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GEMTEK Annual Report 2020

Jul 15, 2021

52434_rns_2021-07-15_dd035d37-dde7-4abb-b5e9-9fab009c5f45.pdf

Annual Report

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TWSE Stock Code ： 4906

==> picture [139 x 39] intentionally omitted <==

Gemtek Technology Co., Ltd.

2020 Annual Report

Published on May 20, 2021

Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw/index.htm Gemtel annual report is available at: http://www.gemteks.com

  1. Company Spokesperson

Spokesperson: Cheng-ren Yang Title: Executive Director Telephone: (03)598-5535#1040 Email Address: [email protected]

Deputy Spokesperson: Heng-li Huang Title: Special Assistance to Managing Director Telephone: (03)598-5535#1013 Email Address: [email protected]

  1. Contact Information

Gemtek Corporate Headquarters, Subsidiaries, and Factory

Address: No. 15-1 Zhonghua Road, Hsinchu Industrial Park, Hukou, Hsinchu, Taiwan R.O.C. Telephone: (03)598-5535

Common Share Transfer Agent and Registrar Company: SinoPac Register & Transfer Agency Department Address: No. 17, Bo-ai Rd., Zhongzheng District, Taipei City, Taiwan, R.O.C. Website: http://www.sinotrade.com.tw Tel: +886-2-2382-6288

Auditing Firm Company: Deloitte & Touche Auditors: Ching-zen Yang, Jing-ting Yang Address: 20F, No. 100, Songren Rd., Xinyi Dist.,Taipei 11073, Taiwan, R.O.C. Website: http://www.deloitte.com.tw Tel: +886-2-27259988 Fax: +886-2-40516888

Company Website: http://www.gemteks.com

TABLE OF CONTENTS

TABLE OF CONTENTS...................................................................................................... 1
I.
Letter to Shareholders............................................................................................ 1
II.
Company Profile.................................................................................................... 4
I.
Date of Establishment: June 29, 1988 .................................................................. 4
II.
Company History and Milestones ......................................................................... 4
III.
Corporate Governance Report................................................................................. 9
I.
Company Organization ......................................................................................... 9
II.
Information on the Company's Directors, Supervisors, General Manager,
Deputy General Manager, Associate Managers, and the Supervisors of All
the Company's Divisions and Branch Units ........................................................ 12
III. Remuneration to Board of Directors, Supervisors, President and Vice
President ............................................................................................................ 21
IV. Corporate Governance ....................................................................................... 29
V.Remuneration to Auditors ...................................................................................... 67
IV.
Capital Overview..................................................................................................72
I.Capital and Shares .................................................................................................. 72
II. Domestic & Overseas Corporate Bonds ................................................................ 82
III.Preferred Stock: None ........................................................................................... 84
IV.Global Depository Receipts: None ........................................................................ 84
V.Employee Stock Options: None ............................................................................. 84
VI.New Restricted Employee Shares: ........................................................................ 84
VII.Status of New Shares Issuance in Connection with Mergers and Acquisitions:
None ................................................................................................................... 88
VIII.Financing Plans and Implementation: None ........................................................ 88
V.
Operational Highlights..........................................................................................89
I.Business Activities ................................................................................................... 89
II. Market Analysis and Status of Goods Production and Sales ................................. 98
III. Employees .......................................................................................................... 107
IV. Environmental Protection Expenditure ............................................................... 109
V. Labor-Management Relations ............................................................................. 110
IV Important Contracts ............................................................................................. 113
VI.Financial Summary.......................................................................................................114
I.Condensed Balance Sheet and Income Statement for the Past 5 Years .............. 114
II. Five Year Financial Analysis ................................................................................ 118
III.Audit Committee’s review report on the financial report for the most recent
fiscal year ......................................................................................................... 124
IV.Consolidated Financial Statements ..................................................................... 125
V.Individual Financial Statement ............................................................................. 236
THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS.. 328
STATEMENT OF CASH AND CASH EQUIVALENTS .............................................. 329
STATEMENT OF ACCOUNTS RECEIVABLE ........................................................... 331
STATEMENT OF INVENTORIES ............................................................................... 332
STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE
THROUGH OTHER COMPREHENSIVE INCOME-NON-CURRENT ............... 333
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING
EQUITY METHOD ................................................................................................. 334
STATEMENT OF SHORT-TERM BORROWINGS ..................................................... 335
STATEMENT OF ACCOUNTS PAYABLE .................................................................. 336
STATEMENT OF OPERATING REVENUE ................................................................ 337
STATEMENT OF OPERATING COSTS ...................................................................... 338
STATEMENT OF SELLING EXPENSES .................................................................... 339
STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES....................... 340
STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES ........................ 341
STATEMENT
OF
EMPLOYEE
BENEFITS,
DEPRECIATION
AND
AMORTIZATION .................................................................................................... 342
VII.Review and Analysis of Financial Position, Financial Performance, and Risk Management343
VIII.Special Disclosure......................................................................................................356
I.Information on the Company Affiliates...................................................................... 356
II.Business Operations Overview................................................................................. 359

I. Letter to Shareholders

Dear Shareholders,

I. Foreword

2020 is an unprecedented year as we are faced with various challenges brought forth by the COVID-19 pandemic. Under such precarious circumstances, Gemtek continues to seek new opportunities in the marketplace while striving to develop innovative business strategies.

In 2020, the Company's annual consolidated net operating income was NT$19,929,372,000, driven up by an annual increase of 10%. Operating net profit and net profit after tax were NT$467,913,000 and NT$1,407,574,000, respectively. Earnings per share after tax was NT$3.86.

Due to the COVID-19, the company had faced a shortage of production manpower and supplies in the first quarter of 2020, which caused revenue and profit to decline. After the second quarter, Gemtek adjusted quickly to meet the exponential growth of remote desktop connection product demands. Moreover, the Gemtek Vietnam, Gemtek Kunshan and Gemtek Changshu factories have also resumed their normal operations, bringing business performances to a higher level. In the third quarter, in response to business development needs, AMPAK Technology Inc., a subsidiary of Gemtek became independent, which caused an increase in the disposal of non-business income. After the fourth quarter, due to the shortage of supply chain materials, the Company spared no effort to prepare sufficient raw materials to respond to customer needs.

Looking back on 2020, the Company had continued to expand its production capacity domestically and internationally to respond to increasing customer demands while working to launch new products and develop new markets and customers. Wireless telecommunications technology is changing with each passing day. The Company seeks to improve and excel in its overall operations and continue to provide comprehensive services to its customers. Gemtek is committed to becoming a leader and supplier in the wireless communications industry.

Gemtek is truly grateful for the support from our shareholders during this difficult time. In the upcoming year, in order to counteract to the changes in the global economic environment, the Company will continue to actively maintain our leadership in the existing market and broaden our business scale in the wireless communication market. Furthermore, Gemtek is looking to come up with new strategies to heighten our business operations and managerial competencies to prepare ourselves for any sort of challenges. We profoundly hope that our shareholders will continue to stand by us in the years to come.

II. 2020 Business Reports

(I) Business Results

In 2020, the total consolidated operating income was NT$19,929,372,000. The combined operating costs and operating expenses was NT$19,461,459,000. The consolidated non-operating income was NT$1,136,102,000. The consolidated non-operating expenses was NT$30,843,000. The pre-tax net profit was NT$1,573,172,000; income tax expense was NT$165,598,000. Therefore, the consolidated net profit after tax for this year is NT$1,407,574,000. Earnings per share (after tax) is NT$3.86.

(II) Financial Status and Profitability

－1－

The Company has always adhered to the conservatism principle in its financial operations, laying out timely plans for the use of long and short-term funds. In 2020, the current ratio was 140.14% and the debt ratio was 49.70%, indicating that the composition of the company's financial structure was adequately sound and stable.

(III) Research and Development

2020 R&D Achievements

  • 1.Next-generation passive optical network/ ultra-wideband network and voice service integration systems GPON/XGSPON /10GEPON/DPoE/NGPON2 product development.

  • G.FAST equipment.

  • Whole home WiFi with Mesh development

  • Advanced WiFi Router 11.ax development

  • Cost-effective and Advanced LTE client device development, including Cat 20, Cat 12, Cat6, Cat4, UER

  • 3GPP based CIOT client device and LGA module development (Cat 4, Cat 1, Cat-M1, NB-IOT)

  • 5G NR CPE development

  • 1W CBRS LTE Small Cell System development

  • mmwave smart antenna phase array system platform development

  • 5G mmwave repeater system platform development

III. 2021 Business Policies

  • (I) Marketing Strategy

  • Strengthen existing customer relationships and develop new customers.

  • Launch new products according to market trends with new technical specifications.

  • Identify market demands and strengthen the ability to collect market information.

  • Understand market demands and actively explore emerging markets.

  • Approach new clients and seek new business opportunities

(II) Production Policy

  1. Strictly control the production process and increase the utilization rate of production capacity.

  2. Strictly select suppliers that meet cost effectiveness and integrate resources to pursue profitability.

  3. Track the lead time and quality of key manufacturing components. Keenly identify changes in supply, demand and prices.

  4. Adjust capital expenditures based on the condition of the industry.

  5. Introduce automated and optimized production systems to increase production efficiency.

(III) Industrial Development

Gemtek has been long dedicated to the development of wireless communications technology. Business development is centered on the following major operations:

－2－

1.Wireless network service products, which include broadband network related equipments that are built on top of telecommunications infrastructures (5G related technologies, LTE Small Cell, CPE), telecommunication network products (Wi-Fi AP/Router) and business-grade wireless AP/routers and Wi-Fi modules etc.

2.Fixed Broadband Network connection related products, which includes telecommunication integration (VoIP, VDSL, G.fast, GPON, Setup Box etc.) and fiber-optic network products.

3.Telecommication modules and services.

4.Cloud software integration services and IoT.

  • IV. The Impacts of External Business Environment, Regulatory Environment, and

Macroeconomics

(I) External Business Environment

Inter-industry competition will make business and R&D more challenging in terms of whether prices and product innovation can meet the overall market trends and customer demands.

(II) Regulatory Environment

China continues to formulate new laws and regulations to regulate Taiwanese businessmen, resulting in a continuous increase in cost for conducting business operations in the Mainland. Furthermore, the Sino-US trade war is driving tariffs to potentially go higher.

(III) Macroeconomics

A network of industries, infrastructures, and consumers are in high demand of advanced telecommunication products due to the rapid development of wired and wireless broadbands technologies such as optical fiber and 5G. In addition, the new generation of WiFi standards also facilitates the production of more diversified cross-domain applications, which may benefit our overall business operations in the future.

V. Conclusion

The Company’s management team is sincerely grateful for the unwavering support from our shareholders. We hope that our shareholders will continue their support and guidance in the forthcoming years.

Hong-wen Chen

Chairman

－3－

II. Company Profile

I. Date of Establishment: June 29, 1988

II. Company History and Milestones

Year/Month Key Historical Events
1988/06 Gemtek Co., Ltd. was founded in Hsinchu City, Taiwan with an initial paid-in capital of
NT$2 million. Business operations mainly centered on data processing, typesetting,
software, hardware, peripheral equipment, and the buying and selling of office
machines.
1992/05 Gemtek Co., Ltd. changed its name to Gemtek Technologies Co., Ltd., and relocated its
headquarters to Taipei City. Paid-in capital increased to NT$8 million. Expanded new
business operations in research and the buying and selling of electronic components,
semi-finished products, andfinished products.
1994/10 The company decided to narrow its business scope onto the development of wireless
communication products, focusing mainly on the research and development of key RF
wireless communicationtechnology and components.
1994/12 Capital increased by NT$12 million by issuance of common stock for cash. Paid-in
capital increased to NT$20 million. The company relocated its business address to
Xizhi Town,TaipeiCounty.
1996/09 Capital increased by NT$10 million by issuance of common stock for cash. Paid-in
capital increased to NT$30 million.
1997/09 Capital increased by NT$25 million by issuance of common stock for cash.
Paid-incapital increased to NT$55million.
1997/12 Transfer of equity shares by significant shareholders to include corporate shareholders.
Capital increased by NT$90.5 million by issuance of common stock for cash. Paid-in
capital increased to NT$150 million. Established first RF production line. Holds
advanced mass production technology for RF products.
1998/01 2.4GHz-WLAN PCMCIA Wireless LAN reached satisfactory completion based on
R&D milestones, entering trialproductionphase.
1998/08 Acquired land in Hsinchu Industrial Park to start first phase construction of the
company'smanufacturing plant.
1999/03 Capital increased by NT$45 million by issuance of common stock for cash. Paid-in
capital increased to NT$195 million.
2.4GHz-2Mbps ISA Wireless LAN reached satisfactory completion based on R&D
milestones, enteringmass productionphase.
1999/06 Public offering of shares was completed. Construction of new plant was completed.
Gemtek aims to become a world leading company that specializes in the research and
development,design,and manufacturingof RFwireless communicationproducts.
1999/08 Obtained ISO-9001 certification from German TÜ V.
1999/11 Capital increased by NT$55 million by issuance of common stock for cash. Paid-in
capital increased to NT$250 million. Zhan-Yi Investment Co., Ltd. transferred shares to
MiTAC Group. An election event was held to re-elect directors and supervisors. Mr.
Feng-Zhe Tsai, representative of MiTAC International Corporation, was elected
chairmanofGemtek Technology Co.,Ltd.
2000/03 2.4GHz-11Mbps W-LAN Card and AP reached satisfactory completion based on R&D
milestones. Conducted successfultrialproduction run.
2000/05 Capital increased by NT$50 million by issuance of common stock for cash. Paid-in
capital increased to NT$300million.
2000/08 Capital increased by NT$100 million by issuance of common stock for cash. Paid-in
capital increased to NT$400million.
2000/09 Received a research grant from the Industrial Development Bureau of the Ministry of
EconomicAffairs.Launched project toresearchand develop 5GHzWirelessLAN.
2001/07 Expanded factory to increase production capacity.

－4－

Year/Month Key Historical Events
2002/01 Company listed in GreTai Securities Market. Securities traded over-the-counter.
2002/07 Capitalization of earnings and commission paid to employees increased cash by
NT$233.7 million. Capital increased by NT$100 million by issuance of common stock
forcash.Paid-incapital increased to NT$733.75million.
2003/03 1st issuance of convertible bonds totaling NT$120 million.
1st issuance of employee stock option certificates totaling NT$15million.
2003/06 Transferred stock exchange listing from OTC market to Taiwan Stock Exchange
market.
2003/08 Capitalization of earnings increased cash by NT$146.75 million. Capitalization of
commission paid to employees increased cash by NT$27 million. Paid-in capital
increased to NT$907million.
2003/12 Purchased new land in Hsinchu Hukou Industrial Park. Set new arrangements to expand
factory and establish R&Dcenter.
2004/10 2nd issuance of employee stock option certificates totaling NT$30 million.
2004/03 1st conversion of bonds to common shares based upon the 2003 1st issuance of
convertible bonds totaling NT$38,191,510, becomes effective. Paid-in capital increased
to NT$945,691,510.
2004/04 2nd conversion of bonds to common shares based upon the 2003 1st issuance of
convertible bonds totaling NT$14,444,430, becomes effective. Paid-in capital increased
toNT$960,135,940.
2004/05 Resolution approved by the 2004 Annual General Shareholders Meeting becomes
effective to re-elect company’s board of directors and supervisors upon expiration of
the termoftheirduties, and to add 8 seats to the company’s board ofdirectors.
2004/08 Capitalization of earnings increased cash by NT$192,027,190. Capitalization of
commission paid to employees increased cash by NT$35,740,000. 3rd conversion of
bonds to common shares based upon the 2003 1st issuance of convertible bonds,
totaling
NT$47,362,890,
becomes
effective.
Paid-in
capital
increased
to
NT$1,235,266,020.
2004/10 4th conversion of bonds to common shares based upon the 2003 1st issuance of
convertible bonds, totaling NT$41,675,820, becomes effective. Paid-in capital
increased toNT$1,276,941,840.
2005/01 5th conversion of bonds to common shares based upon the 2003 1st issuance of
convertible bonds, totaling NT$24,804,700, becomes effective. Paid-in capital
increased to NT$1,301,746,540.
2005/04 6th conversion of bonds to common shares based upon the 2003 1st issuance of
convertible bonds, totaling NT$45,459,010, becomes effective. Paid-in capital
increased toNT$1,347,205,550.
2005/05 Capital increased by NT$200 million by issuance of common stock for cash. Paid-in
capital increased toNT$1,547,205,550.
2005/08 Capitalization of earnings increased cash by NT$243,531,730. Capitalization of
commission paid to employees increased cash by NT$44,270,000. Paid-in capital
increased to NT$1,835,007,280.
2006/03 Capital increased by NT$13,199,000 by issuance of common stock for cash due to
acquisition of Antek Networks Inc. 7th conversion of bonds to common shares based
upon the 2003 1st issuance of convertible bonds, totaling NT$2,618,360, becomes
effective.Paid-incapital increased to NT$1,850,824,640.
2006/06 8th conversion of bonds to common shares based upon the 2003 1st issuance of
convertible bonds, totaling NT$1,221,900, becomes effective. Paid-in capital increased
toNT$1,852,046,540.
2006/07 1st issuance of overseas convertible bonds with a USD50 million cap.
2006/10 Capitalization of earnings increased cash by NT$185,134,830. Capitalization of
commission paid to employees increased cash by NT$45,000,000. 9th conversion of
bonds to common shares based upon the 2003 1st issuance of convertible bonds totaling
NT$6,034,820,become effective. Paid-in capital increased to NT$2,088,216,190.

－5－

Year/Month Key Historical Events
2007/01 10th conversion of bonds to common shares based upon the 2003 1st issuance of
convertible bonds, plus 1st conversion of bonds to common shares based upon the 2006
1st issuance of overseas convertible bonds totaling NT$49,141,270, become effective.
Paid-in capital increased toNT$2,137,357,460.
2007/04 11th conversion of bonds to common shares based upon the 2003 1st issuance of
convertible bonds, plus 2nd conversion of bonds to common shares based upon the
2006 1st issuance of overseas convertible bonds totaling NT$104,668,400, become
effective.Paid-in capital increased toNT$2,242,025,860.
2007/06 Resolution approved by the 2007 Annual General Shareholders Meeting becomes
effective to re-elect company’s board of directors (9 seats, including 2 independent
directors) and supervisors (3 seats) upon expiration of the term of their duties.
2007/10 Capitalization of earnings increased cash by NT$110,598,790. Capitalization of
commission paid to employees increased cash by NT$50,180,000. 3rd conversion of
bonds to common shares based upon the 2006 1st issuance of overseas convertible
bonds totaling NT$9,046,620, becomes effective. Paid-in capital increased to
NT$2,411,851,270.
2008/04 2nd issuance of convertible bonds totaling NT$1 billion. Conversion of 1st issuance of
employee stock option certificates to common shares totaling NT$3,030,000, becomes
effective.Paid-incapital increased to NT$2,414,881,270.
2008/09 Capitalization of earnings increased cash by NT$44,097,620. Capitalization of
commission paid to employees increased cash by NT$72,150,000. Conversion of 1st
issuance of employee stock option certificates to common shares totaling
NT$4,300,000, becomes effective.Paid-incapital increased to NT$2,535,428,890.
2008/11 4th conversion of bonds to common shares based upon the 2006 1st issuance of
overseas convertible bonds totaling NT$47,853,050, conversion of 1st issuance of
employee stock option certificates to common shares totaling NT$2,310,000, and the
cancellation of repurchased treasury stocks totaling NT$22,180,000, become effective.
Paid-in capital increased to NT$2,563,411,940.
2009/01 5th conversion of bonds to common shares based upon the 2006 1st issuance of
overseas convertible bonds totaling NT$18,783,480, and conversion of 1st issuance of
employee stock option certificates to common shares totaling NT$240,000, become
effective.Paid-incapital increased to NT$2,582,435,420.
2009/05 6th conversion of bonds to common shares based upon the 2006 1st issuance of
overseas convertible bonds totaling NT$16,547,360, and conversion of 1st issuance of
employee stock option certificates to common shares totaling NT$600,000, become
effective. Paid-in capital increased to NT$2,599,582,780.
2009/08 Capitalization of earnings, capital reserve, and commission paid to employees increased
cash by NT$135,965,110. 7th conversion of bonds to common shares based upon the
2006 1st issuance of overseas convertible bonds totaling NT$3,577,820, and conversion
of 1st issuance of employee stock option certificates to common shares totaling
NT$50,000, become effective.Paid-incapital increased to NT$2,739,175,710.
2010/01 8th conversion of bonds to common shares based upon the 2006 1st issuance of
overseas convertible bonds totaling NT$27,477,410, and conversion of 1st issuance of
employee stock option certificates to common shares totaling NT$470,000, become
effective. Paid-in capital increased to NT$2,767,123,120.
2010/04 9th conversion of bonds to common shares based upon the 2006 1st issuance of
overseas convertible bonds totaling NT$6,289,680, conversion of 1st issuance of
employee stock option certificates to common shares totaling NT$4,000,000, and
conversion of 2nd issuance of employee stock option certificates to common shares
totaling
NT$5,545,000,
become
effective.
Paid-in
capital
increased
to
NT$2,782,957,800.
2010/06 Resolution approved by the 2010 Annual General Shareholders Meeting becomes
effective to re-elect company’s board of directors (9 seats, including 2 independent
directors) and supervisors (3 seats) upon expiration of the term of their duties.

－6－

Year/Month Key Historical Events
2010/09 Capitalization of capital reserve increased cash by NT$52,718,850, becomes effective.
Paid-incapital increased to NT$2,835,676,650.
2011/01 10thconversion of bonds to common shares based upon the 2006 1stissuance of
overseas convertible bonds totaling NT$8,656,080, becomes effective. Paid-in capital
increased to NT$2,844,332,730.
2011/05 11thconversion of bonds to common shares based upon the 2006 1stissuance of
overseas convertible bonds totaling NT$37,130,090, and conversion of 2ndissuance of
employee stock option certificates to common shares totaling NT$24,455,000, become
effective. Paid-in capital increased to NT$2,905,917,820.
2011/07 3rd issuance of convertible bonds totaling NT$2 billion.
2011/08 Capitalization of capital reserve increased cash by NT$86,988,270. 12th conversion of
bonds to common shares based upon the 2006 1st issuance of overseas convertible
bonds totaling NT$105,695,490, becomes effective. Paid-in capital increased to
NT$3,098,601,580.
2012/03 Cancellation of repurchased treasury stocks totaling NT$30,568,410, becomes
effective. Paid-in capital decreased to NT$3,068,033,170.
2013/09 Cancellation of repurchased treasury stocks totaling NT$17,180,000, becomes
effective. Paid-in capital decreased to NT$3,050,853,170.
2013/05 1st conversion of bonds to common shares based upon the 2011 3rd issuance of
overseas convertible bonds totaling NT$42,180,460, becomes effective. Paid-in capital
increased to NT$3,093,033,630.
2013/06 Resolution approved by the 2013 Annual General Shareholders Meeting becomes
effective to re-elect company’s board of directors (9 seats, including 2 independent
directors) and supervisors (3 seats) upon expiration of the term of their duties.
2013/08 2ndconversion of bonds to common shares based upon the 2011 3rd issuance of
overseas convertible bonds totaling NT$65,280, becomes effective. Paid-in capital
increased to NT$3,093,098,910.
2014/08 Issuance of common stock subject to employee restricted stock totaling
NT$60,000,000, becomes effective. Paid-in capital increased to NT$3,153,098,910.
2015/04 Cancellation of repurchased treasury stocks totaling NT$93,060,000, and reduced
capital due to repurchase of employee restricted stock issued totaling of NT$1,063,600,
become effective.Paid-incapitaldecreased to NT$3,058,975,310.
2015/07 Reduced capital due to cancellation of employee restricted stock issued totaling
NT$1,369,600, become effective. Paid-in capital decreased to NT$3,057,605,710.
2015/11 Cancellation of repurchased treasury stocks totaling NT$27,770,000, and reduced
capital due to repurchase of employee restricted stock issued totaling NT$634,830,
become effective. Paid-in capital decreased to NT$3,029,200,880.
2016/01 Reduced capital due to cancellation of employee restricted stock issued totaling
NT$789,120, become effective. Paid-in capital decreased to NT$3,028,411,760.
2016/03 4th issuance of convertible bonds totaling NT$1 billion.
2016/06 Resolution approved by the 2016 Annual General Shareholders Meeting becomes
effective to re-elect company’s board of directors (9 seats, including 2 independent
directors) and supervisors (3 seats) uponexpirationofthe termoftheirduties.
2016/07 Reduced capital due to cancellation of employee restricted stock issued totaling
NT$1,051,190, become effective. Paid-in capital decreased to NT$3,027,360,570.
2016/12 Reduced capital due to cancellation of employee restricted stock issued totaling
NT$342,140, become effective. Paid-in capital decreased to NT$3,027,018,430.
2017/04 1st conversion of bonds to common shares based upon the 2016 4thissuance of
convertible bonds totaling NT$44,973,750, and reduced capital due to cancellation of
employee restricted stock totaling NT$227,800, becomes effective. Paid-in capital
increased to NT$ 3,071,764,380.

－7－

Year/Month Key Historical Events
2017/06 2nd conversion of bonds to common shares based upon the 2016 4thissuance of
convertible bonds totaling NT$23,212,220, and reduced capital due to cancellation of
employee restricted stock totaling NT$120,000, becomes effective. Paid-in capital
increased to NT$ 3,094,856,600.
2017/09 3rd conversion of bonds to common shares based upon the 2016 4thissuance of
convertible bonds totaling NT$62,546,200, and reduced capital due to cancellation of
employee restricted stock totaling NT$200,000, becomes effective. Paid-in capital
increased to NT$ 3,157,202,800.
2017/12 4th conversion of bonds to common shares based upon the 2016 4thissuance of
convertible bonds totaling NT$49,999,650, becomes effective. Paid-in capital increased
to NT$ 3,207,202,450.
2018/02 Gemtek Technology Co., Ltd. and Gemtek Investment Co., Ltd. issued a public tender
offer to acquire 46,589,780 common shares from AMPAK Technology Inc. Purchase
consideration totaling NT$838,616,040.
2018/04 5th conversion of bonds to common shares based upon the 2016 4thissuance of
convertible bonds totaling NT$235,954,420, becomes effective. Paid-in capital
increased to NT$ 3,443,156,870.
2018/08 6th conversion of bonds to common shares based upon the 2016 4thissuance of
convertible bonds totaling NT$47,212,680, becomes effective. Paid-in capital increased
to NT$ 3,490,369,550.
2018/12 7th conversion of bonds to common shares based upon the 2016 4thissuance of
convertible bonds totaling NT$21,249,850, becomes effective. Paid-in capital increased
to NT$ 3,511,619,400.
2019/03 5th issuance of convertible bonds totaling NT$1.2 billion.
2019/04 8th conversion of bonds to common shares based upon the 2016 4thissuance of
convertible bonds totaling NT$57,215,560, becomes effective. Paid-in capital increased
to NT$ 3,568,834,960.
2019/06 Resolution approved by the 2019 Annual General Shareholders Meeting becomes
effective to re-elect company’s board of directors (9 seats, including 3 independent
directors) upon expiration of the term of their duties.
2019/07 Issuance of common stock subject to employee restricted stock totaling
NT$40,000,000,
and
cancellation
of
repurchased
treasury
stocks
totaling
NT$32,930,000, becomes effective.Paid-incapital increased to NT$3,575,904,960.

－8－

III. Corporate Governance Report

  • I. Company Organization

  • Organizational Chart

==> picture [479 x 168] intentionally omitted <==

Gemtek Organizational Chart

  2. Major Corporate Functions

  3. (1) General Manager’s Office

  4. A. Responsible for establishing overall business strategies and policies.

  5. B. Implement business plans, evaluate development risks, and oversee daily operations.

  6. (2) Auditing Division

  7. A. Responsible for inspecting and evaluating the soundness, rationality, and effectiveness of the company's internal control system and various management systems.

  8. B. Internal audit establishes a follow-up process to ensure that corrective actions have been effectively implemented for improving organizational processes.

  9. (3) Sales Department

  10. A. Responsible for domestic and international marketing, customer management, order management, after-sales services, and collection management.

  11. B. Facilitate research and development work by providing insight on product trends, market information, and customer needs.

  12. C. Reacts quickly to market trends, client demands, and product applications.

  13. D. Responsible for establishing product roadmaps and project management plans.

  14. (4) Project Management Department

  15. A. Responsible for organizing and implementing project management plans.

  16. B. Coordinate company resources to accommodate customer requirements for the project.

  17. C. Facilitate effective communication across different departments in the company to expedite project management.

－9－

D. Assign ad-hoc product development teams when collaborating with customers.

  • (5) Research and Development Department

A. Utilize company facilities and resources to develop new products based on the research and development goals of the company.

B. Supervise project progress control, evaluation of outcome, and provide detailed insight to reinforce overall product development.

C. Support the appearance import, layout design, product architecture, packaging material design, and engineering drawing for the development of the product.

D. Responsible for the approval of new materials, and the evaluation, follow-up trials, and testing of molding equipment.

E. Provide professional advice and assistance for special purchase orders and during the handling of anomalous quality situations.

  • (6) Overseas Manufacturing Plants

(Gemtek Electronics Suzhou Co. Ltd. Manufacturing Plant, Chang-Shu Manufacturing Plant, Gemtek Electronics Kunshan Co., Ltd. Manufacturing Plant, Zheng-Jie Manufacturing Plant, Vietnam Manufacturing Plant)

A. Responsible for offshore manufacturing, production, product shipment, quality control, and other operations.

(7) Hsinchu Manufacturing Plant

A. Responsible for production planning and scheduling, production manufacturing and shipment arrangements, and technical management

  • (8) Materials Planning and Logistics Department

  • A. Responsible for coordinating material logistics across global offices.

  • (9) Client Services Department

A. Responsible for providing satisfactory services and support to meet customer requirements.

  • (10) Quality Assurance and Control Department

A. Responsible for the planning, establishment, integration, management and audit of the company’s quality assurance and control system.

  • (11) IT Department

  • A. Responsible for the planning and management of IT related systems.

  • (12) Organizational Synergy Management Department

A.Responsible for promoting business operations that are associated with human resources, general affairs, environmental safety, business travel, and factory affairs.

－10－

(13) Finance Department

A. Responsible for handling financial activities, accounting, tax affairs, corporate actions, and other financially related matters of the company.

  • (14) Strategy Management and Advanced Technology Team

A. Responsible for establishing and implementing innovated business strategies and goals.

  • (15) Business Development Team

A. Responsible for overlooking business expansion operations, market development analysis, formulation of product sales strategies, resource management that are related to business sales, technology, and production, and the exploration of new business opportunities, markets, and customers.

  • (16) Legal Office

A. Responsible for all legal and legal related external matters such as the drafting and reviewing of legal contracts, providing legal opinions, providing professional interpretation of applicable laws and regulations, litigation, revision of legal documents, and offering legal advice regarding intellectual property rights, etc.

  • (17) Procurement Department

A. Responsible for evaluating suppliers, products, and services, negotiating contracts, and ensuring that approved purchases are cost-efficient and of high quality.

－11－

II. Information on the Company's Directors, Supervisors, General Manager, Deputy General Manager, Associate Managers, and the Supervisors of All the Company's Divisions and Branch Units

the Company's Divisions and Branch Units the Company's Divisions and Branch Units the Company's Divisions and Branch Units the Company's Divisions and Branch Units the Company's Divisions and Branch Units the Company's Divisions and Branch Units the Company's Divisions and Branch Units
(I) Directors and Supervisors As of April 30, 2021
Title Nation
ality		 Name Ge
nd
er		 Date of
Election
(Inaugurat
ion)		 Ten
ure		 Date of
Initial
Appointm
ent		 Shareholding
when Elected		 Current
Shareholding		 Shares Held
by Spouses
and
Dependents		 Shares Held
by Third
Parties		 Education and
Experience		 Concurrent Positions in Other
Companies		 Other
Manage
rs,
Director
s, or
Supervi
sors
Related
by
Marriag
e or
within
Second-
Degree
Kinship
of Each
Other
Number of
shares
%		 Number of
Shares
%		 Numb
er of
Shares		 % Numb
er of
Shares		 % Ti
tl
e		 N
a
m
e		 R
el
at
io
n
Chairma
n
/
General
Manager		 Taiwa
n,
R.O.C.
Chen, Hong Wen		 M
ale		 2019.06.1
8		 3Ye
ars		 1988.06.2
9		 5,907,937 1.66%
TSMC
Syntek Semiconductor
Co., Ltd.
Master of Electrical
Engineering, National
Tsing Hua University		 Chairman of Gemtek Investment
Co.,Ltd
Chairman of Browan
Communications Inc.
Chairman of Antek Networks Inc.
Chairman of Polaris Group
Director of SparkLAN
Communications, Inc.
Director of G-Technology
Investment Co., Ltd
Director of Witek Investment
Co.,Ltd
Director of Ampak International
Holdings Ltd
Director of Primax
Communication (B.V.I.)Inc.
Director of Free PP Worldwide
Co.,Ltd
Director of Yield Microelectronics
Corp.		 - - -

6,532,937
1.80%
11,069
0%
0
0%

－12－

Director Taiwa
n,
R.O.C.
Tsai, Fu Tsan		 M
ale		 2019.06.1
8		 3Ye
ars		 2004.04.2
9		 1,584,732 0.44%
Associate Researcher of
National Chung-Shan
Institute of Science and
Technology
Chairman of Ampak
Technology Inc.
Master of Electro-Optical
Engineering, National
Chiao Tung University		 Senior Deputy General Manager
of Gemtek Technology Co., Ltd.
Supervisor of Ampak Technology
Inc.
Chairman of Gemtek Electronics
Kunshan Co., Ltd.
Chairman of Gemtek Electronics
Suzhou Co. Ltd.
Director of Brightech International
Co., Ltd
Director of INPAQ Technology
Co., Ltd.
Director of APAQ Technology
Co.,Ltd.		 - - -

1,784,732
0.49%
2,225
0%
0
0%
Director Taiwa
n,
R.O.C.
Yang, Jheng Ren		 M
ale		 2019.06.1
8		 3Ye
ars		 1988.06.2
9		 1,271,269 0.36%
General Manager of
Browan Communications
Inc.
Ph.D. of Electrical
Engineering, National
Tsing Hua University		 Executive Director of Gemtek
Technology Co., Ltd.
Professor of Yuan-Ze University
Director of Gemtek Investment
Co.,Ltd
Director of Antek Networks Inc.
Director of Browan
CommunicationsInc.		 - - -

1,462,269
0.41%
905
0%
0
0%
Title Nation
ality		 Name Ge
nd
er		 Date of
Election
(Inaugurat
ion)		 Ten
ure		 Date of
Initial
Appointm
ent		 Shareholding
when elected		 Current
shareholding		 Shares Held
by Spouses
and
Dependents		 Shares Held
by Third
Parties		 Education and
Experience		 Concurrent Positions in Other
Companies		 Other
Manage
rs,
Director
s, or
Supervi
sors
Related
by
Marriag
e or
within
Second-
Degree
Kinship
of Each
Other
Number of
shares
%		 Number of
Shares
%		 Numb
er of
Shares
%		 Numb
er of
Shares		 % Ti
tl
e		 N
a
m
e		 R
el
at
io
n

－13－

Director Taiwa
n,
R.O.C.
Hsu, Jung Hui		 M
ale		 2019.06.1
8		 3Ye
ars		 2013.6.17 860,927 0.24% 1,140,927 0.31%
0
0%
0
0%
Engineer at National
Chung-Shan Institute of
Science and Technology
Bachelor of Electrical
Engineering, Tatung
Institute of Technology		 Senior Deputy General Manager
of Gemtek Technology Co., Ltd.
Director of Gemtek Investment
Co.,Ltd
Supervisor of SparkLAN
Communications, Inc.
Chairmanof BandRich Inc.		 - - -
Director Taiwa
n,
R.O.C.
Chang, Yueh Chi		 Fe
ma
le		 2019.06.1
8		 3Ye
ars		 2007.06.2
8		 3,000,715 0.84% 3,000,715 0.83%
0
0%
0
0%
Master of Business and
Management, National
University of Kaohsiung		 General Manager of BRILLIANT
FOOTWEAR CORPORATION		 - - -
Director Taiwa
n,
R.O.C.
APEX ACTION
INVESTMENT
LIMITED		 2019.06.1
8		 3Ye
ars		 2013.6.17 1,375,000 0.39%
-		 Supervisor of Ampak Technology
Inc.		 - - -

1,375,000
0.38%
0
0%
0
0%
Taiwa
n,
R.O.C.
Representative:
Luo, Wen Yi		 M
ale		 2019.06.1
8		 3Ye
ars		 2018.3.20 0
0%
Master of Business
Administration, National
ChengChi University		 Director of ASANLITE CO.,
LTD.
Chairman of CSX MATERIAL
CO., LTD.
Director of SWEEPOT INC.
Independent Director of Allied
Biotech Corp.
Independent Director of Taiflex
Scientific Co., Ltd.
Supervisor Representative of REC
TECHNOLOGY
CORPORATION
Juridical Person Supervisor Acting
as Representative of Ampak
TechnologyInc.		 - - -

0
0%
0
0%
0
0%
Independ
ent
Director		 Taiwa
n,
R.O.C.
Zhao, Yao Geng		 M
ale		 2019.06.1
8		 3Ye
ars		 2003.06.2
3		 0
0%
PhD of Electrical
Engineering, University
of Maryland, College
Park
Independent Director of
Harbinger Venture
Capital		 Independent Director of Favite
Inc.
Director of ASANLITE CO.,
LTD.
Dean of the College of Electrical
and Communications Engineering,
Yuan-Ze University		 - - -

0
0%
0
0%
0
0%

－14－

Independ
ent
Director		 Taiwa
n,
R.O.C.
Wang, Zhu San		 M
ale		 2019.06.1
8		 3Ye
ars		 2017.6.8 0
0%
PhD of Science in
Finance, University of
Tennessee
Master of Polymer
Science and Engineering,
Case Western Reserve
University
CEO of IEMBA
Program, National Taipei
University
Member of the Securities
and Futures Institute
Exam Committee
Member of the Ministry
of Economic Affairs
Audit Committee
Consultant at Small and
Medium Enterprise
Administration,MOEA		 Professor of Business
Administration, National Taipei
University
Director of the College of
Business Administration, National
Taipei University
Director of The Association of
Global Crowdfunding and
Financial Technology Service		 - - -

0
0%
0
0%
0
0%
Independ
ent
Director		 Taiwa
n,
R.O.C.
Chang, Zhi Yang		 M
ale		 2019.06.1
8		 3Ye
ars		 2019.06.1
8		 0
0%
PhD of Electrical
Engineering, University
of Texas at Austin
Associate Researcher of
National Chung-Shan
Institute of Science and
Technology
Professor of Electrical
Engineering, National
Chiao Tung University
Independent Director of
Ampak TechnologyInc.		 Independent Director/Member of
the Compensation Committee of
Alpha Microelectronics Corp.		 - - -

0
0%
0
0%
0
0%

－15－

(2) List of Major Shareholders within Institutional Shareholders

As of April 30, 2021

Name of the Institutional Shareholding Percentage Shareholder APEX ACTION INVESTMENT Luo, Deh Fu 100% LIMITED

(3)Professional qualifications and independence analysis of directors and supervisors

As of April 30, 2021

Criteria
Name
(Note 1)		 Meet One of the Following Professional
Qualification Requirements, Together with at Least
Five Years of Work Experience		 Meet One of the Following Professional
Qualification Requirements, Together with at Least
Five Years of Work Experience		 Meet One of the Following Professional
Qualification Requirements, Together with at Least
Five Years of Work Experience		 Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Independence Criteria (Note 2） Number of
Other
Public
Companie
s in Which
the
Individual
is
Concurren
tly Serving
as an
Independe
nt Director
An Instructor or
Higher Position
in a Department
of
Commerce,
Law,
Finance,
Accounting, or
Other Academic
Department
Related to the
Business Needs
of the Company
in a Public or
Private
Junior
College, College
or University












A
Judge,
Public
Prosecutor,
Attorney,
Certified
Public Accountant,
or
Other
Professional
or
Technical Specialist
Who has Passed a
National
Examination
and
been
Awarded
a
Certificate
in
a
Profession
Necessary for the
Business
of
the
Company











Have Work
Experience
in the Areas
of
Commerce,
Law,
Finance, or
Accounting,
or Otherwise
Necessary
for
the
Business of
the
Company





1		 2 3 4 5 6 7 8 9 10 11 12
Chen,
HongWen		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Tsai,
Fu
Tsan		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Yang, Jheng
Ren		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Hsu,
Jung
Hui		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Chang, Yueh
Chi		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Luo, Wen Yi ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Zhao,
Yao
Geng
✓		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 1
Wang, Zhu
San
✓		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Chang, Zhi
Yang
✓		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 1

－16－

Note 1: The number of boxes may be subject to change.

