest rate analysis

For the Company’s financial liabilities exposed to interest rate risk, please refer to the attached note about liquidity risk.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.25% when reporting to management internally, which also represents the Company management’s assessment of the reasonably possible interest rate change.

If interest rates had increased or decreased by 0.25% basis points, with all other variables held constant, the Company’s profit after tax for the years ended 2021 and 2020 would have been decreased or increased by $800 and $1,400, respectively. This is mainly as a result of liabilities bearing floating interest rates.

(v) Other price risk

If the prices of equity securities change at reporting date, with all other variables held constant, the influences were as follows:

Prices of
securities at
reporting
date
Increase 3%
Decrease 3%		 2021
Other
comprehensive
income after tax		 Net
income
after tax		 2020
Other
comprehensive
income after tax		 Net
income
after tax
1,412
(1,412)
$
9,415
-		 5,016

$
(9,415)

-
(5,016)

  • (vi) Fair value

  • 1) Fair value hierarchy

The fair value of financial assets and liabilities at fair value through profit or loss and financial assets at fair value through other comprehensive income are measured on a recurring basis. The carrying amount and fair value of the Company’s financial assets and liabilities, including the information on fair value hierarchy are stated below; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

  • 208 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Financial assets at FVTPL
Forward exchange contracts
Financial assets at FVOCI
Equity instrument with quoted
market prices
Equity instrument at fair value
without quoted market prices
Subtotal
Financial assets at amortized
cost
Cash and cash equivalents
Accounts receivable (including
related parties)
Other receivables
Restricted time deposits
Refundable deposits (recognized
in other non-current financial
assets)
Subtotal
Total financial assets
Financial liabilities at amortized
cost
Bank loans
Notes payable
Accounts payable (including
related parties)
Other payables (including related
parties)
Lease liabilities
Guarantee deposits
Total financial liabilities		 December 31, 2021 December 31, 2021 December 31, 2021
Carrying
amount
$ 42
282,185
34,406
316,591
711,866
803,412
1,621
2,538
2,566
1,522,003
$ 1,838,636
$ 398,349
86
532,289
252,113
60,671
34
$ 1,243,542		 Fair Value
Level 1
-
282,185
-

-
-

-

-
-

-

-
-
-

-
-		 Level 2
42
-
-

-
-
-
-
-
-
-
-
-
-
-		 Level 3

-
-
34,406

-
-
-
-
-
-
-
-
-
-
-		 Total
42
282,185
34,406
-
-
-
-
-
-
-
-
-
-
-
Financial assets at FVTPL
Debt investment with quoted
market price
Financial assets at FVOCI
Equity instrument with quoted
market prices
Equity instrument at fair value
without quoted market prices
Subtotal		 December 31, 2020 December 31, 2020 December 31, 2020
Carrying
amount
$ 58,817
139,297
30,746
170,043		 Fair Value
Level 1
58,817
139,297
-		 Level 2
-
-
-		 Level 3
-
-
30,746		 Total
58,817
139,297
30,746
  • 209 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Financial assets at amortized
cost
Cash and cash equivalents
Accounts receivable (including
related parties)
Other receivables
Restricted time deposits
Refundable deposits (recognized
in other non-current financial
assets)
Subtotal
Total financial assets
Financial liabilities at FVTPL
Derivative financial liabilities
Financial liabilities at amortized
cost
Bank loans
Notes payable
Accounts payable (including
related parties)
Other payables (including related
parties)
Lease liabilities
Guarantee deposits
Subtotal
Total financial liabilities		 December 31, 2020 December 31, 2020 December 31, 2020 Total
Carrying
amount
$ 1,159,414
659,851
5,510
1,525
5,834		 Fair Value
Level 1

-
-

-

-
-

-

-
-
-

-
-		 Level 2
-
-
-
-
195
-
-
-
-
-
-		 Level 3
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
195
-
-
-
-
-
-

1,832,134

$ 2,060,994

$ 195
700,000
1,234
446,484
248,338
62,637
34
1,458,727

$ 1,458,922

The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

  • － Level 1: quoted prices (unadjusted) in the active markets for identified assets or liabilities.

  • － Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

  • － Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

  • 2) Valuation techniques for financial instruments measured at fair value

Non-derivative financial instruments

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. Quoted prices of major stock exchanges and quoted prices of government bonds are the basis for measuring the fair value of stocks listed on an exchange, stocks listed on the OTC, and debt instruments with quoted prices in an active market.

  • 210 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The fair values of the Company’s listed stocks and open-end funds with standard terms and conditions traded in an active markets were determined by the quoted market prices.

Measurements of fair value of financial instruments without an active market are based on a valuation technique. Fair value measured by a valuation technique can be extrapolated from similar financial instruments using the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date. Using discounted cash flow method to calculate fair value, the main assumption is to reflect monetary time value and return of invest risk to discount and measure based on investee’s estimated future cash flow.

Derivative financial instruments

The fair value of swap contracts and forward exchange contracts is based on quoted prices from the counterparty.

  • 3)

  • Transfer between Level 1 to Level 2

There was no transfer between the fair value hierarchy levels for the years ended December 31, 2021 and 2020.

  • 4) Movement of financial assets measured at fair value through other comprehensive income categorized as Level 3.
Balance on January 1, 2021
Recognized in other comprehensive income
Balance on December 31, 2021
Balance on January 1, 2020
Recognized in other comprehensive income
Balance on December 31, 2020		 Financial assets measured at
FVOCI
Unquoted equity instruments
$ 30,746
3,660
$
34,406
$ 33,552
(2,806)
$
30,746
  • 5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement.

The Company’s financial instruments that use Level 3 inputs to measure fair value － include fair value through other comprehensive income equity investments”.

The Company’s equity investments without active market in Level 3 have more than one significant unobservable inputs. The significant unobservable inputs of equity investments without active market are individually independent, and there is no correlation between them.

Quantified information of significant unobservable inputs was as follows:

  • 211 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Item
Financial assets at fair
value through other
comprehensive income
－equity investments
without an active
market
Financial assets at fair
value through other
comprehensive income
－equity investments
without an active
market		 Valuation technique
Discounted Cash Flow
Method
Net Asset Value Method		 Significant
unobservable inputs
‧Continuing growth rate
(1.44% and 0.48%,
respectively, as of
December 31, 2021 and
2020)
‧Weighted average cost of
capital (9.75% and
10.52%, respectively, as
of December 31, 2021
and 2020)
‧Market illiquidity discount
rate (58.64% and
60.73%, respectively, as
of December 31, 2021
and 2020)
‧Non-controlling interests
discount rate (29.48%
and 29.87%, respectively,
as of December 31, 2021
and 2020)
‧Net Asset Value		 Inter-relationship
between significant
unobservable inputs and
fair value measurement
‧The higher the
continuing growth
rate is, the higher the
estimated fair value
would be.
‧The higher the
weighted average cost
of capital is, the lower
the estimated fair value
would be.
‧The higher the market
illiquidity discount rate
is, the lower the
estimated fair value
would be.
‧The higher the
non-controlling
interests discount is,
the lower the estimated
fair value would be.
N/A
  • 6) Fair value measurements in Level 3 – sensitivity analysis of reasonably possible alternative assumptions

For fair value measurements in Level 3, changing one or more of the assumptions to reflect reasonably possible alternative assumptions would have the following effects on other comprehensive income:

Inputs
December 31,2021
Continuing growth rate 1.44%
Weighted average cost of capital 9.75%
Market illiquidity discount rate 58.64%
Non-controlling interests discount rate 29.48%
December 31,2020
Continuing growth rate 0.48%
Weighted average cost of capital 10.52%
Market illiquidity discount rate 60.73%
Non-controlling interests discount rate 29.87%		 Fluctuation
in inputs
0.1%
0.1%
1%
1%
0.1%
0.1%
1%
1%		 Other comprehensive income Other comprehensive income
Favorable
$ 150
200
320
180
$ 100
50
280
160		 Unfavorable

150

200

310
180

100

50

280

160
  • 212 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The favorable and unfavorable effects represent the changes in fair value, which is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

  • (aa) Financial risk management

  • (i) Overview

The Company has exposures to the following risks arising from its financial instruments ：

  • 1) Credit risk

  • 2) Liquidity risk

  • 3) Market risk

In this note expressed the information of risk exposure and objectives, policies and process of risk measurement and management. For detailed information, please refer to the related notes of each risk.

  • (ii) Structure of risk management

The Board of Directors has the overall responsibility for the establishment and oversight of the Company’s risk management framework. Every department is responsible for planning and controlling the risk management of the Company’s operation and reports to the Board of Directors regularly.

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in products and services offered. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The supervisor of the Company oversees how the management monitors the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The supervisor is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Board of Directors.

  • (iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, bank deposits, derivative financial instruments, and investment securities.

  • 213 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

1) Accounts receivable

The credit risk is impacted by the individual situation of each client. The Company continuously monitors the information concerning client credit risk factors, such as the default risk of the industries and countries in which the customers operate.

According to the credit policy, the Company has to evaluate the credit of each new customer before setting the payment and delivery terms. The evaluations include external credit ratings, if available, and bank references. The Company reviews credit limits periodically and requires customers to pay in advance when the customers’ credit ratings do not meet the benchmark.

2) Investment

The credit risk exposed in the bank deposits, derivative financial instruments, and other financial instruments is measured and monitored by the finance department. Since the Company’s transactions were with financial institutions with good credit ratings, there were no noncompliance issues, and therefore, there is no significant credit risk. Investments in other financial instruments are measured and monitored by the finance department with the instruction from the chairman to ensure each risk of the investment target is under the Company’s acceptable level.

  • (iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

As of December 31, 2021 and 2020, the Company had unused credit lines amounting to $2,379,365 and $1,973,097, respectively.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, which will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control the market risk exposures within acceptable parameters, while optimizing the return.

The Company engages in derivative financial instrument trading in order to manage the market risk, thus generating financial liabilities or financial assets. The execution of those transactions was under the Board of Directors’ instruction.

1) Currency risk

The Company is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of the Company, primarily the NTD. The currencies used in these transactions are the NTD, USD, JPY, and EUR.

At any point in time, the Company’s principle is to hedge using the net values after offsetting payables and receivables or assets and liabilities which are generated by business operations. The Company mainly hedges its currency risk using foreign exchange agreements wherein the maturity date is less than six months.

  • 214 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • 2) Interest rate risk

The Company adopts a policy to ensure the exposure to changes in interest rates on borrowings is evaluated based on the trend in market interest rates. The Company can manage its interest rate risk through maintaining an appropriate portfolio of floating interest rates and fixed interest rates.

  • 3) Other market price risk

The company is exposed to equity price risk due to the investments in equity instruments and mutual funds that contain unsure future prices. Therefore, the Company monitors and manages the equity investments by holding a varied investment portfolio and regularly updating the information on equity instruments and mutual funds investment.

  • (ab) Capital management

The Board of Directors’ policy is to maintain a strong capital base so as to maintain investors, creditors and market confidence and to sustain future development of the business. Capital consists of ordinary shares, capital surplus, retained earnings, and other equity of the Company. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Company manages its capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders, to maintain the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to the shareholders, repurchase treasury shares, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabilities.

The Company use the debt-to-equity ratio to manage their capital. This ratio is the total net debt divided by the total capital. The net debts from the balance sheet are derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity. As in 2021, the Company’s capital management strategy is consistent with the prior year. The Company’s debt-to-equity ratio at the end of the reporting period were as follows:

Net debt
Total equity
Debt-to-equity ratio		 December 31,
2021		 December 31,
2020
478,695
1,939,757
24.68%
$
715,497

$
2,027,331

35.29%
  • (ac) Investing and financing activities not affecting current cash flow

Reconciliation of liabilities arising from financing activities were as follows:

  • 215 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements


Short-term borrowings
Long-term borrowings (including
current portion)
Lease liabilities
Total liabilities from financing
activities

Short-term borrowings
Long-term borrowings (including
current portion)
Lease liabilities
Total liabilities from financing
activities
January 1,
2021		 Cash flows Non-cash changes
Amortization
Others
(Note2)
Changes in
lease
payments		 Non-cash changes
Amortization
Others
(Note2)
Changes in
lease
payments		 December 31,
2021
**Amortization ** Others
(Note2)
$ 700,000
(1,600)(Note 1)
62,637
(700,000)

400,000

(1,966)
-

(51)

-		 -

-
-		 -
398,349
60,671
459,020
December 31,
2020

$
761,037

(301,966)
(51)		 -



January 1,
2020
Cash flows
**Amortization ** Others
(Note2)
$ 400,000
319,555
65,360
300,000

(320,000)

(1,558)
-

445

-		 -

-
(817)		 700,000
-
62,637
762,637

$
784,915

(21,558)
445
(817)

Note 1: Prepaid expense related to syndicated loan Note 2: Reduction of right-of-use assets

(7) Related-party transactions

  • (a) Names and relationship with related parties

The followings are subsidiaries and other entities that have had transactions with the Company during the periods covered in the parent-company-only financial statements.

Name of related party
Emerging Display Technologies Corp., U.S.A.
(EDTA)
Emerging Display International (Samoa) Corp.
(EDTS)
EDT-Europe ApS (EDTE)
Tremendous Explore Corp. (EDT-B.V.I) (Note)
Emerging Display Technologies Korea (EDTK)
EDT-Japan Corp. (EDTJ)
Ying Dar Investment Development Corp.
(Ying Dar Corp.)
Bae Haw Investment Development Corp.
(Bae Haw Corp.)
Ying Cheng Investment Development Corp.
(Ying Cheng Corp.)
Dong Guan Emerging Display Limited
(EDT-Dong Guan)		 Relationship with the Company

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Sub-subsidiary

Note: Tremendous Explore Corp. was dissolved in July, 2020. The related liquidation procedures had been completed.