Note 2 : Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office.

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

(2) Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director in accordance with the Act or the laws and the regulations fo the local country by, and concurrently serving a s such at the Company and its parent or subsidiary or a subsidiary of the same parent.

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

(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the thrid degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.

(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company , or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a director or supervisor of the Company under Article 27, paragraph 1 or 2 of the Company Act. The same does not apply, however, in cases where the person is an independent director appointed in accordance with the Act or the laws and the regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.

(6) If a majority of the Company’s director seats or voting shares and those of any other company are controlled by the same person: Not a director, supervisor, or employee of that other company. The same does not apply, however, in cases where the person is an independent direct or appointed in accordance with the Act or the laws and the regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.

(7) If the chairperson, general manager, or p erson holding an equivalent position of the Company and a person in any of those positions at another company or institution are the same person or are spouses: Not a director (or governor), supervisor, or employee of that other company or institution. The same does not apply, however, in cases where the person is an independent director appointed in accordance with Act or the laws and the regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.

(8)Not a director, supervisor, or shareholder holding 5% or more of the shares, of a specified company or institution that has a financial or business relationship with the Company. The same does not apply, however, in cases where a specified company or institution holds 20% or more and no more than 50% of the total number of issued shares of the Company and the person is an ndependent director appointed in accordance with Act or the laws and the regulations of the local coun try by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent.

(9)Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the companyfor which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or the Business Mergers and Acquisitions Act or relaed laws or regulations.

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

(11) Not being a person of any conditions defined in Article 30 of the Company Act.

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

－17－

(4) Management Team

As of April 30, 2021

As of April 30, 2021 30, 2021 30, 2021
Title Nation
ality		 Name Gen
der		 Date of
Election
(Inauguratio
n)		 Current
shareholding		 Shares Held by
Spouses and
Dependents		 Shares Held
by Third
Parties		 Education and Experience Concurrent Positions in Other Companies Other
Managers,
Directors, or
Supervisors
Related by
Marriage or
within
Second-Degr
ee Kinship of
EachOther
Titl
e		 Na
me		 Rel
atio
n
Number of
shares		 % Number
of
Shares		 % Numb
er of
Shares		 %
General
Manager		 Taiwa
n,
R.O.C
.		 Li, Rong
Chang		 Mal
e		 2021.03.25 0% Bachelor of Industrial Engineering
and Management, Yuan Ze
University
CSO of Gemtek Technology Co.,
Ltd.		 Chairman of Gemtek CZ, s.r.o. - - -
80,000
0.02%		 0
0%		 0
Senior Deputy
General
Manager		 Taiwa
n,
R.O.C
.		 Tsai, Fu
Tsan		 Mal
e		 1995.07.01 0% Associate Researcher of National
Chung-Shan Institute of Science
and Technology
Chairman of Ampak Technology
Inc.
Master of Electro-Optical
Engineering, National Chiao Tung
University		 Senior Deputy General Manager of Gemtek
Technology Co., Ltd.
Supervisor of Ampak Technology Inc.
Chairman of Gemtek Electronics Kunshan
Co., Ltd.
Chairman of Gemtek Electronics Suzhou Co.
Ltd.
Director of Brightech International Co., Ltd
Director of INPAQ Technology Co., Ltd.
Director of APAQTechnologyCo.,Ltd.		 - - -
1,584,732
0.44%		 2,225
0%		 0
Senior Deputy
General
Manager		 Taiwa
n,
R.O.C		 Liao, Hsi
An		 Mal
e		 2011.01.01 0% MS in Electrical Engineering,
National Cheng Kung University
Microwave Research Team,
National Chung-Shan Institute of
Science & Technology (11 years)		 Chairman of Gemtek Electronics (Changshu)
Co., Ltd.
Supervisor of Browan Communications Inc.
Juridical Person Director Representative of
AMPAK Technology Inc. Juridical Person
Director Representative of SanJet Technology
Corp. Juridical Person Director Representative
of TAI-SAW TechnologyCo.,Ltd.		 - - -

0%
168,348
0.05%		 0 0

－18－

Senior Deputy
General
Manager		 Taiwa
n,
R.O.C		 Hsu, Jung
Hui		 Mal
e		 Mal
e		 2013.06.17 0% Engineer at National Chung-Shan
Institute of Science and Technology
Bachelor of Electrical Engineering,
Tatung Institute of Technology		 Senior Deputy General Manager of Gemtek
Technology Co., Ltd.
Director of Gemtek Investment Co.,Ltd
Supervisor of SparkLAN Communications,
Inc.
Chairman of BandRich Inc.		 - - -
860,927
0.24%		 0
0%		 0
Title Nation
ality		 Name Ge
nd
er		 Date of
Election
(Inauguratio
n)		 Current
shareholding		 Shares Held by
Spouses and
Dependents		 Shares Held
by Third
Parties		 Education and Experience Concurrent Positions in Other Companies Other
Managers,
Directors, or
Supervisors
Related by
Marriage or
within
Second-Degr
ee Kinship of
EachOther
Titl
e		 Na
me		 Rel
atio
n
Number of
shares		 % Number
of
Shares		 % Numb
er of
Shares		 %
Chief
Technology
Officer		 Taiwa
n,
R.O.C		 Yeh, Fu
Ming		 M
ale		 2017.01.01 0% PhD, Electrical Engineering,
National Taiwan University
Associate Researcher, Wireless
Communications Research and
Development, National Chun-Shan
Institute of Science and Technology
Director of Technology for
MBOFDM Project at National
Chun-Shan Institute of Science and
Technology
Project Leader of AMS-02 (Alpha
Magnetic Spectrometer) Electronic
System Research and Development
Project led by Dr. Samuel C. C.
Ting (Ting, Chao Chung). Alpha
Magnetic Spectrometer (a particle
physics detector) is still mounted on
the ISS.		 Director of BandRich Inc. - - -
52,554
0.01%		 0
0%		 0

－19－

Chief
Operating
Officer		 Taiwa
n,
R.O.C		 Lin, Tien Jin
M
ale		 2020.04.16 0% Bachelor of Electronic Engineering,
Chung Yuan Christian University
R&D Manager, Delta Electronics		 Nil - - -
46,681
0.01%		 0
0%		 0
Chief
Financial
Officer		 Taiwa
n,
R.O.C		 Lin, Chih
Hong		 M
ale		 1998.11.23 0% Bachelor of Accounting, Soochow
Uiniversity
Manager, Deloitte Taiwan		 Chairman of G-Technology Investment Co.,
Ltd
Director of of Gemtek Investment Co.,Ltd
Supervisor of SparkLAN Communications,
Inc.
Supervisor of Antek Networks Inc.
Director of BandRich Inc.		 - - -
116,829
0.03%		 0
0%		 0
Chiel Sales
Officer		 Taiwa
n,
R.O.C		 Cheng,
Guang Ming
M
ale		 2017.08.08 0% Business Administration, Kindai
University of Japan		 Nil - - -
22,000
0.01%		 0
0%		 0

－20－

III. Remuneration to Board of Directors, Supervisors, President and Vice President

(1)Remuneration to Board of Directors

Unit: NT$ Thousands

Title Name Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration The sum of A,
B, C, and D as
a percentage
of after-tax net
profit(% )
 The sum of A,
B, C, and D as
a percentage
of after-tax net
profit(% )
 Remuneration for part-time employees Remuneration for part-time employees Remuneration for part-time employees Remuneration for part-time employees Remuneration for part-time employees Remuneration for part-time employees Remuneration for part-time employees Remuneration for part-time employees The sum of A,
B, C, D, E, F
and G as a
percentage of
after-tax net
profit (% )		 The sum of A,
B, C, D, E, F
and G as a
percentage of
after-tax net
profit (% )		 Remune
ration
from
invested
business
es other
than the
subsidiar
ies or
the
parent
compan
y
Compen
sation
(A)		 Retirem
ent
pension
(B)		 Retained
Earnings
distributed as
remuneration
(C)		 Fees for
services
rendered (D)

Salaries,
bonuses, special
allowances etc
(E)		 Retirement
pension (F)		 Distribution of retained
Earnings as remuneration to
employees (G)
Ge
mt
ek		 Con
solid
ated
Subs
idiar
ies
of
Gem
tek
Ge
mt
ek		 Con
solid
ated
Subs
idiar
ies
of
Gem
tek
Gemte
k		 Consolid
ated
Subsidia
ries of
Gemtek		 Ge
mt
ek		 Consolid
ated
Subsidia
ries of
Gemtek		 Gemte
k		 Consol
idated
Subsid
iaries
of
Gemte
k		 Gemte
k		 Consolid
ated
Subsidia
ries of
Gemtek		 Ge
mt
ek		 Consolid
ated
Subsidia
ries of
Gemtek		 Gemtek Consolidated
Subsidiaries of
Gemtek
Gemte
k		 Consolid
ated
Subsidia
ries of
Gemtek
Cash Stock Cash Stock
Chairman Chen, Hong Wen - - - - 31,019
31,019		 - - 2.26 2.26 10,192 10,612 71 71 - - - - 3.01 2.96 None
Director Tsai, Fu Tsan
Director Yang, Jheng Ren
Director Hsu, Jung Hui
Director Chang, Yueh Chi
Director APEX ACTION
INVESTMENT
LIMITED
Independe
nt Director		 Zhao, Yao Geng
Independe
nt Director		 Wang, Zhu San
Independe
nt Director		 Chang, Zhi Yang

－21－

Note 1: The 2020 distribution of retained earnings was approved by the board of directors on March 25, 2021, to distribute NTD31,019,499 as remuneration to directors, and the matter shall be submitted to reported at the Shareholders’ Meeting.

Note 2: The 2019 remuneration to directors was NT$4,294,295.

Note 3: There was no actual retirement payment in the year 2020.

Remuneration Scale for the Board of Directors

Remuneration Scale for the Board of Directors Remuneration Scale for the Board of Directors Remuneration Scale for the Board of Directors Remuneration Scale for the Board of Directors
The Range of Remuneration Name of Directors
The total amount of the first four remuneration items
(A+B+C+D)		 The total amount of the first seven remuneration items
(A+B+C+D+E+F+G)
Gemtek Consolidated Subsidiaries of
Gemtek		 Gemtek Consolidated Subsidiaries of
Gemtek
Less than NT$2,000,000 Zhao, Yao Geng,
Wang, Zhu San,
Chang, Zhi Yang,		 Zhao, Yao Geng,
Wang, Zhu San,
Chang, Zhi Yang,		 Zhao, Yao Geng,
Wang, Zhu San,
Chang, Zhi Yang,		 Zhao, Yao Geng,
Wang, Zhu San,
Chang, Zhi Yang,
NT$2,000,000 ~ NT$4,999,999 Chen, Hong Wen,
Yang, Jheng Ren,
Hsu, Jung Hui,
Tsai, Fu Tsan,
Chang, Yueh Chi,
APEX ACTION INVESTMENT
LIMITED		 Chen, Hong Wen,
Yang, Jheng Ren,
Hsu, Jung Hui,
Tsai, Fu Tsan,
Chang, Yueh Chi,
APEX ACTION INVESTMENT
LIMITED		 Yang, Jheng Ren,
Tsai, Fu Tsan,
Chang, Yueh Chi,
APEX ACTION INVESTMENT
LIMITED		 Yang, Jheng Ren,
Chang, Yueh Chi,
APEX ACTION INVESTMENT
LIMITED
NT$5,000,000~ NT$9,999,999 - - Chen, Hong Wen, Chen, Hong Wen,

－22－

Hsu, Jung Hui, Hsu, Jung Hui,
Tsai, Fu Tsan,
NT$10,000,000~ NT$14,999,999 - - - -
NT$15,000,000~ NT$29,999,999 - - - -
NT$30,000,000~ NT$49,999,999 - - - -
NT$50,000,000~ NT$99,999,999 - - - -
Greater Than or Equal to NT$100,000,000 - - - -
Total Chen, Hong Wen,
Yang, Jheng Ren,
Hsu, Jung Hui,
Tsai, Fu Tsan,
Zhao, Yao Geng,
Wang, Zhu San,
Chang, Yueh Chi,
Chang, Zhi Yang,
APEX ACTION INVESTMENT
LIMITED		 Chen, Hong Wen,
Yang, Jheng Ren,
Hsu, Jung Hui,
Tsai, Fu Tsan,
Zhao, Yao Geng,
Wang, Zhu San,
Chang, Yueh Chi,
Chang, Zhi Yang,
APEX ACTION INVESTMENT
LIMITED		 Chen, Hong Wen,
Yang, Jheng Ren,
Hsu, Jung Hui,
Tsai, Fu Tsan,
Zhao, Yao Geng,
Wang, Zhu San,
Chang, Yueh Chi,
Chang, Zhi Yang,
APEX ACTION INVESTMENT
LIMITED		 Chen, Hong Wen,
Yang, Jheng Ren,
Hsu, Jung Hui,
Tsai, Fu Tsan,
Zhao, Yao Geng,
Wang, Zhu San,
Chang, Yueh Chi,
Chang, Zhi Yang,
APEX ACTION INVESTMENT
LIMITED

－23－

(2)Remuneration to the General Manager and Deputy General Manager

Unit: NT$ Thousands

Title Name Remuneration (A) Remuneration (A) Retirement
pension (B)		 Retirement
pension (B)		 Bonus and special
allowance (C)		 Bonus and special
allowance (C)		 Distribution of retained Earnings as
remuneration to employees (D)		 Distribution of retained Earnings as
remuneration to employees (D)		 Distribution of retained Earnings as
remuneration to employees (D)		 Distribution of retained Earnings as
remuneration to employees (D)		 The sum of A, B, C,
and D as a percentage
of after-tax net profit
(%)		 The sum of A, B, C,
and D as a percentage
of after-tax net profit
(%)		 Remunerat
ion from
invested
businesses
other than
the
subsidiarie
s or the
parent
company
Gemtek Consolidat
ed
Subsidiari
es of
Gemtek		 Gemtek Consolid
ated
Subsidia
ries of
Gemtek		 Gemtek Consolidat
ed
Subsidiari
es of
Gemtek		 Gemtek Consolidated
Subsidiaries of
Gemtek		 Gemtek Consolidat
ed
Subsidiari
es of
Gemtek
Cash Stock Cash Stock
General
Manager		 Chen, Hong
Wen		 31,916

 32,757 718 718 - - - - - - 2.38 2.38 None
Senior
Deputy
General
Manager		 Tsai, Fu Tsan
Senior
Deputy
General
Manager		 Liao, Hsi An
Senior
Deputy
General
Manager		 Hsu, Jung Hui
Chief
Financial
Officer		 Lin, Chih
Hong
Chief
Operating
Officer		 Lin, Tien Jin
Chief
Technology
Officer		 Yeh, Fu Ming
Chief Sales
Officer		 Cheng, Guang
Ming
Chief Sales
Officer		 Cheng, Guang
Ming

－24－

Note 1: The 2020 distribution of retained earnings was approved by the board of directors on March 25, 2021, to distribute NTD232,646,248 as remuneration to employees, and the matter shall be submitted to reported at the Shareholders’ Meeting.

Note 2: An amount equivalent to 6% of employee salary for retirement pension is deposited in an account administered by the Bureau of Labor Insurance

in accordance with the law. There was no actual retirement payment in the most recent year.

Note 3: On March 25, 2021, the newly appointed general manager was approved and announced by the board of directos.

－25－

Remuneration Scale for the General Manager and the Deputy General Manager

The Range of Remuneration Name of the General Manager and the Deputy General Manager Name of the General Manager and the Deputy General Manager
Gemtek Consolidated Subsidiaries of Gemtek
Less than NT$2,000,000 Tsai, Fu Tsan Tsai, Fu Tsan
NT$2,000,000 ~ NT$4,999,999 Li, Rong Chang
Liao, Hsi An,
Hsu, Jung Hui,
Lin, Tien Jin		 Li, Rong Chang
Hsu, Jung Hui,
Lin, Tien Jin
NT$5,000,000~ NT$9,999,999 Chen, Hong Wen,
Lin, Chih Hong
Yeh, Fu Ming,
Cheng, Guang Ming		 Chen, Hong Wen,
Su, Hui Hao,
Yeh, Fu Ming,
Cheng, Guang Ming,
Liao, Hsi An,
NT$10,000,000~ NT$14,999,999 - -
NT$15,000,000~ NT$29,999,999 - -
NT$30,000,000~ NT$49,999,999 - -
NT$50,000,000~ NT$99,999,999 - -
Greater Than or Equal to NT$100,000,000 - -
Total Chen, Hong Wen,
Li, Rong Chang
Tsai, Fu Tsan,
Liao, Hsi An,
Hsu, Jung Hui,
Lin, Chih Hong,
Lin, Tien Jin
Yeh, Fu Ming,
Cheng, Guang Ming		 Chen, Hong Wen,
Li, Rong Chang
Tsai, Fu Tsan,
Liao, Hsi An,
Hsu, Jung Hui,
Lin, Chih Hong,
Lin, Tien Jin
Yeh, Fu Ming,
Cheng, Guang Ming

－26－

(4) Employee Compenstion to the Management Team

As of April30,2021 As of April30,2021 As of April30,2021 As of April30,2021 As of April30,2021
Title Name Employee
Compenstion – in
Stock
(NT$Thousands)		 Employee
Compenstion – in
Cash
(NT$Thousands)		 Total
(NT$Thousands)		 The total amount
as a percentage of
net income after
tax (%)
Management Team Chief
Executive
Officer		 Chen,
Hong Wen		 - 3,426 3,426 0.25
Senior
Deputy
General
Manager		 Tsai, Fu
Tsan
Senior
Deputy
General
Manager		 Liao, Hsi
An
Senior
Deputy
General
Manager		 Hsu, Jung
Hui
Chief
Financial
Officer		 Lin, Chih
Hong
Chief
Operating
Officer		 Lin, Tien
Jin
Chief
Technology
Officer		 Yeh, Fu
Ming
Chief Sales
Officer		 Li, Rong
Chang
Chief Sales
Officer		 Cheng,
Guang
Ming

Note : The 2020 distribution of retained earnings was approved by the board of directors on March 25, 2021, to distribute

NTD232,646,248 as remuneration to employees.

(5) Comparison analysis of the current and previous fiscal years regarding the percentage of total remuneration paid to directors, supervisors, the general manager, and deputy general manager by the Company and by affiliated companies that are included in the consoliated financial statements to the net income, and its correlation with the remuneration payment policies, standards, and portfolios, the procedures for determining the remuneration, operation performance, and potential risks described in detail:

  1. The percentage of total remuneration paid to directors, supervisors, the general manager, and deputy general manager by the Company and by affiliated companies that are included in the consoliated financial statements to the net income as of current and previous fiscal years: 2018 – (146.29)% 2019 – 20.57% 2020 – 4.83%

－27－

  1. Correlation with the remuneration payment policies, standards, and portfolios, the procedures for determining the remuneration, operation performance, and potential risks:

Pursuant to Article 20 of the Article of Incorporation, the Company shall, after deducting the employee bonuses and renumeration benefits of directors from the current year's pre-tax benefits, allocate 13.5% for employee profit sharing bonuses and 1.8% for the renumeration benefits of directors and supervisors. Employee profit sharing bonuses are to be granted in the form of securities or cash to qualified company employees, which the occurrences are to be mentioned and reported in the shareholders’ meeting. The Company shall not distribute bonuses in the event of accumulated losses

Pursuant to Article 20-1 of the Article of Incorporation, upon the closing of the Company's annual financial accounts, if surplus profit is determined, the Company shall first pay taxes and make up for all past losses; then, set aside a 10% legal capital reserve and a special capital reserve in accordance with applicable laws, rules and regulations. The remainder of the profits after deducting the foregoing shall be allocated as shareholders' dividends, subject to proposal by the board of directors and approval by shareholders at a shareholders' meeting.

Considering the current development status of the Company and the overall conditions of the industrial environment, other factors such as the Company's financial measures that might influence the financial structure and profit earnings are the key elements for determining the amount and type of surplus distributed. Bearing in mind the Company’s capital requirements, long-term financial goals, and shareholders’ demands for liquidity, the distribution of surplus profit shall be made preferably by way of cash and stock dividends. The distribution of cash dividends per year shall not be lower than 10% of the aggregate amount of the stock dividends and cash dividends distributed for that particular year.

Potential Risks:

The Company's remuneration is established upon a performance-related pay standard, which evaluates the overall performances of the company's operational outcomes, individual managers’ achievements and contributions, and other factors that may influence the remuneration structure. If performances are recognized and approved by management, the fixed and variable rewards paid shall fully reflect the performances of either individuals or teams.

－28－

IV. Corporate Governance

(1) Operation Status of the Board of Directors

The Board of Directors held 8 [A] meetings during the current fiscal year. The attendance record of the Board of Directors is shown below:

Title Name
(Note 1)		 Attendance
In Person
[B]		 Attendance
by Proxy		 Attendance Rate
(%)
(B/A )
(Note2)		 Remarks
Chairman Chen, Hong Wen 8 - 100%
Director Yang, Jheng Ren 8 - 100%
Director Tsai, Fu Tsan 7 - 88%
Director Chang, Yueh Chi 5 - 63%
Director Hsu, Jung Hui 8 - 100%
Director APEX ACTION
INVESTMENT LIMITED
Representative: Luo, Wen Yi		 8 - 100%
Independent
Director		 Zhao, Yao Geng 8 - 100%
Independent
Director		 Wang, Zhu San 8 - 100%
Independent
Director		 Chang, Zhi Yang 8 - 100%

Note 1: For directors and supervisors acting as the representatives of institutional shareholders, this section shall indicate the names of the institutional shareholders Note 2:

(1)If any of the directors or supervisor resigns before the end of the year, it is required to spec ify the date of his/her resignation in the remarks column, The actual attendance rate(%) should be calculated by the actual number of meetings he/ she attended during his/her term at the Board of Directors.

(2)If there is any re-election of the Board before the end of the year, both the information of current and former directors and supervisors should be filled in the table, and the status and the re-election date should also be specified in the remarks column, The actual attendance rate (%) should be calculated by the actual number of meetings he/she attended during his/her term at the Board of the Directors.

Other matters to be recorded:

－29－

  1. Where any of the following circumstances occurs to the meeting of the Board of Directors, the date, term and proposal of the meeting as well as the opinions of all the independent directors and Company’s action on these opinions shall be described:

  2. (1) On issues stated in Article 14-3 of the Securities and Exchange Act: None.

  3. (2) In addition to the matters mentioned ab ove, any independent director expresses dissent or reservation with respect to a resolution of the Board of Directors, and such dissent or reservation is recorded in the minutes or a written statement: None.

  4. If the directors have personal interest confl icts to the proposal and are required for recusal, please specify the name of the directors, proposal, reason and the resolution: None

  5. Please find details regarding the evaluation frequency, scope, method, and content for Status of Board Evaluation in the following chart

  6. An evaluation of targets for strengthening of the functions of the board during the current and immediately preceding fiscal years, and measures taken toward achievement thereof; and any other matters that require reporting (i.e. establish audit committee, improve information transparency) : (1) An audit committee and a remuneration committee was set up by the Board of Directors to assist on supervisory duties

  7. (2) The remuneration committee is composed of 3 independent directors, eff ective on December 27, 2011.

  8. (3) The audit committee is composed of 3 independent directors, effective on June 18, 2019.

  9. (4) To facilitate the implementation of corporate governance, the company has appointed Mr. Chih-Hong Lin, the Chief Financial Officer of the company as the head of corporate governance department. The corporate governance department, in accordance with the law, will be overlooking matters related to the board of directors, audit committee, remuneration committee, and shareholders; assisting newly appointed directors adapt to the the new role as well as the arrangement of advanced education; providing directors with information relevant to business affairs; and provide guidance to regulatory compliance.

Status of Board Evaluation

Frequency Period Scope Method Scope of Evaluation
Once a year 2020/1/1~
2020/12/31		 Evaluation
on
the
performance of the
Board,
individual
Board members and
Functional
Committee members.		 Self-evaluation of the
Board,
Self-evaluation
of the Board member,
Self-evaluation of the
functional committee		 Please see Note 1.

－30－

Note 1: The scope of the evaluations shall include at least the following items.

  • 1.Performance evaluation of the Board:

  • (1)The Directors’ level of participation in the Company's operations

  • (2)The quality of the Board's decision -making

  • (3)The composition and structure of the Board

  • (4)The selection and continuous training of Directors

  • (5)Internal control

  • Performance evaluation of functional committee:

  • (1)The committee members’ level of participation in the Company's operations

  • (2)The committee members’ understanding in responsibilities

  • (3)The quality of decision -making of the committee members

  • (4)The composition of functional committees and the selection of members

  • (5)Internal control

  • Performance evaluation of individual Directors:

  • (1)The Company's objectives and tasks

  • (2)Directors' understanding in responsibilities

  • (3)Directors’ level of participation in the Company's operations

  • (4)Internal relationship management and communicatio n

  • (5)Professional and continuous education of Directors

  • (6)Internal control

(2) Operation Status of the Audit Committee

The main annual duties of Audit Committee are summarized as follows:

  1. Financial report.

  2. Internal Control Policies

  3. Adoption of procedures for handling material financial or business

  4. activities, such as acquisition or disposal of assets, derivatives trading, loans of funds to others, and endorsements or guarantees for others.

  5. Matters in which a director is an interested party.

  6. Derivatives trading of a material nature.

  7. Loans of funds, endorsements, or provision of guarantees of a material nature.

  8. The offering, issuance, or private placement of equity-type securities.

  9. The hiring or dismissal of a certified public accountant and their compensation.

  10. The appointment or discharge of a financial, accounting, or internal audit officer.

  11. Other matters of material nature as prescribed by the Company or competent authority.

－31－

The Audit Committee held 5[A] meetings during the current fiscal year. The attendance record of the Independent Directors is shown below:

Title Name
(Note 1)		 Attendance In
Person [B]		 Attendance Rate (%)
(B/A )		 Remarks
Chairperson Wang, Zhu San 5 100%
Member Zhao, Yao Geng 5 100%
Member Chang, Chih Yang 5 100%

Note :

(1)If any of the independent directors resigns before the end of the year, it is required to specify the date of his/her resignation in the remarks column, The actual attendance rate(%) should be calculated by the actual number of meetings he/ she attended during his/her term at the Audit Committee.

(2)If there is any re-election of the Board before the end of the year, both the information of current and former independent directors should be filled in the table, and the s tatus and the re-election date should also be specified in the remarks column, The actual attendance rate (%) should be calculated by the actual number of meetings he/she attended during his/her term at the Audit Committee.

Other matters to be recorded:

  1. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified:

( 1 ) The items listed in Article 14-5 of Securities and Exchan g e Act.

Audit
committee
Sessions of
Board and date
of meetings		 Motion Resolution made by
the Audit Committee		 Follow-up actions
made by the
Company
2020.03.10 1. 2019 business reports and financial statements.
2. Ratification of 2019 Internal Control Statement
3. Amendment of Internal Control Policy.
4. Securiy listing application of subsidiary company AMPAK Technology Inc.
5. Replacement of of CPA beginning on 2020 Q1.
6.External
Auditor
Assessment Report
regarding
Independence and
Competency		 The motions are
passed by all Audit
Committee members.		 Resolved and
approved by the
board of directors.
2020.04.28 1.2020 Q1 financial statements.
2.Distribution of 2019 profits.
3.Implementation of 2019 cash distribution derived from capital reserve
4.Issuance of new employee restricted stock units.
5.Stock release plans for AMPAK Technology Inc.		 The motions are
passed by all Audit
Committee members.		 Resolved and
approved by the
board of directors.
2020.06.17 1.Stock listing price and subscription periods for AMPAK Technology Inc. The motions are Resolved and

－32－

passed by all Audit
Committee members.		 approved by the
board of directors.
2020.08.07 1.2020 Q2 financial statements.
2.Disposal of Mainland investment in Gemtek Electronics (Suzhou) Co. Ltd.
3.Issuance of new employee restricted stock units.		 The motions are
passed by all Audit
Committee members.		 Resolved and
approved by the
board of directors.
2020.10.30 1.2020 Q3 financial statements.
2.Draw up 2021 Auditing Plan
3.Appointment of CPA for 2020 financial statement		 The motions are
passed by all Audit
Committee members.		 Resolved and
approved by the
board of directors.
2021.03.25 1.2020 business reports and financial statements.
2. 2020 “Assessment of the Effectiveness of the Internal Control System” and
“Internal Control Statement”.
3.Ratification of derivatives trading.
4.External
Auditor
Assessment Report
regarding
Independence and
Competency
5. Long-term investment (PYRAS Technology Inc.)
6. Distribution of 2020 profits.
7. Implementation of 2020 cash distribution derived from capital reserve		 The motions are
passed by all Audit
Committee members.		 Resolved and
approved by the
board of directors.
2021.05.06 1.2021 Q1 financial statements.
2.Annual bonus and rewards plan for managers.		 The motions are
passed by all Audit
Committee members.		 Resolved and
approved by the
board of directors.

(2) Except for the proposal mentioned above, other resolutions which are not approved by Audit Committee but are approved by two -third of directors: None.

  1. If there are independent directors’ avoidance of motions in conflict of interest, the directors’names, contents of motion, causes for avoidanc e and voting shold be specified:None

  2. Communications between the independent directors, the Company’s Chieg Internal Audit or and CPAs (e.g.the items, methods and results of audits of corporate finance or operations, etc.)

(1) The Company Chief Internal Auditor communicates with independent directors of the Audit Committee through the audit report on a monthly basis. Through the Audit Meeting, the execution status of audit procedures is reported at least once every quarter. In case of irregularities, such matters will be reported to the members of the Audit Committee in a timely manner.

(2) In the quarterly Audit Committee Meeting, the Company’s CPA reports to independent directors the financial affairs, audit results, internal control, IFRSs revisions, impacts on the Company, and relevant regulatory requirements of the Company and its overseas subsidiaries. The CPA communicates whether the abovementioned should affect the way accounting items are recognized or adjusted..

(3)Audit supervisors, CPAs, and independent directors should communicate directly as much needed as possible.

－33－

(3) Implementation Status of Corporate Governance

Corporate Governance Implementation Status and Deviations from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies

Evaluation Item Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies
Yes No Summary
I.Has the Company established and disclosed the Corporate
Governance Best practice Principle based on the Corporate
Governance Best Practice Principles for TWSE/TPEx Listed
Companies?		 V In compliance with the Corporate Governance Best Practice Principles for
TWSE/TPEx Listed Companies, the Company has established the
"Corporate Governance Best-Practice Principles” upon the approval of the
Board of Directors, and has posted the document on the Company's website
and MOPS .



None
II. Shareholding structure and shareholder’s equity
(I)
Does the Company have an internal procedure and act
accordingly for handling of the suggestions, doubts,
disputes, and lawsuits of the shareholders?
(II)
Does the Company have the list of major shareholders who
have ultimate control over the company?
(III) Does the Company establish and implement a firewall
mechanism to control the risks between the Company and
the affiliates?
(IV) Does the Company have internal policies to prohibit insiders
from trading securities with undisclosed information ?		 V
V
V
V		 (I) The Company has set up relevant departments i.e.investor relations,
corporate actions, legal, to properly handle the suggestions,
doubts, disputes, and lawsuits of the shareholders.
(II) The Company regularly reviews the shareholding status of the board,
managers, and the list of major shareholders who holds more than
10% of the shares.
(III) The company has established risl control measures within its internal
control operation procedures.
(IV) The Company has formulated the "Procedures for Handling Material
Inside Information" .





None
None
None
None

－34－

Evaluation Item Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies
Yes No Summary
III.Composition and responsibilities of the Board of Directors
(I) Does the Board develop and implement a diversified policy for
the composition of its members?
(II)Does the Company voluntarily establish other functional
committees in addition to the Remuneration Committee
and the Audit Committee?
(III)Does the Company establish a standard to measure the
performance of the Board annually, report the results of
the performance evaluation to the Board, and use it as a
reference for individual directors’ remuneration and
nomimation?		 ˇ
ˇ
ˇ
ˇ		 (I)
According to the Company's "Corporate Governance Best-Practice
Principles" , the company has developed and implemented a
diversified policy for the composition of its Board of Directors.
The members of the Board have a fair representation of people of
different genders, professional experience and competencies.
(II)
The functional committees of the Company are: 1.Renumeration
Committee (Est.2011) . 2.Audit Committee (Est.2019). The
establishment of additional functional committees is dependent on
the company’s overall operational performances and strategies.
(III) On Mar. 10, 2020, the Company has passed the motion for the
establishment of the “Procedures for Performance Evaluation of
Board of Directors” , which clearly states the frequency, time
frame, evaluation criteria, the department in charge of conducting
the internal evaluation, procedures, etc. for carrying out the
evaluation process. The 2020 Performance Evaluation of the
Board of Directors is mainly centered on “Board Self-Evaluation”
and “Evaluation of Board Effectiveness”. As per the 2020
Performance Evaluation, the results indicate that the overall
performances of the Board of Directors and functional committees
None
None
None

－35－

Evaluation Item Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies
Yes No Summary
(IV)Does the Company regularly evaluate the independence of
CPAs?		 were well-achieved and effective.
(IV) The Company’s Finance Department performed an annual
independence assesement of CPAs, and has submitted the results
to the Board of Directors for resolution on March 25, 2021.(Please
refer to page 30-32)
None
IV.Does the TWSE/TPEx listed company have a designated
corporate governance unit or personnel in place to address corporate
governance affairs ( including, but not limited to, the provision of
relevant business information to attending directors and supervisors,
ensure regulatory compliance, assist directors and supervisors with
matters related to board meetings and shareholders meetings as
required by law, and prepare minutes for board meetings and
shareholders meetings)?

ˇ		 (I)Corporate Governance Personnel: Chief Finance Officer
(II)Main Duties: Responsible for handling corporate governance affairs,
including the provision of relevant business information to attending
directors and independent directors, ensure regulatory compliance,
assist directors and supervisors with matters related to board
meetings and shareholders meetings as required by law, company
registration affairs, and prepare minutes for board meetings and
shareholders meetings		 None

－36－

Evaluation Item Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies
Yes No Summary
V.Did the Company establish effective communication channels
with stakeholders, construct a designated section on its website to
address issues raised by stakeholders (including but not limited to
shareholders, employees, customers, and suppliers) , i.e. Corporate
Social Responsibility, with appropriate responses?		 ˇ The Company has various communication channels in place to facilitate
stakeholder engagement and management, e.g. investment relations,
corporate actions team, legal department. The Company has constructed a
designated section on its website to address issues raised by stakeholders,
i.e. Corporate Social Responsibility, with appropriate responses.		 None
VI.Does the Company commission a professional registrar to deal
with the affairs of the shareholders’ meeting?		 ˇ The Company has appointed SinoPac Securities Corporation to deal with the
affairs of the shareholders’ meeting.
None
VII. Information disclosure
(I)Does the Company have a website to disclose the financial and
corporate governance information of the Company?
(II)Does the Company adopt other information disclosure methods
(such as setting up an English website, designating a person
for collection and disclosure of information, implementing a
spokesperson system, and publishing the meeting agenda of
investor conferences on the website)?
(III) Does the company announce and report the annual financial
report within two months after the end of the fiscal year, and
has announced and reported Q1, Q2, Q3 financial reports and
the operating status of each month prior to the prescribed		 ˇ
ˇ
ˇ		 (I)
The Company discloses its financial and corporate governance
information on the company website and TWSE MOPS.
(II)
The Company’s investor relations webpage is available in both
Chinese and English. A website administrator is responsible for
updating and disclosing the Company’s information on the
website in a timely manner. The Company has employed a
spokesperson and deputy spokesperson to represent the company.
The meeting agenda of the Institutional Investor Conference is
posted on the Company’s website.
(III) The Company has announced and reported its financial report within
two months after the end of the fiscal year, and has announced and
reportd Q1, Q2, Q3 financial reports and the operating status of
None
None
None

－37－

Evaluation Item Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies
Yes No Summary
deadline? each month prior to the prescribed deadline.
VIII. Does the Company have additional information that may
further explain its corporate governance principles (including
but not limited to the rights and care of employees, investor
relationship, supplier relationship, rights of stakeholders,
board member training, implementation of risk management
policies and measurement criteria, implementation of
customer management policies and liability insurance
coverage for directors and supervisors)?		 ˇ (1) Employee Rights: The Company understands the importance of labor
management, and spares no effort in caring for its employees. For
more information, please refer to “Labor Relations” (page 82-85) and
the Company’s "Corporate Social Responsibility Report".
(2) Investor Relations and Stakeholders: The Company has constructed a
designated section on its website to address issues raised by
stakeholders, i.e. Corporate Social Responsibility, with appropriate
responses.
(3) Suppliers: The Company adopts a coexisting business model to share
profit and sustain good relationship with all of its business partners.
(4) Board Member Training: Directors are obliged to participate in advanced
training courses arranged by the Company, and are also encouraged to
take courses outside the Company according to personal
requirements. To know more about the training courses, please refer
to “Board Member Training” (page 33).
(5) Risk Management Policies and Evaluation:
The Company’s Internal Control Plan and policies have been
approved by the Board of Directors and resolved by the Shareholders'

None

－38－

Evaluation Item Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from the Corporate
Governance Best Practice
Principles for TWSE/TPEx
Listed Companies
Yes No Summary
meeting. Internal audit personnel shall report audit results and
findings to the Board on a quarterly basis.
(6) Customer Relationship Management : Gemtek values its customers and
strives to provide high-quality products to meet customer
requirements. We make sure that customer relationships are
well-maintained through effective communication, creating long-term
success in business partnership.
(7) Directors and Officers Liability Insurance: The Company has purchased
liability insurance for its directors and managers.
(IX)Please describe the Company’s improvement measures and progress in response to the evaluation results published by the Corporate Governance Center of Taiwan Stock Exchange
Corporation:
(1) Performance Evaluation of Board of Directors: Implemented performance evaluation in year 2020.
(2) Report “Directors and Officers Liability Insurance” to the Board of Directors: The Directors and Officers Liability Insurance has long been part of the Company’s corporate governance and
business contingency plan. The insurance policy has been reiterated and reported to the Board on October 30, 2020.