  • 216 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (b) Significant transactions with related parties

  • (i) Operating revenue

The amounts of significant sales by the Company to related parties were as follows:

Subsidiaries－EDTA 2021
$
1,038,132		 2020
1,066,651

As of December 31, 2021 and 2020, the unrealized profit from sales to related parties amounted to $9,804 and $15,309, respectively, which were included in adjustment to investments accounted for using equity method in the accompanying balance sheets.

The selling prices for sales to subsidiaries were not significantly different from those for third-party customers. The collection terms were three months, which were not significantly different from those of other customers.

  • (ii) The receivables from related parties were as follows:
Relationship
Subsidiaries－EDTA		 December 31,
2021		 December 31,
2020
202,276
$
310,944

(iii) Consigned for processing

The Company’s sales of raw material (including the Company purchased on behalf of the related parties) and semi-finished products to EDT-Dong Guan were considered as contracted processing. The processing cost and material cost in 2021 and 2020 amounted to $200,133 and $179,986, respectively. The payables resulting from the － above transactions were as follows, and were included in accounts payable related parties in the accompanying balance sheets.

Sub-subsidiary－EDT-Dong Guan December 31,
2021
$
27,082		 December 31,
2020
90,862
  • (iv) Commission expenses

The details of commission expenses paid to subsidiaries were as follows:

Subsidiaries
EDTE
EDTJ
Other subsidiaries		 2021 2020

56,204

14,547

4,122
$ 58,210
13,368
3,904

$
75,482


74,873
  • 217 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The details of commission expenses payables to subsidiaries, included in accounts － payable related parties in accompanying balance sheets, were as follows:

Subsidiaries
EDTE
EDTA		 December 31,
2021		 December 31,
2020

7,920
64
7,984
$ 9,434
21
$
9,455

(v) Loans to related parties

The Company made a loan to the subsidiary, EDTA. The interest is based on US dollars and floating rate. As of December 31, 2020, the loan to EDTA and related interest amounting to $103 had been fully collected. The interest rate was 3.96% in 2020.

(vi) Others

Ying Dar Corp., Bae Haw Corp., and Ying Cheng Corp. have used the Company’s address as their office addresses. In both 2021 and 2020, the Company received $12, from each of them, with a total of $36, which were included in other income in the accompanying statements of comprehensive income.

During the years ended December 31, 2021 and 2020, cash dividends paid to subsidiaries were both $10,553. In addition, cash dividends received from subsidiaries were $12,351 and $3,006, respectively, which were recognized as the deduction of investments accounted for using equity method in the accompanying balance sheets.

Ying Dar Corp. and Bae Haw Corp. are the directors of the Company. In 2021 and 2020, the estimated directors’ remuneration amounted to $800 and $4,417, respectively. As of December 31, 2021 and 2020, the remuneration payable amounted to $1,965 and － $1,800, respectively, which were recognized as other payables related parties in the accompanying balance sheets.

  • (c) Key management personnel compensation

  • (1) Key management personnel compensation comprised:

Short-term employee benefits
Post-employment benefits
Termination benefits
Other long-term benefits
Share-based payments		 2021 2020

27,401

415
-
-
-
27,816
$ 32,313
489
-
-
-
$
32,802
  • 218 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (2) In 2020, according to the requirement under Section 157 Short-swing Trading of the Securities and Exchange Act, the amount arising from the exercise of disgorgement after tax was $473, which was recognized as capital surplus.

(8) Pledged assets

The carrying values of pledged assets were as follows:

Pledged assets
Restricted time deposits－
current
Property, plant and equipment
－buildings		 Purpose
Guarantee for customs
Guarantee for long-term
borrowings		 December 31,
2021		 December 31,
2020

1,525
-
1,525
$ 2,538
173,195

$
175,733

(9) Commitments and contingencies

  • (a) As of December 31, 2021 and 2020, the Company’s unused letters of credit for purchases of raw materials and equipment amounted to $2,075 and $4,422, respectively.

  • (b) As of December 31, 2021 and 2020, the Company has signed contracts for the purchase of equipment. The unrecognized contingencies of those contracts amounted to $2,539 and $1,995, respectively.

(10) Losses due to major disasters: none

(11) Subsequent events

The Company retired 5,000 thousand treasury shares based on a resolution approved during the board meeting held on January 12, 2022. As of Marth 10, 2022, the related registration procedures had been completed.

(12) Other

The followings were the summary statement of current period employee benefits, depreciation and amortization expenses by function:

By function
By item		 2021 2021 2021 2020 2020 2020
Cost of
sales		 Operating
expenses		 Total Cost of
sales		 Operating
expenses		 Total
Employee benefits
Salary
Labor and health insurance
Pension
Remuneration of directors
Others
Depreciation
Amortization		 415,909
46,205
21,085
-
3,936
41,919
284
127,833

8,770

5,822
13,532

691

4,741

910
543,742

54,975

26,907

13,532

4,627

46,660

1,194
381,695

41,252

20,371

-

3,267

55,461

308
126,777

8,383

5,978
11,540

618

4,642

1,057
508,472

49,635

26,349

11,540

3,885

60,103

1,365
  • 219 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The additional information of number of employees and employee benefits was as follows:

Number of employees
Number of non-employee directors
Average employee benefits
Average employee salary
Adjustment of average employee salary
Remuneration of supervisors		 2021 2020
870 870
7 6
$
730		 681
$
630		 589
7.0%
$
1,413		 2,945

The Company’s remuneration policy including directors, supervisors, managers, and employees is stated below:

  1. Remuneration policy for directors and supervisors

Directors’ and supervisors’ remuneration includes salary, transportation allowance and the remuneration stipulated in the Company’s articles. The transportation allowance is based on the number of attendance of the directors and supervisors, which is $10 each time. In accordance with section 221 in the Articles of incorporation, the remuneration should be contributed no more than 3% of the profit. The amount is first proposed by the salary and remuneration committee, agreed by the Board of Directors, and then submitted during the shareholders’ meeting for approval. The amount of final payment depends on the decision made at the shareholders’ meeting.

  1. Remuneration policy for managers

Managers’ remuneration includes salary, bonus, and employee remuneration, which is calculated based on the position and responsibility of the individual. Industry level will also be taken into consideration.

  • (1) Salary:

The salary is based on personal experiences, performance, evaluation of work, market salary level, seniority, position, and contract.

  • (2) Year-end bonus:

Year-end bonus is paid based on the performance of the individual or the Company, historical experiences, and retention of professional employees.

  • (3) Employee remuneration:

Employee remuneration is distributed based on personal performance, overall contribution, and special achievements.

  1. Remuneration policy for employees:

Considering the benefit level in same industry and personal ability, contribution, and performance, the employee’s remuneration policy, which is enacted according to Salary Management Regulation of the Company, is positively correlated to business performance. The overall remuneration portfolio mainly contains basic salary, bonus, and dividends.

The standards of remuneration are the basic salary, which is decided based on the policy of the Company and the competitiveness of its position in the market, as well as bonus and dividends, which are paid according to the achievement of each employee and department goals along with business operation. The remuneration policy of the Company is in compliance with the law and regulations, taking into consideration the needs of employees and business operation goals to create a harmonious working relationship.

  • 220 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(13) Other disclosures

  • (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company for 2021:

  • (i) Loans to other parties: none

  • (ii) Guarantees and endorsements for other parties: none

  • (iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

Name of
security holder		 Name of security
and type		 Relationship
between issuer of
security and the
security holder		 Financial statement
account		 December 31, 2021 December 31, 2021 December 31, 2021
Remarks
Units (shares) Carrying
value		 Percentage
of
ownership
Fair value
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
The Company
Ying Dar Investment
Development Corp..
Ying Dar Investment
Development Corp.
Bae Haw Investment
Development Corp.
Bae Haw Investment
Development Corp.
Bae Haw Investment
Development Corp.
Ying Cheng
Investment Corp.		 Ascendax Venture
Capital Corp. stock
Chenfeng Optronics
Corp. stock
Fubon Financial
Holding Co., Ltd.
preference stock
Innolux Corp. stock
Quanta Computer Inc.
stock
Pegatron Co., Ltd.
stock
Chicony Electronics
Co., Ltd. stock
Lite-On Technology
Corp. stock
Mega Financial
Holding Co., Ltd. stock
Taiwan Cement Corp.,
Ltd. stock
CoAsia Electronics
Corp. stock
Shian Yih Electronic
Co., Ltd. stock
Becton, Dickinson and
Company stock
Shian Yih Electronic
Co., Ltd. stock
The Company's stock
Everest Technology
Inc. stock
Shian Yih Electronic
Co., Ltd. stock
The Company's stock
Chenfeng Optronics
Corp. stock		 -
-
-
-
-
-
-
-
-
-
-
-
-
-
Parent Company
-
-
Parent Company
-		 Financial assets at fair value
through other comprehensive
income–noncurrent
Financial assets at fair value
through other comprehensive
income–noncurrent
Financial assets at fair value
through other comprehensive
income–noncurrent
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–noncurrent
Financial assets at fair value
through other comprehensive
income–noncurrent
Financial assets at fair value
through other comprehensive
income–current
Financial assets at fair value
through other comprehensive
income–noncurrent
Financial assets at fair value
through other comprehensive
income–noncurrent
1,749,300

1,000,000

13,845

1,147,089

699,000

216,000

300,000

620,000

1,236,000

790,000

459,344

480,000

2,000

550,000

5,346,672

1,000,000

395,000

3,447,716

6,000,000		 21,376
13,030
874
22,483
66,195
14,925
24,690
39,556
43,940
37,920
7,120
10,560
13,922
12,100
103,993
-
8,690
67,058
78,180
5.25%

1.37%

-

0.01%

0.02%

0.01%

0.04%

0.03%

0.01%

0.01%

0.32%

0.78%

0.01%

0.90%

3.29%
1.47%

0.65%

2.12%

8.22%
21,376

13,030
874

22,483

66,195

14,925

24,690

39,556

43,940

37,920

7,120

10,560

13,922

12,100

103,993

-

8,690

67,058

78,180
-

-

-

-

-

-

-

-

-

-

-

-

-

-

-
-

-

-

-
  • 221 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NTD$300 million or 20% of the capital stock: none

  • (v) Acquisition of individual real estate with amount exceeding the lower of NTD$300 million or 20% of the capital stock: none

  • (vi) Disposal of individual real estate with amount exceeding the lower of NTD$300 million or 20% of the capital stock: none

  • 222 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(vii) Related-parties transactions for purchases to and sales from with amount exceeding the lower of NTD$100 million or 20% of the capital stock:

Purchasing
(selling) company
Related party		 Nature of
relation-ship		 Details of transaction Details of transaction Details of transaction Details of transaction Circumstances of and reasons for deviation from
regular trading conditions		 Circumstances of and reasons for deviation from
regular trading conditions		 Resulting receivables (payables) Resulting receivables (payables) Remarks
Purchase (sale) Amount Percentage of
net purchases
(sales)		 Credit line Unit price Payment terms Balance Percentage of
notes and
accounts
receivable
(payable)
The Company
Emerging Display
Technologies
Corp., U.S.A.
The Company
Dong Guan
Emerging Display
Limited		 Emerging Display
Technologies
Corp., U.S.A.
The Company
Dong Guan
Emerging Display
Limited
The Company		 Subsidiary of the
Company
Subsidiary of the
Company
Sub-subsidiary of
the Company
Sub-subsidiary of
the Company		 Sale
Purchase
Purchase
(processing
expense)
Sale
(processing
revenue)		 1,038,132
1,038,132
200,133
200,133
25.41%

100.00%

7.31%

100.00%
3 months

3 months

1-3 months

1-3 months		 Sales prices offered to
Emerging Display
Technologies Corp., U.S.A.
were not significantly
different from those offered
to other customers.
The Company is the major
supplier for Emerging
Display Technologies
Corp., U.S.A. There is no
comparable transaction
The Company is the only
entity the sub-subsidiary
provides processing
service to. There is no
comparable transaction.
The Company is the only
entity the sub-subsidiary
provides processing
service to. There is no
comparable transaction.		 Considering the special
trading practices in North
American market, the
Company set credit
duration as three months
for North American market,
which is slightly longer than
one to three months set in
other markets.
The Company is the major
supplier for Emerging
Display Technologies
Corp., U.S.A.
The Company is the only
entity the sub-subsidiary
provides processing
service to.
The Company is the only
entity the sub-subsidiary
provides processing
service to.
310,944
310,944
27,082
27,082
38.44%

100.00%

5.09%

100.00%
-

-

-

-
  • 223 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(viii) Receivables from related parties with amounts exceeding the lower of NTD$100 million or 20% of the capital stock:

Name of
company
that has the
receivables		 Counterparty Relationship Balance of
amount		 Turnover
ratio		 Overdue Overdue Amount
collected in the
subsequent
period		 Allowance for
doubtful
accounts		 Remarks
Amount Status
The Company Emerging Display
Technologies
Corp., U.S.A.
Subsidiary of
the Company		 Accounts
receivable of
$310,944		 4.05 - - 238,996
-		 -
  • (ix) Trading in derivative instruments:

Please refer to note 6(b).