Note 1: Please fill-in all relevant fields with complete descriptions.

－39－

External Auditor Assessment Report regarding Independence and Competency

I. Statutory Provisions

(I)Pursuant to Article 29 of the "Corporate Governance Best Practice Principles for TWSE/ TPEx Listed Companies", the Company should select professional, responsible and independent CPA to regularly check the Company's financial status and internal control.

(II)The Company assesses the CPAs for their independence on a regular basis (once a year). If the Company has not changed its CPAs for seven consecutive years or is subject to disciplinary action or damage to its independence, the Company shall consider whether it is necessary to change the CPAs and report the results to the board of directors.

(III) According to No.46 Taiwan Generally Accepted Accounting Principles – Quality Control Standards Article 68, the chief accountant or lead engagement partner is subject to rotation after the end of a certain assignment period. During the years following the rotation, he or she may not provide any services to the firm until a period of two years has elapsed.

II. Assessment Results:

(I) CPA Audit Opinions over the past five years:

Year Audit Firm CPA Audit Opinions
2016 Deloitte & Touche Yang, Ching Cheng
Gong, Zhe Li		 Unqualified opinion
2017 Deloitte & Touche Yang, Ching Cheng
Gong, Zhe Li		 Unqualified opinion
2018 Deloitte & Touche Yang, Ching Cheng
Gong, Zhe Li		 Unqualified opinion
2019 Deloitte & Touche Yang, Ching Cheng
Gong, Zhe Li		 Unqualified opinion
2020 Deloitte & Touche Yang, Ching Cheng
Yang, Jing Ting		 Unqualified opinion
  • (II) CPA Relationship Evaluation

(1) The evaluation is conducted in accordance with Code of Ethics for Professional Accountants No.10 - Integrity, Objectivity and Independence. The results are listed as follows:

Independence In compliance with
auditor
independence
standards and
requirements

－40－

Independence In compliance with
auditor
independence
standards and
requirements		 In compliance with
auditor
independence
standards and
requirements
Item Description Yes No
1 The accountants should avoid and should not accept the engagement when they may be involved in
anydirect or material indirect interests which mayimpair their impartialityand independence.		 ν
2 The audit or review of financial statements provides a wide range of potential statement users with
a high or moderate but not absolute confidence herein. In addition to maintaining independence in
fact, independence in appearance is critical as well. Therefore, the members of audit team, and the
partners of the accounting firm and any of its affiliates must always maintain independence with
his/their clients.		 ν
3 A professional accountant shall demonstrate the highest sense of integrity, maintain objectivity,
and adheres to the spirit of independence when serving the public interest.
(1)Integrity: A professional accountant shall perform all professional responsibilities with the
highest sense of integrity.
(2)Objectivity: A professional accountant shall maintain objectivity and be free of conflicts of
interest in discharging professional responsibilities.
(3)Independence: A professional accountant in public practice should be independent in fact and
appearance when providing auditing and other attestation services.		 ν
4 Independence is defined to include integrity and objectivity. Lack of independence may impair the
auditor’s integrity, reliability, and objectivity.		 ν
5 Auditor independence may be compromised by threats to the fundamental principles
-- self-interest, self-review, advocacy, familiarity and intimidation.		 ν
6 Self-interest threat occurs when a firm or a person on the audit engagement team could benefit
from a financial interest in, or other self-interest conflict with, a client. Examples of circumstances
that may create a self-interest threat include, but are not limited to:
(1) A direct financial interest or material indirect financial interest in a client.
(2) A loan or guarantee to or from an audit client or any of its directors or officers.
(3) Undue concern about the possibility of losing the audit engagement.
(4) Having a close business relationship with an audit client.
(5) Potential employment with an audit client.
(6) Contingent audit fees related to the audit case.		 ν

－41－

Independence In compliance with
auditor
independence
standards and
requirements		 In compliance with
auditor
independence
standards and
requirements
7 Self-review threat occurs when accountants perform reports or judgments made in non-audit
service cases, and such reports or judgments serve as an important basis for reaching conclusions
in the process of checking or reviewing financial information, or when a person on the engagement
team was previously an officer or director of the audit client, or was in a position to exert
significant influence over the subject matter of the assurance engagement. Examples of
circumstances that may create a self-review threat include, but are not limited to:
(1) The members of the audit engagement team being, or having recently served as directors,
supervisors, managers, or was in a position to exert significant influence over the subject matter of
the engagement within the past two years.
(2) Rendering non-audit services to clients with items that may directly impact the audited cases.		 ν
8 Advocacy threat occurs when the auditor is asked to promote or represent their client’s opinion to
the point where objectivity is potentially compromised. Examples of circumstances that may create
an advocacy threat include, but are not limited to:
(1)Dealing in, or being a promoter of, shares of an audit client.
(2) Acting as an advocate for or on behalf of an audit client in litigation or in resolving disputes
with thirdparties.		 ν
9 Familiarity threat occurs when, by virtue of a close relationship with an audit client, its directors,
officers or employees, a firm or a person on the engagement team becomes too sympathetic to the
client’s interests. Examples of circumstances that may create a familiarity threat include, but are
not limited to:
(1) A person on the engagement team having an immediate or close family member who is an
officer or director of the audit client or in a position to exert significant influence over the subject
matter of the engagement;
(2) A former partner of the firm, within one year before dismissal, serves as an officer or director
of the audit client or in a position to exert significant influence over the subject matter of the
engagement;
(3) The acceptance of gifts or hospitality from the audit client, its directors, officers or employees,
unless the value thereof is clearlyinsignificant.		 ν

－42－

==> picture [488 x 372] intentionally omitted <==

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

In compliance with
auditor
Independence independence
standards and
requirements
Intimidation threat occurs when a person on the engagement team may be deterred from acting
objectively and exercising professional skepticism by threats, actual or perceived, from the
directors, officers or employees of an audit client. Examples of circumstances that may create an
intimidation threat include, but are not limited to:
10 ν
(1) Accountants are required to accept improper management choices in accounting policies or
improper disclosure in financial statements.
(2) The application of pressure to inappropriately reduce the extent of work performed in order to
reduce or limit fees.
The firm, or members of the engagement team have an ongoing responsibility to maintain
professional independence by taking into account the context in which they practise, the threats to
11 ν
independence and the safeguards which may be available to eliminate the threats or reduce them to
an acceptable level.
If the firm, or members of the engagement team determine that the identified threats to compliance
12 with the fundamental principles are not at an acceptable level, he/she shall address the threats by ν
eliminating them or reducing them to an acceptable level.
If no measures are taken or the measures adopted cannot effectively reduce the impact on
13 independence or reduce to an acceptable level, the accountant should refuse to execute the audit ν
case to maintain its independence.
----- End of picture text -----

(2) Auditor Competency

Competency Qualification Qualification
Item Description Yes No
1 Holds a CPA license to practice public accounting. ν
2 No penalty imposed by the competent authority or the CPA Associations R.O.C.(Taiwan), or under
the provisions of Paragraph 3, Article 37, of the Securities and Exchange Act.		 ν
3 Has a general understanding of the client’s business. ν
4 Review financial reports and prepare audit worksheets in accordance with the “Generally Accepted
Auditing Standards” and the “Regulations Governing Auditing and Attestation of Financial
Statements by Certified Public Accountant”.		 ν
5 Uses the CPA title to benefit from acts of unfair competition. ν

－43－

III. Conclusion:

Based on the above analysis, we conclude that CPA Ching Cheng Yang and CPA Jing Ting Yang of Deloitte & Touche, who were proposed to be retained for the audit of the Company's 2021 annual financial statements, are considered independent and competent. This matter is submitted to the board of directors for resolution.

－44－

2020 Board Member Advanced Training Courses

Title Name Date Organizer Course Name Hours
Director Chen, Hong Wen 2020/12/18
 Taiwan Corporate Governence Association (1) Board of Directors or Listed Companies and Shareholders
Meeting In Practice
(2) Inside Trading in Practice		 6 Hours
Director Tsai, Fu Tsan 6 Hours
Director Yang, Jheng Ren 6 Hours
Director Chang, Yueh Chi 6 Hours
Director Hsu, Jung Hui 6 Hours
Legal Entity
as Director		 APEX ACTION
INVESTMENT LIMITED
Representative: Luo, Wen
Yi		 6 Hours
Independent
Director		 Wang, Zhu San 6 Hours
Independent
Director		 Chang, Chih Yang 6 Hours
6 Hours
Independent
Director		 Zhao, Yao Geng 6 Hours
6 Hours

－45－

2020 Manager Advanced Training Courses

Title/Name Date Organizer Course Name Hours
Senior
Deputy
General
Manager/Liao, Hsi An
2020/11/25		 Corporate Operation Association Business and M&A strategies of Taiwanese Businessmen from the
Global Political and Economic Perspective		 3 Hours
2020/12/08 How to Resist Hostile Takeovers and the Responsibilities of the Head 3 Hours
CFO/Lin, Chih Hong 2020/12/03 Accounting Research and Development Foundation SEC Advanced Courses for Accounting Managers 6 Hours
2020/12/04 6 Hours
Audit Officer/Huang,
LingYi		 2020/09/09 Accounting Research and Development Foundation Analysis of Business Cases 3Hours
2020/10/13 Common Corporate Governance Errors and Relevant Laws 3 Hours
2020/11/03 Regulatory Compliance Audit Cases on Shareholders Meeting 3 Hours
2020/12/10 Fraudulent Financial Statements and Methods to Spot Key Information 3 Hours

－46－

(IV)Composition, Responsibilities, and Operations of the Remuneration Committee

(1) Professional Qualifications and Independence Analysis of the Remuneration Committee

Title
（Note 1）		 Qualificati
ons
Name		 Work experience of more than 5 years
and the following professional
qualification		 Work experience of more than 5 years
and the following professional
qualification		 Work experience of more than 5 years
and the following professional
qualification		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Compliance with independence
requirements（Note 2）		 Number of
other
public
companies
where the
member
also serves
in a
remunerati
o n
committee



Remarks
(Note 3)

Lecturer or
higher
position at a
public or
private
university/co
ll ege in the
department
of
commerce,
law, finance,
accounting
or other
fields related
to the
business
Judge, public
prosecutor,
attorney,
certified
public
accountant, or
other
professional
or technical
specialists
who have
passed a
national
examination
and received a
certificate in a
profession
necessary for
our business

Work
experience
in
commerce,
law, finance,
accounting
or any other
fields
necessary
for our
business
1		 2 3 4 5 6 7 8 9 10
Independent
Director
Zhao, Yao
Geng		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Independent
Director
Wang,
Zhu San		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 0
Independent
Director
Chang,
Chih Yang
✓		 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 1

Note 1: Please enter Director, Independent Director, or Others to specify the Title.

Note 2: Place a “ ” in the box below if the member met the following conditions at any time during active duty and two years prior to the date of appointment

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

(2) Not a director or supervisor of the company or any of its affiliates. (The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

－47－

(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held

by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders.

(4) Not a manager of (1), or spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of (2) or (3).

(5) Not a director, supervisor, or employee of a institutional shareholder that directly holds 5% or more of the total number of issued shares of the Company, or ranks as of its top five shareholders, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. (The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

(6) Not a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: a director, supervisor, or employee of that other company (The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.).

(7) Not the chairperson, president, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: a director (or governor), supervisor, or employee of that other company or institution. (The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

(8) Note a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. (The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company in the most recent 2 years with an accumulated service compensation of less than NT$500 thousand, or a spouse thereof. This restriction does not apply to any member of the Remuneration Committee, public tender offers Audit Committee or mergers and acquisition special committee, who exercises powers pursuant to relative regulations of the Securities and Exchange Act and Business Mergers And Acquisitions Act.

(10)The provisions of Article 30 of the Company Act are not applicable.

  • (2) Information of the Operation of the Remuneration Committee

Responsibilities, and Operations of the Remuneration Committee

  • (1)Evaluation and approval of director’s remuneration

  • (2)Review manager performances as well as the compensation policies, systems, standards and structure.

  • (3)Evaluation and approval of manager’s compensation.

Attendance at Remuneration Committee Meetings

－48－

I.Our Remuneration Committee is composed of 3 members.

II.The term of office of the current Remuneration Committee is from Jun. 26, 2019 to Jun. 17, 2022. A total number of 2 remuneration committee meetings (A) were being held in the current fiscal year. The attendance of committee members is as follows:

Title Name Actual
Attendance(B)		 Number
of
meetings
in
attendanc
e
by
proxy		 Actual
attendance
rate
(%)(B/A)
(Note)		 Remarks
Convener Zao, Yao
Geng		 2 - 100%
Member Wang, Zhu
San		 2 - 100%
Member Chang, Chih
Yang		 2 - 100%
Other matters to be recorded:
1. If the Board of Directors decline to adopt or modify a recomm endation of the
remuneration committee, it should specify the date of the meeting, session, content of
the motion, resolution by the Board of Directors, and the Company’s response to the
remuneration passed by the Board of Directors exceed the recommendati on of the
remuneration committee, the circumstances and cause for the difference shall be
specified: None.
2. Resolutions of the remuneration committee objected to by members or subject to a
qualified opinion and recorded ro declared in writing, the date of t he meeting, session,
content of the motion, all members’ opinions and the response to members’ opinion
should be specified: None.

Note:

(1)If any of the Remuneration Committee member resigns before the end of the year, it is required to specify the date of his/her resignation in the remarks column, The actual attendance rate(%) should be calculated by the actual number of meetings he/ she attended during his/her term at the Remuneration Committee.

(2)If there is any re-election of the Remuneration Committee before the end of the year, both the information of current and former directors and supervisors should be filled in the table, and the status and the re-election date should also be specified in the remarks column, The actual attendance

－49－

rate (%) should be calculated by the actual number of meetings he/she attended during his/her term at the Remuneration Committee.

－50－

（V）Corporate Social Responsibility and Deviations from “The Corporate Social Responsibility Best-Practive Principles fo TWSE/TPEx Listed Companies”

Evaluation Items Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from
“The Corporate
Social
Responsibility
Best-Practive
Principles fo
TWSE/TPEx Listed
Companies”
Yes No Summary (Note 2)
I.Has the company performed risk assessments on environmental, social, and
corporate issues in relation to the Company’s operations according to material
principles, and formulated relevant risk management policies or strategies?
(Note 3)		 V The Corporate Social Responsibility Policy Rules established by the Company
shall be implemented after obtaining the approval of the Board.		 None
II. Does the company have a designated corporate social responsibility unit or
personnel in place assigned by the Board of Directors to address and promote
corporate social responsibility affairs, and to report the status to the Board of
Directors?		 V The Company has appointed a Corporate Sustainability Committee to promote
relevant policies and affairs: A designated management team is continuously
making efforts to promote CSR.		 None
III. Environmental Issues
(I)Has the company established proper environmental management systems
based on the characteristics of its industry?
(II)Is the company committed to enhance the utilization efficiency of resources		 V
V		 (I)In addition to meeting legal compliance requirements, the company has adopted
the ISO14001 system to facilitate the implementation of the environmental
management system and promote continuous improvement in the organization.
(II)Gemtek Technology actively implements measures to increase energy		 None
None

－51－

Evaluation Items Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from
“The Corporate
Social
Responsibility
Best-Practive
Principles fo
TWSE/TPEx Listed
Companies”
Yes No Summary (Note 2)
and use renewable materials that may create lesser impact on the environment?
(III)Has the company assessed the potential risks and opportunities for business
operations now and the future regarding climate change and will it adopt
response measures relating to climate issues?
(IV) Has the company calculated the greenhouse gas emissions, water
consumption, and total weight of waste in the past 2 years, and formulated
policies on energy conservation and carbon reduction, greenhouse gas
reduction, water consumption, or other waste management?
V
V		 efficiency and reduce emissions of greenhouse gases. We purchase products that
are certified and have been granted a Green Mark Label by the Environmental
Protection Administration, Executive Yuan, R.O.C. The Company spares no effort
in improving energy efficiency and adopting eco-friendly products to reduce the
environmental impacts caused by manufacturing activities and enhance corporate
competitiveness.
(III)The Company has included environmental protection and sustainable practices
in its employee training programs and daily business operations. And followed by
the adoption of ISO14064-1, the Company will be establishing strategies to
effectively reduce greenhouse gas based on standard test results and analysis.
(4) The Company aims to promote a paperless office environment. The Company
also wished to reduce carbon footprint by setting standards to regulate the average
office room temperature and the comsumption of water and electricity		 None
None

－52－

Evaluation Items Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from
“The Corporate
Social
Responsibility
Best-Practive
Principles fo
TWSE/TPEx Listed
Companies”
Yes No Summary (Note 2)
IV. Social Issues
(I)Does the company have the relevant management policies and procedures
stipulated in accordance with the relevant laws and regulations and international
conventions on human rights?
(II) Has the company established and implemented reasonable measures for
employee benefits (including: remuneration, holidays and other benefits), and
appropriately reflect the business performance or achievements in the employee
remuneration?
V
V		 (I)The company strictly complies with relevant regulations and follows
international human rights law, such as gender equality, right to work, and
prohibition of discrimination. In order to fulfill the
primary responsibility for protecting and promoting human rights, the company
abides by relevant labor laws and regulations. The appointment, removal, and
remuneration of employees are handled in accordance with the company's internal
control system.
(II)The company's salary and leave policies are set up in accordance with the
provisions of the Labor Standards Act. In addition, employee bonuses are offered
based on business achievements and individual performances. The Company also
provides recreational spaces such as an office cafe, gymnasium, and other break
rooms for personal wellness. Employee group tours are held each year.		 None
None

－53－

Evaluation Items Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from
“The Corporate
Social
Responsibility
Best-Practive
Principles fo
TWSE/TPEx Listed
Companies”
Yes No Summary (Note 2)
(III) Does the company provide employees with a safe and healthy work
environment, and provide safety and health education to employees regularly?		 ˇ (III) Measures to establish a safe working environment and protect the safety of
employees:
(1) Access control: Deploys an around the clock security and surveillance system
to strictly monitor and manage access control.
(2) Employee Health Checkups: The company organizes a bi-annual employee
health checkup to improve employee wellbeing.
(3) Insurance and Workers Compensation: As mandated by the law, the company
provides employees with the benefits of labor and health insurance coverage. An
insurance consultant is stationed on-site to provide supplementary services to
employees who are in need of accident insurances.
(4) Maintenance and Inspection of Facilities and Equipment: The company
regularly maintains and inspects the safety of company elevators, air conditioners,
drinking fountains, fire-fighting appliances, and mechanical equipment according
to the Rules for Public Safety Inspection and the Fire Services Act.		 None

－54－

Evaluation Items Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from
“The Corporate
Social
Responsibility
Best-Practive
Principles fo
TWSE/TPEx Listed
Companies”
Yes No Summary (Note 2)
(IV)Does the company establish effective training programs to benefit the
employee's career development?
(V)Has the company complied with laws and international standards with
respect to customers' health, safety and privacy, marketing and labeling in all
products and services offered, and implemented consumer protection policies
and complaint procedures?
(VI) Has the company established supplier management policies demanding
compliance with relevant regulations and their execution status regarding issues
such as environmental, occupational safety, and health or labor rights?		 V
V
V		 (IV) The Company has formulated a professional training program in terms of our
colleagues’ career development so that they can pursue and gain the
professionalism needed for promotion while carrying out work in their existing
position. The Company ensures that business performances are appropriately
reflected in the implementation of employee compensation policies to satisfy
employee expectations and facilitate the recruitment of talents.
(V) The company has set up a designated unit: Customer Services Department.
Offering after-sales services.
(VI) Corporate social responsibility is being taken seriously by the Company if
suppliers wish to establish or carry on with the business partnership. Gemtek takes
steps to fully communicate and make sure that our supply chain is free of any form
of malpractice that may harm the principles of environmental protection,
occupational safety and health, and labor rights. The Company has not yet issued a		 None
None
None

－55－

Evaluation Items Implementation Status (Note 1) Implementation Status (Note 1) Implementation Status (Note 1) Deviations from
“The Corporate
Social
Responsibility
Best-Practive
Principles fo
TWSE/TPEx Listed
Companies”
Yes No Summary (Note 2)
“Corporate Social Responsibility Agreement” for our suppliers to sign. However, if
any supplier should violate the principles of Corporate Social Responsibility, the
Company shall terminate the business partnership accordingly. In addition, the
company will ask the supplier to sign the agreement whenever necessary.
V. Has the company taken reference from the internationally accepted reporting
standards or guidance when compiling CSR reports to disclose
non-financial information? Have the reports mentioned previously
obtained the assurance of third party verification?


ˇ		 The CSR report is published according to international reporting rules and
guidelines. The related information will be disclosed on the company website, the
Market Observation Post System, and in this Annual Report.		 None
VI. For companies who have established corporate responsibility code of conducts in accordance with the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies”,
please describe the current practice and any deviations from the code of conduct: None
VII. Other information that may facilitate a better understanding of the Company’s corporate social responsibility practices: All information are disclosed in the CSR report.

VI. For companies who have established corporate responsibility code of conducts in accordance with the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies”, please describe the current practice and any deviations from the code of conduct: None VII. Other information that may facilitate a better understanding of the Company’s corporate social responsibility practices: All information are disclosed in the CSR report.

Note 1: If you check "Yes", please describe the key policies, strategies, and measures taken in addition to the current implementation status; if you check "No", please explain and describe what relevant policies, strategies and measures will be in place. Note 2: Please provide the page number from within the Annual Report if a Corporate Social Responsibility Report is available.

Note 3: The materiality principle refers to those who have a significant influence on the company's investors and other stakeholders on environmental, social and corporate governance issues.

－56－

(VI)Ethical Corporate Management and Deviations from the “The Corporate Social Responsibility Best-Practive Principles fo TWSE/TPEx Listed Companies”

Listed Companies”
Evaluation Item Implementation Status(Note 1) Deviations from “The Corporate
Social Responsibility Best-Practive
Principles fo TWSE/TPEx Listed
Companies”
Yes No Summary
I. Ethical Management Policies and Action Plans
(I) Has the company established an ethical management policy that has been
passed by its Board of Directors, and clearly specified in its rules and external
documents the ethical corporate management policies and the commitment by
the Board of Directors and senior management on rigorous and thorough
implementation of such policies and methods?
(II) Has the company established a risk assessment mechanism against
unethical behavior, analyzed and assessed business activities within their
business scope on a regular basis which are at a higher risk of being involved in
unethical behavior, and established prevention programs at least covering the
preventive measures specified in Paragraph 2, Article 7 “Ethical Corporate
Management Best Practice Principles for TWSE/TPEx Listed Companies”?








V
V		 (I) The Company has always upheld the principles of ethical
management and complies with the government laws and regulations,
enforces corporate governance and fulfills corporate responsibility.
The Company has also established the “Code of Business Conduct”
and the “Procedures for Ethical Management and Guidelines for
Conduct”. The Company’s Board of Directors and senior
management are also committed to proactively enforce and supervise
the execution of the ethical management policy.
(II) The Company’s establishment of the “Code of Business
Conduct” and the “Procedures for Ethical Management and
Guidelines for Conduct” both clearly stipulate contents, handling
rules and procedures in terms of unethical conducts, which include
prohibition of bribery and acceptance of bribes, prohibition
of acceptance of improper gifts, entertainment, other inappropriate
form of hospitality or benefits, avoidance of conflict of interest,
prohibition of the abuse of intellectual property rights and
confidential information, personal data protection, and prohibition of
unfair competition, prohibition against discrimination, are strictly
















None
None

－57－

Evaluation Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Deviations from “The Corporate
Social Responsibility Best-Practive
Principles fo TWSE/TPEx Listed
Companies”
Yes No Summary
(III) Has the company specified operational procedures, behavioral guidelines,
disciplines of violations, as well as an appeal system in the program against
unethical behavior, and implemented such programs, and reviewed and revised
the previous program on a regular basis?


V		 reinforced. All Gemtek employees should be fully aware of the
above. The Company should evaluate the effectness of the Code and
strengthen areas where violation of the code is suspected.
(III)The Company has stated in integrity clauses of the Procurement
Contracts that the Company adheres to ethical conducts during
business transactions. If there should be any sort of unethical
engagements, such violators will be subject to prosecution or
punishment by judicial or administrative authorities





None
II. Implementation of Ethical Management
(I)Does the company evaluate the integrity of all counterparties it has business
relationships with? Are there any integrity clauses in the agreements it signs
with business partners?
(II)Has the company set up a dedicated responsible unit to promote corporate
ethical management under the Board of Directors, and has such unit reported its
execution in terms of ethical management policy and preventive programs
against unethical behaviors and the supervision status to the Board of Directors
on a regular basis (at least once a year)?





V
V		 (I) The Company conducts various assessments including integrity
standards before carrying out formal business activities with its
business partners. The business partner is required to sign a letter of
commitment to show their cooperation and compliance with
Gemtek’s code of conduct once the relationship has been established
(II)The company has established internal management measures to
promote corporate ethical management across all operations and
under the Board of Directors..






None
None

－58－

Evaluation Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Deviations from “The Corporate
Social Responsibility Best-Practive
Principles fo TWSE/TPEx Listed
Companies”
Yes No Summary
(III)Does the company have any policy that prevents conflict of interest, and
channels that facilitate the reporting of conflicting interests?
(IV) Has the company established an effective accounting system and internal
control system in order to implement ethical management, and propose relevant
audit plans according to the assessment results of the risks of unethical
behaviors, and review the compliance status of the prevention of unethical
behaviors, or entrust an account to carry out the review?
(V) Does the company organize internal or external training on a regular basis
to maintain business integrity?





V
V
V		 (III)The Company has established preventive measures to mitigate
conflict of interest, and has assigned dedicated personnel to gather
and compile relevant information to facilitate the reporting of
conflicting interests. .
(IV)The company conducts a self-inspection once a year, and then the
internal audit department reviews the self-inspection report of
individual departments and subsidiaries. Self-inspection should
include environment control, risk assessment, operations control,
information, communication, and supervision, etc. Any findings or
improvement items proposed by the audit department shall be used as
the main basis for evaluating the effectiveness of the overall internal
control system by the board of directors and general manager.
(V) The Company introduces its code of conduct to new hires during
educational training sessions and asks employees to sign the
Statement of Commitment to Integrity and Ethical Conduct. The
Company has stated in integrity clauses of the Procurement Contracts
that the Company adheres to ethical conducts during business
transactions. If there should be any sort of unethical engagements,















None
None
None

－59－

Evaluation Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Deviations from “The Corporate
Social Responsibility Best-Practive
Principles fo TWSE/TPEx Listed
Companies”
Yes No Summary
such violators will be subject to prosecution or punishment by
judicial or administrative authorities
III. Whistleblowing System
(I)Does the company have a specific whistleblowing and reward system
stipulated, a convenient report channel established and a responsible staff
designated to handle the individual being reported?
(II) Has the company implemented any standard procedures and/or subsequent
measures after carrying out an investigation or confidentiality measures for
handling reported misconduct?
(III) Has the company taken appropriate measures to protect the whistle-blower
from suffering any consequences of reporting an incident?




V
V
V		 (I)The Company has set up various channels for employees to bring
up matters that may be negatively affecting their rights at work, as
well as measures to respond to any sort of ethical violation. The
Company regularly inspects and revises the whistleblowing
procedures to meet international standards and the Company’s
policies and principles.
(II) The Company has established rules to secure employee privacy
and trade secrets. The Company strictly enforces such rules, and
forbids any form of theft, usage, or disclosure of private information.
(III)The Company fully protects the safety and identity of the
whistleblower, and shall not tolerate any form of retaliation against
whistleblowers.









None
None
None
IV. Reinforcement of Information Disclosure V

－60－

Evaluation Item Implementation Status(Note 1) Implementation Status(Note 1) Implementation Status(Note 1) Deviations from “The Corporate
Social Responsibility Best-Practive
Principles fo TWSE/TPEx Listed
Companies”
Yes No Summary
(I) Does the company have the contents of ethical corporate management and
its implementation disclosed on the website and MOPS?		 (I)The Company has disclosed relevant information on the Company
website, but has not yet disclosed the contents of the Code of
Integrity Management on the Official Market Observation Post
System.		 None
V. For companies who have established Ethical Corporate Management Best Practice Principles in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed
Companies”, please describe the current practice and any deviations from the code of conduct: None
VI.Other information that may facilitate a better understanding of the ethical management practices of the company (e.g., the review and revision of the best-practice principles of the Company in ethical
management): The Company has reiterated our business integrity policies and the Ethical Corporate Management Best Practice Principles to our business partners during the course of transactions. The
Company had clearly stated that any form of direct or indirect provisions, promises, requests, or acceptance of improper benefits such as refunds, bribes, commissions, gifts, or unethical exchanges are
strictly prohibited.

Note 1: If you check "Yes", please describe the key policies, strategies, and measures taken in addition to the current implementation status; if you check "No", please explain and describe what relevant policies, strategies and measures will be in place.

(VI) If the Company has established corporate governance best practice principles and rules on ethical management, please specify websites or locations authorized for disclosure: All Corporate Social Responsibilities and relevant materials are disclosed in the Annual Report and Annual Shareholders Meeting Handbook For more information, please go to the MOPS website.

(VIII) Other information that may facilitate a better understanding of the Company’s corporate governance and ethical practices: None

－61－

(IX) Implementation Status of Internal Control

1. Internal Control System Statement

Gemtek Technologies Co., Ltd.

Internal Control System Statement

Date: March 25, 2021

Based on the findings of a self-assessment, the Company states the following with regard to its internal control system for the current fiscal year:

I. The Company understands that the establishment, implementation and maintenance of internal control system are the responsibility of the Board of Directors and managers of the Company. The Company has established such 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, timeliness, transparency of our reporting, and compliance with applicable rulings, laws and regulations

II. Any internal control system has its inherent limitations. No matter how well an internal control system is designed, it can only provide reasonable assurance regarding the achievement of the above three objectives. Moreover, the effectiveness of an internal control system may be altered as a result of changes in the environment and circumstances. Nevertheless, our internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies.

III. The Company 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 activities. Each criteria includes several items. For the aforementioned items, please refer to the “Regulations”.

IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid regulations.

V. Based on the findings of such evaluation, the Company believes that during the current fical year, 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, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.

－62－

VI. This Statement is an integral part of the Company’s annual report 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 Exchange Act.

VII. This Statement was passed by the Board of Directors in their meeting held on Mar. 25, 2021, with 0 of the 9 attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Gemtek Technologies Co., Ltd.

Chairman：Chen, Hong Wen General Manager : Chen, Hong Wen

Signature:___ Signature:___

－63－

  1. If review of the internal control system has been conducted by entrusted CPAs, the CPAs’ review report must be disclosed: None

(X) During the most recent fiscal year and as of the printing date of this annual report, did the Company or its internal personnel receive punishment in accordance with the laws? Did the Company’s internal personnel receive punishment for violating the requirements of the internal control system? Please describe any defect found during the same period and its status of improvement: None.

(XI)Important resolutions of the Shareholders’ Meeting and Board of Directors’ meetings during the most recent fiscal year and as of the printing date of this annual report.

Date Board of
Directors
Meeting		 Summary of Important Resolutions
2020.03.10 Board of
Directors
Meeting		 1.To approve 2019 business reports and financial statements
2.To approve 2019 employees’ profit sharing bonus and directors’
compensation
3.To approve 2019 Internal Control System Statement
4.To approve the amendments to the Internal Control Policy
5.To approve 2019 annual shareholders meeting
6.To approve proprosals from the shareholders meeting
7.To approve securities listing of subsidiary AMPAK Technology Inc.
8.To approve the establishment of “Self-Evaluation or Peer Evaluation of the
Board of Directors of Gemtek Technology Co., Ltd”
9.To approve replacement of of CPA beginning on 2020 Q1.
10.To approve External Auditor Assessment Report regarding independence
and competency
11.To approve credit line proposed by Sinopac Bank and E-Sun Bank.
12.To approve corporate organizational changes.
2020.03.23 Board of
Directors
Meeting		 1.To approve implementation of treasury stock
2020.04.28 Board of
Directors
Meeting		 1.To approve earnings distribution of 2019
2.To approve 2019 implementation of cash distribution derived from capital
reserve
3.To approve new employee restricted stock units
4.To approve stock release of AMPAK Technology Inc.
5.To approve 2020 shareholders meeting venue.
2020.06.09 Board of
Directors
Meeting		 1.To approve base date for 2019 cash distribution derived from capital reserve
2.To approve close conversion period and execution period of the 5th issuance
of convertible bonds.
3.To approve adjustment of conversion price associated with the 2019 cash
distribution derived from capital reserve.
4.To approve stock release plan for AMPAK Technology Inc.
5.To approve the disposal of financial assets measured at fair value through
other comprehensive income.
6.To approve guidelines for new employee retricted stock units.
7.To approve credit lines proposed by Standard Chartered Bank.

－64－

Date Board of
Directors
Meeting		 Summary of Important Resolutions
2020.06.17 Board of
Directors
Meeting		 1.To approve stock price and subscription period of AMPAK Technology Inc.
2020.08.07 Board of
Directors
Meeting		 1.To approve credit lines proposed by local banks.
2.To approve cancellation of repurchased stock for the 9thtime.
3.To approve amendment and stipulation of guidelines for 2020 new employee
restricted stock units.
4.To discuss adjustment of 2020 employee compension.
5.To approve granting of bonus rewards to AMPAK employees.
6. To approve disposal of Mainland investment in Gemtek Electronics
(Suzhou).
7.To approve distribution of new employee restricted stock units.
2020.10.30 Board of
Directors
Meeting		 1.To approve 2021 audit plans.
2.To approve 2020 CPA appointment
3. To approve credit lines proposed by CTCB and Land Bank.
2020.12.18 Board of
Directors
Meeting		 1.To approve investment in Vietnam
2. To approve credit lines proposed by HSBC.
2021.01.25 Board of
Directors
Meeting		 1.To approve acquisition of Taipei Zhonghe office.
2021.03.25 Board of
Directors
Meeting		 1.To approve 2020 business reports and financial statements
2.To approve 2020 employees’ profit sharing bonus and directors’
compensation
3.To approve 2020 “Effectiveness Evaluation of the Declaration of Internal
Control Policies” and “Internal Control System Statement”
4.To approve 2021 annual shareholders meeting
5.To approve proprosals from the shareholders meeting
6.To ratify derivatives transactions.
7.To ratify the acquisition and disposal of assets of related persons.
8. To approve External Auditor Assessment Report regarding independence and
competency
9. To approve credit lines proposed by local banks
10.To approve long-term investments in PYRAS Technology Inc.
11.To approve appointment of Head of Corporate Governence Department.
12.To approve corporate organizational changes.
13.To approve earnings distribution of 2020
14. To approve 2020 implementation of cash distribution derived from capital
reserve.
2021.05.06 Board of
Directors
Meeting		 1.To approve base date for conversion of the 5th issuance of convertible bonds.
2.To approve repurchase of issued new employee restricted stock and
implementation of cash decrease.
3.To approve manager performance reward programs.

－65－

2019 Important Resolutions of the Shareholders’ Meeting

Date Important Resolutions Implementation Status
2020.06.09 Report Items
1.To report the business of 2019.
2.Audit Committee’s review report.
3.To report 2019 employees’ profit sharing bonus and
directors’ compensation.
4.To report on convertible bonds.
5.To report on implementation of Share Buyback
Program
Proposed Resolutions
1.To accept 2019 Business Report and Financial
Statements		 The
announcement
of
major
information on the day of the
Shareholders’
Meeting
was
an
important
resolution
of
the
Shareholders’ Meeting and was
disclosed on the Company's website
2.To approve the proposal for distribution of 2019
earnings		 No dividends will be distributed for
the year 2019 due to insufficient
earnings.
Discussion Items
1.2019 Implementation of Cash Distribution derived from
Capital Reserve.
Base date is scheduled on July 13,
2020.
Cash dividend distribution dated is
scheduled on August 12, 2020.
2.Plans to grant employee retricted stock units Effective on July 14, 2020 as
approved by the Executive Yuan
under
Authorized
Letter
Jinguanzhengzhi No.1090349323.
3. AMPAK Technology Inc.’s share release plan Settled and transferred on August 10,
2020.

(XII)In the event that any director or supervisor expressed a dissenting opinion regarding any of the important resolutions adopted at the Board of Directors’ meeting during the most recent fiscal year as of the date on which the annual report was printed, and that the opinion was recorded or delivered in writing, please describe its main content: None.

(XIII)Resignation or dismissal of the Company’s influential roles, including the chairman, general manager, the heads of accounting, finance, internal audit, and R&D during the most recent fiscal year as of the date on which the annual report was printed:

Title Name Date of
Inauguration		 Date of
Resignation		 Reason for resignation
ordismissal
General
Manager		 Su, Hui Hao 2017/08/08 2020/03/10 Organizational Change
General
Manager		 Chen, Hong
Wen		 2020/03/10 2021/03/25 Organizational

－66－

V.Remuneration to Auditors

Remuneration Scale for Auditors

Name of Audit Firm Name of Auditor/CPA Name of Auditor/CPA Audting Period Remarks
Deloitte & Touche Yang,
Ching
Cheng		 Yang, Jing
Ting
2020/01/01-2020/12/31

Unit: NT$, all in thousands

Fee Item
Range of Remuneration		 Fee Item
Range of Remuneration
Audit Fees		 Non-Audit Fees Total
1 Less than NT$2,000,000
2 NT$2,000,000~ NT$3,999,999
3 NT$4,000,000~ NT$5,999,999 4,180 4,180
4 NT$6,000,000~ NT$7,999,999
5 NT$8,000,000~ NT$9,999,999
6 Greater Than or Equal to
NT$10,000,000
  • 1 、 Non-audit fee items should be displayed separately. If the amount of non-audit fee is over 25% of all

categories of the total audit fee, please provide a list of the respective items: None

  • 2 、 In the event that the audit firm has been changed and that the amount of annual audit fees paid is lower than

the previous fiscal year, the decreased amount and percentage must be disclosed: None

  • 3 、 In the event that the amount of audit fees is reduced by at least 15% in comparison with the previous fiscal

year, the decreased amount, percentage and reasons for this matter must be disclosed: None

VI.Replacement of CPA Audit Firm: None 。

VII.Any member of the company, e.g. chairman, general managers, or

financial/accounting managers have served a position in the audit firm(s) or its affiliate companies during the past year: None.

VIII.Transfer of equity or pledge by directors, supervisors, managerial officers, or shareholders with shareholdings that exceed 10% as of the latest fiscal year and as of the date of publication of this Annual Report.

1.Changes in Shareholding Structure - Directors, Supervisors, Managerial Officers,and Supervisors.

Unit: Share

Unit: Share Unit: Share
Title Name 2020 As of April 30, 2021
Increased
(decreased)
number of
shares held		 Increased
(decreased)
number of
sharespledged
Increased
(decreased)
number of
shares held		 Increased
(decreased)
number of
sharespledged

－67－

Chairman Chen, Hong Wen 350,000 - - -
Director Tsai, Fu Tsan 200,000 - - -
Director Yang, Jheng Ren 200,000 - (9,000) -
Director Hsu, Jung Hui 65,000 - 215,000 -
Director Chang, Yueh Chi - - - -
Director APEX ACTION INVESTMENT
LIMITED		 - - -
Representative: Luo, Wen Yi - - - -
Independent
Director		 Zhao, Yao Geng - - - -
Independent
Director		 Wang, Zhu San - - - -
Independent
Director		 Chang, Chih Yang - - - -
General
Manager		 Li, Rong Chang 5,000
Senior Deputy
General
Manager		 Liao, Hsi An - - - -
CTO Yeh, Fu Ming - - - -
COO Lin, Tien Jin (59,000) - - -
CFO Lin, Chih Hong - - - -
CSO Cheng, Guang Ming - - - -

2.Information on transfer of equity:

No equity shares were transferred to related persons had occurred among the Company's directors, supervisors, managerial officers, and ten-percent shareholders.

3.Information on transfer of equity pledge:

No equity pledges were transferred to related persons had occurred among the Company's directors, supervisors, managerial officers, and ten-percent shareholders.

－68－

IX. Top Ten Major Shareholders and the Shareholding Structure as per the Relationships Specified in the Financial Accounting Standard Board Statement N0.6 of Taiwan

As of April 11, 2021 As of April 11, 2021 As of April 11, 2021 As of April 11, 2021 As of April 11, 2021 As of April 11, 2021 As of April 11, 2021
Name（Note 1） Shares Held under the
Current Name		 Shares held by spouse
or dependents		 Shares Held by
Third Parties		 Disclosure of names
and
relationships
among the top ten
shareholders, including
spouses,
2nd
tier
relatives or closer, or
as per the relationships
specified
in
the
Financial Accounting
Standard
Board
Statement
N0.6
of
Taiwan(Note 3).		 Rem
ark
Shares (%) Shares (%) Shares (%) Title or
Name		 Relations
hip
Chen, Hong Wen 6,532,937 1.80 - - - - - - -
Citibank (Taiwan) in
Custody for Norges
Bank
Investment
Account		 6,195,530 1.71
Lien, Hua Rong 4,869,876 1.34 2,704,633 0.75 - - Lin, Zhen
Yueh		 Spouse -
JPMorgan Chase Bank
N.A. Taipei Branch in
Custody for Vanguard
Total
International
Stock Index Fund, a
series of Vanguard Star
Funds		 4,169,000 1.15 - - - - - - -
JPMorgan Chase Bank
N.A. Taipei Branch in
Custody for Vanguard
Emerging
Markets
Index Fund, a Series of
Vanguard International
Index Fund		 4,126,668 1.14
Hsu, Hsi Duo 4,038,019 1.11
Sinopac
Bank
in
Custody for Gemtek
Technology Co., Ltd.
Employee
Restricted
Stock Account		 4,000,000 1.10
JPMorgan Chase Bank
N.A. Taipei Branch in
Custody for JP Morgan
Securities
Investment
Account		 3,349,591 0.92
Chang, Yueh Chi 3,043,000 0.84 - - - - - - -
Standard
Chartered
Bank (Taiwan) Limited
in Custody for Credit
Suisse AG Investment
Account		 3,000,715 0.83

Note 1: Top ten major shareholder ranking should be disclosed. If any of the shareholders is an institutional shareholder, the name of the institutional shareholder and its representative should be disclosed separately.

－69－

Note 2:Shareholding percertage is calculated by the shares owned by the shareholders himself/herself, spouse and dependents or by third parties separately.

Note3 : The relationship of the shareholders (including institutional and natural person) should be disclosed according to Regulations Governing Information to be published in Annuals Reports of Public Companies.

－70－

X. Direct and Indirect Stock Ownership of Affiliated Investments by the Company, Board of Directors, Supervisors, Managerial Officers, Affiliate Companies or Subsidiaries

Unit: Shares, All in thousands; %

Affiliated Investments
(Note)		 Gemtek Gemtek Direct and Indirect Stock
Ownership of Affiliated
Investments by the Board
of Directors, Supervisors,
Managerial Officers,
Affiliate Companies or
Subsidiaries		 Direct and Indirect Stock
Ownership of Affiliated
Investments by the Board
of Directors, Supervisors,
Managerial Officers,
Affiliate Companies or
Subsidiaries		 Total Ownership Total Ownership
Shares % Shares % Shares %
Gemtek Investment Co.,Ltd 76,946 100.00% 0 0.00% 76,946 100.00%
G-TECHNOLOGY INVESTMENT CO.,
LTD
78,600 100.00% 0 0.00% 78,600 100.00%
BRIGHTECH INTERNATIONAL CO.,
LTD
6,145 100.00% 0 0.00% 6,145 100.00%
WI TEK INVESTMENT CO., LTD 4,000 100.00% 0 0.00% 4,000 100.00%
AMPAK TECHNOLOGY INC. 20,101 33.37% 0 0.00% 20,101 33.37%
SparkLAN Communications, Inc. - - 10,203 100.00% 10,203 100.00%
BROWAN COMMUNICATIONS
INCORPORATION
11,191 24.33% 9,826 21.36% 21,017 45.69%
Gemtek Vietnam Co., Ltd. 0 100.00% 0 0.00% 0 100.00%

Note: The above intercorporate investments are recorded under the equity method.

－71－

IV. Capital Overview

I.Capital and Shares

(I)Source of Capital

Unit: Shares, NT$, All in thousands

Unit: Shares, NT$, All in thousands Unit: Shares, NT$, All in thousands Unit: Shares, NT$, All in thousands
Year /
Month		 Issue
Price		 Authorized Capital Paid-inCapital Remark


Shares		 Amount Shares Amount Sources of Capital Capital
Increased
by Assets
Other than
Cash
Others
2010.01 10 500,000 5,000,000 276,712 2,767,123 Conversion of
Corporate Bond
/Employee Stock to
Common Shares		 None MOE
Authorization
No. 09901006530
Effective as of
2010/1/14
2010.04 10 500,000 5,000,000 278,296 2,782,958 Conversion of
Corporate Bond
/Employee Stock to
Common Shares		 None MOE
Authorization
No. 09901076230
Effective as of
2010/4/20
2010.09 10 500,000 5,000,000 283,568 2,835,676 Capitalization of
Capital Reserve		 None FSC Authorization
No. 0990035129
Effective as of
2010/7/7
2011.01 10 500,000 5,000,000 284,433 2,844,333 Conversion of
Corporate Bond to
Common Shares		 None MOE
Authorization
No. 10001011070
Effective as of
2011/1/19
2011.05 10 500,000 5,000,000 290,592 2,905,918 Conversion of
Corporate Bond
/Employee Stock to
Common Shares		 None MOE
Authorization
No. 10001096090
Effective as of
2011/5/13
2011.08 10 500,000 5,000,000 309,860 3,098,601 Capitalization of
Capital Reserve and
Conversion of
Corporate Bond to
Common Shares		 None FSC Authorization
No. 1000031536
Effective as of
2011/7/7
MOE
Authorization
No. 10001199410
Effective as of
2011/8/26
2012.03 10 500,000 5,000,000 306,803 3,068,033 Cancellation of
Repurchased
Treasury Stocks		 None MOE
Authorization
No. 10101054240
Effective as of
2012/3/29
2012.09 10 500,000 5,000,000 305,085 3,050,853 Cancellation of
Repurchased
Treasury Stocks		 None MOE
Authorization
No. 10101191030
Effective as of
2012/9/17
2013.05 10 500,000 5,000,000 309,303 3,093,033 Conversion of
Corporate Bond to
Common Shares		 None MOE
Authorization
No. 10201091390
Effective as of
2013/5/16
2013.08 10 500,000 5,000,000 309,309 3,093,099 Conversion of
Corporate Bond to
Common Shares		 None MOE
Authorization
No. 10201172250

－72－

Year /
Month		 Issue
Price		 Authorized Capital Authorized Capital Paid-inCapital Paid-inCapital Remark Remark Remark


Shares		 Amount Shares Amount Sources of Capital Capital
Increased
by Assets
Other than
Cash
Others
Effective as of
2013/8/2
2014.08 10 500,000 5,000,000 315,309 3,153,099 Issuance of
Employee Restricted
Stocks		 None MOE
Authorization
No. 10301175260
Effective as of
2014/8/28
2015.04 10 500,000 5,000,000 305,898 3,058,975 Cancellation of
Repurchased
Treasury Stocks and
Employee Restricted
Stocks		 None MOE
Authorization
No. 10401055750
Effective as of
2015/4/8
2015.07 10 500,000 5,000,000 305,761 3,057,606 Cancellation of
Employee Restricted
Stocks		 None MOE
Authorization
No. 1040112209
Effective as of
2015/7/3
2015.11 10 500,000 5,000,000 302,920 3,029,201 Cancellation of
Repurchased
Treasury Stocks and
Employee Restricted
Stocks		 None MOE
Authorization
No. 10401246050
Effective as of
2015/11/27
2016.01 10 500,000 5,000,000 302,841 3,028,412 Cancellation of
Employee Restricted
Stocks		 None MOE
Authorization
No. 10401281240
Effective as of
2016/1/11
2016.07 10 500,000 5,000,000 302,736 3,027,360 Cancellation of
Employee Restricted
Stocks		 None MOE
Authorization
No. 10501142050
Effective as of
2016/7/5
2016.12 10 500,000 5,000,000 302,701 3,027,018 Cancellation of
Employee Restricted
Stocks		 None MOE
Authorization
No. 10501293290
Effective as of
2016/12/19
2017.04 10 500,000 5,000,000 307,176 3,071,764 Conversion of
Corporate Bond to
Common Shares
and Cancellation of
Employee Restricted
Stocks		 None MOE
Authorization
No. 10601041050
Effective as of
2017/4/12
2017.06 10 500,000 5,000,000 309,485 3,094,856 Conversion of
Corporate Bond to
Common Shares
and Cancellation of
Employee Restricted
Stocks		 None MOE
Authorization
No. 10601077940
Effective as of
2017/6/20
2017.09 10 500,000 5,000,000 315,720 3,157,202 Conversion of
Corporate Bond to
Common Shares
and Cancellation of
Employee Restricted
Stocks		 None MOE
Authorization
No. 10601123440
Effective as of
2017/09/04
2017.12 10 500,000 5,000,000 320,720 3,207,203 Conversion of
Corporate Bond to
Common Shares		 None MOE
Authorization
No. 10601161600
Effective as of
2017/12/05
2018.04 10 500,000 5,000,000 344,315 3,443,157 Conversion of
Corporate Bond to
Common Shares		 None MOE
Authorization
No. 10701034740

－73－

Year /
Month		 Issue
Price		 Authorized Capital Authorized Capital Paid-inCapital Paid-inCapital Remark Remark Remark


Shares		 Amount Shares Amount Sources of Capital Capital
Increased
by Assets
Other than
Cash		 Others
Effective as of
2018/4/11
2018.08 10 500,000 5,000,000 349,037 3,490,370


 Conversion of
Corporate Bond to
Common Shares		 None MOE
Authorization
No. 10701108700
Effective as of
2018/8/23
2018.12 10 500,000 5,000,000 351,162 3,511,619


 Conversion of
Corporate Bond to
Common Shares		 None MOE
Authorization
No. 10701152350
Effective as of
2018/12/04
2019.04 10 500,000 5,000,000 356,883 3,568,834


 Conversion of
Corporate Bond to
Common Shares		 None MOE
Authorization
No. 10801037570
Effective as of
2019/04/17
2020.09 10 500,000 5,000,000 357,590 3,575,905





 Issuance of
Employee Restricted
Stock and
Cancellation of
Repurchased
TreasuryStocks		 None MOE
Authorization
No. 10901163820
Effective as of
2020/09/15

As of April 20, 2021

Type of
Stock		 Authorized Capital Authorized Capital Authorized Capital Authorized Capital Aggregate Total Remark
Outstanding Shares Unissued
Listed Unlisted Total
Common
Stock		 363,031,547 0 363,031,547 136,968,453 500,000,000 -

(II)Shareholder Structure As of April 20, 2021

Category
Quantity		 Government
Agency		 Financial
Institution		 Other Legal
Person		 Individual Foreign
Institutions and
Individuals		 Total
Number of
Shareholders		 2 13 284 59,633 122 60,054
Shareholding 4 2,762,439 10,615,498 308,468,280 41,185,326 363,031,547
% 0 0.76 2.93 84.97 11.35 100

－74－

(III)Distribution of Shareholding

As of April 20, 2021

Range of Shares Held Number of Shareholders Number of Shares Held ％of Total Shareholders
1 ~ 999 21,112 1,233,794 0.34
1,000 ~ 5,000 29,057 62,179,414 17.13
5001 ~ 10,000 5,207 41,725,950 11.49
10,001 ~ 15,000 1,520 19,050,207 5.25
15,001 ~ 20,000 1,059 19,771,574 5.45
20,001 ~ 30,000 731 18,980,499 5.23
30,001 ~ 50,000 634 25,726,831 7.09
50,001 ~ 100,000 410 29,513,294 8.13
100,001 ~ 200,000 178 25,240,519 6.95
200,001 ~ 400,000 79 22,285,299 6.14
400,001 ~ 600,000 20 10,038,557 2.77
600,001 ~ 800,000 12 8,246,935 2.27
800,001 ~ 1,000,000 6 5,518,000 1.52
Above 1,000,001 29 73,520,674 20.25
Total 60,054 363,031,547 100.00

(IV)List of Major Shareholders

Names, number of shares held, and shareholding ratios of shareholders who hold five percent or more of the shares or are one of the 10 largest shareholders

As of April 20, 2021

Shares
Name of Shareholder		 Number of Shares Held %
Chen, Hong Wen 6,532,937 1.80
Citibank (Taiwan) in Custody for Norges Bank Investment Account 6,195,530 1.71
Lien, Hua Rong 4,869,876 1.34
JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard
Total InternationalStock Index Fund, a series ofVanguard Star Funds
4,169,000		 1.15
JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard
Emerging Markets Index Fund, a Series of Vanguard International
Index Fund

4,126,668		 1.14
Hsu, Hsi Duo 4,038,019 1.11
Sinopac Bank in Custody for Gemtek Technology Co., Ltd. Employee
Restricted Stock Account
4,000,000		 1.10
JPMorgan Chase Bank N.A. Taipei Branch in Custody for JP Morgan
SecuritiesInvestmentAccount
3,349,591		 0.92
Standard Chartered Bank (Taiwan) Limited in Custody for Credit
Suisse AG Investment Account Chang,Yueh Chi
3,043,000		 0.84
Chang, Yueh Chi 3,000,715 0.83

－75－

(V) Market Price, Net Value, Earnings, and Dividend Per Share in the last two years

Unit: NT$

Item Fiscal Year Fiscal Year 2019
(Note 4)		 2020 As of
April 30, 2021
(Note 8)
Market Price
(Note 1)		 Highest 29.45 31.90 36.95
Lowest 21.70 14.75 27.40
Average 25.38 24.75 31.90
Net Value
(Note 2)		 Before Distribution 23.59 26.24 30.31
After Distribution 23.59 26.24 -
Earnings Per
Share
(Note 3)		 Weighted average shares
outstanding		 355,629,000
shares		 354,868,000 shares 353,656,000 shares
Before Distribution 0.57元 3.86元 0.36元
After Distribution 0.53元 3.36元 -
Dividends Per
Share		 Cash Dividends 0.5元 2元 -
Stock
Dividends		 Retained Earnings - - -
Capital Reserve - - -
Accumulated unpaid dividend
(Note 4)-		 - - -
Return On
Investment		 Price / Earnings Ratio (Note 5) 44.53 6.41 88.61
Price / Dividend Ratio (Note 6)
50.76		 12.37 -
Cash Dividend Yield (%)
(Note 7)		 1.97% 8.08% -

＊If the Company uses earnings or capital surplus to increase capital, the adjusted market price per share and cash dividends should be recalculated accordingly.

Note 1: The highest market price and lowest market price should be listed. The average price is calculated by total transaction value and total transaction volume of each year.

Note 2: Net worth per share is based on the distribution amount resolved by annual general shareholders’ meeting and the shares issues at the end of the financial year.

Note 3: If the Company distributes stock dividends, the earnings per share should be adjusted and disclosed as well.

Note 4: If the conditions of the issue of equity securities regulated the undistributed dividends can be

accumulated until profit year, the undistributed dividends should be disclosed.

Note 5: Price / Earnings Ratio = Average Market Price / Earnings per Share

Note 6: Price / Dividend Ratio= Average Market Price / Cash Dividends per Share

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

Note 8 :Net Worth per share and Earnings per share as of the most recent quarter should be reviewed by the

CPA and disclosed accordingly. Other items are disclosed as of the most recent fiscal year amid the printing of this annual report.

－76－

  • (VI) Dividend Policy and Implementation Status

1. Dividend Policy

According to the Company's Article of Incorporation, the Company shall, after deducting the employee bonuses and renumeration benefits of directors from the current year's pre-tax benefits, allocate 13.5% for employee profit sharing bonuses and 1.8% for the renumeration benefits of directors. Employee profit sharing bonuses are to be granted in the form of securities or cash to qualified company employees, which the occurrences are to be mentioned and reported in the shareholders’ meeting. The Company shall not distribute bonuses in the event of accumulated losses.

Upon the closing of the Company's annual financial accounts, if surplus profit is determined, the Company shall first pay taxes and make up for all past losses; then, set aside a 10% legal capital reserve and a special capital reserve in accordance with applicable laws, rules and regulations. The remainder of the profits after deducting the foregoing shall be allocated as shareholders' dividends, subject to proposal by the board of directors and approval by shareholders at a shareholders' meeting.

Considering the current development status of the Company and the overall conditions of the industrial environment, other factors such as the Company's financial measures that might influence the financial structure and profit earnings are the key elements for determining the amount and type of surplus distributed. Bearing in mind the Company’s capital requirements, long-term financial goals, and shareholders’ demands for liquidity, the distribution of surplus profit shall be made preferably by way of cash and stock dividends. The distribution of cash dividends per year shall not be lower than 10% of the aggregate amount of the stock dividends and cash dividends distributed for that particular year.

  1. The company's earnings can be paid out in either full or partial cash dividends or stock dividends. At present, the company distributes its profit earnings predominantly in the form of cash dividends. In 2020, the Company board of directors approved the distribution of cash dividends NT$357,666,541 in total, which takes up 89.50% of retained earnings.

  2. Implementation Status

Earnings distribution proposed at the most recent shareholders’ meeting:

Unit: NT$

－77－

Item Amount
2019 Undistributed retained earnings -
2020 Profit after tax 1,370,155,581
Less: Disposal of subsidiary (4,636,228)
Less: Recognized retained earningsfrom remeasurement of Defined (1,854,784)
Benefit Plans
Less:Transfer accumulated profit or loss to retained earnings for the (90,359,995)
disposal of equity investment instruments measured at fair value
through other comprehensive income
Adjusted unappropriated retained earnings from current profit after
tax and extraordinary items		 1,273,304,574
Less: Legal Capital Reserve (10%) (127,330,457)
Less: Special Capital Reserve (746,327,857)
Profit available for distribution for the current period 399,646,260
Shareholder dividend (NT$/share) 357,666,541
2021 Undistributed retained earnings 41,979,719

Note 1: The payout ratio was calculated on the basis of 357,666,541 outstanding shares as of March 25, 2021. Each common shareholder shall be entitled to receive a cash dividend of NT$1 per share. Cash dividends shall be distributed only to the minimal extent of the smallest integer. Any fractional amounts rendered below NT$1 shall be transferred to the Employee Benefits Committee.

Note 2: In the event that the proposed profit distribution plan is affected by the buyback of the Company’s common stock, transfer, conversion or cancellation of the treasury shares, the exercise of the employee stock options or the conversion of convertible bonds, it is proposed that the Board of Directors be fully authorized by the Shareholder’s Meeting to adjust the dividend ratio and handle relevant matters accordingly.

  1. Description of any material changes in the expected dividend policy: None

  2. (VII) Impacts on the Company’s business performance, EPS, and shareholder ROI due to distribution of stock grants: Not applicable.

(VIII)Compensation and Remuneration of Employees and Directors:

  1. According to the Company's Article of Incorporation, the Company shall, after deducting the employee bonuses and renumeration benefits of directors from the current year's pre-tax benefits, allocate 13.5% for employee profit sharing bonuses

－78－

and 1.8% for the renumeration benefits of directors. Employee profit sharing bonuses are to be granted in the form of securities or cash to qualified company employees, which the occurrences are to be mentioned and reported in the shareholders’ meeting. The Company shall not distribute bonuses in the event of accumulated losses.

  1. The basis for estimating the amount of employees’ compensation and directors’ remuneration, 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 accrued figure, for the current period:

The Company recognizes the 2020 employees’ compensation and directors’ remuneration according to the Company’s Articles of Incoporation, as proclaimed, the Company shall, after deducting the employee bonuses and renumeration benefits of directors from the current year's pre-tax benefits, allocate 13.5% for employee profit sharing bonuses and 1.8% for the renumeration benefits of directors. In light of business circumstances, the Company did not distribute stock grants as of the recent fiscal year. In the event that the actual distribution amounts should be different from the accrued amounts, the adjustment will be recognized in the distribution year as changes in accounting estimates.

  1. Compensation and Remuneration Approved by the Board:

  2. (1)Distribution of Employee Bonuses and Renumeration Benefits of Directors： A. Employee Cash Bonuses：NT$232,646,248

  3. B. Renumeration Benefits of Directors：NT$31,019,499

  4. (2) The 2020 distribution of employee bonuses and renumeration benefits of directors was approved by the Board. There are no adjustments to be made due to the fact that there are no significant differences between the actual distributed amount NT$263,665,747 and the estimated amount recognized as expense NT$263,665,747 .

  5. (3)The ratio of the total amount of employees compensation distributed in stocks to the sum of the after-tax net income amount stated in the financial reports of the parent company or individual financial reports for the current period plus total amount of employees’ compensation: Not applicable.

  6. The distribution status of employees compensation and directors remuneration of the previous year (including distributed shares, amount, and stock price) and, if the amounts distributed vary from the amounts recognized, please illustrate the reason for the discrepancy and how it is treated:

－79－

Item Employee Compensation and Director Remuneration
Approved bythe Shareholder Meeting		 Employee Compensation and Director Remuneration
Approved bythe Shareholder Meeting		 Employee Compensation and Director Remuneration
Approved bythe Shareholder Meeting
Amount(NTD) Cash Increase
Converted to
Shares		 Cash Distributed
Employee
Compensation
13.5%		 32,207,213 - 32,207,213
Director
Remuneration
1.8%		 4,294,295 - 4,294,295

2019 Employee Compensation and Director Remuneration

Item Stock Dividend Stock Dividend Stock Dividend Cash Dividend
Total
Stock
Price		 Shares
Amount		 Amount
Employee
Compensation
13.5%		 - - - 32,207,213 32,207,213
Director
Remuneration
1.8%		 - - - 4,294,295 4,294,295

Description: There are no significant differences between the actual distributed amount and the estimated amount recognized as expense.

－80－

(IX)Repurchase of Treasury Stock:

May 19, 2021

May19, 2021
Term of Repurchase 9th
Purpose Maintain Company Credibility and
Shareholder Equity
Type Common Stock
Repurchasing Limit NTD5,593,801,000
Estimated Shares to Repurchase 20,000,000 shares
Repurchase Price Range NT$13.8~NT$26.0
Repurchase Period March 31, 2020 – May 22, 2020
Type and Number of Shares
Repurchased		 3,293,000 Common Shares
Total Value of Repurchased Shares NT$68,766,973
Percentage of Current Repurchased
Shares to Estimated Shares to
Repurchase（%）		 16.47%
Number of Cancelled and Transferred
Shares		 3,293,000 shares
Date of Cancellation September 25, 2020

－81－

II. Domestic & Overseas Corporate Bonds

(I)Outstanding Corporate Bonds:

The Financial Supervisory Commission R.O.C approved the Company’s issuance of convertible bonds totaling NT$1.2 billion on March 15, 2019.

Type of Corporate Bond 5thIssuance of Domestic ConvertibleBonds
Date of Issuance March 15, 2019
Par Value NTD $ 100,000
Place of Issuance and
transaction		 -
Issue Price Issued at Par Value
Total Price NT$ 1.2 billion
Interest Rate 0% .
Tenor 3 Years
Due on March 15, 2022
Guarantee Agency -
Trustee KGI Bank Co., Ltd.
Underwriter KGI Securities Co., Ltd.
Certified Attorney -
CPA -
Method of Repayment Unless the bondholders convert into ordinary shares of the Company in accordance with
Article 10 of the Method of Transfer, or the bondholder exercises rights to sell in
accordance with Article 19, or the Company redeems in advance or exercise redemption at
securities firm in accordance with Article 18 of these Procedures, or the Company
repurchases from securities agents for the purpose of cancellation, the Company will repay
the converted bonds held by bondholders in cash in accordance with the denomination of
the bonds when the Company's conversion of bonds expires.
Outstanding Principal NTD $ 1,056,900 thousand
Terms for Redemption of Early
Call		 (1) Starting from the fourth month subsequent to the issuance of the convertible bonds
(June 16, 2019) until forty days prior to the expiration of the issuance period
(February 3, 2022), if the closing price of the company’s ordinary shares is at least
30% or higher than the conversion price for thirty consecutive business days, the
Company may, within thirty business days thereafter, deliver a "Bond Call Notice" to
the bondholder ( With reference to the list of bondholders 5 days prior to the
deliverance of the “Bond Call Notice”. Other bondholders who should acquire the
bond after that specific date due to purchasing and selling or through other means of
transactions shall be informed by way of announcement.) by registered mail (The
aforesaid period for bond call shall be calculated from the date the letter is issued,
and the expiry date of the period shall be the base date for bond call. The period shall
not be the close conversion period of the corporate bond). The bond redemption price
is the face value, and bonds are redeemed in cash. OTC shall be notified to make an
official post for the announcement. The company executes the early call by

－82－

redeeming the outstanding convertible bond in cash based on its face value within
five days following the bond call base date.
(2) Starting from the fourth month subsequent to the issuance of the convertible bonds
(June 16, 2019) until forty days prior to the expiration of the issuance period
(February 3, 2022), if the outstanding balance of the convertible bond is less than
10% of the total number of convertible bonds issued for thirty consecutive business
days, the Company may, within thirty business days thereafter, deliver a "Bond Call
Notice" to the bondholder ( With reference to the list of bondholders 5 days prior to
the deliverance of the “Bond Call Notice”. Other bondholders who should acquire the
bond after that specific date due to purchasing and selling or through other means of
transactions shall be informed by way of announcement.) by registered mail (The
aforesaid period for bond call shall be calculated from the date the letter is issued,
and the expiry date of the period shall be the base date for bond call. The period shall
not be the close conversion period of the corporate bond). The bond redemption price
is the face value, and bonds are redeemed in cash. OTC shall be notified to make an
official post for the announcement. The company executes the early call by
redeeming the outstanding convertible bond in cash based on its face value within
five days following the bond call base date.
(3) If the bondholder fails to reply in written form to the Company’s stock brokerage
before the bond call base date set forth in the "Bond Call Notice" (Call period is
effective upon postmark.), the Company shall, within five business days after the
bond call base date, execute the redemption in cash based on the face value.
Restrictive Clause N/A
Name of Credit Rating
Agency,Rating Date, Rating of
Corporate Bonds
N/A
Other
Rights		 As of the
printingdate of
this annual
report,
converted
amount of
(exchanged or
subscribed)ord
inary shares,
GDRs or other
securities		 Number of shares converted
5,441,051 shares

－83－

Issuance and
conversion (exchange
or subscription)
method		 -
Issuance and conversion,
exchange or subscription
method, issuing condition
dilution, and impact on exiting
shareholders’ equity		 The company will deliver newly issued ordinary shares. As of the publication date of the
annual report, no bonds were converted into ordinary shares.
Transfer agent N/A

Note 1: The handling of corporate bonds includes public offering bonds and private corporate bonds in the process.

Public offering bonds under process refer to those that have become effective (approved) by the FSC; private corporate bonds under process refer to those that have been approved by the board of directors.

(II)Convertible Bonds:

(II)Convertible Bonds: (II)Convertible Bonds:
Type of Corporate Bond 5thIssuance of Convertible Bonds
Item Year
2019		 2020 As of Apil 30, 2021
Market Price of
the Convertible
Bond		 Highest 116.95
123.50 139.00
Lowest 106.10
98.50 113.50
Average
110.97
111.13 121.73
Convertible Price 26.90
26.30 26.30
Date of Issuance and
ConvertiblePrice		 Date of Issuance: March 15, 2019
ConvertiblePrice:26.90
Conversion Method New Stocks

III.Preferred Stock: None

IV.Global Depository Receipts: None

V.Employee Stock Options: None

VI.New Restricted Employee Shares:

(I)Implementation of New Restricted Employee Shares

Type of New Restricted
Employee Shares		 2ndIssuance
New Restricted Employee Shares
Effective Date July 14, 2020
Date o Issuance August 07, 2020
Issued Shares 4,000,000shares

－84－

Issue Price NTD10
Percentage of Issued New
Restricted Employee
Shares to Total Number of
Issued Ordinary Shares
1.10%
Vesting Conditions 1.If an employee still serves the Company for one year after the
subscription of New Employee Retricted Stock, provided that the
employee has not violated the Company’s labor contract, work rules,
or company regulations, and under the circumstance that the overall
business operations and employee performances have reached the
reasonable targets set out by the Company for the preceding year, the
ratio of shares that can be vested is: 30%.
2.If an employee still serves the Company for two years after the
subscription of New Employee Retricted Stock, provided that the
employee has not violated the Company’s labor contract, work rules,
or company regulations, and under the circumstance that the overall
business operations and employee performances have reached the
reasonable targets set out by the Company for the preceding year, the
ratio of shares that can be vested is: 30%.
3.If an employee still serves the Company for three years after the
subscription of New Employee Retricted Stock, provided that the
employee has not violated the Company’s labor contract, work rules,
or company regulations, and under the circumstance that the overall
business operations and employee performances have reached the
reasonable targets set out by the Company for the preceding year, the
ratio of shares that can be vested is: 40%.
Vesting Limits 1.Before vesting conditions are met, employee restricted stocks
received by the employee are not to be sold, mortgaged, transferred,
gifted, pledged, or otherwise sanctioned except in the event of
inheritance.
2.The attendance, proposal, speech, and voting rights of the
shareholders meeting shall be implemented in accordance with the
trust custody agreement. Any cash dividends, stock dividends, and
capital reserve cash (stocks) allocated to the New Employee
Restricted Stocks shall be placed under the custody of the trust. For
those New Employee Restricted Stocks whom their owners have not

－85－

yet fulfilled the vesting conditions, the cash dividends, stock
dividends, and capital reserves (stocks) generated shall be forfeited
and being reclaimed or cancelled by the Company in accordance with
relevant laws and regulations.
Custody Entrusted with custodian
Measures to be taken
when employees fail to
meet the vesting
conditions		 If the employee fails to meet the vesting conditions, or has violated the
Company’s labor contract, work rules, or company regulations, and
under the circumstance that the overall business operations and
employee performances have not reached the reasonable targets set
out by the Company for the preceding year, the Company shall
redeem the shares under no additional cost and consideration, and
holds the right to cancel the shares according to law.
Redeemed or Repurchased
New Restricted Employee
Shares
110 ,000 shares
Cancelled Shares Not Applicable
Uncancelled Shares 3,890,000shares
Percentage of Uncancelled
Shares to Issued Ordinary
Shares
1.07%
Affects on Shareholder
Interest		 Not Applicable

(II)Managers and Top 10 Major Owners of Employee Restricted Shares ：

As of April 30, 2021

Title
（Note 1）		 Name Acquired
Number
of
Employee
Restricte
d Shares		 Percentage
to Total
Number of
Issued
Ordinary
Shares		 Cancelled Cancelled Cancelled Uncancelled Uncancelled
Shares Issue
d
Price
Am
ount
Percenta
ge to
Total
Number
of Issued
Ordinary
Shares		 Shares Issue
d
Price		 Amo
unt		 Percentag
e to Total
Number
of Issued
Ordinary
Shares

－86－

M
a
n
a
g
e
r		 CEO Chen, Hong
Wen		 1,890,000
 0.52% 0 0 0 0% 1,890,000 0 0 0.52%
General Manager Li, Rong
Chang
Senior Deputy
General Manager		 Tsai, Fu Tsan
Senior Deputy
General Manager		 Hsu, Jong Hui
Senior Deputy
General Manager		 Liao, Hsi An
CTO Yeh, Fu Min
COO Lin, Tien Jin
CFO Lin, Chih
Hong
CSO Cheng, Guang
Ming
Title
（Note 1）		 Name Acquired
Number
of
Employee
Restricte
d Shares		 Percentage
to Total
Number of
Issued
Ordinary
Shares		 Cancelled Cancelled Cancelled Uncancelled Uncancelled
Shares Issue
d
Price		 Am
ount
Percenta
ge to
Total
Number
of Issued
Ordinary
Shares		 Shares Issue
d
Price		 Amo
unt		 Percentag
e to Total
Number
of Issued
Ordinary
Shares
E
m
p
l
o
y
e
e
(
N
o
t
e
3
)		 Spokesperson Yang, Zheng
Jen		 1,220,000 0.34% 0 0 0 0% 1,220,000 0 0 0.34%
Head of Division Yao, Chi Sian
Head of Division Lai, Zhi Hao
Special Assistant Li, Long Jun
Vice President Wang, Shih
Jun
Deputy General
Manager		 Ting, Yuan
Zhe
Manager Lin, Jun Han

－87－

Senior Manager Zheng, Chung
Liang
Manager Huang, Shueh
Guan
Head of Division Wu, Zong En
Mananger Hsu, Ching
Song
  • Note 1: Name and titles of employee restricted stock owners, including managers and employees (resigned or deceased individuals should be denoted）, ought to be disclosed. The number of shares received or subscribed are presented in aggregate.

Note 2 :

  • Note 3 : Refers to non-managerial employees who are the top 10 major owners of employee restricted stock.

VII.Status of New Shares Issuance in Connection with Mergers and Acquisitions: None

VIII.Financing Plans and Implementation: None

－88－

V. Operational Highlights

I.Business Activities

(I)Business Scope

The scope of business of the Company shall be as follows:

  1. Research, development, manufacture, purchase and sale of electronic components, semi-finished products and finished products;

  2. Research, development, manufacture, purchase and sale of computer software, hardware and peripheral equipment;

  3. Import-export trading business in relation of the foregoing products;

  4. CC01101 Restricted telecom radio frequency equipment and materials manufacturing;

  5. F401021 Restricted telecom radio frequency equipment and materials import;

  6. E701031 Restrained telecom radio frequency equipment and materials construction;

  7. F113070 Wholesale of telecom instruments; and

  8. F213060 Retail sale of telecom instruments.

2. 2020 Proportion of each product (service) to total business operations

Product Ratio
WLAN CARD 12.62 %
WIRELESS GATEWAY 74.89 %
WIRELESS TELECOMMUNICATION
MODULE		 6.06 %
OTHERS 6.43 %
TOTAL 100.00%

3. Product Portfolio

roduct Portfolio
Product Name Purpose and Function
WLAN CARD Office computers and wireless
transmission equipment
WIRELESS GATEWAY Wired and wireless network transmission
equipment
WIRELESS
TELECOMMUNICATION
MODULE		 Wireless transmission module for IoT
equipment
OTHERS Buying and selling wires, packaging
materials,pallets and raw materials

－89－

4.New Reasearch and Development Plans

(1) Next-generation passive optical network/ ultra-wideband network and voice service integration systems GPON/XGSPON /10GEPON/DPoE/NGPON2 product development.

  • (2) xDSL, G.FAST equipment

  • (3) Whole home WiFi with Mesh development

(4)Advanced WiFi 6 AP,Repeater,and Mesh development

(5) Cost-effective and Advanced LTE client device development, including Cat

20, Cat 12, Cat6, Cat4, UER

(6) 3GPP based CIOT client device and LGA module development (Cat 4, Cat 1, Cat-M1, NB-IOT)

(7) 5G NR CPE development

(8) mmwave smart antenna phase array system platform development

(9) 5G mmwave repeater system platform development

(10)Tern smart mesh WiFi 6/6e System development

(11)5G smallcell solution and core network platform development

(12) Low Earth Orbit Satellite Smart Antenna CPE System research

(II)Industry Overview

1.The Status and Development of Industry

With the introduction of 5G specifications and standards, many communication service providers have also begun to develop various deployment strategies. In 2020, Apple launched the iPhone12 equipped with 5G technology standards, which has prompted a vast array of technological advances in the market. The chipmaker giant Qualcomm said in its previous financial report that they are optimistic about the development trend of 5G technology after 2021. Not only is 5G widely used in consumer products such as mobile phones, Internet of Vehicles, and Internet of Things, but it also has a lot to offer for edge computing, data center and 5G infrastructure markets.