  • (b) Information on investees (excluding information on investees in Mainland China):

The following is the information on investees for the year 2021:

Name of
investor		 Name of
investee		 Location Business
scope		 Original cost of
investment		 Original cost of
investment		 Balance as of December 31, 2021 Balance as of December 31, 2021 Balance as of December 31, 2021 Net income
(loss) of
the
investee		 Investment
income
(loss)
recognized
Remarks
December
31, 2021		 December
31, 2020		 Shares
owned		 Percentage
owned		 Carrying
value
The Company
Emerging
Display
Technologies
Corp.,
U.S.A.		 USA Trading 121,656
121,656
3,500,000
100.00%
92,754
(Note 1)
12,616
12,646
Subsidiary
The Company Emerging
Display
International
(Samoa)
Corp.		 Samoa
 Investment
holding		 180,503
180,503
5,984,071
78.49%
60,475
(16,595)
(13,025)		 Subsidiary
The Company EDT-Europe
ApS		 Denmark
 Customer service
and business
support
2,077
2,077
125,000
100.00%
2,715
1,333
1,333		 Subsidiary
The Company Emerging
Display
Technologies
Korea		 Korea
 Business support
1,677
1,677		 58,212,500
100.00%
1,524
242
242		 Subsidiary
The Company EDT-Japan
Corp.		 Japan
 Customer service
and business
support
17,401
17,401
5,000
100.00%
6,299
1,842
1,842		 Subsidiary
The Company Ying Dar
Investment
Development
Corp.		 Taiwan
 Investment 89,000
89,000
8,900,000
100.00%
26,100
6,577
161
(Note 2)
Subsidiary
The Company Bae Haw
Investment
Development
Corp.		 Taiwan
 Investment 89,000
89,000
8,900,000
100.00%
38,569
3,247
(890)
(Note 2)
Subsidiary
The Company Ying Cheng
Investment
Corp.		 Taiwan
 Investment 84,000
84,000
8,400,000
52.50%
46,217
(100)
(53)
Subsidiary
Ying Dar
Investment
Development
Corp.		 Emerging
Display
International
(Samoa)
Corp.		 Samoa
 Investment
holding		 13,234
13,234
450,000
5.90%
4,546
(16,595)
(979)		 Subsidiary
Bae Haw
Investment
Development
Corp.		 Emerging
Display
International
(Samoa)
Corp.		 Samoa
 Investment
holding		 25,488
25,488
870,000
11.41%
8,791
(16,595)
(1,893)		 Subsidiary

Note 1 ： Unrealized sales profit amounting to $9,804 was deducted. Note 2 ： Cash dividends to subsidiaries, which were reclassified as capital surplus, were deducted.

  • 224 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(c) Information on overseas branches and representative offices:

(i) Information on investment in Mainland China:

Investee
company		 Main
businesses and
products		 Received
capital		 Investment
method		 Accumulated
amount invested
in Mainland
China as of
January 1, 2021
Invested capital
remitted from or
repatriated to Taiwan
Invested capital
remitted from or
repatriated to Taiwan		 Accumulated
amount invested
in Mainland
China as of
December 31,
2021
Net income of
investee		 The Company's
direct or indirect
investment
ratio
Investment
gain (loss)
recognized by
the Company		 Book value of
the investment
as of
December 31,
2021		 Accumulated
investment
income
repatriated to
Taiwan as of
December 31,
2021

Remittance		 Repatriation
Dong Guan
Emerging Display
Limited		 Manufacturing of
LCDs		 248,516
(USD$7,625,300)
Investing through
a third country by
establishing a
holding company,
Emerging Display
International
(Samoa) Corp., in
a third country.		 219,225
(USD$6,746,936)
(Note 1)

-		 - 219,225
(USD$6,746,936)
(16,324)
95.80%
(Note 2)		 15,639
Based on the
investee's financial
statements audited
by the same auditor
of the Company
(Note 3)

65,412
(Note 4)
-
  • 225 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (ii) Limitation on investment in Mainland China:
Accumulated Investment
in Mainland China as of
December 31, 2021
Investment Amounts
Authorized by Investment
Commission of Ministry of
Economic Affairs
Upper Limit on investment in
Mainland China by
Investment Commission of
Ministry of Economic Affairs
191,952
(Note 8)
(USD$6,934,668)
(Note 5)		 386,184
(Note 8)
(USD$13,951,732)
(Note 6)		 1,357,830
(Note 7)

  • Note 1: The amount includes $13,234 which was invested by Ying Dar Investment Development Corp. and $25,488 which was invested by Bae Haw Investment Development Corp.

  • Note 2: The ratio includes 5.90% which was held by Ying Dar Investment Development Corp. and 11.41% which was held by Bae Haw Investment Development Corp.

  • Note 3: The amount includes a loss of $963 which was recognized by Ying Dar Investment Development Corp. and a loss of $1,863 which was recognized by Bae Haw Investment Development Corp.

  • Note 4: The amount includes $4,029 which was invested by Ying Dar Investment Development Corp. and $7,791 which was invested by Bae Haw Investment Development Corp.

  • Note 5: The amount includes the remaining capital amounting to US$187,732 of Emerging Technologies Int’l Trading (Shanghai) Co., Ltd. not remitted back after it had completed liquidation in 2009.

  • Note 6: The approved amount includes US$637,732 obtained from Ying Dar Investment Development Corp. and US$870,000 obtained from Bae Haw Investment Development Corp. The amount obtained from Ying Dar Investment Development Corp. includes the remaining capital amounting to US$187,732 of Emerging Technologies Int’l Trading (Shanghai) Co., Ltd. not remitted back after it had completed liquidation in 2009.

  • Note 7: The amount includes $78,055 for Ying Dar Investment Development Corp. and $63,376 for Bae Haw Investment Development Corp.

  • Note 8: Transactions denominated in foreign currencies were recorded using the rate of exchange at December 31, 2021.

  • (iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China in 2021 are disclosed in “Information on significant transactions”.

  • 226 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

  • (d) Major shareholders:
Shareholding
Shareholder’s Name		 Shares Percentage
Tseng,Jui-Ming 11,043,723
6.8%

  • Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

  • Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, refer to Market Observation Post System.

(14) Segment information

Please refer to the consolidated financial statements for the year ended December 31, 2021.

  • 227 -

6.6 If the company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, the annual report shall explain how said difficulties will affect the company’s financial situation: None.