The telecommunications equipment and services company, Ericsson, had pointed out in a report that by the end of 2026, there will be 3.5 billion 5G users worldwide, accounting for more than 50% of mobile data traffic, and 60% of the population will live in areas covered by 5G signals. Although the epidemic has brought about many uncertainties, the pace of 5G network deployment and the introduction of new features in 5G devices has accelerated in 2020. This report also pointed out that the increase in 5G users and population coverage has

－90－

confirmed that the fifth-generation mobile communications system is deployed faster than any mobile network.

The COVID-19 pandemic has accelerated the development of digitalization, and the demand for faster and more reliable home broadband networks has also increased. Numerous communication service providers have begun to offer Fixed Wireless Access (FWA) services. The demand for Wi-Fi connectivity is high as well. Wi-Fi 6 uses many of the same technologies as 5G, which renders low latency connectivity and the ability to connect to multiple devices simultaneously. In January 2020, the advent of Wi-Fi 6E was announced by the Wi-Fi Alliance. Wi-Fi 6E is an extended version of WiFi, which is, aside from the initial 2.4GHz and 5GHz frequency bands, an additional 6GHz is added to ensure high-efficiency Wi-Fi transmission.

Wi-Fi technology complements 5G and plays a role in various wireless communication. Gemtek has long been an innovator in the field of wireless technologies. The Company will continue to keep up with the trend and come up with new products to satisfy customer demands.

2. The Industry's Upstream, Midstream and Downstream Operations

The wireless LAN industry-value chain starts with upstream IC design houses (Broadcom, Qualcomm and Sigma Design, etc.), IC manufacturers (TSMC, UMC, etc.) and travels to midstream and downstream system design and manufacturing (Gemtek, CyberTAN, Askey Computer, Asus, etc.) and product sales companies (Belkin, Buffalo, Intel, etc.). Gemtek’s product supply chain begins with the purchasing of electronic components such as integrated circuits and circuit boards, which the materials would be placed through the SMT assembly process, testing, completion, and are then sold directly to assembly system companies or to general users through retail distributors. The Company’s line of business involves midstream manufacturing with connections to various manufacturers in the industry, depicted as follows:

Upstream
IC Design
House,
IC
Manufacturer		 Midstream
System
Developer and
Manufacturer		 Downstream
Retailer,
PC OEM,
System
Integrator		 Application
Users,
Application
System
Developer

－91－

3. Product Development Trends and Competition

A. Wireless LAN Market Outlook

Forbes reported that the advent of 5G will indeed change the overall wireless industry significantly. Its high-speed and low-latency features provides the foundation for a host of current and emerging uses in manufacturing, medical care, smart cities, self-driving cars, and augmented reality. In terms of Wi-Fi standards, the new generation of Wi-Fi also continues to evolve, offering highly scalable and cost-effective network solutions.

The Wi-Fi Alliance has given the next-generation wireless standard a new name, Wi-Fi 6, and the transmission speed in device-dense areas can reach four times higher than that of Wi-Fi 5 (the 802.11ac protocol), providing users with greater bandwidth so that all wireless devices can take full advantage of high-speed transmission.

Wi-Fi plays an important role in the digital transformation of enterprises. Mobile offices can be set up through Wi-Fi network applications, allowing all personnel to work in any area within the company premises. At present, the deployment of Wi-Fi 6 is still relatively limited. It is expected that in the next 2 to 3 years, there will be a transition period when Wi-Fi 5 and Wi-Fi 6 mutually coexist, and the latter is expected to be scaled up after 2023.

Wi-Fi 6 can greatly improve the capacity and bandwidth of wireless base stations (access point; AP), and can also divide channels into narrower sectors, greatly reducing network congestions and signal interference issues. Due to this newly enhanced feature, Wi-Fi 6 routers can connect and manage more devices at the same time, and significantly reduce the waiting and delay time when interference and connection problems occur. Wi-Fi 6 devices are also equipped with improved battery performance, thus making data transmission more efficient.

As for the dispute on whether the co-existence of the new Wi-Fi and 5G may appear redundant, take corporate office buildings for example, besides having Wi-Fi networks set up in open areas, places such as restrooms, elevators, emergency exit staircases, and corridors may require internet access as well. However, installing Wi-Fi hotspots in these locations will not benefit the entirety of the enterprise budget-wise, therefore having the support of 5G cellular on demand can fill in for the lack of WiFi signals when needed.

Therefore, choosing between 5G or Wi-Fi 6 may not be the main issue in terms of finding the optimal network solution, but how the two can complement one another in overlapping environments.

－92－

B. Technological Advancements

3GPP is the engineering organization that develops and defines the technical specifications and standards for 5G cellular networks; and the IEEE 802.11 standard, popularly known as WiFi, lays down the architecture and specifications of wireless LANs (WLANs). The biggest difference between the two is that Wi-Fi uses unlicensed spectrum, so the spectrum can be reused; while 5G, which uses licensed spectrum, has relatively higher transmission efficiency. In order to support innovative use cases such as the Internet of Things (IoT), GPS, and Internet of Vehicles, both Wi-Fi and 5G have evolved with new frequency bands.

Wi-Fi 6 will soon be applying the 802.11ax standard due to its outstanding features such as increased throughput, increased bandwidth efficiency, extended battery lifespan and performance, and wider coverage. In addition, 802.11ax has already included the ISM bands of 2.4GHz and 5GHz during its initial establishment, allowing it to operate on all Wi-Fi bands, including 2.4GHz, 5GHz and the upcoming 6GHz, narrowing the differences between Wi-Fi and 5G in terms of communication efficiency.

The latest technological advancement of Wi-Fi 6 is that its QAM modulation accuracy is doubled, which enables single devices to run faster, and the additional OFDMA Technology allows routers to accommodate more device connections at the same time. Furthermore, the BSS Coloring Technology that is newly introduced to WiFi can reduce signal interference between routers. WiFi power consumption runs more efficiently with the Target Wake Time (TWT) design. Compared with the Wi-Fi 5 routers currently used by most households, the maximum data transmission speed of Wi-Fi 6 is increased by nearly 40%.

The Wi-Fi 6E standard announced by the Wi-Fi Alliance in 2020 enables the 6GHz frequency band to transmit large quantities of data within a short distance, and can help alleviate the traffic congestion and interference of connected devices. In other words, Wi-Fi 6E is considered the newest highway channel added on top of Wi-Fi, and is packed with all the advantages of Wi-Fi 6.

Specifications and applications of various types of wireless technologies:

－93－

Type of
Technology		 Zig-Bee Bluetooth/BLE 802.11(b/g/n/ac) Wi-Fi 6(802.11ax)
Application Indoors Indoors Indoors/Outdoors Indoors/Outdoors
Band or
Spectrum		 2.4GHz ISM
868MHz,
915MHz		 2.4GHz ISM 2.4GHz/5GHz 2.4GHz/5GHz
Access CSMA-CA GFSK/8DPSK/pi/4
DQPSK		 OFDM/MIMO OFDMA/MIMO
Distance(meter) 10~75 100 100~250 100~250
Transmission
Speed		 250Kbps;40Kbps
20Kbps		 1~3Mbps 11Mbps~1.73Gbps Several Gigabit
Encryption Yes Yes Yes Yes
Data
Transmission		 Yes Yes Yes Yes
Voice
Transmission		 No Yes Yes Yes
Details According to the
current vision of
the
ZigBee
Alliance,
ZigBee’s
target
markets
mainly
include:
PC
peripherals
(mouse,
keyboard,
game
joystick),
consumer
electronic
equipment
(remote
control
devices on TV,
VCR, CD, VCD,
DVD, etc.), home
intelligent control
(lighting,
gas
metering control
and alarm, etc.),
toys
(electronic
pet), medical care
(monitor
and
sensor), industrial
control (monitor,
sensor
and
automatic control
equipment)
and
other fields.






















Bluetooth
technology
is
currently maintained
by
the
Bluetooth Special
Interest
Group
(SIG), with more
than
30,000
members
in
the
fields
of
telecommunications,
computers,
networks,
and
consumer
electronics.









Many
consumer
devices are equipped
with
Wi-Fi
capabilities. On other
device
applications,
personal
computers
can use Wi-Fi
to
establish
networks
and connect to the
Internet;
mobile
computers
can
connect to the Internet
through any Wi-Fi
hotspot; and digital
cameras
can
even
transmit
images
wirelessly.















Wi-Fi 6 technology
can
increase
the
number of devices
simultaneously
connected
to
the
service by each AP.
Usually, when you
connect more than a
dozen devices at the
same time through
retail
channels/domestic
mainstream
routers,
you may have some
challenges to Wi-Fi,
and the use effect and
experience
will
gradually deteriorate.
The
Wi-Fi
6
technology
specifically
introduces some new
features, allowing the
same server to serve
multiple devices at
the same time, which
is an improvement
over
the
previous
generation.

－94－

Technology 3G 4G 5G
Time of Creation 1998 2008 2019-2020
Bandwidth
(Uplink/Downlink)
64K/2M		 50M/100M Approx. 500M/1G
Type of Multiple
Access		 FDMA/CDMA FDMA/OFDM OFDM
Channel
Bandwidth		 5MHz 20MHz 100MHz (Below 6GHz)
400MHz (Above 6GHz)
Transmission
Speed		 70Mbps 64k~1Mbps 150Mbps ~ over 1Gbps
Application Mainly used for
sending and
receiving short
messages.		 Sending and
receiving text
messages.
Internet browsing
speed is much
smoother than
3G.		 Sending and receiving text
messages. Internet
browsing, watch 4K
videos without delay.
Used in innovative
applications such as the
Internet of Vehicles and
the Internet of Things.
Details Cellular network
mobile phone
technology that
supports
high-speed data
transmission. 3G
service can
transmit voice
(calls) and
information
(email, instant
messaging, etc.)
at the same time.
The
representative
feature of 3G is
to provide
high-speed data
services, with a
speed generally
above several
hundred kbps.		 Based on
technical
standards and
ITU's definition,
when the static
transmission rate
reaches 1Gbps,
and the user
reaches 100Mbps
under high-speed
movement,it can
be deemed as
4G.		 The main advantage of the
5G network is that the data
transmission rate is much
higher than the previous
cellular network, reaching
up to 10 Gbit/s, which is
100 times faster than the
current wired Internet and
faster than the previous 4G
LTE cellular network.
Another advantage is its
lower network latency
(faster response time),
which is less than 1
millisecond, compared to
30-70 milliseconds for 4G.

－95－

(III)Research and Development Overview

1.R& D Expenses by recent years and by the publication of this Annual Report

Item 2019 2020 2021Q1
Investments NT$837,667,000 NT$874,998,000 NT$174,268,000
As a percentage of total
revenue		 4.64% 4.39% 3.33%

Note: No financial forecasts have been prepared for 2020

2. Recent Research and Development Achievements

Year Achievements
2019 1.GPON/XGSPON / 10GEPON/DPoE/NGPON2
2.G.fast
3.Whole home WiFi with Mesh development
4.Tern smart mesh WiFi System development
5.Advanced WiFi Router 11.ax development
6.Cost-effective and Advanced LTE client device development, including Cat 20,
Cat 12, Cat6, Cat4, UER
7.3GPP based CIOT client device and LGA module development (Cat 4, Cat 1,
Cat-M1, NB-IOT)
8. 5G NR CPE development
9.1W CBRS LTE Small Cell System development
10.IIOT software System platform MERC development
11. New-generation Timestamp and High-end Switch products
12. mmWave System Platform development
2020 1. GPON/XGSPON /10GEPON/DPoE/NGPON2 product development.
2. G.FAST equipment
3. Whole home WiFi with Mesh development
4. Advanced WiFi 6 AP,Repeater,and Mesh development
5. Cost-effective and Advanced LTE client device development, including Cat 20,
Cat 12, Cat6, Cat4, UER
6. 3GPP based CIOT client device and LGA module development (Cat 4, Cat 1,
Cat-M1, NB-IOT)
7. 5G NR CPE development
8. 1W CBRS LTE Small Cell System development
9. mmwave smart antenna phase array system platform development
10. 5G mmwave repeater systemplatform development
  • (IV)Short-term and Long-term Business Development Plans

(1)Short-term Business Development Plans

A.Marketing Policies

a.Customer Retention and Market Expansion

Learn about customer demands and market trends. Expand the scope of services on the basis of existing production capacity and professional knowledge to expand the scale of business.

－96－

b. Complete Marketing Channel

Set up domestic and overseas offices and liaisons through subsidiaries and strategic alliances and maintain a good rapport with distributors to form a well-structured marketing channel.

c. Complete After-Sales Service

Establish quality control inspections. Provide after-sales consultation and maintenance services.

B.Production Policy

  • a. Reduce Production Costs and Improve Production Efficiency.

Strengthen product planning and quality control. Train and develop employees. Implement budget and cost control to improve production efficiency and reduce production costs.

b. Product Inspection and Quality Control

Implement ISO-9001:2015 and TQM to enhance overall product inspection and manufacturing quality.

C.Industrial Development

The Company researches and develops wireless communication products such as wireless network cards and wireless gateways. In addition to seeking continuous improvement in the quality of existing products, the company continues to develop products that are in line with the latest technical standards and design wireless multimedia products and services to meet market demands.

D. Business Scale

Seek opportunities to expand business scale in order to achieve the Company’s short-term goals in marketing, production, and R&D,

E. Finance

Obtain adequate sources of funding and investment plans to facilitate the Company’s manufacturing and development goals.

(2)Long-term Business Development Plans

A. Marketing Strategy

a. Follow market trends. Launch new products. Expand global market.

b.Work with large-scale international businesses through strategic alliances or technical cooperation to win OEM / ODM orders.

  • B.Production Policy

a. Material Requirements Planning

Continue to improve the Company’s Material Requirements Planning (MRP) system to maintain smooth operation, effective capacity and production quality. The goal is to enhance the overall efficiency of the supply chain and production lead time.

  • b. Automation

－97－

In order to successfully transition to production line automation, the Company needs to devise new product line layouts, invest in the professional training and development of operators, and discover more advanced manufacturing processes besides adding new machinery and equipment to the entire plan.

C.Industrial Development

Taiwan’s telecommunications industry incorporates various types of technologies to facilitate the construction and development of wireless communication networks. Ranging from wireless base stations, Wi-Fi6 routers, modules, to LTE terminals and LTE small cell products, and 5G and Pre-5G products in response to the advent of 5G technology, then supplemented by wired G.fast and GPON with its existing copper cables to achieve 1 Gps in the last mile to replace expensive optical fiber -----the amalgamation of technologies has helped telecom operators to deploy and operate with better efficiency.

Bearing in mind its long-term global expansion goals, the Company devotes itself to the advanced development of wireless communication network software, hardware, application services, and product integration devices to satisfy customer requirements. The Company also invests heavily on the research and development of new technologies and products and seeks opportunities to work closely with enterprises through technology collaboration. The Company wishes to combine the next-generation 5G and Wi-Fi and other wireless technologies with its existing telecommunication architecture to achieve higher market growth and business profit.

D. Business Scale

Adhere to the concept of corporate sustainability. Establish a good corporate culture. Extend short-term development plans to accommodate growing business operations.

E. Finance

a. Train and develop financial and accounting professionals..

b. Strengthen comprehensive financial planning to reduce operational risks and enhance competitiveness.

II. Market Analysis and Status of Goods Production and Sales

(I)Market Analysis

1.Global Sales Regions and Statistics

Year
Area		 Year
Area
2019
2019		 2020 2020
Amount % Amount %
Domestic 564,771 3.13% 976,463 4.90%
Overse
as		 Asia 23.88% 27.48% 6,215,478 31.19%
Europe 24.09% 20.71% 3,922,576 19.68%
America 48.86% 49.02% 8,807,938 44.2%
Others 0.04% 0.07% 6,917 0.03%
Total 18,057,131 100.00% 19,929,372 100.00

－98－

2.Market Share

In recent years, Gemtek had become widely successful with its advanced developments in the telecommunications market and has therefore been able to expand its worldwide businesses by leaps and bounds.

By following the technological trend in telecommunications infrastructure services, the Company’s main sales products has been keenly focused on LTE and Wi-Fi devices. However, based on its in-house R&D advantages, the Company was able to launch new projects and come up with numerous innovative products at the same time. The growing surge in telecommunications infrastructure and commercial networks deployment has led telecom carriers in many countries eager to upgrade their network capacity almost instantly. In 2019, Gemtek’s global sales has vastly expanded and its worldwide market share has also continued to increase exponentially.

3. Future Outlooks on Market Supply and Demand

In 2020, the world was threatened by the COVID-19 pandemic causing the electronics industry to suffer immensely by the effects of limited transportation and supply shortage due to city lockdown protocols. However, once people began to implement remote work and learning mechanisms, we were able to see an exponential surge of demand for telecommunications equipment. Domestic and international sales for related products were clearly on the rise. It was not until the global economy had slowly nudged towards the path of recovery was the electronics industry market able to take a breather. Under the effects of such economic turmoil, more advanced 5G related products, which include smart phones, WLAN, GPS, Ethernet LAN Switch, and Cable CPE etc. were gaining ground in every aspect, which the IEK Consulting Center of the Industrial Technology Research estimates that the total output of Taiwan’s telecommunications equipment may reach NT$868 billion in 2021, with an annual growth of 4% compared to 2020. The overall communications equipment and service market maintains steady growth momentum.

Despite the delay caused by the COVID-19 pandemic, 5G deployment is gradually warming up to market demands, picking up from where it had started back in 2019. Many countries have now initiated the use of 5G services, a new wave of market demands for base stations, network devices, RF Front-End modules, and smart phones will be anticipated.

At the end of 2020, upstream semiconductor suppliers began to manifest tight production capacity, which in turn caused supply shortages downstream. As far as production materials are concerned, the Company has taken measures to alleviate the risk of supply shortages to respond to customer needs. However, it is expected that supplies would continue to struggle to keep up with growing demands in the telecommunication industry in the following year.

－99－

4. Competitive Niche

A. Professional and Reliable Management Team

The Company’s management team has many years of accumulated technological experience and are all veterans in the industry. They have the core technological knowledge and the ability to develop new products on their own. Consequently, their contributions has facilitated the Company to maintain a good competitive edge and remain second to none as a world leading manufacturer.

B.Complete Product Line and Effective Manufacturing

The company has been in the field of wireless communication since 1994. It has a complete product line of wireless devices and automated manufacturing processes. Based on years of broad experience, the company continues to refine its production abilities in terms of design quality and manufacturing effectiveness. The Company is recognized by international business partners for its superior product stability.

C. Excellent R&D and Production Capabilities

The company’s R&D department continues to engage in the improvement of existing products, and pursue product innovation and diversification. Beginning from multimedia systems to the current wireless LAN network card products, the Company has always been able to keep pace with market trends, launch innovative products and increase overall profitability.

D. Well-Estabslihed Management System and Harmonious Labor Relations

The Company is well aware that if it wants to stay ahead in an increasingly competitive and volatile environment, and seek long-term sustainability in the market, the central strategies are to strengthen the company's management system and to elevate the effectivenee of employee training and development. In addition, a harmonious labor-management relationship is also a very important part, which needs to be backed by a good employee welfare system. In view of this, in addition to establishing a reasonable and sound management system through a written and standardized system, the company also pays special attention to employee welfare and workplace camaraderie to maintain harmonious labor relations, improve operating performance, and increase business profit.

E. Stable Customer Base and Complete After-Sales Service

The Company received the ISO9001 certification in 1999 and is a certified manufacturer. The Company attaches great importance to product quality and customer satisfaction, and maintains long-term partnerships with customers. The company has established a complete customer inquiry system and after-sales service.

5.Favorable and Unfavorable Factors in Prospects and Countermeasures

A.Favorable Factors

－100－

a. High Potential in Development Across the Industry

With the liberalization of global telecommunications, and the rapid development of mobile communications and networks, the communications technology is still the leading trend in the technological industry.

b. Has Obtained International Recognition

The Company is committed to the research and development and production of wireless LAN products. Its products and service applications continues to exhibit excellent quality, and has successfully won the recognition of international business partners.

c. Independent Research and Development Capabilities

The Company’s management team has many years of accumulated technological experience and are all veterans in the industry. They have the core technological knowledge and the ability to develop new products on their own. Consequently, their contributions has facilitated the Company to maintain a good competitive edge and develop new products with accelerated speed.

d. Superior Quality

In terms of quality, the Company conducts strict testings and quality controls to deliver the best products to its customers. In terms of price, the Company implements a set of effective strategies in product planning and positioning, giving its business pricing a competitive edge. In addition, the company has established a good reputation with its outstanding after-sales service, which all contributes to the advanced development of the company.

B. Unfavorable Factors and Countermeasures

a. Low-Cost Competition

Due to fierce competition in the market, business rivals often compete by cutting prices, which results in the declination of business profits.

Countermeasures

The Company is working towards the research and development of high profibility products, and hopes to expand the scale of operations and improve manufacturing processes to reduce production cost. At the same time, the Company plans to provide custom integrated services to enhance the overall performance of hardware device products, software, and cloud maintenance services.

b. Currency Fluctuation Risks

The Company sells products denominated in U.S. dollars. The appreciation of the New Taiwan Dollar will adversely affect revenue caused by foreign exchange losses. The Company has adopted measures such as currency hedging and customer negotiations to reduce the impact of exchange rate fluctuations.

－101－

Countermeasures

Adopt financial hedging strategies and negotiate with customers to adjust product prices.

  • (II) Main Products and Manufacturing Process

1. Main Products

Gemtek’s wireless broadband products mainly consists of LTE data terminal routers. LTE is not only widely used among small units such as individuals and families, but also by large entities as in enterprises and factories. Wireless LTE can be deployed in wide metropolitan areas, and even in remote towns, pastures, and open landscapes, saving significant amount of cost in contrast to setting up wired network infrastructures.

Gemtek owns a complete set of production lines designated to LTE portable routers, indoor routers, outdoor routers, and micro base stations to satisfy the different application requirements of operators and market demand.

The LTE system architecture includes Evolved Packet Core (EPC) and Evolved Universal Terrestrial Radio Access Network (E-UTRAN) [1]. EPC is a multi-access network based on the IP network protocol. It enables access to 3GPP wireless networks such as LTE and 3G, and can even connect to non-3GPP standard WLAN and WiMAX networks. Its main network components include Mobility Management Entity (MME), Serving Gateway (S-GW), Packet Data Network Gateway (PDN GW; P-GW), and Home Subscriber Server (HSS). In E-UTRAN, the base station (E-UTRAN Node B; eNodeB) is responsible for allocating the wireless network resources among User Equipment (UE).

The rapid development of diversified networking such as streaming media, online games, IP VoD, 4K/8K Ultra HD quality and the Internet of Things is giving rise to the incessant demand for bandwidth. Fixed-line technology is still undergoing evolutionary changes. The telephone transmission technology has progressed from VDSL2 to 106MHz and 212MHz G.fast; fiber-optic transmission technology has also evolved from 2.5G GPON to 10G XGS-PON and 40G NG-PON2.

Gemtek provides a whole series of new-generation fixed-line broadband products, including PON, xDSL/G.fast, and DPU, which can all be customized to meet customers' diverse network requirements and develop terminal equipment that render a higher competitive edge in the market.

Smart products have become essential parts of our everyday life. People nowadays are looking beyond the high speed and high coverage of Wi-Fi for more connectivity. Gemtek has been working in the telecommunications field for over 30 years, and had developed numerous products that are in line with technological advances. From 802.11ac to 802.11ax, WiFi networks have become more efficient with its broadened capacity and ability to coordinate multiple access points at the same time. 802.11ax also supports 2.4GHz and 5GHz bands, and can be used in various high density wireless scenarios. Smart devices can be used to manage all sorts of sensors and smart products, allowing enterprise applications and smart homes to be deployed with more flexibility.

－102－

Gemtek has also incorporated the latest WiFi technology into its seamless wireless mesh network system to enhance network reliability and enable multiple connections. The system is capable of automatically detecting and switching between Wi-Fi access points to optimize Wi-Fi signals, working towards the goal of achieving zero attenuation and zero dead ends to build a truly seamless network environment.

Gemtek has also incorporated the latest WiFi technology into its seamless wireless mesh network system to enhance network reliability and allow for multiple connections. The system is capable of automatically detecting and switching between Wi-Fi access points to optimize Wi-Fi signals, working towards the goal of achieving zero attenuation and zero dead ends to build a truly seamless network environment.

Last but not least, Gemtek’s smart sensors alongside with its controlling systems are designed to automatically screen or monitor the environment, and then help create the best living condition through indoor smart controlling devices. The series of smart sensor and device solutions can also be managed remotely through mobile phones and computers. These solutions can be used for the purpose of security monitoring, access control management, and energy-saving control etc., to allow for a better quality of life.

2.Manufacturing Process

==> picture [331 x 353] intentionally omitted <==

－103－

(III) Supply of Raw Materials

The main raw materials of the company’s products include integrated circuits, circuit boards, wires, diodes, and capacitors, among which the raw materials that are used to assemble communication chipsets are made by designated manufacturers overseas. Due to the fact that these special components rely mainly on import, which the long wait for supply delivery might affect the overall production lead time, therefore, effective inventory control is vital to get the Company better prepared for unexpected supply outages. Procurement of raw materials from certified domestic suppliers may have less of an issue in terms of supply shortage, though the supply of several passive components can be tight at times, the Company has established contingency plans to mitigate the risks caused by insufficient supplies. As of now, there are no cases where the Company’s production plans were hindered or suspended by the lack of raw materials.

－104－

(IV) Sales and Procurement Data from the Past Two Years 1.Sales Data

2019 2019 2019 2019 2020 2020 2020 2020 As of 2021Q1 As of 2021Q1 As of 2021Q1 As of 2021Q1
Ite
m		 Name Amount As a
percentage
of total net
procureme
nt (%)		 Relati
onshi
p with
the
Comp
any
Name		 Amount As a
percentage
of total net
procureme
nt (%)		 Relati
onshi
p with
the
Comp
any
Name		 Amount As a
percentage
of total net
procureme
nt (%)		 Relati
onship
with
the
Comp
any
1 Client
A		 5,473,384 30.32 None Client
D		 4,278,476 21.48 None Client
D		 1,053,241 20.10 None
2 Client
B		 3,224,002 17.85 None Client
B		 2,759,107 13.84 None Client
B		 923,076 17.62 None
3 Client
C		 1,451,726 8.04 None Client
A		 2,569,367 12.89 None Client
A		 637,672 12.17 None
Client
C		 2,174,766 10.91 None Client
C		 613,780 11.71 None
Others 7,908,019 43.79 Others
8,147,656		 40.88 Others
2,012,514		 38.40
Net
Sales		 18,057,131 100.00 Net
Sales		 19,929,372 100.00 Net
Sales		 5,240,283 100.00
  1. YoY Sales Variance Analysis: In 2020, Gemtek has become part of Client D’s business supply chain. Client D is the major contributor of the Company’s sales revenue for the year 2020

3.Procurement Data

2019 2019 2019 2019 2020 2020 2020 2020 As of 2021Q1 As of 2021Q1 As of 2021Q1 As of 2021Q1
Ite
m		 Name Amount As a
percentage
of total net
procureme
nt (%)		 Relati
onshi
p with
the
Comp
any
Name		 Amount As a
percentage
of total net
procureme
nt (%)		 Relati
onshi
p with
the
Comp
any
Name		 Amount As a
percentage
of total net
procureme
nt (%)		 Relati
onship
with
the
Comp
any
1 Client
E		 1,288,395
9.03		 None Client
H		 1,845,074
10.48		 None Client
H		 471,212
9.00		 None
2 Client
F		 1,035,549
7.26		 None Client
G		 781,222
4.44		 None Client
J		 211,872
4.05		 None
3 Client
G		 1,037,917
7.28		 None Client
I		 634,990
3.61		 None Client
I		 189,282
3.62		 None
Others 10,902,354
76.43		 Others 14,345,753
81.48		 Others
4,363,017
83.33
Net
Procur
ement		 14,264,215
100.00		 Net
Procur
ement		 17,607,039
100.00		 Net
Procur
ement		 5,235,383
100.00

4. YoY Procurement Variance Analysis:

The procurement sources of various raw materials of the Company are diversified. In addition to cooperating with various suppliers for many years, the

－105－

Company maintains a good cooperative relationship and actively develops new sources of procurement. Manufacturer H is a designated supplier of one of our clients. Due to the client’s significant increase in gross profit in 2020, manufacturer H has became one of the three major suppliers of the Company.

(V) Production Analysis for the Past Two Years

Unit: All numbers in NT$ thousands ;SET

Year
Production
Product		 2019 2019 2019 2020 2020 2020
Capacity Volume Value Capacity Volume Value
WLAN CARD 804,175
796,213
186,310
93,306,834
90,589,159
1,876,688
WIRELESS GATEWAY 12,118,670
9,322,054
11,814,666
12,300,266
10,250,222
13,784,962
WIRELESS
TELECOMMUNICATIO
N MODULE		 16,661,578
16,334,880
1,048,973
9,303,203
9,120,787
709,894
Total 29,584,423
26,453,147
13,049,949		 114,910,303 109,960,168
16,371,544

(VI) Sales Analysis from the Past Two Years

Unit: All numbers in NT$thousands;SET Unit: All numbers in NT$thousands;SET Unit: All numbers in NT$thousands;SET Unit: All numbers in NT$thousands;SET Unit: All numbers in NT$thousands;SET Unit: All numbers in NT$thousands;SET Unit: All numbers in NT$thousands;SET Unit: All numbers in NT$thousands;SET
Year
Sales

Product		 2019 2020
Domestic Sales International Sales Domestic Sales International Sales
Quantity V a l u e Quantity V a l u e Quantity V a l u e Quantity V a l u e
WLAN CARD 113,454
16,917
1,472,220
432,551
570,109
70,200		 89,874,795
2,445,761
WIRELESS
GATEWAY		 260,730 316,702
9,389,486		 12,714,933
498,240
563,157		 10,170,487 14,361,375
WIRELESS
TELECOMMUNIC
ATIONMODULE		 1,469,428 170,220 28,780,466 1,833,564
1706698
175,111		 14,991,615
,1033,043
OTHERS -
60,932
-		 2,511,312
-
167,995
-
1,112,730
Total 1,843,612 564,771 39,642,172 17,492,360 2,775,047
976,463		 115,036,897 18,952,909

Note: 1. Due to inconsistent units, the quantity for products that are classified as OTHERS may not be included.

－106－

III. Employees

(I)Human Resource Data
Year 2019 2020 As of March
31,2021
Number of
Employee(s)		 As of the Previous
Year		 921 897 1091
New Hire Count for
theCurrent Year		 153 588 59

Number of
Resignations for the
Current Year		 177 394 76
Total 897 1091 1074
Average Age 36.2 37.1 37.1
Average Tenure 7.5 7.1 7.3
Distribution
of education
background
(%)		 Doctorate or
Professional Degree		 0.45% 0.37% 0.45%

Master’s Degree		 40.58% 34.37% 41.41%

Bachelor’s Degree		 50.61% 48.4% 58.71%

High School Degree		 5.46% 13.75% 15.74%
Less Than High
School		 2.9% 3.12% 3.57%

(II)Training and Development

Employees are Gemtek’s most valuable asset. Therefore, the proper planning and utilization of all resources to continuously invest in employee training and development is a critical and important task.

According to the Company’s employee training and development policies, details and schedules for the training courses are determined by direct needs or essential matters that ought to be addressed as a part of workplace knowledge.

In 2020, Gemtek’s total number of employee training hours is 18240.1 hours, which is 16.7 training hours per person. The total amount of training cost was NT$493,150. Gemtek’s training programs are grouped by the following categories:

1.New Employee Training: Training programs should include new employee orientation, a tour of the workplace environment, brief introduction to the company’s products, manufacturing process, systems, information security, and standards of quality, and general courses such as personal development and engagement. Other day to day training would include on-the-job induction training given by team mentors to help the new employee learn and adapt to their roles to quickly achieve a higher level of performace. The goal of all trainings are to help

－107－

new employees acclimate to the organization in order to contribute their knowledge and skills with less effort, and be conscientious of rules that are imperative to their rights, health, safety, and their obligations as an employee.

2.Industry and Product Training: The Company holds a series of industry and product training courses from time to time to keep employees updated with the latest product developments and information that are relevant to the wireless communication technology.

3.Language Training: Having a higher level of English fluency may help employees engage in better communication with Gemtek’s worldwide business partners. The Company holds business English courses from time to time to help employees master the skills that may be beneficial to their job performances.

  1. Professional Training: Include research and development training, quality management training, and business marketing training.

  2. Management training: Training programs our carried out according to the different levels of management. The main idea is to instill insight and leadership skills among managers.

  3. Occupational Safety and Health Training: As mandated by law, the Company has the obligation to educate employees about occupational safety and health as part of the corporate goal to build a safer and healthier work environment.

  4. Intellectual Property Training: A general guide to help R&D employees understand patents and the patent application process.

In addition to the above-mentioned corporate training programs, each department are endowed with a budget to allow employees to pursue further studies through external training programs such as seminars, professional and management courses, and so forth. In addition, internal training programs may also encompass broader engagements such as cross-departmental trainings, experience sharing forums, book clubs, etc. The goal is to create a learning atmosphere where employees may have the appropriate sources to learn continuously.

(III) Employee Code of Ethics and Conduct

The Company’s work principles are based on code of ethics and professional conduct. Employees should be diligent, prudent, and trustworthy. They have the obligation to contribute their knowledge and capacity to the Company, and abide by the code of ethics and professional conduct throughout work. The rules that the Company’s employees should abide by are as follows:

  1. Company employees, being part of the Company, are responsible for maintaining the Company’s reputation, exhibit camaraderie, be loyal and diligent, and abide by all rules and regulations of the Company.

－108－

  1. Employees should follow the reasonable supervision and guidance of supervisors at all levels and pay attention to work safety. Supervisors at all levels should respect employee’s individual identity, show appreciation to subordinates, and provide proper guidance to help employees complete their work.

  2. Employees should be fully engaged and committed to their work, respect public property, implement cost-saving initiatives, improve operations quality, increase business production, ensure overall effectiveness, and practice professional business conducts in terms of securing trade secrets and confidential information.

  3. Employees must not exhibit arrogance, laziness, or other toxic behaviors that could harm the reputation of individuals and the Company.

  4. Employees are not allowed to bring relatives, friends and guests into the factory without approval.

  5. Employees are not allowed to carry hazardous substances, dangerous goods, prohibited items, flammable (explosive) materials, or things that have nothing to do with workplace duties.

  6. Employees are not allowed to bring company property off company grounds without prior approval.

  7. Employees must not make secret profits for themselves by virtue of their positions, and must not violate their duties by accepting improper rebates, gifts, entertainment. or other illegal benefits from others.

  8. Without the written consent of the Company, employees are not allowed to conduct side businesses that are related to their current work which may impact personal or organizational performances. Nor should employees create a similar business, either individually or through a third party, which may have the potential to compete with the Company.

  9. The Company name and brand can only be used for business or commercial reasons.

  10. Maintaining and Protecting Trade Secrets

(1) Employees of the Company shall observe the rules to maintain and protect trade secrets that are relevant to their business.

(2) Employees of the company shall not attempt to obtain or inquire about the trade secrets that are not related to their own business.

(3) Employees of the company shall not share or discuss salaries with co-workers.

(4) If the disclosure of trade secrets should inflict any sort of damage to the Company, the Company shall, in accordance with the law, be entitled to claim compensation to secure and maintain the rights of its mass shareholders and employees.

IV. Environmental Protection Expenditure

  1. According to laws and regulations, if it is required to apply for a permit for installing anti-pollution facilities, or permit of pollution drainage, or to pay anti-pollution fees, or to organize and set up an exclusively responsible unit/office for environmental issues, the description of the status of such applications, payment or establishment shall be made:

－109－

(1) Application status for Permission to Install Anti-Pollution Facilities or Discharge Wastes: According to regulations, the Company is located in the vicinity of the Hsinchu Industrial Park centralized sewage system, therefore the Company had applied for a permit to channel its wastewater discharge through the local system . On May 28, 1999, XinGuanZi Letter No. 0498 was approved and granted.

(2) Payment status for Pollution Control Fees: The Company pays a monthly fee to the Hsinchu Industrial Park Management Center for sewage treatment.

  1. Setting forth the company's investment on the major anti-pollution facilities, the use purpose of such facilities and the possible effects to be produced: None

  2. Describing the process undertaken by the company on environmental pollution improvement for the most recent 2 fiscal years and up to the prospectus publication date. If there had been any pollution dispute, its handling process shall also be described: None

  3. Describing any losses suffered by the company in the most recent 2 fiscal years and up to the prospectus publication date due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in environmental protection inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, 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: None

  4. Explaining the current condition of pollution and the impact of its improvement to the profits, competitive position and capital expenditures of the company, as well as the projected major environment-related capital expenses to be made for the coming 2 fiscal years:

The Company mainly researches, develops, designs, produces, and sells wireless communication products, and is a major player in the electronic high-tech industry. The Company’s manufacturing process consists of surface dressing, product testing, product assembly, and product packaging, consequently, no form of pollution is generated and the Company is naturally exempt from specific environmental protection laws and regulations. Moreover, all manufacturing wastes are handled by designated waste management companies that have been certified by the competent authority. Taking into account the aforementioned facts, while also considering that the Company has not caused any pollution nor incurred any penalties derived from pollution, therefore the Company has no obligation to install pollution prevention equipment. Presumably, for the next three years, the Company will have no major capital expenditures related to the prevention of environmental pollution, therefore, the Company's surplus and competitive position will not be affected by these matters.

V. Labor-Management Relations

Employees are Gemtek's most valuable asset, and the cornerstone of success. Gemtek makes proactive efforts to ensure that each and every one of our colleagues feel appreciated for their time and contributions. In order to enhance and pepetuate this

－110－

well-balanced organizational atmosphere and culture, Gemtek is fully committed to providing employees with the best workplace environment, while helping our employees achieve higher expectations and standards in life. Respect and care are part of Gemtek’s core principles, therefore, Labor-Management Relations has always been harmonious and well-maintained. In the future, we will continue to build even better working environments and create satisfactory benefits for our employees. And through various welfare measures and leisure activities, we hope to provide employees with the opportunities to maintain mental and physical well-being between work and life, as well as strengthen team spirits and group cohesiveness to achieve long-term corporate sustainability.

(I) List any 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.:

Employee Welfare Committee and Retirement Plan Committee

Name Date of
Establishment		 Letter Granted by
CompetentAuthority
Employee Welfare Committee of
Gemtek Technology Co.,Ltd.		 January 19, 1999 1999Beifulaoshizhi
No.20324
Supervisory Committee of Business
Entities‘ Labor Retirement Reserve of
Gemtek TechnologyCo.,Ltd.		 October 30, 2000 2000Fulaozhizhi
No.159743

1.Employee Benefits:

(1) Labor Insurance and National Health Insurance: The Company offers Labor Insurance and National Health Insurance benefits to Gemtek employees starting from the first day of work.