  • 228 -

VII. Review of Financial Conditions, Operating Results, and Risk Management

7.1 Financial position

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands
Year Difference
2021 2020
Item Amount %
Current assets 2,979,118 3,010,069 (30,951) -1.03%
Property, plant and equipment 332,762 331,314 1,448
0.44%
Intangible assets 3,685 4,111 (426) -10.36%
Other assets 273,878 263,695 10,183 3.86%
Total Assets 3,589,443 3,609,189 (19,746) -0.55%
Current liabilities 947,700 1,478,103 (530,403) -35.88%
Non-current liabilities 569,360 150,521 418,839
278.26%
Total Liabilities 1,517,060 1,628,624 (111,564) -6.85%
Equity attributable to
2,027,331 1,939,757 87,574 4.51%
shareholders of the parent
Capital stock 1,624,076 1,624,076 0 0%
Capital surplus 25,980 15,423 10,557
68.45%
Retained earnings 654,787 591,094 63,693
10.78%
Other equity interest (104,491) (117,815) 13,324 11.31%
Treasury stock (173,021) (173,021) 0
0%
Non-controlling interest 45,052 40,808 4,244 10.40%
Total Equity 2,072,383 1,980,565 91,818 4.64%

Analysis of changes in financial ratios:

  • A. The decrease of current liabilities and the increase of non-current liabilities were due to using syndicated loans to repay short-term borrowings, short-term borrowings decreased by NT$700,000 but long-term borrowings increased by NT$398,349 than 2020.

  • B. The increase of capital surplus was due to distributing dividends to the subsidiary be recorded as capital surplus.

  • 229 -

7.2 Financial performance 7.2.1 Analysis of financial performance

Unit: NT$ thousands

Unit: NT$thousands Unit: NT$thousands
Year Difference

2021		 2020
Item Amount %
Operatingrevenue 4,183,403 3,737,299 446,104 11.94%
Grossprofit 713,185 785,867 (72,682) -9.25%
Operatingincome 266,855 333,952 (67,097) -20.09%
Non-operating income
1,069 (59,843) 60,912
101.79%
and expenses
Income before tax 267,924 274,109 (6,185) -2.26%
Tax expense 31,389 41,113 (9,724) -23.65%
Net income 236,535 232,996 3,539
1.52%
Other comprehensive
33,615 (26,549) 60,164 226.61%
income(after tax)
Total comprehensive
270,150 206,447 (63,703)
30.86%
income

Analysis of changes over 20% in financial ratios:

  • A. The decrease of operating income was due to the material cost greatly increased in 2021.

  • B. The increase of non-operating income and expenses were due to the less impact of unfavorable exchange rates, thus caused foreign exchange losses decreased NT$50,754 than 2020.

  • C. The decrease of tax expense was due to the tax adjustment of previous year.

  • D. The increase of other comprehensive income (after tax) and total comprehensive income were due to unrealized gain from financial assets measured at fair value through other comprehensive income and net income increased in 2021.

7.2.2 Analysis of gross profit

Unit: NT$ thousands

Unit: NT$thousands
Year
2021 2020 Change %
Item
Grossprofit 785,867 785,867 -9.25%

Analysis of change:

The decrease of gross profit was mainly due to the material cost greatly increased in 2021.

7.2.3 Sales volume forecast and the basis therefor: Please refer to page 4.

  • 230 -

7.3 Cash flows

7.3.1 Analysis of cash flows for 2021

Unit: NT$ thousands

Cash and cash
il		 Net cash flow
f i		 Net cash flow
f ii		 Net cash flow
f fii		 Effects of changes
i fi
Cash surplus
dfii		 Leverage of cash deficit Leverage of cash deficit
equvaents,
beginning of year
(1)
rom operatng
activities		 rom nvestng
activities		 rom nancng
activities		 n oregn
exchange rates		 (ect)
(1)+(2)+(3)		 Investment Financing

(2)		 (3) (4)
(5)
+(4)+(5)		 plans plans
1,242,331
150,004 (77,745) (492,327) (5,907) 816,356 － －

  • A. Analysis of cash flow:

  • ‧ Operating activities: Net cash inflow was mainly due to there was income before tax in 2021.

  • ‧ Investing activities: Net cash outflow was mainly due to the acquisition of financial assets at fair value through other comprehensive income.

  • ‧ Financing activities: Net cash outflow was mainly due to the repayment of short-term borrowings.

  • B. Corrective measures to be taken in response to illiquidity: Not applicable.

7.3.2 Analysis of liquidity for 2022

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands
Cash and cash
il bii		 Estimated net cash
fl f i		 Estimated net cash used
i ii d fii		 Ch l dfii Leverage of cash deficit
equvaents, egnnng
of year		 ow rom operatng
activities		 n nvestng an nancng
activities		 as surpus (ect)
(1)+(2)+(3)		 Investment Financing
plans

(1)		 (2) (3) plans
－
816,356 375,443 (175,197) 1,016,602 －

  • A. Liquidity analysis: It is estimated that the Company will generate cash inflow from operating activities NT$375,443 thousand in 2022. Further, it is estimated NT$175,197 thousand net cash used in investing activities and financing activities, are primarily for repayment of borrowings for materials and working capital, payment for cash dividends, and so on. The balance of cash at the end of year is estimated to be NT$1,016,602 thousand.

  • B. Remedial actions for liquidity shortfall: Not Applicable.

7.4 Major capital expenditure items: None.

7.5 Investment policy in the last year, main causes for profits or losses, improvement plans and investment plans for the coming year

The Company’s investment strategy is mainly focus on vertical integration of flat display industry or related industry that is beneficial for the upgrade of technologies or management of production and sales. The Company will remain focus on the above said investment to upgrade production lines and enhance competitive advantages for the coming year. The decrease of recent year’s investment profit was due to the Company transferred a part of products to manufacture in Taiwan caused the lower capacity utilization of the subsidiary in China. The Company will remain focus on investment that is beneficial to technology development or evaluate if it is beneficial to our industry before investment for unrelated industry.

  • 231 -

7.6 Risk analysis and assessment

7.6.1 The effect upon the company’s profits (losses) of interest and exchange rate fluctuations and changes in the inflation rate, and response measures to be taken in the future

A. Interest rate

The increase of interest rate will drive the higher capital cost, but its effect for short-term borrowing is smaller.

  • B. Exchange rate

The sales of the Company’s products are mainly export abroad and the critical materials such as liquid crystal, driver IC, LCD or backlight modules are denominated primarily in foreign currencies. The Company receives net foreign currencies when export abroad, therefore, any significant fluctuation in such exchange rate would have an effect on the Company’s revenue and profit.

To avoid the foreign exchange volatility, the Company takes protection steps as follows:

  •  Asset offset with liabilities of foreign currency: Foreign currencies received from sales directly pay off the import materials to lower the exchange rate exposure.

  •  Utilize hedged derivative financial instruments: Utilize currency forward contracts or options to avoid foreign currency risk of assets and liabilities due to its fluctuation.

  •  Collect exchange rate information at any time to monitor the trend of exchange rate and decide the best timing to convert from foreign currency to NTD or retain in foreign currency account.

  •  Enhance quality and added value of products to adjust cost and price in time during foreign currency fluctuation.

7.6.2 The company’s policy regarding high-risk investments, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future

The Company did not engage in any high-risk or high-leveraged investments. The transactions and procedures related to lending and endorsement are based on the Company’s “Procedures for Lending” and “Procedures for Endorsement Guarantee”. Furthermore, derivative

transactions follow the “Regulations Governing the Acquisition and Disposal of Assets”.

7.6.3 Research and development work to be carried out in the future, and further expenditures expected for research and development work: Please refer to page 3.

  • 232 -

7.6.4 Effect on the company’s financial operations of developments in science and technology as well as industrial change, and measures to be taken in response

The Company consistently pays close attention to any changes in local and foreign regulations and makes appropriate amendments to our systems such as Corporate Governance Practice Principles and Article of Corporation. During 2021 and as of the date of publication of this annual report, changes in related laws have not had a significant impact on our operations.

7.6.5 Effect on the company’s financial operations of developments in science and technology (including cyber security risks) as well as industrial change, and measures to be taken in response

The package technologies of flat panel display have been upgraded for the recent years. Further, the global individual business operation system and the application of flat panel displays keep expanding. In an attempt to grasp market opportunities, the Company continues to pay attention to market changes and related technological development trends. Also, it is committed to developing new products and new customer sources in order to enhance the long-term competitiveness. In response to information security incidents such as frequent cyber-attacks and ransom ware in recent years, the Company also strengthens the risk control and protection of cyber security, and implements various control measures, including the construction of firewalls, and the appointment of external professionals to evaluate. The details were listed as “5.6 Cyber security management” in this report. During 2021 and as of the date of publication of this annual report, those changes have not had a significant impact on our operations.

7.6.6 Effect on the company’s crisis management of changes in the company’s corporate image, and measures to be taken in response. The Company has consistently maintained an ethical business philosophy and pay attention to corporate image and risk control. There is no foreseeable risk currently.

7.6.7 Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken: None.

7.6.8 Expected benefits and possible risks associated with any plant expansion, and mitigation measures being or to be taken

The Company has layout detail capital, technologies, source of customers, talented persons and site planning for factory expansion and management to expand CTP production lines and develop total solutions for flat display technologies. In this way, the Company can not only keep the competitive advantage within this industry but also meet customer’s demand.

7.6.9 Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken

The change of quantities demand from customers will affect the operation, so the Company had improved the risk of sales concentration and continue to develop new customers. As to the material purchase, the Company acquire multiple sources of suppliers to minimize suppliers’ risk.

  • 233 -

  • 7.6.10 Effect upon and risk to the company in the event a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the company has been transferred or has otherwise changed hands, and mitigation measures being or to be taken: None.

7.6.11 Effect upon and risk to company associated with any change in governance personnel or top management, and mitigation measures being or to be taken: Not applicable.

7.6.12 Litigious and non-litigious matters: None.

  • 7.6.13 Other important risks, and mitigation measures being or to be taken: In order to respond to changes in the COVID-19 epidemic and protect the safety of employees, the Company has launched “epidemic prevention measures” at each operation and sales location, and the top executive of each location is in charge of epidemic prevention. This expects to master the health management status of all personnel, material scheduling of supply chains, production/capacity division and transportation delivery, etc. so as to ensure that the Company can operate normally and minimize the impact of the epidemic. Relevant countermeasures are as follows:
Items Countermeasures
To promote the epidemic prevention awareness of staff, masks must be worn
during duty, and disinfection measures for the office environment and
personnel are strengthened, personnel on different floors are separated from
entry and exit, and temperature measurement and disinfection equipment are
installed. When the epidemic is serious, work in different places in groups is
adopted to reduce the risk of personnel infection.
To decrease non-essential business visits and replace by video conferences.
Those need to enter the factory must fill in the “Declaration of Entering the
Factory” to declare their health status and travel history. When the epidemic is
severe, all non-employee outsiders are prohibited from entering the
Company’s premises.
The receipt of express and logistics delivery must be signed outdoors, and
personnel are prohibited from entering the factory.
To actively cooperate with government policies, standardize and publicize
relevant epidemic prevention measures, and provide employees with vacation
needed due to the epidemic.
To strengthen disinfection work of the public area, and increase epidemic
prevention equipment such as epidemic prevention partitions and diverted
meals. When the epidemic situation is serious, all the indirect staff will be
cancelled to the restaurant for meals.
For outsourced services (such as cleaning, group meals, and security)
entering the factory, special personnel are required for full-time, book-keeping
management, wearing masks throughout the process, and reducing contact
with employees.
Personnel
management
To discuss and adjust the Company’s epidemic prevention measures and
personnel scheduling through high-level meetings.
To fully communicate with customers about the Company’s epidemic
prevention situation and capacity allocation, negotiate shipping methods and
time, and reduce their concerns.
To make flexible adjustments of cross-plant production capacity, including
procurement of materials.
If there is necessary repair and maintenance operations need to be carried out
in the factory, all are arranged on holidays or after the approval of the
application,the admission control will be accompanied bya specialperson.
Production
management
  • 234 -

7.7 Other important matters

7.7.1 Risk management

The Company formulated the “Risk Management Policies and Procedures” and approved by the Board of Directors on November 3, 2020. This expects to conduct risk management against uncertain factors that may threaten the enterprise’s business operations, and is jointly implemented by the Board of Directors, Audit Office, President, all risk management departments, all units, and subsidiary companies.

The Company implements a risk assessment every year with the heads of each risk management department to be in charge of analyzing and monitoring the risks faced by their business jurisdictions. All risk management policies and major decisions have to report to the Board of Directors for approvals. In accordance with the results of risk assessment, an annual audit plan is mapped out by the Audit Office for this purpose. The President is in charge of coordinating and supervising the implementation and coordination of the entire risk management. Each unit and subsidiary companies must abide by the regulations when performing necessary operations and risk management, ensuring that the risks involved are controlled within the affordable range.

As an attempt to review business and operating characteristics, the Company has now included a total of 12 risk categories under management. They are: interest rate change risk, exchange rate change risk, climate change and environmental risk, occupational safety risk, raw material price and supply chain risk, information security risk, strategy and operation risk, investment risk, legal risk, technology risk, management risk, and corporate image risk. For more details of the risk control measures mentioned above, please refer to the contents of the Company regulations “Risk Management Policies and Procedures” under the “Corporate Governance” section of the Company’s website.