(2) Group Insurance Plan: Based on the job grades of individuals, Gemtek employees can receive an additional Group Insurance Plan benefit which the premiums are paid at the Company’s expense. Employees are also given the option to purchase Self-insured Plans for family members, providing an extra layer of coverage and care for the their loved ones.

(3) Travel Insurance for Business Trips: Gemtek employees are entitled to receive a comprehensive, company-paid travel benefit for any accidental death or injury that may occur when going on business trips.

(4) Staff Cafeteria, Dormitory, Parking Lot.

(5) Employee Bonus and Compensation Programs.

(6)Reacreational Ares and Break Rooms: Gemtek headquarters is equipped with an indoor cafe, aerobics training room, office gym, table tennis room, badminton court, basketball court, etc.

(7) Employee Welfare Committee: In compliance with relevant regulations, the Company has set up an Employee Welfare Committee to administer employee welfare funds and deploy various welfare measures and events to broaden employee benefits and wellness, which include birthday rewards, travel benefits, holiday bonuses, marriage benefits, maternity and paternity benefits, bereavement benefits, and recreational club activities funding, etc.

2.On October 30th, 2000 (89 FuLaoZhiZhi Letter No. 159743), the Company has officially established a Supervisory Committee of Business Entities‘ Labor

－111－

Retirement Reserve in accordance with the provisions of the “Rules Governing Organization of Supervisory Committee of Business Entities‘ Labor Retirement Reserve” promulgated by the Ministry of the Interior. The Supervisory Committee prepares a retirement reserve based on the approved provisions each year. This retirement reserve is allocated to a special account owned by the Labor Retirement Reserve Supervisory Committee for future pension payments. In addition, in accordance with the Labor Pension Act, for employees who have chosen the new labor retirement plan since July 1, 2005, the company will deposit 6% of the employee’s salary to the employee’s personal labor retirement pension account every month, which will be kept under the custody of the Bureau of Labor Insurance. Up to the present, no pension payments have been claimed.

3.In order to enhance the quality of human resources, the Company has formulated employee education and training programs to sustain the company's development goals and support lifelong learning plans for employees. The ultimate goal is to cultivate talents at all levels, keep employees inspired, and improve work efficiency.

4.Health Management:

(1) Hold employee health promotion activities and lectures regularly. Provide high-quality health management services.

(2) Routine on-site healthcare services.

(3) Regular health checks.

(4) A specialized team is set up to protect the Company against the threat of infectious diseases. Team members are in charge of collecting news sources about disease prevention, organizing employee vaccination sessions, and administering infection control kits to colleagues who are required to go on business travels overseas.

(5) Holds workplace safety and health inspections on a regular basis to ensure the quality of the work environment and protect the health and safety of employees. (6) In 2020, Gemtek is specially committed to promoting Workplace Smoke-Free Policies and Cessation Programs to establish a healthy work environment, and was awarded the " Badge of Accredited Healthy Workplace " by the National Health Administration of the Ministry of Health and Welfare.

  1. Status of labor-management agreements and measures for preserving employees' rights and interests.

(1)Department Meetings: Mainly for addressing issues on communication, allocation of human resources, uncovering problems, in addition to promoting and executing certain matters. The purpose of the meetings is to allow employees to fully understand the Company’s standards in production, technology, safety, and quality, as well as create a sense of camaraderie.

(2)Employee Welfare Committee Meeting: Meetings are held quarterly to discuss and inspect matters that center on employee welfare, and also for the purpose of allowing managerial offices to reflect on these particular issues. Reprensentatives of labor and management are to sit together and discuss the policies and measures to improve employee welfare, i.e. understanding employee demands and concerns. (3)The Company regularly convenes labor-management meetings and has also established an anti-sexual harassment committee. The duty of the ad hoc committee is to address and respond to grievances regarding sexual harassment.

－112－

(II) 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:

The company has always attached importance to labor-management relations and has made efforts to maintain a harmonious labor-management relationship. There has been no loss due to labor disputes. It is estimated that in the future, under the company's comprehensive employee welfare measures, no labor disputes shall occur.

IV Important Contracts

Company
Name		 Type of
Contract		 Counterparty Contract Period Main Content Restrictive
Clauses
Empresa de
Gemtek Gemtek sells CPE
Product Supply

Telecomunicaciones
Technology September 24, 2020 ~ products to the None

Agreement
Nuevatel (PCS DE

Co., Ltd.
counterparty
Bolivia) SA
License
Agreement		 Gemtek is licensed to
Gemtek
Intrinsyc Technologies use the
Technology November 4, 2020 ~ None

Corporation		 counterparty’s
Co., Ltd.
technology.
License
Agreement
Gemtek Gemtek is licensed to
Technology MaxLinear Inc. May 20, 2020 ~ use the counterparty’s None

Co., Ltd.		 technology.
Collaborative
Research
Agreement
Gemtek
August 1, 2020 ~ Gemtek partners with
Technology Yuan Ze University None

July 31, 2021
counterparty
Co., Ltd.

－113－

VI.Financial Summary

  • I.Condensed Balance Sheet and Income Statement for the Past 5 Years

(I) Condensed Balance Sheet

(1) Condensed Balance Sheet (Consolidated) of Gemtek and its Subsidiaries – Based on IFRS

Unit: All numbers in NT$ thousands

Year

Item		 Year

Item		 Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1） Financial Position
As of Mar 31, 2021
（Note2）
2016 2017 2018 2019 2020
Current Assets 8,260,664 8,855,395 10,995,489 9,548,019 12,673,645 12,151,751
Property, plant and equipment 3,105,014 2,780,898 2,886,755 2,867,476 3,325,158 3,345,585
Intangible assets - - 389,010 447,765 79,763 79,202
Other Assets 2,411,684 3,424,381 1,824,977 1,836,476 2,577,810 3,813,617
Total Assets 13,777,362 15,060,674 16,096,231 14,699,736 18,656,376 21,390,155
Current
Liabilities		 Before
dividend
distribution		 5,384,567 7,234,900 4,613,772 7,234,900 9,043,613 10,313,986
After
dividend
distribution		 5,728,883 7,234,900 4,791,683 7,234,900
Non-current Liabilities 1,140,722 183,099 218,612 1,398,089 228,628 227,247
Total
Liabilities		 Before
dividend
distribution		 5,567,666 7,453,512 6,011,861 7,453,512 9,272,241 10,541,233
After
dividend
distribution		 5,911,982 7,453,512 6,189,772 7,453,512
Attributable to the equity of the
ownerofthe parent company		 - - 8,603,133 8,417,519 9,384,003 10,848,307
Share Capital 3,038,210 3,273,104 3,565,540 3,568,835 3,575,905 3,575,905
Capital
Reserve		 Before
dividend
distribution		 4,507,982 4,669,276 4,761,281 4,669,276 4,606,007 4,611,087
After
dividend
distribution		 4,439,119 - 4,583,370 - -
Retained
Earnings		 Before
dividend
distribution		 1,269,229 1,106,780 1,310,513 1,106,780 2,583,817 2,749,423
After
dividend
distribution		 993,776 1,106,780 1,310,513 1,106,780 -
Other equity (249,623) 442,693 (738,463) (1,223,110) (1,381,726) (91,302)
Treasury Stock - - - - - -
Non-controlling interests - - 39,586 270,356 132 615

－114－

Total Equity Before
dividend
distribution		 9,493,008 8,642,719 8,687,875 8,642,719 9,384,135 10,848,922
After
dividend
distribution		 9,148,692 8,642,719 8,509,964 8,642,719 -

Note 1: For the years 2016 to 2020, the Company has adhered to the IFRS standards. The above financial information was audited by the CPA.

Note 2: For the year 2021, the Company has adhered to the IFRS standards The Financial information as of March 31, 2021 was reviewed by the CPAs.

(2) Condensed Balance Sheet – Based on IFRS

Unit: All numbers in NT$ thousands

Unit: All numbers in NT$thousands Unit: All numbers in NT$thousands Unit: All numbers in NT$thousands Unit: All numbers in NT$thousands
Year
Items		 Financial Summary（Note 1）
2016 2017 2018 2019 2020
Current Assets 4,715,548 5,435,042 6,442,789 5,516,874 8,769,744
Property , plant, and equipment 1,357,283 1,181,550 1,170,049 1,131,078 1,321,057
Intangible Assets - - - - -
Other Assets 6,603,859 7,812,966 7,463,753 7,197,393 7,242,756
Total Assets 12,676,690 14,429,558 15,076,591 13,845,345 17,333,557
Current
Liabilities		 Before dividend
distribution		 3,020,693 4,761,603 6,263,933 4,057,253 7,735,749
After dividend
distribution		 3,481,492 5,105,919 6,263,933 4,235,164
Non-current Liabilities 1,131,970 174,947 209,525 1,370,573 213,805
Total
Liabilities		 Before dividend
distribution		 4,152,663 4,936,550 6,473,458 7,949,554 7,949,554
After dividend
distribution		 4,613,462 5,280,866 6,473,458 5,605,737
Attributable to the equity of the
ownerofthe parent company		 - - - - -
Share Capital 3,038,210 3,273,104 3,565,540 3,568,835 3,575,905
Capital
Surplus		 Before dividend
distribution		 4,312,177 4,507,982 4,669,276 4,761,281 4,606,007
After dividend
distribution		 - 4,439,119 - 4,583,370 -
Retained
Earnings		 Before dividend
distribution		 1,423,263 1,269,229 1,106,780 1,310,513 2,583,817
After dividend
distribution		 962,464 993,776 1,106,780 1,310,513
Other Equities (249,623) 442,693 (738,463) (1,223,110) (1,381,726)
Treasury Stock - - - - -
Non-contolling Interests - - - - -
Total Equity Before dividend
distribution		 8,524,027 9,493,008 8,603,133 8,417,519 9,384,003
After dividend
distribution		 8,063,228 9,148,692 8,603,133 8,239,608

Note 1: For the years 2016 to 2020, the Company has adhered to the IFRS standards The above financial information was audited by the CPA.

－115－

(II) Income Statements

(1) Condensed Income Statement (Consolidated) of Gemtek and

Subsidiaries– Based on IFRS

Unit: All numbers in NT$ thousands

Year
Items		 Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1） Financial Position
As of
March 31,
2021(Note 2）
2016 2017 2018 2019 2020
OperatingIncome 14,511,254 13,580,607 17,333,751 18,057,131 19,929,372 5,240,283
GrossProfit 2,285,273 1,702,867 1,600,685 1,772,491 2,265,576 522,150
OperatingProfit 339,196 (41,685) (58,779) 51,499 467,913 127,566
Non-operating income and
expense		 341,354 368,757 86,088 231,056 1,105,259 23,400
Profit before tax 680,550 327,072 27,309 282,555 1,573,172 150,966
Net income for the year from
the continuing department		 567,072 311,941 (21,846) 209,973 1,407,574 128,786
Loss from the discontinued
department		 - - - - - -
Currentperiod netprofit 567,072 311,941 (21,846) 209,973 1,407,574 128,786
Other current comprehensive
income (loss) profit( net after
tax)		 (445,033) 676,141 (1,112,689) (475,358) (184,190) 1,316,558
Total comprehensive income of
current period		 122,039 988,082 (1,134,535) (265,385) 1,223,384 1,445,344
Net profit attributable to the
ownerofthe parent company		 567,072 311,941 (22,804) 201,193 1,370,155 128,303
Net profit attributable to
non-controllinginterests		 - - 958 8,780 37,419 483
Total current comprehensive
income attributable to the owner
ofthe parent company		 122,039 988,082 (1,135,533) (272,976) 1,186,605 1,444,861
Total current comprehensive
income attributable to
non-controllinginterests		 - - 998 7,591 36,779 483
Earningsper share 1.89 1.01 (0.07) 0.57 3.86 0.36

Note 1: For the years 2016 to 2020, the Company has adhered to the IFRS standards The above financial information was audited by the CPA.

Note 2: For the year 2021, the Company has adhered to the IFRS standards The Financial information as of March 31, 2021 was reviewed by the CPAs.

－116－

(2) Condensed Comprehensive Income Statement of Gemtek – Based on IFRS

Unit: All numbers in NT$ thousands

Year
Items		 Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1） Financial Summary（Note 1）
2016 2017 2018 2019 2020
Operating Income 13,311,451 12,467,384 14,248,465 14,530,958 16,484,007
GrossProfit 1,865,732 1,175,032 1,190,357 1,180,414 1,568,999
Net operating income (loss) 342,983 (130,014) (10,659) (66,480) 230,908
Non-operating income and
expenses		 311,562 412,671 7,520 268,551 1,228,732
Profit before tax 654,545 282,657 (3,139) 202,071 1,459,640
Net income for the year from the
continuing department		 567,072 311,941 (22,804) 201,193 1,370,155
Loss from the discontinued
department		 - - - - -
Current periodnet profit 567,072 311,941 (22,804) 201,193 1,370,155
Other comprehensive income
recognized for the period (net
amount aftertax)		 (445,033) 676,141 (1,112,729) (474,169) (183,550)
Total comprehensive income of
current period		 122,039 988,082 (1,135,533) (272,976) 1,186,605
Net profit attributable to the
owner of the parent company		 567,072 311,941 (22,804) 201,193 1,370,155
Net profit attributable to
non-controllinginterests		 - - - - -
Total current comprehensive
income attributable to the owner
of the parent company		 122,039 988,082 (1,135,533) (272,976) 1,186,605
Total current comprehensive
income attributable to
non-controlling interests		 - - - - -
Earningsper share 1.89 1.01 (0.07) 0.57 3.86

Note 1: For the years 2016 to 2020, the Company has adhered to the IFRS standards The above financial information was audited by the CPA.

(III) Factors that may impact the effectiveness of the above comparison: None

( 四 ) Audit Opinions

1. Auditors and their Audit Opinions over the Past 5 Years

Year Audit Firm CPA Opinion
2020 Deloitte & Touche Ching-zen Yang, Jing-ting
Yang		 Unqualified opinion
2019 Deloitte & Touche Ching-zen Yang, Zhe-li Gung
Unqualified opinion
2018 Deloitte & Touche Ching-zen Yang, Zhe-li Gung
Unqualified opinion
2017 Deloitte & Touche Ching-zen Yang, Zhe-li Gung
Unqualified audit report with
explanatory paragraph or modified
wording
2016 Deloitte & Touche Ching-zen Yang, Zhe-li Gung
Unqualified audit report with
explanatory paragraph or modified
wording

－117－

II. Five Year Financial Analysis

（ I） Financial Analysis (Consolidated) of Gemtek and its Subsidiaries – Based onn IFRS


Items		 Year As of
2016 2017 2018 2019 2020 March 31, 2021
(Note 1）
Financial
Structure（％		 Debt to Assets Ratio 38.13
36.97
46.31
40.90
49.70
49.28
）
Long-term capital to
property, plant, and
equipment		 311.26
347.95
305.59
351.74
289.09
331.07
Solvency(％) Current Ratio 200.86
164.46
151.98
206.95
140.14
137.21

Quick Ratio		 160.47
129.97
110.09
150.97
92.02
82.45
Times interest earned
(times)		 1675.32
2280.11
198.39
627.95
11776.04
2843.82
Operational
abilities		 Average collection turnover
(times)		 3.74
3.59
3.58
3.65
3.94
4.42
Average Collectiondays 97.59 101.67 101.94
100		 92.63 60.33
Inventoryturnover（times） 8.10
6.86
6.50
5.86
5.14
5.20
Average payable turnover
（times）		 4.56
4.16
4.77
4.60
3.93
4.01
Average inventory turnover
days		 45.06
53.20
56.19
62.25
71.01
51.05
Property, plant, and
equipment turnover(time)		 4.38
4.61
6.12
6.28
6.44
6.50
Total assets turnover (times)
0.99
0.94
1.11
1.17
1.19
0.27
Return on
investment
(%)		 Return on assets 4.12
2.35
0.02
1.65
8.59
0.76
Return on shareholders’
equity		 6.66
3.46
(0.25)
2.42
15.58
1.33
Income before tax as a
percentage ofpaid-incapital
22.48
10.20
0.77
7.92
43.99
4.22
Net profit rate 3.91
2.30
(0.13)
1.16
7.06
2.46
Earnings per share (NTD)
(Note 2)		 1.89
1.01
(0.07)
0.57
3.86
0.36
Cash flows
(%)		 Cash flow ratio 45.92
(5.60)
(12.05)
60.6
(10.03)
(1.61)
Cash Flow adequacy ratio 160.39
102.84
43.48
163.63
40.41
5.37
Cash Flow Reinvestment
Ratio		 13.97
(5.97)
(9.62)
21.47
(8.35)
(1.15)
Leverage Operating Leverage 2.12
(6.58)
(4.69)
7.91
1.90
1.88
Financial Leverage 1.14
0.56
0.64
(14.86)
1.07
1.06

Changes in financial ratios over the past 2 fiscal years (Analysis is not required for changes less than 20%):

A. The 2020 increase in short-term borrowings and accounts payable resulted in a 22% increase in debt ratio compared with that in 2019. B. In 2020, the current ratio and quick ratio decreased by 32% and 39% as compared to 2019, respectively, due to the conversion of corporate bonds that are due within one year recognized as current liabilities.

C. Due to the increase in pre-tax income in 2020, the times interest earned increased by 1,775% compared with that in 2019.

D. Due to the increase in net profit after-tax in 2020, the return on assets, return on equity, ratio of pre-tax net profit to paid-in capital, profit margin, and earnings per share increased significantly compared with that in 2019.

－118－

E. Due to the increase in net cash outflow from operating activities in 2020, the cash flow ratio, the cash flow adequacy ratio and cash reinvestment ratio decreased by 117%, 75% and 139%, respectively, compared with that in 2019.

  • F. Due to the increase in operating income in 2020, the degree of operating leverage decreased by 76% compared with that in 2019.

  • G. Due to the increase in operating income in 2020, the degree of financial leverage increased by 107% compared with that in 2019.

  • Note 1: For the years 2016 to 2020, the Company has adhered to the IFRS standards The above financial information was audited by the CPA.

  • Note 2: TWSE listed and TPEx listed companies shall also set forth the condensed balance sheet and statement of comprehensive income information up to the quarter immediately preceding the prospectus publication date.

Note 3: The following formulas are applied when calculating the financial ratios.

  1. Financial structure

  2. (1) Debt ratio = Total liabilities / Total assets

  3. (2) Ratio of long-term funds to property, plant, and equipment = (Total equity + Non-current liabilities) / Net property, plant, and equipment

  4. Debt service ability

  5. (1) Current ratio = Current assets / Current liabilities

  6. (2) Quick ratio = (Current assets - Inventory - Prepaid expenses) / Current liabilities

  7. (3) Times interest earned ratio = Earnings before interest and taxes / Interest expenses

  8. Operating ability

  9. (1) Accounts receivable turnover rate (including accounts receivable and bills receivable from business activities) = Net sales / Balance of average accounts receivable in each period (including accounts receivable and bills receivable from business activities)

  10. (2) Average days for cash receipts = 365 / Accounts receivable turnover

  11. (3) Inventory turnover rate= Cost of sales / Average inventory

  12. (4) Payables turnover rate (including accounts payable and bills payable from business activities) = Cost of sales / Balance of average accounts payable in each period (including accounts payable and bills payable from business activities)

  13. (5) Average days for sale of goods = 365 / Inventory turnover

  14. (6) Turnover rate for property, plant and equipment = Net sales / Average net property, plant, and equipment

  15. (7) Total asset turnover rate = Net sales/Average total assets

  16. Profitability

  17. (1) Asset return ratio = [Profit or loss after tax + Interest expenses × (1 - Tax rate) ] / Average total assets

  18. (2) Equity return ratio = Profit or loss after tax / Average total equity

  19. (3) Net profit ratio = Profit or loss after tax / Net sales

  20. (4) Earnings per share = (Income attributable to owners of parent company - Preferred shares dividends) / Weighted average number of shares issued

  21. Cash flow

  22. (1) Cash flow ratio = Net cash flows from operating activities / Current liabilities

  23. (2) Cash flow sufficiency ratio = Net cash flow from operating activities for the most recent five years / (Capital expenditures + Inventory increment + Cash dividends) for the most recent five years

－119－

  • (3) Cash reinvestment ratio = (Net cash flow from operating activities - Cash dividends) / (Gross property, plant, and equipment + Long-term investment + Other non-current assets + Working capital)

  • Leverage

  • (1) Operating leverage = (Net operating revenue - Variable operating costs and expenses) / Operating income

  • (2) Financial leverage = Operating income / (Operating income - Interest expenses)

  • Note 4: When the above formula for calculation of earnings per share is used during measurement, give special attention to the following matters:

  • Measurement should be based on the weighted average nymber of common shares, not the number of issues shares ar year end.

  • In any case where there is a cash capital increase of treasury stock transaction, the period of time in circulation shall be considerd in calculating the weighted average number of shares.

  • In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase.

  • If the preferred shres are non-converitble cumulative preferred shares, the dividend of the current year (whether issued of not) shall be subtracted from the net profit after tax, or added tp the net loss after tax. In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be subtracted from the net profit after tax; if there is loss, then no adjustment need to be made.

Note 5. Give special attention to the following matters when carrying out cash flow analysis:

  1. Net cash flow from operating activities means net cash in-flows from operating activities listed in the statement of cash flows.

  2. Capital expenditures means the amounts of cash out-flows for annual capital investment.

  3. Inventory increase will only be entered when the ending balance is larger than the beginning balance. An inventory decrease at year end will be deemed zero for calculation.

  4. Cash dividend includes cash dividends from both common shares and preferred shares.

  5. Gross property, plant and equipment means the total value of property, plant and equipment prior to the subtraction of accumulated depreciation.

Note 6: Issuers shall separate operating costs and operating expenses by their nature into fixed and variable categories. When estimations or subjective judegments are involved, give special attention to their reasonableness and to maintain consistency.

Note 7: In the case of a company whose shares have no par value or have a par value other than NT$10, for the calculation of the above-mentioned paid-in capital ratio, the ratio of equity attributable to owners of the parent as stated in the balance sheet shall be substituted.

－120－

(II） Financial Analysis of Gemtek – Based on IFRS


Items		 Year
2016 2017 2018 2019 2020
Financial
Structure（％		 Debt to Assets Ratio 32.76
34.21
42.91
39.20
45.86
）
Long-term capital to
property, plant, and
equipment		 711.42
818.24
753.19
865.38
726.52
Solvency(％) Current Ratio 156.11
114.14
102.86
135.98
113.37

Quick Ratio		 151.96
111.56
99.56
119.18
103.18
Times interest earned
(times)		 24700.07
2244.08
108.50
630.71
11088.75
Operational
abilities		 Average collection turnover
(times)		 3.44
3.48
3.12
3.27
3.22
Average Collection days 106.01
104.80
117.16
117.71
113.52
Inventoryturnover（times） 59.68
76.34
83.62
30.63
20.44
Average payable turnover
（times）		 5.11
4.45
4.49
4.10
2.80
Average inventory turnover
days		 6.12
4.78
4.37
11.92
17.86
Property, plant, and
equipment turnover (time)		 9.57
9.82
12.12
12.63
13.44
Total assets turnover (times)
1.01
0.92
0.97
1.00
1.06
Return on
investment
(%)		 Return on assets 4.52
2.49
0.01
1.69
8.94
Return on shareholders’
equity		 6.66
3.46
(0.25)
2.36
15.39
Income before tax as a
percentage ofpaid-incapital
21.62
8.81
-		 5.66
40.82
Net profit rate 4.26
2.50
(0.16)
1.38
8.31
Earnings per share (NTD)
(Note2)		 1.89
1.01
(0.07)
0.57
3.86
Cash flows
(%)		 Cash flow ratio 66.20
(11.66)
(16.66)
44.03
(18.65)
Cash Flow adequacy ratio 253.18
162.50
91.69
139.32
42.63
Cash Flow Reinvestment
Ratio		 17.03
(9.49)
(13.98)
16.30
(17.43)
Leverage Operating Leverage 1.35
0.14
(10.47)
(0.92)
1.59
Financial Leverage 1.11
0.81
0.26
0.55
1.15

Changes in financial ratios over the past 2 fiscal years (Analysis is not required for changes less than 20%):

A. Due to the increase in pre-tax income in 2020, the times interest earned increased by 1,658% compared with that in 2019.

B. Due to the increase in inventory in 2020, the inventory turnover rate decreased by 33% compared with that in 2019, and the average sales days increased by 50%.

C. Due to the increase in accounts payable in 2020, the turnover rate of accounts payable decreased by 32% compared with that in 2019.

D. Due to the increase in net profit after-tax in 2020, the return on assets, return on equity, ratio of pre-tax net profit to paid-in capital, profit margin, and earnings per share increased significantly compared with that in 2019.

－121－

E. Due to the increase in net cash outflow from operating activities in 2020, the cash flow ratio, the cash flow adequacy ratio and cash reinvestment ratio decreased by 142%, 69% and 207%, respectively, compared with that in 2019.

F. In 2020, the degree of operating leverage and degree of financial leverage increased by 273% and 109%, respectively, compared with 2019 due to operating income in the current period.

  • Note 1: For the years 2016 to 2020, the Company has adhered to the IFRS standards The above financial information was audited by the CPA.

  • Note 2: TWSE listed and TPEx listed companies shall also set forth the condensed balance sheet and statement of comprehensive income information up to the quarter immediately preceding the prospectus publication date.

Note 3: The following formulas are applied when calculating the financial ratios.

  1. Financial structure

  2. (1) Debt ratio = Total liabilities / Total assets

  3. (2) Ratio of long-term funds to property, plant, and equipment = (Total equity + Non-current liabilities) / Net property, plant, and equipment

  4. Debt service ability

  5. (1) Current ratio = Current assets / Current liabilities

  6. (2) Quick ratio = (Current assets - Inventory - Prepaid expenses) / Current liabilities

  7. (3) Times interest earned ratio = Earnings before interest and taxes / Interest expenses

  8. Operating ability

  9. (1) Accounts receivable turnover rate (including accounts receivable and bills receivable from business activities) = Net sales / Balance of average accounts receivable in each period (including accounts receivable and bills receivable from business activities)

  10. (2) Average days for cash receipts = 365 / Accounts receivable turnover

  11. (3) Inventory turnover rate= Cost of sales / Average inventory

  12. (4) Payables turnover rate (including accounts payable and bills payable from business activities) = Cost of sales / Balance of average accounts payable in each period (including accounts payable and bills payable from business activities)

  13. (5) Average days for sale of goods = 365 / Inventory turnover

  14. (6) Turnover rate for property, plant and equipment = Net sales / Average net property, plant, and equipment

  15. (7) Total asset turnover rate = Net sales/Average total assets

  16. Profitability

  17. (1) Asset return ratio = [Profit or loss after tax + Interest expenses × (1 - Tax rate) ] / Average total assets

  18. (2) Equity return ratio = Profit or loss after tax / Average total equity

  19. (3) Net profit ratio = Profit or loss after tax / Net sales

  20. (4) Earnings per share = (Income attributable to owners of parent company - Preferred shares dividends) / Weighted average number of shares issued

  21. Cash flow

  22. (1) Cash flow ratio = Net cash flows from operating activities / Current liabilities

  23. (2) Cash flow sufficiency ratio = Net cash flow from operating activities for the most recent five years / (Capital expenditures + Inventory increment + Cash dividends) for the most recent five years

  24. (3) Cash reinvestment ratio = (Net cash flow from operating activities - Cash dividends) / (Gross property, plant, and equipment + Long-term investment + Other non-current assets + Working capital)

－122－

  1. Leverage

  2. (1) Operating leverage = (Net operating revenue - Variable operating costs and expenses) / Operating income

  3. (2) Financial leverage = Operating income / (Operating income - Interest expenses)

  4. Note 4: When the above formula for calculation of earnings per share is used during measurement, give special attention to the following matters:

  5. Measurement should be based on the weighted average nymber of common shares, not the number of issues shares ar year end.

  6. In any case where there is a cash capital increase of treasury stock transaction, the period of time in circulation shall be considerd in calculating the weighted average number of shares.

  7. In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase.

  8. If the preferred shres are non-converitble cumulative preferred shares, the dividend of the current year (whether issued of not) shall be subtracted from the net profit after tax, or added tp the net loss after tax. In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be subtracted from the net profit after tax; if there is loss, then no adjustment need to be made.

Note 5. Give special attention to the following matters when carrying out cash flow analysis:

  1. Net cash flow from operating activities means net cash in-flows from operating activities listed in the statement of cash flows.

  2. Capital expenditures means the amounts of cash out-flows for annual capital investment.

  3. Inventory increase will only be entered when the ending balance is larger than the beginning balance. An inventory decrease at year end will be deemed zero for calculation.

  4. Cash dividend includes cash dividends from both common shares and preferred shares.

  5. Gross property, plant and equipment means the total value of property, plant and equipment prior to the subtraction of accumulated depreciation.

Note 6: Issuers shall separate operating costs and operating expenses by their nature into fixed and variable categories. When estimations or subjective judegments are involved, give special attention to their reasonableness and to maintain consistency.

Note 7: In the case of a company whose shares have no par value or have a par value other than NT$10, for the calculation of the above-mentioned paid-in capital ratio, the ratio of equity attributable to owners of the parent as stated in the balance sheet shall be substituted.

－123－

III.Audit Committee’s review report on the financial report for the most recent fiscal year

Gemtek Technology Co., Ltd.

==> picture [55 x 34] intentionally omitted <==

Audit Committee’s Report

To the Shareholders Meeting

In reference to the Company’s 2020 business report and financial statements compiled by the Board of Directors,the CPA firm of Deloitte & Touche has provided an audit report based on the scope of the audit engagement. In addition, the business report and financial report have been reviewed and determined to be correct and accurate by the Audit Committee members of

Gemtek. In accordance with the Securities and Exchange Act and the Company Act, we hereby

submit this report.

Gemtek Technologies Co., Ltd.

Convener of the Audit Committee

Wang, Zhu san

March 25, 2021

－124－

IV.Consolidated Financial Statements

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND INDEPENDENT AUDITOR’S REPORT

REPRESENTATION LETTER

The entities that are required to be included in the combined financial statements of Gemtek Technologies Co., Ltd. as of and for the year ended December 31, 2020, 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 Standards 10, “Consolidated and Separate Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Gemtek Technologies Co., Ltd. and Subsidiaries do not prepare a separate set of combined financial statements.

Gemtek Technologies Co., Ltd.

==> picture [472 x 98] intentionally omitted <==

Chairman

March 25, 2021

－125－

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders

Gemtek Technologies Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Gemtek Technologies Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and 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 audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

－126－

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 for the year ended December 31, 2020. 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.

We hereby summarize the Key Audit Matters of the 2020 Consolidated Financial Statements of the Group as follows:

Revenue Recognition

The 2020 operating income of Gemtek Technology Co., Ltd. and its subsidairies is NT$19,929,372,000, in which NT$4,278,475,000 sales revenue is attributed to the sale of a major customer product, accounting for 21% of the operating income. Due to the fact that the sales revenue makes up a consequential part of the operating income in contrast to the year 2019, the operating income for the sale to the specific customer product is listed as a Key Audit Matter. For related accounting policies pertaining to revenue recognition, please refer to Note 4 and 22.

Main Audit Procedures conducted by the CPA are as follows:

1.Assess the quality of composition and implementation of the Group’s Internal Control Policy that are related to sales income conjointly with the Group’s Sales Revenue Recognition Policy.

2.Conduct inspections on selected materials acquired from income reports that are related to sales transactions and receivables, etc. to verify whether the origins of the operating income are documented truthfully.

3.Verify whether the customer has received any substantial sales return or discounts after the transaction.

Additional Matters:

The financial statements of Gemtek Vietnam Co., Ltd. has been incorporated in the consolidated financial statements of Gemtek Technologies Co., Ltd. and its subsidiaries. Due to the

－127－

differences in the respective financial reporting structures, the audit engagement for the financial statements of Gemtek Vietnam Co., Ltd. was by a separate CPA firm other than us.

The financial statements of Gemtek Vietnam Co., Ltd. was audited by the appointed CPA in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and 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. Therefore, when issuing our opinions for the consolidated financial statements, the opinions for the financial statements of Gemtek Vietnam Co., Ltd. is based on the audit report given by the appointed CPA.

The total assets of Gemtek Vietnam Co., Ltd. as of December 31, 2020 was NT$2,232,563,000, accounting for 12% of the total consolidated assets. The net operating income from January 1 to December 31, 2020 was NT$70,000, accounting for 0% of consolidated net operating income.

We have audited the individual financial statements of Gemtek Technologies Co., Ltd. as of and for the years December 31, 2020 and 2019 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 the Regulations Governing the Preparation of Financial Reports by Securities Issuers, 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, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

－128－

concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the 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

－129－

continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  1. 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.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 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.

－130－

Deloitte & Touche Taiwan Deloitte & Touche Taiwan Certified Public Accountant Certified Public Accountant Ching-zen Yang Jing-ting Yang Securities and Futures Commission Securities and Futures Commission Approved Document Number: Approved Document Number: 6-0920123784 6-0930128050

Date: March 25, 2021

－131－

GEMTEK TECHNOLOGY CO.,LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019 (Unit: NT$ thousand)

Code

1100
1110
1136
1150
1160
1170
1180
1200
1220
130X
1470
11XX

1517
1535
1550
1600
1755
1805
1821
1840
1990
15XX
1XXX

Code

2100
2120
2130
2150
2170
2180
2219
2230
2280
2321
2399
21XX

2530
2570
2580
2670
25XX
2XXX

3110
3200
3310
3320
3350
3300
3490
31XX
36XX

3XXX
 ASSETS
CURRENT ASSETS
Cash and cash equivalents
Financial assets at fair value through profit or loss - current
Financial assets at amortised cost - current
Notes receivables
Notes receivable due from related parties, net
Accounts receivable, net
Accounts receivable due from related parties, net
Other receivables
Current tax assets
Current inventories
Other current assets
Total current assets
NON-CURRENT ASSETS
Non-current financial assets at fair value through other comprehensive income
Non-current financial assets at amortised cost
Investments accounted for using equity method
Property, plant and equipment
Right-of-use assets
Goodwill
Other intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current borrowings
Current financial liabilities at fair value through profit or loss
Current contract liabilities
Notes payable
Accounts payable
Accounts payable to related parties
Other payables
Current tax liabilities
Current lease liabilities
Current portion of corporate bonds payables
Other current liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Bonds payable
Deferred tax liabilities
Non-current lease liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EQUITY
Share capital
Ordinary share
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated retained earnings (accumulated deficit)
Total retained earnings
Other equity interest
Total equity attributable to owners of parent
Non-controlling interests
Total equity
TOTAL LIABILITIES AND EQUITY		 2020/12/31 ％
10
1
-
-
-
32
1
-
-
22
2
68
5
1
6
18
1
-
-
-
1
32
100
6
-
1
-
31
-
4
1
-
6
-
49
-
1
-
-
1
50
19
25
4
3
7
14

8)
50
-
50
100		 2019/12/31
Amount
$ 1,925,250
160,308
3,274
-
11,250
5,888,372
112,537
65,196
1,236
4,189,305
316,917
12,673,645
925,288
172,652
1,111,163
3,325,158
111,160
72,845
6,918
40,841
216,706
5,982,731
$ 18,656,376
$ 1,082,240
7,278
218,433
-
5,697,231
304
713,758
80,331
3,012
1,179,157
61,869
9,043,613
-
222,621
4,528
1,479
228,628
9,272,241
3,575,905
4,606,007
750,939
559,574
1,273,304
2,583,817

1,381,726)
9,384,003
132
9,384,135
$ 18,656,376		 Amount
$ 2,731,118
136,483
55,921
43,732
-
3,978,648
60,969
34,056
5,165
2,302,166
199,761
9,548,019
1,187,989
165,494
74,313
2,867,476
119,276
417,835
29,930
109,339
180,065
5,151,717
$ 14,699,736
$ 454,800
6,063
243,802
21,345
3,273,027
-
510,129
58,055
6,533
-
40,018
4,613,772
1,162,082
221,697
5,126
9,184
1,398,089
6,011,861
3,568,835
4,761,281
730,820
375,960
203,733
1,310,513

1,223,110)
8,417,519
270,356
8,687,875
$ 14,699,736		 ％
















(













(















(













(


 19
1
-
-
-
27
1
-
-
16
1
65
8
1
-
20
1
3
-
1
1
35
100
3
-
2
-
22
-
4
-
-
-
-
31
8
2
-
-
10
41
24
32
5
3
1
9

8)
57
2
59
100

The attached notes are part of this consolidated financial report

－132－

GEMTEK TECHNOLOGY CO.,LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

Code
4000
Total operating revenue

5000
Total operating costs

5900
Gross profit (loss) from operations

OPERATING EXPENSES
6100
Selling expenses

6200
Administrative expenses

6300
Research and development expenses
6000
Total operating expenses

6900
Net operating income (loss)

NON-OPERATING INCOME AND
EXPENSES
7100
Total interest income
7010
Total other income
7020
Other gains and losses, net
7050
Finance costs, net

7060
Share of profit (loss) of associates
and joint ventures accounted for
using equity method, net
7000
Total non-operating income
and expenses
7900
Profit (loss) from continuing operations
before tax
7950
Total tax expense (income)

8200
Profit (loss) from continuing operations
 2020 ％
100

(
89)


11

(
2 )
(
3 )
(
4)

(
9)


2

-
1
5

-


-


6

8
(
1)


7
 2019
Amount
$ 19,929,372


17,663,796)

2,265,576


389,353 )

533,312 )

874,998)


1,797,663)

467,913

27,033
117,205
960,490

30,843 )
31,374

1,105,259

1,573,172

165,598)

1,407,574
 Amount
$ 18,057,131


16,284,640)

1,772,491


372,352 )

510,973 )

837,667)


1,720,992)

51,499

43,839
54,105
219,506

54,964 )

31,430)

231,056

282,555

72,582)

209,973
 ％

(

(
(
(
(

(


(
(

(
(
(
(

(
(

(
 100
(
90)

10
(
2 )
(
3 )
(
5)
(
10)

-
-
-
1

-

-

1
1

-

1		 
(Continued)

－133－

（ Brought Forward ）

（Brought Forward）
Code
OTHER COMPREHENSIVE INCOME (LOSS)
8310
Items that will not be reclassified subsequently
to
profit or loss:
8311
Gains (losses) on remeasurements of
defined benefit plans
8316
Unrealised gains (losses) from
investments in equity instruments
measured at fair value through
other comprehensive income
8330
Share of other comprehensive income
of associates and joint ventures
accounted for using equity
method, components of other
comprehensive income that will
not be reclassified to profit or
loss
8360
Components of other comprehensive income
that will not be reclassified to profit or
loss
8361
Exchange differences on translation