  • 235 -

VIII. Special Disclosure

8.1 Summary of affiliated companies

8.1.1 Consolidated business report of affiliated companies

A. Organization structure

==> picture [432 x 257] intentionally omitted <==

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

Emerging Display Technologies Corp.
100% 78.49% 100% 100% 100% 100% 100% 52.50%
Emerging Emerging Bae Haw Ying Dar
EDT- EDT- Ying Cheng
Display Display Investment Investment
Japan Europe Investment
Technologies Technologies Development Development
Corp. ApS Corp.
Corp., U.S.A. Korea Corp. Corp.
11.41%
5.90%
Emerging
Display
International
(Samoa) Corp.
100%
Dong Guan
Emerging
Display Ltd.
----- End of picture text -----

B. The profile of affiliated companies:

Company Name Date of
Incorporation		 Address Paid-in Capital
(NT$thousands)		 Main Areas of Business
Operations
Emerging Display Technologies
Corp.,U.S.A.		 Sep. 23, 1994 390 Goddard, Irvine, CA 92618, U.S.A. 116,731 Sales channel of North
America
Emerging Display International
(Samoa)Corp.		 Feb. 7, 2000 Offshore Chambers,PO Box 217, Apia,
Samoa		 248,063 Investment holding
Dong Guan Emerging Display Ltd. Aug 11, 2000 E2 Junda Industrial Park, Dong Keng Town
DongGuan City,GuangDong,China		 248,516 Manufacturing of CTP and
LCDs
EDT-Europe ApS Oct. 26, 2000 Raadhustorvet 3 3520 Farum, Denmark 451 Sales channel of Pan-
Europe
Bae Haw Investment
Development Corp.		 Jun. 6, 2001 3F, No. 5, Central 1st Road, Cianjhen Dist.,
Kaohsiung,Taiwan		 89,000 Investment
Ying Dar Investment
Development Corp.		 Jun. 7, 2001 3F, No. 5, Central 1st Road, Cianjhen Dist.,
Kaohsiung,Taiwan		 89,000 Investment
Emerging Display Technologies
Korea		 Jun. 11, 2004 A-1111, Pyungchon Acro Tower, 1591,
Gwanyang-Dong, Dongan-Ku, Anyang-Si,
Kyunggi-Do,Korea		 1,677 Sales channel of Korea
EDT-Japan Corp. Sep. 10, 2012 2-21-41 Takanawa Minatoku Tokyo,
Japan108-0074 Takanawa No.1 Building		 17,401 Sales channel of Japan
Ying Cheng Investment Corp. Jul. 23, 2013 3F, No. 5, Central 1st Road, Cianjhen Dist.,
Kaohsiung,Taiwan		 160,000 Investment

C. The particulars for companies presumed to have a relationship of control and subordination where the shareholders in common: Not applicable.

  • 236 -

D. The industries covered by the business operated by the affiliated companies overall: Refer to “The profile of affiliated companies”.

E. Directors, supervisors and general manager of affiliated companies:

Company Name Title Name or Representative Shareholding Shareholding
Shares %
Emerging Display Technologies Corp.,
U.S.A.		 Director Emerging Display Technologies Corp.
Representative: Tseng,Jui-Ming		 3,500,000
100%
Emerging Display International
(Samoa)Corp.		 Director Emerging Display Technologies Corp.
Representative: Tseng,Jui-Ming		 5,984,071
78.49%
Dong Guan Emerging Display Ltd. Director Emerging Display International (Samoa) Corp.
Representative: Tseng,Jui-Ming		 － 100%
EDT-Europe ApS Director Emerging Display Technologies Corp.
Representative: Tseng,Jui-Ming		 125,000
100%
Bae Haw Investment
Development Corp.		 Director Emerging Display Technologies Corp.
Representative: Tseng,Jui-Ming		 8,900,000
100%
Ying Dar Investment
Development Corp.		 Director Emerging Display Technologies Corp.
Representative: Tseng,Jui-Ming		 8,900,000
100%
Emerging Display Technologies Korea Director Emerging Display Technologies Corp.
Representative: Tseng,Jui-Ming		 58,212,500
100%
EDT-Japan Corp. Director Emerging Display Technologies Corp.
Representative: Tseng,Jui-Ming		 5,000
100%
Ying Cheng Investment Corp. Director Emerging Display Technologies Corp.
Representative: Tseng,Jui-Ming		 8,400,000
52.50%

8.1.2 Financial statement of affiliated companies

Unit: NT$ thousand

Unit: NT$ thousand
Company name Paid-in
capital		 Total
assets		 Total
liabilities		 Net worth Operating
revenue
Income
(loss) from
operations		 Net income
(loss)		 Earnings
per share
(NT$)
Emerging Display
Technologies Corp.,U.S.A.		 116,731
444,707
342,284
102,423		 1,134,438
13,973
12,616		 3.60
Emerging Display International
(Samoa)Corp.
248,063
158,787
81,738
77,049
200,113
(16,559)
(16,595)		 (2.18)
Dong Guan Emerging Display
Ltd.		 248,516
150,018
81,738
68,280
200,113
(16,525)
(16,324)		 －
EDT-Europe ApS 451
16,067
13,351
2,716
59,030
1,494
1,333		 10.66
Bae Haw Investment
Development Corp.		 89,000
105,678
51
105,627
0
(108)
3,247		 0.36
Ying Dar Investment
Development Corp.		 89,000
130,143
51
130,092
0
(120)
6,577		 0.74
Emerging Display
Technologies Korea		 1,677
2,655
1,131
1,524
3,862
261
242		 －
EDT-Japan Corp. 17,401
8,287
1,988
6,299
13,726
1,905
1,842		 368.45
Ying Cheng Investment Corp. 160,000
88,082
50
88,032
0
(102)
(100)		 (0.01)
  • 237 -

8.1.3 Loans extended to other parties, guarantees provided to other parties and derivative financial instrument transactions of affiliated companies: None.

8.2 Private placement securities in the most recent years: None.

8.3 Shares in the company held or disposed of by subsidiaries in the most recent years:

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Name of
subsidiary		 Paid-in
capital		 Fund
source		 Shareholding
ratio of the
Company
Date of
acquisition or
disposition		 Shares
and
amount
acquired		 Shares
and
amountd
disposed		 Investment
gain (loss)		 Shareholdings
and amount in
most recent year		 Mortgage
Endorsement
amount
made for the
subsidiary
Amount
loaned to
the
subsidiary
Ying Dar
Investment
Development
Corp.		 $89,000 Capital
Increase
by Cash		 100% － － － － 5,346,672 shares
$65,183		 － － －
As of
Apr. 23, 2021		 － － － 5,346,672 shares
$65,183		 － － －
Bae Haw
Investment
Development
Corp.		 $89,000 Capital
Increase
by Cash		 100% － － － － 3,447,716 shares
$45,210		 － － －
As of
Apr. 23, 2021		 － － － 3,447,716 shares
$45,210		 － － －

8.4 Other matters that require additional description: None.

IX. The situations listed in Article 36, paragraph 3, subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholders’ equity or the price of the company’s securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report: None.

  • 238 -

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