8370
Share of other comprehensive income
of associates and joint ventures
accounted for using equity
method, components of other
comprehensive income that will
be reclassified to profit or loss
8300
Components of other comprehensive
income that will be reclassified to
profit or loss
8500
TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR
Profit (loss), attributable to:
8610
Profit (loss), attributable to owners of parent

8620
Profit (loss), attributable to non-controlling
interests
8600

Profit (loss), attributable to:
8710
Comprehensive income, attributable to owners
of parent
8720
Comprehensive income, attributable to
non-controlling interests
8700

earnings per share
9750
Total basic earnings per share

9850
Total diluted earnings per share
 2020 ％

-

(
1 )
-

-


-

(
1)


6

7


-


7

6


-


6


 2019
Amount
$ 1,928 )

160,503 )
73

21,747 )

85)


184,190)

$ 1,223,384

$ 1,370,155
37,419

$ 1,407,574

$ 1,186,605
36,779

$ 1,223,384

$ 3.86
$ 3.36		 Amount
$ 4,179 )

327,252 )
-

142,959 )

968)


475,358)

$ 265,385)

$ 201,193
8,780

$ 209,973

$ 272,976 )
7,591

$ 265,385)

$ 0.57
$ 0.53		 ％
(
(
(
(
(








 (
(
(
(
(
(



(

(
-
(
2 )
-

-

-
(
2)
(
1)
1

-

1
(
1 )

-
(
1)

The attached notes are part of this consolidated financial report

－134－

GEMTEK TECHNOLOGY CO.,LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

C o d e
A1
BALANCE, JANUARY 1, 2019
Appropriation and distribution of retained earnings, 2018
B3
Appropriated special reserve
C5
Recognized equity component of convertible corporate bonds
issued by the company
C7
Changes of additional paid-in capital of Associates Accounted
for Using Equity Method
D1
Net profit (loss) for the year ended December 31, 2019
D3
Other comprehensive income (loss) for the year ended
December 31, 2019, net of income tax
D5
Total comprehensive income (loss) for the year ended
December 31, 2019
I1
Corporate bond transfer to ordinary shares
M7
Changes in ownership interest in subsidiaries
O1
Changes of non-controlling interest
Q1
Disposal equity investments at fair value through profit or loss
Z1
BALANCE, DECEMBER 31, 2019

Appropriation and distribution of retained earnings, 2019
B1
Legal reserve
B3
Appropriated special surplus reserve
B5
Cash dividends of share holder
Subtotal
C15
Capital Surplus Cash Dividend
D1
Net income for the year ended December 31, 2020
D3
Other comprehensive income (loss) for the year ended
December 31, 2020, net
of income tax
D5
Total comprehensive income (loss) for the year ended
December 31, 2020
L1
Purchase of treasury stocks
L3
Treasury stock cancellation

M3
Disposal of Investments accounted for using equity method
N1
Issuance of employee rights shares
T1
Restricted employee rights stock compensation costs
O1
Changes of non-controlling interest
Q1
Disposal equity investments fair value through profit or loss
Z1
BALANCE, DECEMBER 31, 2020		 Share capital
Capital Collected In
Advance
$ 53,920

-
-

-

-
-

-

53,920)
-
-
-
-

-
-
-
-
-

-
-
-
-
-

-
-
-
-
-
$ -
 C a p i t a l S u r p l u s
$ 4,669,276

-
45,527

6,513)

-
-

-
2,475
49,265
1,251
-
4,761,281

-
-
-
-

177,911)
-
-
-
-

35,837)
-
58,474
-
-
-
$ 4,606,007
 Retained Earnings Undistributed surplus
$ 180,682


180,682)
-

6,422)

201,193
4,088)

197,105

-
-

-
13,050
203,733


20,119 )

183,614 )
-

203,733)
-
1,370,155

1,855)

1,368,300

-
-

4,636)
-
-
-

90,360)
$ 1,273,304
 Other Equit y Total
$ 738,463)

-
-

833

-
470,081)


470,081)
-

2,349)
-

13,050)
1,223,110)

-
-
-
-
-
-

181,695)

181,695)
-

-
8,544

98,474)
22,649
-
90,360
$ 1,381,726)
 Treasurystock
$ -

-
-

-

-
-

-
-
-

-
-
-

-
-
-
-
-
-
-

-

68,767)
68,767
-

-
-
-
-
$ -
 N on-controlling equity
$ 39,586

-
-

-

8,780
1,189)

7,591

-

60,582)

283,761
-
270,356

-
-
-
-
-

37,419

640)

36,779
-

-

307,367)

-
-
364
-
$ 132
 Total Equity
Exchange
Differences on
Translating the
Financial Statements
of Foreign
Operations
$ 351,769)

-
-

833

-
143,797)


143,797)

-

2,349)
-
-

497,082)


-

-
-
-
-
-

21,779)


21,779)

-
-
3,908
-
-
-
-
$ 514,953)
 C Unrealized Gain
(Loss) on Financial
Assets at Fair Value
Through Other
omprehensive Income

$ 386,694)

-
-

-

-
326,284)


326,284)
-
-
-

13,050)
726,028)

-
-
-
-
-
-

159,916)

159,916)
-
-
4,636
-

-
-
90,360
$ 790,948)
 Un earned employee salary
$ -

-
-

-

-
-

-

-
-

-
-

-

-
-
-
-
-
-
-

-

-
-
-

98,474)

22,649
-
-
$ 75,825)
N umber Of Shares（in
thousand）
351,162

-
-

-

-
-

-
5,722
-
-

-
356,884

-
-
-
-
-
-
-
-
-

3,293)

-
4,000
-
-
-
357,591
 Amount
$ 3,511,620

-
-

-

-
-

-
57,215

-
-
-
3,568,835

-
-
-
-
-
-
-
-
-

32,930)
-
40,000
-
-
-
$ 3,575,905
 Legal Reserve
$ 730,820

-
-

-

-
-

-
-
-
-
-
730,820

20,119
-
-
20,119
-
-
-
-
-
-
-
-
-
-
-
$ 750,939
 Special Reserve
$ 195,278

180,682

-

-

-
-

-
-
-
-
-
375,960

-

183,614

-
183,614

-
-
-

-
-
-
-

-
-
-
-

$ 559,574





(




(



(

(


(
(










(

(
(

(
(
(
(
(
(
 (


(
(
(
(


(
(
(		 (


(
(
(
(
(
(
(




(
(		 (


(
(
(
(
(
(
(
(
(




(


(
(

(
(

(
(
(
(

(
(
(
(
 $ 8,642,719
-
45,527
12,102)
209,973
475,358)

265,385)
5,770

13,666)
285,012
-
8,687,875
-
-
-
-

177,911)
1,407,574

184,190)
1,223,384

68,767)
-

303,459)
-
22,649
364
-
$ 9,384,135

The attached notes are part of this consolidated financial report

－135－

GEMTEK TECHNOLOGY CO.,LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars)

Code
CASH FLOWS FROM OPERATING ACTIVITIES
A00010
(Loss) income before income tax

A20010
Profit (loss) before tax
A20100
Depreciation expense
A20200
Amortization expense
A20300
Expected credit loss (gain) / Provision
(reversal of provision) for bad debt expense
A20400
Net loss (gain) on financial assets or liabilities
at fair value through profit or loss
A20900
Interest expense
A21200
Interest income

A21300
Dividend income

A21900
Share-based payments
A22300
Share of loss (profit) of associates and joint
ventures accounted for using equity method
A22500
Loss (gain) on disposal of property, plan and
equipment
A23200
Loss (gain) on disposal of investments
accounted for using equity method
A23700
Impairment loss on non-financial assets
A24100
Unrealized foreign exchange loss (gain)
A30000
Total adjustments to reconcile profit (loss)
A31115
Decrease (increase) in financial assets at fair
value through profit or loss, mandatorily
measured at fair value
A31130
Decrease (increase) in notes receivable
A31140
Decrease (increase) in notes receivable due
from related parties
A31150
Decrease (increase) in accounts receivable

A31160
Decrease (increase) in accounts receivable due
from related parties
A31180
Decrease (increase) in other receivable

A31200
Decrease (increase) in inventories

A31240
Decrease (increase) in other current assets

A31990
Prepaid pension cost

A32125
Increase (decrease) in contract liabilities

A32130
Increase (decrease) in notes payable
 2020
$ 1,573,172

329,409
89,720
(
47 )

7,786

30,843
(
27,033 )

(
6,552 )

22,649
(
31,374 )
2,480
(
1,033,557 )

30,661

78,756
(
30,571 )
43,732
(
11,250 )
(
2,548,429 )
(
54,104 )

(
67,899 )
(
2,180,699 )
(
122,204 )

(
2,246 )

(
20,735 )
(
21,345 )
 2019
$ 282,555
291,400
64,587
(
1,035 )
(
270,036 )
54,964
(
43,839 )
(
8,204 )
1,560
31,430
13,603
(
9,677 )
(
16,541 )
54,909
484,116
4,050
-
1,669,962
(
44,594 )
50,359
452,664
(
38,656 )
(
2,354 )
125,352
(
2,366 )		 
(Continued)

－136－

（ Brought Forward ）

Code
A32150
Increase (decrease) in accounts payable

A32160
Increase (decrease) in accounts payable to
related parties
A32180
Increase (decrease) in other payable
A32230
Increase (decrease) in other current liabilities

A33000
Cash inflow (outflow) generated from operations

A33100
Interest received
A33200
Dividends received
A33300
Interest paid

A33500
Income taxes refund (paid)

AAAA
Net cash flows from (used in) operating
activities
CASH FLOWS FROM INVESTING ACTIVITIES
B00010
Acquisition of financial assets at fair value through
other comprehensive income
B00020
Proceeds from disposal of financial assets at fair value
through other comprehensive income
B00040
Acquisition of financial assets at amortised cost

B00050
Proceeds from disposal of financial assets at
amortised cost
B01800
Acquisition of investments accounted for using equity
method
B02200
Net cash flow from acquisition of subsidiaries
B02300
Proceeds from disposal of subsidiaries
B02700
Acquisition of property, plant and equipment

B02800
Proceeds from disposal of property, plant and
equipment
B04500
Acquisition of intangible assets

B06700
Increase in other non-current assets

BBBB
Net cash flows from (used in) investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
C00100
Increase in short-term loans
C01200
Proceeds from issuing bonds
C04020
Payments of lease liabilities

C04300
Increase in other non-current liabilities
C04500
Cash dividends paid

C04900
Payments to acquire treasury shares

C05800
Change in non-controlling interests

CCCC
Net cash flows from (used in) financing
activities
DDDD
Effect of exchange rate changes on cash and cash equivalents		 2020
$ 2,708,434

44,481

236,628
69,310


889,984 )
37,771
6,552

13,621 )


47,414)


906,696)


27,336 )

98,471

20,016 )
-
-

7,696
477,364

823,641 )

32,317

652 )


145,034)


400,831)

745,360

-

6,035 )

366

177,911 )

68,767 )
-

493,013

8,646
 2019


(
(
(
(
(
(
(
(
(
(
(
(
(


 (
(
(
(
(

(
(
(
(
(
(
(
(
(
(
(		 $ 348,161 )

10,641 )
57,162

3,355)
2,839,214
36,343
8,204

53,749 )

34,101)
2,795,911

227,713 )
-
-
93,792

40,000 )
91,521
-

406,245 )
34,008

1,348 )

106,611)

562,596)

2,385,184 )
1,197,316

5,162 )
8,234
-
-

13,960)

1,198,756)

22,811)		 
(Continued)

－137－

（ Brought forward ）

Code
EEEE
Net increase (decrease) in cash and cash equivalents

E00100
Cash and cash equivalents at beginning of period

E00200
Cash and cash equivalents at end of period
 2020
$ 805,868 )

2,731,118

$ 1,925,250
 2019
(

$ 1,011,748
1,719,370
$ 2,731,118

The attached notes are part of this consolidated financial report

－138－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

I. COMPANY HISTORY

Gemtek Technologies Co., Ltd. was incorporated on June 29, 1988. It researches, develops, manufactures, purchases, sells, exports, and imports electronic components, semi-finished products, finished products, computer software, hardware and peripheral equipment. The Company’s shares was listed on the Taipei Exchange (OTC) in January of 2002, and have been listed on the Taiwan Stock Exchange (TWSE) since June 30, 2003.

The consolidated financial statements of the Company and its subsidiaries (collectively, referred to as the “Group”) are presented in the Company’s functional currency, the New Taiwan dollar.

II. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors and authorized for issuance on March 25, 2021.

III. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND

INTERPRETATIONS

  • (1) Initial application of the amendments to 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) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies:

－139－

  • (2) New, Amended and Revised Standards and Interpretions of IFRSs endorsed and issued into effect by the FSC

New, Amended and Revised Standards and Interpretions Effective Date per IASB Amendments to IFRS 4--Extension of the Temporary Effective per announcement Exemption from Applying IFRS 9 date Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS The amendment is effective 16--Interest Rate Benchmark Reform — Phase 2 for annual reporting periods beginning on or after January 01, 2021 Amendments to IFRS 9 --Covid-19-Related Rent The amendment is effective Concessions for annual reporting periods beginning on or after June 01, 2020

As of the date that the accompanying consolidated financial statements were approved and authorized for issue, the Group continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the above standards or interpretations. The related impact will be disclosed when the Group completes the evaluation.

  • (3) New, Amended and Revised Standards and Interpretions of IFRSs Announced by the IASB but not yet endorsed and issued into effect by the FSC

New, Amended and Revised Standards Effective Date per IASB and Interpretions (Note1) Annual Improvements to IFRS Standards January 01, 2022 (Note 2) 2018–2020 Amendments to IFRS 3 -- Reference to the January 01, 2022 (Note 3) Conceptual Framework Amendments to IFRS 10 and IAS 28 --Sale or To be determined Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 17 Insurance Contracts January 01, 2023 Amendments to IFRS 17 January 01, 2023 Amendments to IAS 1 -- Classification of January 01, 2023 Liabilities as Current or Non-current Amendments to IAS 1 and IFRS Practice January 01, 2023 (Note 4)

－140－

New, Amended and Revised Standards and Interpretions Annual Improvements to IFRS Standards 2018–2020 Amendments to IFRS 3 -- Reference to the Conceptual Framework Amendments to IFRS 10 and IAS 28 --Sale or Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 17 Insurance Contracts Statement 2IAS 1 -- Disclosure of Accounting Policies Amendments to IAS 8 -- Definition of Accounting Estimates Amendments to IAS 16 -- Property, Plant and Equipment — Proceeds before Intended Use Amendments to IAS 37 -- Onerous Contracts — Cost of Fulfilling a Contract

Effective Date per IASB (Note1) January 01, 2022 (Note 2) January 01, 2022 (Note 3) To be determined January 01, 2023 January 01, 2023 (Note 5) January 01, 2022 (Note 6) January 01, 2022 (Note 7)

  • Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

  • Note 2: The Group shall apply IFRS9 amendments prospectively for annual reporting periods beginning on or after January 01, 2022; the Group shall apply IAS41 amendments prospectively for annual reporting periods beginning on or after January 01, 2022; the Group shall apply IFRS1 amendments prospectively for annual reporting periods beginning on or after January 01, 2022.

  • Note 3: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 01, 2022 and to asset acquisitions that occur on or after the beginning of that period.

  • Note 4: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 01, 2023.

  • Note 5: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 01, 2023.

  • Note 6: The Group shall apply these amendments retrospectively for annual reporting periods beginning on or after January 01, 2021.

  • Note 7: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 01, 2022.

－141－

As of the date the accompanying consolidated financial statements were authorized for issue, the Group continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Group completes the evaluation.

IV.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(I)Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed by the FSC.

  • (II)Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

  1. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

  2. Level 2 inputs are 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); and

  3. Level 3 inputs are unobservable inputs for the asset or liability.

  4. (III) Classification of current and non-current assets and liabilities

  5. Current assets include:

  6. Assets held primarily for the purpose of trading;

  7. Assets expected to be realized within twelve months after the reporting period; and

  8. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

  1. Liabilities held primarily for the purpose of trading;

  2. Liabilities due to be settled within twelve months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are authorized for issue; and

  3. Liabilities for which the Group does not have an unconditional right to defer settlement for at least twelve months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

－142－

(IV) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Group and the entities controlled by the Company (i.e., its subsidiaries, including special purpose entities). Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to shareholders of the parent.

See Note 12, Attachment 6, and Attachment 7 for detailed information on subsidiaries (including the percentages of ownership and main businesses).

(V) Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer’s previously held equity interests in the acquire over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

For each business combination, the Group measures the non-controlling interests at either fair value or the share in the recognized amounts of the acquiree’s identifiable net assets. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets, in the event of liquidation, may be initially measured at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of the measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value.

When a business combination is achieved in stages, the Group’s previously held equity interest in an acquiree is remeasured to fair value at the acquisition date, and the resulting gain or loss is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are recognized on the same basis as would be required if those interests were directly disposed of by the Group.

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If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement period or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.

(VI) Foreign Currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period except for exchange differences on transactions entered into in order to hedge certain foreign currency risks.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, and in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the functional currencies of the Corporation and the group entities (including subsidiaries and associates in other countries that use currencies that are different from the currency of the Corporation) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Corporation and non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving the loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences

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is re-attributed to non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

(VII) Inventories

Inventories consist of raw materials, supplies, finished goods and work in process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the end of reporting period.

(VIII)Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. A joint venture is a joint arrangement whereby the Group and other parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The Group uses the equity method to account for its investments in associates and joint ventures.

Under the equity method, investments in an associate and joint venture are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Group also recognizes the changes in the Group’s share of the equity of associates and joint ventures.

Any excess of the cost of an acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the acquisition, after reassessment, is recognized immediately in profit or loss.

When the Group subscribes for additional new shares of an associate and joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in that associate and joint venture. The Group records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus - changes in the Group’s share of equity of associates and joint ventures. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate and joint venture, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as would be required had the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by using the equity method is insufficient, the shortage is debited to retained earnings.

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When the Group’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture (which includes any carrying amount of the investment accounted for by using the equity method and long-term interests that, in substance, form part of the Group’s net investment in the associate and joint venture), the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate and joint venture.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on its initial recognition as a financial asset. The difference between the previous carrying amount of the associate and joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required had that associate had directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method and does not remeasure the retained interest.

When a group entity transacts with its associate and joint venture, profits and losses resulting from the transactions with the associate and joint venture are recognized in the Group’ consolidated financial statements only to the extent that interests in the associate and the joint venture are not related to the Group.

(IX)Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

Depreciation is recognized using the straight-line method with their estimated useful lives. Each significant part is depreciated separately. If the lease term is shorter than its estimated useful life, an item of property, plant and equipment is depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at least once at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

(X)Goodwill

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Goodwill arising from the acquisition of a business is measured at cost as established at the date of the acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit or groups of cash-generating units was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit or groups of cash-generating units is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation that is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

(XI) Intangible assets

  • 1.Intangible assets acquired separately

  • Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss. When the Group has a right to charge for usage of concession infrastructure (as a consideration for providing construction services in a service concession arrangement), it is initially recognized as an intangible asset at its fair value. The intangible asset is subsequently measured at cost less accumulated amortization and any accumulated impairment loss.

2.Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

3.Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

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(XII) Impairment of tangible assets (property, plant, and equipment), right-of-use assets, and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets (property, plant and equipment), right-of-use assets, and other intangible assets (excluding goodwill) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of an asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (less amortization expenses or depreciation expenses) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

(XIII) Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1.Financial assets

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

(1)Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI.

A.Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily

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classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 31.

B.Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

a.The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

b.The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets measured at amortized cost, including cash and cash equivalents, note receivables, account receivables, account receivables-related party, other receivables, and refundable deposits, which equals the gross carrying amount determined using the effective interest method less any impairment loss measured at amortized cost. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

a.Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

b.Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Evidence of impairment may include indications that the debtor is experiencing significant financial difficulty, default or delinquency in interest or principal payments, indications that the debtor or issuer will probably enter bankruptcy or other financial reorganization, and the disappearance of an active market for that financial asset because of financial difficulties

Cash equivalents include time deposits and bank acceptances with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant

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risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

C.Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

(2)Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivables).

The Group always recognizes lifetime expected credit losses (ECLs) for accounts receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

For internal credit risk management purposes, the Group determines that the following situation indicate that a financial asset is in default (without taking into account any collateral held by the Group):

A.Internal or external information shows that the debtor is unlikely to pay its creditors. B.When a financial asset is more than 365 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

The Group recognizes an impairment loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account,

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except for investmens in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in the other comprehensive incomeand does not reduce the carrying amount of the financial assets.

(3)Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2. Equity instruments

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

Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Corporation’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Corporation’s own equity instruments.

3. Financial liabilities

(1)Subsequent measurement

All the financial liabilities are measures at amortized cost using the effective interest method.

Financial liabilities at FVTPL.

Financial liabilities are classified as at FVTPL when such financial liabilities are held for trading.

Financial liabilities held for trading are stated at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The fair value is determined in the manner described in Note 31.

(2)Derecognition of financial liabilities

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The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

4. Convertible bonds

The component parts of compound instruments (i.e. convertible bonds) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

On initial recognition, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or upon the instrument’s maturity date. Any embedded derivative liability is measured at fair value.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised; in which case, the balance recognized in equity will be transferred to capital surplus - share premiums. When the conversion option remains unexercised at maturity, the balance recognized in equity will be transferred to capital surplus - share premiums.

Transaction costs that relate to the issuance of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component.

5. Derivative financial instruments

The Group enters into foreign exchange forward to manage its exposure to foreign exchange rate risks.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately. When the fair value of derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instrument is negative, the derivative is recognized as a financial liability.

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(XIV)Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

Revenue from the sale of goods

Revenue from the sale of goods comes from sales of wireless gateways and wlan cards. Sales of wireless gateways and wlan cards are recognized as revenue when the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. The transaction price received is recognized as a contract liability until the customer acquires control of the good.

The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

(XV)Leasing

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

For a contract that contains a lease component and non-lease components, the Group allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately.

1.The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operatin leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2.The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

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Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, and variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

(XVI)Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the year in which they are incurred.

(XVII)Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related cost for which the grants are intended to compensate.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit of loss in the period in which they become receivable.

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(XVIII) Employee benefits

1.Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2.Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service costs, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service costs and net interest on the net defined benefit liability (asset) are recognized as an employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

The net defined benefit liability (asset) represents the actual deficit (surplus) in the Group’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plan or reductions in future contributions to the plan.

(XIX)Share-based payment arrangements Employee share options

The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in non-controlling interest; it is recognized as an expense in full at the grant date if vested immediately.

At the end of each reporting period, the Group revises its estimates of the number of employees share options expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus-employee share options.

(XX)Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1.Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous years.

According to the Income Tax Law, an additional tax of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

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Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2.Deferred tax

Deferred tax is recognized on temporary differences between the consolidated financial statement carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards and unused tax credits for research and development expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. For deferred tax assets arising from deductible temporary differences associated with such investments and equity, the interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3.Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, and in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity.

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V. ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Group takes the economic impact caused by the COVID-19 into consideration as part of a key source of estimation uncertainty. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

VI. CASH AND CASH EQUIVALENTS

H AND CASH EQUIVALENTS
Cash on hand
Checking accounts and demand
deposits
Cash equivalents
Time deposits with original
maturities of less than 3
months
Market rate intervals of cash in
banks at the end of the
reporting period		 December 31, 2020
$ 2,117
1,884,043

39,090
$ 1,925,250
0.001%~2.75%		 December 31, 2019
$ 2,347
1,470,340
1,258,431
$ 2,731,118
0.001%~2.90%

VII. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets-current
Mandatorily measured at FVTPL
Non-derivative financial assets
－Domestic listed shares
－Trust Beneficiary Certificate
－Financial Products		 December 31, 2020
$ 120,131
-
23,745		 December 31, 2019
$ 110,990
15,007
10,486

－157－

Hybrid Financial Assets － Convertible Bonds $ 15,592 $ - Derivative instruments（nonhedge accounting） －Convertible option 840 - $ 160,308 $ 136,483 Financial liabilities - current Held for trading Derivative instruments（nonhedge accounting） － Foreign Exchange Forward Contract $ 7,278 $ 3,423 －Convertible option - 2,640 $ 7,278 $ 6,063

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting for the balance sheet were as follows:

December 31, 2020

December 31, 2020
Sell
Sell
December 31,		 Currency
USD/NTD
USD/NTD
2019
Currency
USD/NTD		 MaturityDate

2020.11.05~2021.01.11


2020.11.19~2021.01.25

MaturityDate
2019.12.02~2020.01.06
 Notional Amount
（In Thousands）
USD 20,000/NTD 571,840
USD 10,000/NTD 285,060
Notional Amount
（In Thousands）

Sell
USD 10,000/NTD 304,870

The Group entered into foreign exchange forward contracts to manage exposures due to exchange rate fluctuations of foreign currency denominated assets and liabilities.

VIII. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - OTHERS

E-OTHERS
Non-current
Domestic Investments
Listed shares
Unlisted shares
Total
Overseas Investment
Listed shares		 December 31, 2020
$ 664,480

70,214

734,694
74,926		 December 31, 2019




$ 683,239
148,484
831,723
127,498

－158－

Unlisted shares

Total

 115,668

190,594

$ 925,288
 228,768
356,266
$ 1,187,989

Foreign investments are held for medium- to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

IX.FINANCIAL ASSETS MEASURED AT AMORTIZED COST

Current
Domestic Investment
Time deposits with original
maturities of more than 3
months (1)
Non-current
Domestic Investment
Standard Chartered Subordinated
Bond (2)
Time deposits with original
maturities of more than 3
months (1)		 December 31, 2020
$ 3,274
$ 132,652

40,000
$ 172,652		 December 31, 2019 December 31, 2019






$ 55,921
$ 141,167
24,327
$ 165,494

(I) As of 2020 and December 31, 2019, the annual interest rate for time deposits with original maturities of more than 3 months are within the ranges of 0.18%~0.35% and 0.48%~1.065

(II) In February 2016, the Group purchased Standard Chartered Bank Subordinated Bond at a nominal value of USD4,600 thousand. The maturity date is January 25, 2022. The coupon rate is 5.7%, and the effective interest rate is 4.49%.

(III)Please see Note 33 for more details on financial assets pledged as collateral measured at amortized cost.

－159－

X.NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

Notes Receivable
Arising from operations
Accounts Receivables
At Amortized Cost
Less: Allowance for impairment loss		 December 31, 2020
$ -
$ 5,888,881
(
509)
$ 5,888,372		 December 31, 2019 December 31, 2019


(

(
 $ 43,732
$ 3,999,767

21,119)
$ 3,978,648

The average credit period on sales of goods is 90 days with no accrued interest. The allowance for doubtful receivables was assessed by referring to the collectability of receivables based on an individual trade term analysis, aging analysis, the historical payment behavior and current financial condition of customers.

The Group measures the loss allowance for accounts receivables at an amount equal to lifetime expected credit losses.The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

In the event there is an evidence indicating that the customer is under severe financial difficulty and the Group cannot reasonably estimate the recoverable amounts, the Group writes off relevant accounts receivable. However, the Group continues to engage in enforcement activity to attempt to recover the receivables which are due. Where recoveries are made, the recoverable amounts are recognized in profit or loss.

The following table details the loss allowance of note receivables and accounts receivables based on the Group’s provision matrix.

－160－

December 31, 2020

December 31, 2020
Expected Credit Loss Rate
Gross carrying amount

Loss allowance (Lifetime
ECL）

Amortized cost

December 31, 2019
Expected Credit Loss Rate
Gross carrying amount

Loss allowance (Lifetime
ECL）

Amortized cost
 Less than
180 Days		 181～365 Days
0.33%
$ 303

(
1)

$ 302

181～365 Days
25.04%
$ 2,013

(
226)

$ 1,787
 Over
366 Days
100%
$ 67

67)
$ -

Over
366 Days
100%
$ 20,290

20,290)
$ -
 Total

(
 0.01%
$ 5,888,511
441)
$ 5,888,070

Less than
180 Days
(
(
 $ 5,888,881
509)
$ 5,888,372
Total

(
 0.01%
$ 4,021,196
603)
$ 4,020,593
(
(
(
 $ 4,043,499
21,119)
$ 4,022,380

The movements of the loss allowance of account receivables were as follows:

December 31, 2020 December 31, 2019 Balance, beginning of year (Jan. 01) $ 21,119 $ 17,845 Add: Acquire Subsidiary - 4,309 Less: Net remeasurement of loss allowance ( 47 ) ( 1,035 ) Less: Disposal of Subsidiary ( 20,563 ) - Balance, end of year (Dec. 31) $ 509 $ 21,119

XI. INVENTORIES

Finished goods
Work in process
Raw materials and supplies
Inventory in transit		 December 31, 2020
$ 365,620
596,129
3,180,444

47,112
$ 4,189,305		 December 31, 2019 December 31, 2019






$ 243,849
242,879
1,786,216
29,222
$ 2,302,166

As of December 31, 2020 and 2019, the cost of inventories recognized as cost of goods sold were NT$17,663,796 thousand and NT$16,284,640 thousand, respectively. Loss (gain) on reversal of write-downs were $30,661 thousand and $(16,541) thousand, respectively. Increase in net realisable value of inventories was due to inventory write-off.

－161－

XII.SUBSIDIARIES

(I) Subsidiaries included in consolidated financial statements:

Investor
Gemtek Technologies Co., Ltd.
Gemtek Technologies Co., Ltd.
Gemtek Technologies Co., Ltd.
Gemtek Technologies Co., Ltd.
Gemtek Technologies Co., Ltd.
Gemtek Investment Co.,Ltd
Gemtek Investment Co.,Ltd
Brightech International Co., Ltd.
G-Technology Investment Co., Ltd.
G-Technology Investment Co., Ltd.
G-Technology Investment Co., Ltd.
G-Technology Investment Co., Ltd.
AMPAK International Holdings Ltd.
Primax Communication (B.V.I.) Inc.
AMPAK Technology Inc.		 Investee
Main
Business
Investment
Investment
Investment
Telecommu
nications
Telecommu
nications
Telecommu
nications
Telecommu
nications
Telecommu
nications
Telecommu
nications
Investment
Investment
Telecommu
nications
Telecommu
nications
Telecommu
nications
Telecommu
nications		 % o f O w n e r s h i p
2020
December
31
100.00%
100.00%
100.00%
100.00%
-
-
97.92%
80.46%
100.00%
100.00%
100.00%
100.00%
100.00%
19.54%
-		 2019
December
31
Brightech International Co., Ltd.

G-Technology Investment Co., Ltd.

Gemtek Investment Co.,Ltd

Gemtek Vietnam Co., Ltd.

AMPAK Technology Inc.

AMPAK Technology Inc.

5V Technologies, Ltd.

Gemtek Electronics Suzhou Co. Ltd.

Gemtek Electronics Kunshan Co., Ltd.

AMPAK International Holdings Ltd.

Primax Communication (B.V.I.) Inc.

Gemtek CZ., s.r.o.

Gemtek Electronics (ChangShu) Co., Ltd.

Gemtek Electronics (Suzhou) Co. Ltd.

SparkLAN Communications, Inc.
 100.00%
100.00%
100.00%
100.00%
59.98%
14.90%
-
80.46%
100.00%
100.00%
100.00%
100.00%
100.00%
19.54%
100.00%

－162－

On June 9, 2020, the shareholders meeting of the Group passed the resolution proposed by the Company and Gemtek Investment Co.,Ltd to release a total of 25,000 thousand shares from AMPAK Technology Inc. In August 2020, 26.61% and 14.90% of the shareholdings of AMPAK Technology Inc. were sold respectively, and the subscription of shares was completed, decreasing its shareholding ratio from 74.88% to 33.37%. As a result, the Group lost control over AMPAK Technology Inc. and its subsidiaries, hence, the above companies are excluded from the combined entity. Please see Note 28 for more details regarding equity shares of AMPAK Technology Inc.

In January 2020, the Group acquired 97.92% of the shareholdings of 5V TECHNOLOGIES, TAIWAN LTD. by NT$90,000 thousand in cash. Please see Note 27 for more details on the acquisition of 5V TECHNOLOGIES, TAIWAN LTD.

On August 23, 2019, the Group obtained 100% shareholdings of SparkLAN Communications Inc. via Ampak Technology Inc. by means of cash and issuance of equity instruments, and has since included SparkLAN Communications Inc. in the Group’s consolidated reports. However, the Group did not subscribe for the new shares issued by Ampak Technology Inc. based on the shareholding ratio, as a result, its comprehensive shareholding ratio decreased to 74.88%.

The condolidated financial statements of the Group as of December 31, 2020 and 2019, which includes the financial statements of its subsidiaries, have been duly audited for the same year.

(II) Subsidiaries not included in consolidated financial statements

Investor
Gemtek Technologies Co., Ltd.
G-Technology Investment Co., Ltd.
Wi Tek Investment Co., Ltd.		 Investee
Wi Tek Investment Co., Ltd.

PT. South Ocean

Browan Communications (Xi'An)
Inc.
Main
Business
Investment

Telecommun
ications
Telecommun
ications
 % o f O w n e r s h i p
2020
December
31
100.00%
95.00%
100.00%		 2019
December
31
100.00%
95.00%
100.00%

－163－

As of 2020 and December 31, 2019, the Group held 100% of Wi Tek Investment Co., Ltd., and its total assets were NT$20,950 thousand and NT$30,276 thousand, accounting for 0.10% and 0.21% of consolidated assets, respectively. Operating incomes were NT$0 for both years, accounting for 0% of the consolidated total operating income. As a result, Wi Tek Investment Co., Ltd. was not included in the consolidated financial statements of the Group.

As of 2020 and December 31, 2019, the Group held 95% of PT. South Ocean, and its total assets were NT$2,613 thousand and NT$2,751 thousand, accounting for 0.01% and 0.02% of consolidated assets, respectively. Operating incomes were NT$0 for both years, accounting for 0% of the consolidated total operating income. As a result, PT. South Ocean was not included in the consolidated financial statements of the Group.

As of 2020 and December 31, 2019, the Group held 100% of the shares of Browan Communications (Xi'An) Inc. through Wi Tek Investment Co., Ltd., and its total assets were NT$22,614 thousand and NT$32,263 thousand, accounting for 0.11% and 0.22% of consolidated assets, respectively. Operating incomes were NT$1,441 thousand and NT$2,056 thousand, accounting for 0.01% and 0.01% of the consolidated total operating income, respectively. As a result, Browan Communications (Xi'An) Inc. was not included in the consolidated financial statements of the Group.

XIII.INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investment in subsidiaries
Investment in associates		 December 31, 2020
$ 23,565
1,087,598
$ 1,111,163		 December 31, 2019 December 31, 2019




$ 33,027
41,286
$ 74,313
(I)
Investment in subsidiaries
Unlisted Company
Wi Tek Investment Co.,		 December 31, 2020
$ 20,951		 December 31, 2019
$ 30,276

－164－

Ltd. PT. South Ocean 2,614 2,751 $ 23,565 $ 33,027

Proportion of ownership and voting rights:

WiTek Investment Co., Ltd.
PT. South Ocean		 December 31, 2020
100.00%
95.00%		 December 31, 2019
100.00%
95.00%

The investments in subsidiaries accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the year ended December 31, 2020 and 2019 was based on the subsidiaries’ financial statements which have been audited for the same year.

Please refer to Note 12 for details on subsidiaries that are not included in the consolidated financial statement. For more information regarding the nature of activities, principal place of business and country of incorporation of the associates, please refer to Attachment 6.。

(II) Investments in associates

vestments in associates

Investor has significant influence
over associate
AMPAK Technology Inc.
Investor as no significant influence
over associate
Free PP Worldwide Co., Ltd.
BANDRICH, INC.
BROWAN
COMMUNICATIONS
INCORPORATION		 December 31, 2020
$ 1,048,268
13,930
5,389

20,011
$ 1,087,598		 December 31, 2019




$ -
15,688
8,124
17,474
$ 41,286

－165－

1. Investor has significant influence over associate：

or has significant influence over associate：
Company Name
AMPAK
Technology
Inc.		 Proportion of
ownership and voting
rights
December 31, 2020
33.37%

For more information regarding the nature of activities, principal place of business 。 and country of incorporation of the associates, please refer to Table 6.

In August 2020, the Group sold 41.51% of the shareholdings of AMPAK Technology Inc., its shareholding ratio was decreased to 33.37% as a result. The dramatic change in ownership percentage is presumed to have significant influence over the investee, therefore the change of percentage was included in the investment in associates using the equity method.

Summarized financial information in respect of each of the Group’s material associates is set out below. The summarized financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRSs adjusted by the Group for equity accounting purposes.

AMPAK Technology Inc.

MPAK Technology Inc.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Proportion of the Group’s
ownership
Equity attributable to the
Group
Goodwill
Carrying amount		 December 31, 2020
$ 1,336,964
524,035
(
619,704 )
(
8,511)
$ 1,232,784
33.37%
$ 411,397

636,871
$ 1,048,268

（ Continued）

－166－

Operating revenue
Net profit for the year
Other comprehensive income
Total comprehensive income
for the year
Equity obtained from AMPAK
Technology Inc.		 December 31, 2020 December 31, 2020




$ 2,417,460
$ 286,468
4,158
$ 290,626
$ 40,201
2.
Investor has no significant influence over associate：
2020
Shares attributable to the Group
Total comprehensive income
for the year
$ 40,996		 2019
( $ 43,280)

The Group previously has held 25% equity of PCL (Hsinchu ) Co., Ltd. In November 2019, PCL (Hsinchu) Co., Ltd. implemented a cash increase subsequent to a capital reduction to cover losses. However, as the Group did not participate in the subscription of shares based on its existing shareholding proportion, its percentage of ownership decreased from 25% to 15.14% resulting in the loss of significant influence. The fair value of the remaining 15.14% of the equity held by the Group on the disposal date was NT$35,543 thousand, which its financial assets were therefore measured at fair value through other comprehensive gains and losses.

BROWAN COMMUNICATIONS INCORPORATION, an investee of the Group, increased its capital by NT$60,000 thousand in cash in January 2019. The Group did not participate in the subscription of shares based on its existing shareholding proportion, but rather subscribed in cash increase by NT$40,000 thousand, resulting in the shareholding percentage to increase to 45.69%.

－167－

The investments in associates accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the year ended December 31, 2020 and 2019 were based on the associates’ financial statements which have been audited for the same year.

XIV.PROPERTY, PLANT AND EQUIPMENT

Cost

Balance on January 01,
2019

Additions
Disposals
Acquired from business
combination
Prepayments for business
facilities
Reclassification

Effect of foreign
currency exchange
differences

Balance on December
31, 2019

Accumulated
depreciation and
impairment
Balance on January 01,
2019
Disposals

Depreciation expenses

Acquired from business
combination
Effect of foreign
currency exchange
differences
Balance on December
31, 2019

Net value on December
31, 2019


Cost

Balance on January 01,
2020

Additions
Disposals
Acquired from business
combination
Received prepayments
for business facilities
Disposal of subsidiary
Reclassification
Effect of foreign
currency exchange
differences
 Land
$ 313,818
-
-
-
-
(
59,849 )

5,310

$ 259,279

$ -
-
-
-

-

$ -

$ 259,279

$ 259,279
-
-
-
-
-
-

-
 Buildings
$ 3,036,682

44,307
(
3,489 )

-

-

18,687
(
47,458)

$ 3,048,729

$ 1,184,062
(
3,240 )

118,069

-
(
26,710)

$ 1,272,181

$ 1,776,548

$ 3,048,729

18,748
(
6,138 )

-

-

-

69,818

7,397
 Machinery and
Equipment
$ 1,660,182

189,791
(
221,704 )

1,965

2,313

5,455
(
56,958)

$ 1,581,044

$ 1,213,873
(
184,132 )

88,486

1,965
(
39,213)

$ 1,080,979

$ 500,065

$ 1,581,044

246,929
(
123,231 )

2,934

14,359
(
53,891 )

251,624

3,238
 Miscellaneous
Equipment
$ 1,309,616

105,246
(
84,186 )

4,851

3,556

2,217
(
38,304)
$ 1,302,996
$ 1,055,549
(
74,396 )

76,502

3,993
(
29,256)
$ 1,032,392
$ 270,604
$ 1,302,996

184,594
(
142,584 )

1,038

494
(
14,438 )

22,310

12,734		 Construction
in progress
and
equipments
pending
acceptance
$ 19,941

66,901

-

-

-
(
26,359 )

497

$ 60,980

$ -

-

-

-

-

$ -

$ 60,980

$ 60,980

373,370

-

-

-

-
(
343,752 )
(
3,850)
 Total
$ 6,340,239

406,245
(
309,379 )

6,816

5,869
(
59,849 )
(
136,913)
$ 6,253,028
$ 3,453,484
(
261,768 )

283,057

5,958
(
95,179)
$ 3,385,552
$ 2,867,476
$ 6,253,028

823,641
(
271,953 )

3,972

14,853
(
68,329 )

-

19,519

－168－

Balance on December
31, 2020

Accumulated
depreciation and
impairment
Balance on January 01,
2020

Disposals

Depreciation expenses

Acquired from business
combination
Disposal of subsidiary
Effect of foreign
currency exchange
differences

Balance on December
31, 2020


Net value on December
31, 2020
 $ 259,279
$ 3,138,554
$ 1,923,006
$ 1,367,144

$ - $ 1,272,181 $ 1,080,979 $ 1,032,392

- (
3,909 ) (
111,858 ) (
121,389 )
-
112,264
124,330
83,777
-
-
582
833
-
- (
41,349 ) (
11,752 )
-

10,295

12,496

9,701

$ -
$ 1,390,831
$ 1,065,180
$ 993,562

$ 259,279
$ 1,747,723
$ 857,826
$ 373,582
 $ 86,748
$ 6,774,731
$ - $ 3,385,552

- (
237,156 )

-
320,371

-
1,415

- (
53,101 )
-

32,492
$ -
$ 3,449,573
$ 86,748
$ 3,325,158

No impairment assessment was performed for the years ended December 31, 2020 and 2019 as there were no indication of impairment.

The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of the asset:

Building
Main buildings 50 years
Others 3~50 years
Machinery and equipment 2~10 years
Miscellaneous equipment 2~10 years

XV.LEASE ARRANGEMENTS

(I) Right-of-use Assets

Right-of-use Assets
Carrying amounts
Land
Building
Transportation equipment		 December 31, 2020
$ 102,854
6,893

1,413
$ 111,160		 December 31, 2019
$ 107,724
10,239

1,313
$ 119,276


$ 107,724
10,239
1,313
$ 119,276

－169－

For the Year Ended For the Year Ended December 31, 2020 December 31, 2019 Additions to right-of-use assets $ 11,847 $ 1,065 Depreciation charge for right-of-use assets Land $ 2,860 $ 3,125 Buildings 5,343 4,237 Transportation equipment 835 981 $ 9,038 $ 8,343

(II) Lease Liabilities

December 31, 2020 December 31, 2019 Carrying amounts Current $ 3,012 $ 6,533 Non-current $ 4,528 $ 5,126

Range of discount rate for lease liabilities was as follows: December 31, 2020 December 31, 2019 Buildings 0.79%~1.39% 1.39%~1.50% Transportation equipment 0.79%~4.41% 1.39%~4.41%

(III) Other lease information

December 31, 2020 December 31, 2019 Expenses related to short-term leases $ - $ 418 Expenses related to low-value asset leases $ - $ 115 Total cash outflow for leases ( $ 6,170 ) ( $ 5,918 )

The Group leases certain transportation equipment which qualify as short-term leases and certain office spaces which qualify as low-value asset leases. The Group elected to apply the recognition exemption and, thus, did not recognize right-of-use assets and lease liabilities for these leases.

For the years ended December 31, 2020 and 2019, the short-term leases qualified for exemption was NT$0.

XVI.OTHER ASSETS

December 31, 2020

December 31, 2019

－170－

Current
Prepaid expenses $ 29,717 $ 37,663
Prepayments 9,742 16,447
Temporary debits 9,555 10,666
Excess business tax paid (or Net
Input VAT) 267,903 134,985
$ 316,917 $ 199,761
Non-current
Deferred expenses $ 150,154 $ 144,567
Guarantee deposits paid 6,084 6,760
Overdue receivables 196,741 196,741
Allowance for loss－Overdue
receivables ( 196,741 ) ( 196,741 )
Net defined benefit asset(Note20) 10,596 16,186
Other 49,872 12,552
$ 216,706 $ 180,065

XVII.BORROWINGS

Short-term borrowings

Short-term borrowings
Unsecured borrowings
Line of credit borrowings
Rate of interest per annum (%)		 December 31, 2020
$ 1,082,240
0.64%~0.75%		 December 31, 2019
$ 454,800
0.85%~2.15%

XVIII.BONDS PAYABLE

BONDS PAYABLE
5thDomestic unsecured
convertible bonds
Less: Current portion due within 1
year		 December 31, 2020
$ 1,179,157
(1,179,157)
$ -		 December 31, 2019

(

$ 1,162,082
-
$ 1,162,082

On March 15, 2019, the Company issued its 5th domestic unsecured convertible bond in the amount of $1,200,000 thousand at 100.2% of its par value for 12 thousand units, in which the denomination for the bond is NT$100 thousand. The maturity period is 3 years, with a zero coupon rate.

－171－

On December 31, 2020, the conversion price was NT$26.3 per common share, conversion period was from June 16, 2019 to March 15, 2022. After the convertible bonds are issued for 2 years, bondholders may request the Company to redeem the convertible bonds in cash at 100.5% of the bond's face value per sale base date. After 3 months following the offering date of the convertible bonds and up until 40 days prior to its maturity date, if the closing price of the Company’s common stock exceeds the current conversion price by 30% (inclusive) for 30 consecutive business days, the Company may, based on the face value of the bond, exercise its rights to redeem all convertible bonds in cash. After 3 months following the offering date of the convertible bonds and up until 40 days prior to its maturity date, if the outstanding balance of the convertible bonds is less than 10% of the total amount issued, the Company may, based on the face value of the bond, exercise its rights to redeem all convertible bonds in cash. Except for conversions into common stock and early redemptions made by the Company, a lump-sum payment will be given in cash upon maturity.

This convertible bond includes liability and equity components. The equity components are expressed as capital reserve-stock options under equity. The effective interest rate originally recognized for the liability component is 1.46%.

Proceeds from issuance (Less: NT$5,084 thousand
transaction cost) $ 1,197,316
Equity component (Less: NT$193 thousand transaction cost
allocated to the equity component) (
45,527 )
Financial liabilities at fair value through profit or loss－
current (Less: NT$13 thousand transaction cost) ( 3,107)
Liability component at issue date (Less: NT$4,878 thousand
transaction cost allocated to the liability component) 1,148,682
Interest charged at Effective interest rate 1.46% 13,400
Liability component on December 31, 2019 1,162,082
Interest charged at Effective interest rate 1.46% 17,075
Liability component on December 31, 2020 $ 1,179,157

On March 15, 2016, the Company issued its 4th domestic unsecured convertible bond in the amount of $1,000,000 thousand, in which the denomination for the bond is NT$100 thousand. The maturity period is 3 years, with a zero coupon rate.

－172－

On December 31, 2018, the conversion price was NT$17.6 per common share, conversion period was from March 15, 2016 to March 15, 2019. After the convertible bonds are issued for 2 years, bondholders may request the Company to redeem the convertible bonds in cash, based on the bond's face value per sale base date. After 1 month following the offering date of the convertible bonds and up until 40 days prior to its maturity date, if the closing price of the Company’s common stock exceeds the current conversion price by 30% (inclusive) for 30 consecutive business days, the Company may, based on the face value of the bond, exercise its rights to redeem all convertible bonds in cash. After 1 month following the offering date of the convertible bonds and up until 40 days prior to its maturity date, if the outstanding balance of the convertible bonds is less than 10% of the total amount issued, the Company may, based on the face value of the bond, exercise its rights to redeem all convertible bonds in cash. Except for conversions into common stock and early redemptions made by the Company, a lump-sum payment will be given in cash upon maturity.

This convertible bond includes liability and equity components. The equity components are expressed as capital reserve-stock options under equity. The effective interest rate originally recognized for the liability component is 1.87%.

Proceeds from issuance (Less: NT$4,829 thousand
transaction cost) $ 994,920
Equity component (Less: NT$220 thousand transaction cost
allocated to the equity component) ( 43,080 )
Financial liabilities at fair value through profit or loss－
current (Less: NT$31 thousand transaction cost) ( 6,169)
Liability component at issue date (Less: NT$4,829 thousand
traansaction cost allocated to the liability component) 945,671
Interest charged at Effective interest rate 1.87% 31,621
Gain on valuation of financial asset ( 748 )
Bonds payable converted to common shares ( 970,836)
Liability component on December 31, 2018 5,708
Interest charged at Effective interest rate 1.87% 62
Bonds payable converted to common shares ( 5,770)
Liability component on December 31, 2019 $ -

－173－

XIX.OTHER LIABILITIES

THER LIABILITIES
Other payables-current
Payables for other expenses
Payables for salaries and
bonuses
Other payables – related
parties (Note 33)
Other liabilities－current
Temporary credits
Others
Other liabilities－non-current
Others		 December 31, 2020
$ 263,946
449,812

-
$ 713,758
$ 52,858

9,011
$ 61,869
$ 1,479		 December 31, 2019














$ 205,979
304,140
10
$ 510,129
$ 21,975
18,043
$ 40,018
$ 9,184

XX.RETIREMENT BENEFIT PLANS

(I)Defined contribution plans

The Company and its subsidiaries adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

(II) Defined benefit plans

The defined benefit plan adopted by the Company and its subsidiaries in accordance with the Labor Standards is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Group contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that

－174－

should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”) and the Group has no right to influence the investment policy and strategy.

Among the Group’s subsidiaries, Gemtek Electronics (Kunshan) Co., Ltd. and Gemtek Electronics (Changshu) Co., Ltd. follow the above plans to contribute an amount equal to the proportion allocated from their employees' salaries, and deposit the total amount into a special pension account. The pension fund is managed by the local statutory insurance agency. When an employee retires, he/she will be eligble to receive the employee's personal pension savings and the Group's relative contributions, plus its accrued interest from the past years.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present Value of the Defined
Benefit Obligation
Fair Value of the Plan Assets
Net Defined Benefit Asset		 December 31, 2020
$ 64,604
(75,200)
($ 10,596)		 December 31, 2019 December 31, 2019

(
(
(
(		 $ 67,264
83,450)
$ 16,186)

Movements in net defined benefit assets were as follows:

Balance on January 01, 2019

Acquired from business
combination
Service cost
Current service cost
Interest expense(Income)

Recognized in profit or loss

Remeasurement
Return on plan assets
Actuarial gains and losses
－changes in
 Present Value
of the Defined
Benefit
Obligation
$ 56,724


3,067

570

671


1,241

-


350		 Fair Value of
the Plan Assets
($ 73,236)

(
4,566)


-
(
895)

(
895)

(
2,589 )

-		 Net Defined
Benefit Asset





($ 16,512)
(
1,499)

570
(
224)

346
(
2,589 )

350

－175－

demographic
assumptions
－changes in financial
assumptions
－experience
adjustments

Recognized in other
comprehensive income

Contributions from the
employer

Benefits paid
(
Balance on December 31, 2019
Disposal of subsidiary
(
Service cost
Current service cost
Interest expense(income)

Recognized in profit or loss

Remeasurement
Return on plan assets
Actuarial gains and losses
－changes in
demographic
assumptions
－changes in financial
assumptions
－experience
adjustments

Recognized in other
comprehensive income

Contributions from the
employer
(
Benefits paid

Balance on December 31, 2020		 1,808
-
1,808
4,610

-

4,610
6,768
(
2,589)

4,179
-
(
2,700)
(
2,700)

536)

536

-
67,264
(
83,450)
(
16,186)

4,387)

10,295

5,908
573
-
573
503
(
585)
(
82)
1,076
(
585)

491
- (
2,313 ) (
2,313 )
444
-
444
2,219
-
2,219
1,578

-

1,578
4,241
(
2,313)

1,928

3,590)

3,590

-
-
(
2,737)
(
2,737)
$ 64,604
($ 75,200)
($ 10,596)

The amounts of defined benefit plans recognized in profit or loss by function were as follows:

Operation cost
Promotion expense
Management expense
R&D expense		 December 31, 2020
$ 154
36
104

197
$ 491		 December 31, 2019 December 31, 2019




$ 117
16
83
130
$ 346

－176－

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

  1. Investment risk: The plan assets are invested in domestic/and foreign/equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau of Labor Funds, Ministry of Labor or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

  2. Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

  3. Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate
Expected rates of future salary
increase		 December 31, 2020
0.350%
3.250%		 December 31, 2019
0.800%～0.875%
2.500%～3.500%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate
Increase 0.25%
Decrease 0.25%
Expected rates of future salary
increase		 December 31, 2020
($ 1,254)
$ 1,298		 December 31, 2019 December 31, 2019
(
 (
 $ 1,407)
$ 1,456

－177－

Increase 0.25% $ 1,227 $ 1,385 Decrease0.25% ( $ 1,193 ) ( $ 1,346 )

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

assumptions may be correlated.
The expected contributions to
the plan for the next year
The average duration of the
defined benefit obligation		 December 31, 2020
$ 2,737
12年		 December 31, 2019
$ 2,700
12 year～13.6 year

XXI.EQUITY

(I) Share capital Common stock

Common stock
Authorized shares（in
thousands）
Authorized capital
Issued and paid shares (in
thousands)
Issued capital		 December 31, 2020

500,000
$ 5,000,000

357,591
$ 3,575,905		 December 31, 2019






500,000
$ 5,000,000
356,884
$ 3,568,835

A holder of issued ordinary shares with par value of NT$10 is entitled to the proportional rights to vote and to dividends.

Bondholders had exercised the right to convert the Company’s 4th domestic unsecured convertible bonds, the number of ordinary shares exchanged were 5,722 thousand shares, 2,125 thousand shares, 4,722 thousand shares and 23,595 thousand shares, in which the capital increase base dates were on March 21, 2019, November 8, 2018, August 10, 2018, and March 19, 2018, respectively..

On June 09, 2020, the Company’s regular shareholders’ meeting approved the issuance of employee restricted stock at an estimated total of 4,000 thousand shares, with a par

－178－

value of NT$10, which the total amount is NT$40,000 thousand.The above transaction was approved by the FSC, under Authorization Letter Jinguanzheng Fazi No. 1090349323 effective on July 14, 2020, and the subscription base date was to be set on August 07, 2020 as determined by the Board of Directors. In addition, on August 7, 2020, the Company's Board of Directors resolved to reduce capital by cancelling 3,293 thousand treasury shares. The base date for capital reduction was on August 7, 2020.

(II) Capital Surplus

Capital Surplus
Shares premium from issuance
Conversion premium
Recognition of changes in
ownership
interests
in
subsidiaries
Recognition of changes in
investment in subsidiaries
and associates by using the
equity method
Share option
Employee restricted stock
Expired share option
Others		 December 31, 2020
$ 1,448,441
2,846,020
50,516
5,990
45,527
58,474
150,566

473
$ 4,606,007		 December 31, 2019






$ 1,662,189
2,846,020
50,516
5,990
45,527
-
150,566
473
$ 4,761,281

The capital surplus arising from shares issued in excess of par value (including share premium from issuance of ordinary shares), and donations may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).

The capital surplus arising from investments, employee share options, and convertible bonds options accounted for equity method may not be used for any purpose.

－179－

(III) Retained earnings and dividends policy

Under the dividends policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For information on the accrual basis of the employees’ compensation and remuneration of directors and the actual appropriations, refer to Note 23-8 employee benefits and remuneration of directors.

Appropriation of earnings to legal reserve shall be made until the reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash

Under FSC Authorization Letters Jinguanzheng Fazi No. 1010012865 and No. 1010047490, and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Company should appropriate or reverse to a special reserve.

The appropriation of earnings for 2019 and 2018 were approved by the shareholders’ general meetings on June 09, 2020 and June 18, 2019, respectively. The appropriations were as follows:

Legal reserve
Special reserve		 Appropriation of Earnings Appropriation of Earnings
For the year ended
2019
$ 20,119
183,614		 For the year ended
2018
$ -
180,682

－180－

In addition, the shareholders’ meeting on June 09, 2020 resolved to distribute NT$177,911 thousand capital reserve in cash, and to allocate NT$0.5 per share.

The appropriation of the 2020 earnings had been proposed by the Company’s board of directors on March 25, 2021. The appropriation and dividends per share were as follows:

Legal reserve
Special Reserve
Cash dividend		 Appropriation of
Earnings
$ 127,330
746,328
357,666		 Dividends per share
(NT$)
$ 1

The Company’s board of directors proposed to issue cash dividends from capital surplus of $357,666 thousand, and to allocate NT$1 per share. The appropriations of earnings for 2020 are subject to the resolution of the shareholders’ meeting that is to be held on June 18, 2021.

(IV) Special reserve

Special reserve
Beginning balance
Appropriated special reserve
Other deducted equity items
Ending balance		 For the year ended
2020
$ 375,960
183,614
$ 559,574		 For the year ended
2019




$ 195,278
180,682
$ 375,960

Upon the initial adoption of the IFRSs, the reversal of special reserve appropriated due to exchange differences resulting from translation of financial statements of a foreign operation (including subsidiaries) shall be based on the Group’s disposal of ownership. In the event that the Group loses significant influence, the special reserve will be fully reversed. When distributing the earnings, the difference between the

－181－

net deduction of other shareholders’ equity and the special reserve appropriated during the initial adoption of the IFRSs should be added to the special reserve at the end of the reporting period. Thereafter, earnings may be distributed based on the reversal of the deduction balance of other shareholders' equity.

(V)Other equity items

  1. Exchange differences on translating the financial statements of foreign operations
Beginning balance
Recognized for the year
Exchange differences
on translating the
financial statements
of foreign
operations
Changes in
investments in
subsidiaries
Share of subsidiaries
and associates
accounted for using
the equity method
Changes in
investments in
subsidiaries and
associates
accounted for using
the equity method
Disposal of
subsidiaries
Ending balance		 For the year ended
2020
( $ 497,082 )
(
21,747 )
-
( $ 32 )
-

3,908
($ 514,953)		 For the year ended
2019
( $ 351,769 )
(
142,959 )
(
2,349 )
( $ 838 )
833

-
($ 497,082)

－182－

  1. Unrealized gain (loss) on financial assets at FVTOCI (fair value through other comprehensive income)
comprehensive income)
Beginning balance
Recognized for the year
Unrealized gain or loss
Equity instruments
Share of subsidiaries
and associates
accounted for using
the equity method
Disposal of
subsidiaries
Cumulative unrealized loss
of equity instruments
transferred to retained
earnings due to disposal
Ending balance		 For the year ended
2020
( $ 726,028 )
(
143,312 )
(
16,604 )
4,636

90,360
($ 790,948)		 For the year ended
2019
( $ 386,694 )
(
10,967 )
(
315,317 )
-
(
13,050)
($ 726,028)

3. Unearned compensation

On June 9, 2020, the shareholders' meeting resolved to issue employee restricted stocks. Please see Note 26 for more details.

Beginning balance
Issued for the year
Recognized share-based
payment expenses
Ending balance		 For the year ended
2020
$ -
( 98,474 )
22,649
($ 75,825)		 For the year ended
2019		 For the year ended
2019


$ -
-
-
$ -

－183－

(VI) Non-controlling interests

Non-controlling interests
Beginning balance
Net income
Other comprehensive income
Exchange differences on
translating the financial
statements
of
foreign
operations
Unrealized gain or loss from
financial assets measured
at fair value through
other
comprehensive
income
Remeasurement of defined
benefit plans
Capital decrease refunded by
subsidiary
Change
in
investment
in
subsidiary
Disposal of subsidiary
Issuance of equity instrument by
subsidiary
Acquisition of non-controlling
interests in subsidiaries（Note
27）
Outstanding stock options held
by
the
employees
of
subsidiaries
related
to
non-controlling interests (Note
26)
Ending balance		 For the year ended
2020
$ 270,356
37,419
(
53 )
(
587 )
-
-
-
(
307,367 )
-
364

-
$ 132		 For the year ended
2019
$ 39,586
8,780
(
130 )
(
968 )
(
91 )
(
13,960 )
(
60,582 )
-
297,412
-

309
$ 270,356

(VII) Treasury Stock


Treasury Stock
Purpose
To maintain the company's credit and shareholders'
rights and interests
Number of shares on January 01, 2020
Increased for the period
Decreased for the period
Number of shares on December 31, 2020		 Cancelled after
repurchase
（in thousands of
shares）
(
 -
3,293

3,293)
-

－184－

In order to maintain the company’s credit and shareholders’ rights and interests, on March 23, 2020, the Company’s board of directors decided to buy back and cancel 20,000 thousand treasury shares from the centralized securities exchange market beginning from March 24, 2020 to May 23, 2020. The repurchase price was set between NT$13.8~26 per share. In the case that the stock price should be lower than the lowest repurchase price, the company may continue to execute the repurchasing of shares. The total amount of shares repurchased is expected to be capped at NT$5,593,801 thousand.

As of December 31, 2020, the Company has repurchased a total of 3,293 thousand shares, amounting to NT$68,767 thousand. On August 7, 2020, the board of directors resolved to cancel the 3,293 thousand treasury shares, in addition to the completion of relevant changes in registration with the authority.

According to the provisions of the Securities Exchange Law, treasury stocks cannot be pledged by the corporation, nor have the eligibility to claim dividends and voting rights.

XXII.REVENUE

EVENUE
Revenue from contracts
Revenue from product sales		 For the year ended
2020
$ 19,929,372		 For the year ended
2019
$ 18,057,131

(I)Contract balance

ract balance
Notes receivable (Note 10）
Notes receivable－related
parties (Note 32）		 December 31,
2020
$ -

11,250		 December 31,
2019
$ 43,732

-		 January 01,
2019
$ 48,507
-

－185－

Account
receivable
(Note10)

Account
receivable
-
related parties (Note 32）


Contract liabilities - current
Product sales
 5,888,372

112,537

$ 6,012,159

$ 218,433
 3,978,648

60,969

$ 4,083,349

$ 243,802
 5,707,086
16,817
$ 5,772,410
$ 105,493
  • (II) Details on revenue from contracts

Please see note 37.

XXIII. PROFIT BEFORE INCOME TAX

Net profit (loss) from continuing operations include the following items:

(I) Interest income

Interest income
Bank deposit For the year ended
2020
$ 27,033		 For the year ended
2019
$ 43,839

(II) Other income

Other income
Rental incomes
DividendS
Government grantS
Other income		 For the year ended
2020
$ 7,234
6,552
59,630
43,789
$ 117,205		 For the year ended
2019





$ 1,375
8,204
-
44,526
$ 54,105

(III) Other gains and losses

Other gains and losses
Gain (loss) on financial assets and
liabilities measured at FVTPL
Gain
(loss)
on
disposal
of
investments
Gain
(loss)
on
disposal
of
subsidiaries
Foreign currency exchange gain		 For the year ended
2020
( $ 7,786 )
-
1,033,557
(
50,932 )		 For the year ended
2019
$ 270,036
9,677
-
(
43,313 )

－186－

(loss)

(loss)
Loss on disposal of property, plant
and equipment (
2,480 )		 (
13,603 )
Others ( 11,869) ( 3,291)
$ 960,490 $ 219,506
  • (IV) Finance costs
Finance costs
Interest from bank loans
Interest from lease liabilities		 For the year ended
2020
$ 30,708

135
$ 30,843		 For the year ended
2019




$ 54,741
223
$ 54,964
  • (V) Impairment loss（ reverse）
Impairment loss（reverse）
Reversal of accounts receivable
recognised in profit or loss
Inventory（includes operating
cost）		 For the year ended
2020
($ 47)
$ 30,661		 For the year ended
2019
(
 (
(		 $ 1,035)
$ 16,541)
  • (VI) Depreciation and amortization
Depreciation and amortization
Property, plant and equipment
Right-of-use assets
Deferred expenses
Depreciation
Expenses
by
Function
Operating costs
Operating expenses
Amortization
expenses
by
function
Operating costs
Operating expenses		 For the year ended
2020
$ 320,371
9,038

89,720
$ 419,129
$ 224,384

105,025
$ 329,409
$ 27,840

61,880
$ 89,720		 For the year ended
2019
















$ 283,057
8,343
64,587
$ 355,987
$ 194,556
96,844
$ 291,400
$ 6,816
57,771
$ 64,587

－187－

(VII) Employee Benefits Expenses


Employee Benefits Expenses
Post-employment benefits
Defined contribution plans
Defined benefit plans (Note
20）
Share-based payments
Equity-settled
Other employee benefit
Total employee benefits
expenses
Employee benefits expense by
function
Operating cost
Operating expense		 For the year ended
2020
$ 56,857

491

57,348

22,649
2,112,899
$ 2,192,896
$ 979,369
1,213,527
$ 2,192,896		 For the year ended
2019
















$ 86,847
346
87,193
1,560
1,990,548
$ 2,079,301
$ 994,418
1,084,883
$ 2,079,301

(VIII) Employee compensation and Remuneration of Board of Directors In compliance with the Articles of incorporation, the Company shall, after deducting the employee bonuses and renumeration benefits of directors from the current year's pre-tax benefits, allocate at least 13.5% for employee profit sharing bonuses and no more than 1.8% for the renumeration benefits of directors. The board of directors have resolved the accrual of employee compensation and remuneration of board of directors for the years ended December 31, 2020 and 2019 on March 25, 2021 and March 10, 2020, respectively, as follows:

Accrual Rate

Accrual Rate
Employee compensation
Remuneration of Directors		 For the year ended
2020
13.5%
1.8%		 For the year ended
2019
13.5%
1.8%

Amount

For the year ended

For the year ended

－188－

Employee compensation
Remuneration of Directors		 2020
Cash
$ 232,646
31,019		 2019
Cash
$ 32,207
4,294

If there is a change in the proposed amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in accounting estimate and will be reflected in the following year.

There was no difference between the amounts of the bonus to employees and the remuneration of directors and supervisors approved in the shareholders’ meetings and the amounts recognized in the consolidated financial statements for the years ended December 31, 2019 and 2018.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors in 2021 and 2020 are available on the Market Observation Post System website of the Taiwan Stock Exchange.

XXIV. INCOME TAXES RELATING TO CONTINUING OPERATIONS

(I) Major components of tax expense recognized in profit or loss:

Current income tax
In respect of the current year
Income tax on unappropriated
earnings
Adjustments for prior years

Deferred tax
In respect of the current year
Adjustments for prior years
Income tax expense recognized
in profit or loss		 For the year ended
2020
$ 128,147
-

621
128,768
19,208

17,622
$ 165,598		 For the year ended
2019		 For the year ended
2019






$ 65,704
347
2,314
68,365
4,217
-
$ 72,582

－189－

A reconciliation of accounting profit and income tax expense is as follows:

Income before income tax from
continuing operations
Income tax expense calculated
at the statutory rate
Nondeductible
expenses
in
determining taxable income
Tax-exempt income
Additional income tax under
the basic income
Income tax on unappropriated
earnings
Unrecognized
temporary
differences
Investment tax credits used
Adjustments for prior years’
tax
Income tax expense recognized
in profit or loss		 For the year ended
2020
$ 1,573,172
$ 397,572
1,895
(
273,897 )
24,322
-
(
2,537 )
-

18,243
$ 165,598		 For the year ended
2019
$ 282,555
$ 129,600
12,399
(
93,583 )
18,290
347
4,336
(
1,121 )

2,314
$ 72,582

(II) Current tax asset and liability

Current tax asset and liability
Current tax asset
Tax refund receivable
Current tax liability
Income tax payable		 For the year ended
2020
$ 1,236
$ 80,331		 For the year ended
2019


$ 5,165
$ 58,055

－190－

(III) Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as

follows:

For the year ended December 31, 2020

Deferred tax assets
Temporary differences
Write-down of
inventories
Allowance for loss
exceeded
Loss
carryforwards
Unrealized
exchange gains
and losses
Others

Deferred tax liabilities
Temporary differences
Profit and loss
from
investments in
overseas
investees
accounted for
using the equity
method
Unrealized
exchange gains
and losses
Others

 Opening
Balance
$ 40,354
15,527
47,306
2,234

3,918

$ 109,339

$ 205,313
1,717

14,667

$ 221,697
 Disposal of
Subsidiary

( $ 28,631 )
(
2,856 )
-
(
859 )

-

($ 32,346)

$ -
(
28 )
(
4)

($ 32)
 Recognized in
Profit or Loss
( $ 9,141 )
(
7,129 )
(
17,622 )
(
1,375 )
(
830)

($ 36,097)

$ -
(
64 )

797

$ 733
 Exchange
Differences
( $ 95 )

-

-

-

40

($ 55)

$ -
-

223

$ 223
 Closing
Balance













$ 2,487

5,542

29,684

-

3,128
$ 40,841
$ 205,313
1,625

15,683
$ 222,621

For the year ended December 31, 2019

Deferred taxassets
Temporary differences
Write-down of
inventories
Allowance for loss
exceeded
Loss carryforwards
Unrealized
exchange gains
and losses
Investment tax
credits
Others


Deferred tax liabilities
Temporary differences
Profit and loss
from investments		 Opening
Balance
$ 41,318
11,137

53,199
-
-

1,196

$ 106,850

$ 205,313		 Acquisition
from business
combination
$ 5,263
680

-
-
-

-

$ 5,943

$ -		 Recognized in
Profit or Loss
( $ 4,609 )
3,710
(
5,893 )
2,234
-

2,343

($ 2,215)

$ -		 Exchange
Differences
( $ 1,618 )

-

-

-

-

379

($ 1,239)

$ -		 Closing
Balance















$ 40,354

15,527

47,306

2,234

-

3,918
$ 109,339
$ 205,313

－191－

in overseas
investees
accounted for
using the equity
method
Unrealized
exchange gains
and losses
Others

 3,643

9,134

$ 218,090
 1,304
(
3,230 )

-

5,232

$ 1,304
$ 2,002
 -

301

$ 301
 1,717

14,667

$ 221,697

  • (IV) Deductible temporary differences, unused loss carryforwards, and unused investment tax credits for which no deferred tax assets have been recognized in the balance

  • sheets.

sheets.
Loss carryforwards
2023
2027
Deductible temporary
differences
Impairment loss on
financial assets
measured by cost		 For the year ended
2020
$ 35,889
14,084
93,665
$ 143,638		 For the year ended
2019






$ 36,316
14,084
93,665
$ 144,065
  • (V) Details on unused loss carryforwards, unused investment tax credits, and tax exemptions.
and tax exemptions.
Loss carryforwards
2027
2029		 For the year ended
2020
$ 140,306

8,109
$ 148,415		 For the year ended
2019




$ 177,283
59,244
$ 236,527
  • (VI) The information of temporary differences associated with investments for which deferred tax liabilities have not been recognized.

As of December 31, 2020 and 2019, the taxable temporary differences associated with subsidiaries for which no deferred tax liabilities have

－192－

been recognized were NT$109,181 thousand and NT$96,498 thousand, respectively.

(VII) Income tax assesments

The tax return filing of 5V TECHNOLOGIES, TAIWAN LTD. as of 2019 and previous years have been assessed by the tax authorities. The tax return filing of Gemtek Technology Co., Ltd. and Gemtek Investment Co. Ltd. as of 2018 and previous years have been assessed by the tax authorities.

XXV. EARNINGS PER SHARE

EARNINGS PER SHARE
Basic earnings per share
from continuing operations
Diluted earnings per share
from continuing operations		 For the year ended
2020
$ 3.86
$ 3.36		 Unit: NT$ Per Share
For the year ended
2019
$ 0.57
$ 0.53


The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Current net income

Current net income
Net income attributable to owners
of the company
Effect of potentially dilutive
ordinary shares:
Interest after tax for
convertible bonds
Net income in computation of
diluted earnings per share		 For the year ended
2020
$ 1,370,155

13,660
$ 1,383,815		 For the year ended
2019




$ 201,193
10,769
$ 211,962

Ordinary shares

Unit: Thousand Shares

－193－

Weighted average number of
ordinary shares in computation
of basic earnings per share
Effect of potentially dilutive
ordinary shares:
Convertible bonds
Employee restricted stock
Employee compensation
Weighted average number of
ordinary shares used in the
computation of diluted earnings
per share		 For the year ended
2020
354,868
45,627
4,000

7,909

412,404		 For the year ended
2019		 For the year ended
2019


355,629
45,864
-
1,248
402,741

If the Group offered to settle compensation or bonuses paid to employees in cash or shares, the Group assumed the entire amount of the compensation or bonuses would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

(I) New Employee Restricted Stock

On June 09, 2020, the annual shareholders’ meeting of the Company approved the issuance of New Employee Restricted Stocks with a total amount of NT$40,000 thousand, that is 4,000 thousand shares to be issued at issue price of NT$10 per share. Followed by the approval letter Jinguanzheng Fazi No. 1090349323 issued by the Financial Supervisory Commission, Executive Yuan on July 14, 2020, the board of directors therefore determined August 7, 2020 as the capital increase base date.

If an employee still serves the Company after the subscription of New Employee Retricted Stock, provided that the employee has not violated the Company’s labor contract, work rules, or company regulations, and under the circumstance that the overall business operations and employee performances have reached the reasonable

－194－

targets set out by the Company for the preceding year, the following ratio of shares for each vesting anniversary are:

  1. 1[st] anniversary： 30% of subscription；

2.2[nd] anniversary：30% of subscription；

  • 3.3[rd] anniversary：40% of subscription。

Vesting restrictions if conditions have not been fulfilled:

  1. Measures to be taken when employees fail to meet the vesting conditions:

  2. (1) Before vesting conditions are met, employee restricted stocks received by the employee are not to be sold, mortgaged, transferred, gifted, pledged, or otherwise sanctioned except in the event of inheritance.

  3. (2) The attendance, proposal, speech, and voting rights of the shareholders meeting shall be implemented in accordance with the trust custody agreement. Any cash dividends, stock dividends, and capital reserve cash (stocks) allocated to the New Employee Restricted Stocks shall be placed under the custody of the trust. For those New Employee Restricted Stocks whom their owners have not yet fulfilled the vesting conditions, the cash dividends, stock dividends, and capital reserves (stocks) generated shall be forfeited and being reclaimed or cancelled by the Company in accordance with relevant laws and regulations.

2.Based upon the above trust custody agreement, employees who have received New Employee Restricted Stocks are eligible to retain certain rights, including but not limited to: the right to receive dividends, bonuses, and capital reserves, the right to subscribe shares for cash increase, and voting rights, which are equivalent to the rights of common shares issued by the Company.

－195－

  1. New Employee Restricted Stocks that are issued in accordance with this arrangement shall be handled via trust and custody before vesting conditions are fulfilled.

(II) Employee Stock Option Plans for Subsidiary’s

In June 2019, AMPAK Technology Inc. granted 4,000 thousand stock option units to its employees. Each unit received is eligible to subscribe 1 common stock. The recipients of such stock options include the employees of AMPAK Technology Inc. and qualified employees of the Company. The subscription period for the stock option is 6 months. The holder of the stock option certificate can exercise all rights pertaining to the stock option beginning from the day after receipt until the expiration of the certificate. The exercise price of the stock options will not affected by changes in the Company's common shares.

Employee stock options:

Employee stock options:
Employee stock options
Outstanding, beginning
Granted during the period
Exercised during the period
Outstanding, ending
Weighted average fair value of
options granted(NT$)		 For the year 2019
January 01 to December 31
Unit（thousands）
-
4,000
(
4,000)

-
$ 0.39		 Weighted average
exercise price
（NT$）
(

 $ -
12.77

AMPAK Technology Inc. administered the Employee Stock Option plan for 2019 June based upon the Black Scholes Option Pricing Model. The input variables are as follows:

Spot price
Strike price
Expected volatility
Time to maturity		 2019 June
NT$13.16
NT$12.77
26.01%
0.0041Years

－196－

Expected dividend yield -% Risk-free rate 0.8%

In 2019, the remuneration cost recognized was NT$1,560 thousand, which was added to the capital reserve. The Company recognized all equity changes in subsidiaries and increased the capital reserve by NT$1,251 thousand based on the shareholding ratio.

XXVII.STATUS OF NEW SHARES ISSUANCE IN CONNECTION WITH MERGERS AND ACQUISITIONS

  • (I) Business combination
5V TECHNOLOGIES,
TAIWAN LTD.

SPARKLAN
COMMUNICATIO
NS INC.
 Main Operating
Activities
IC design, development
of telecommunication
products IC
Sale of electronic
equipment and
devices		 Date of Business
Combination
January 30, 2020
August 23, 2019		 Proportion of
Voting Equity
Interests Acquired
（%）
Consideration
Transferred
97.92

100.00
 $ 90,000
$ 358,570

The Group acquired 5V TECHNOLOGIES, TAIWAN LTD. and

SPARKLAN COMMUNICATIONS INC. in 2020 and 2019, respectively for the purpose of expanding business.

(II) Consideration Transferred

Consideration Transferred
Cash
Issuance of equity
instrument(Note)
Total		 5V
TECHNOLOGIE
S, TAIWAN
LTD.
$ 90,000

-
$ 90,000		 SPARKLAN
COMMUNICAT
IONS INC.


$ 112,238
246,332
$ 358,570

Note:

－197－

AMPAK Technology Inc. issued another 10,203 thousand ordinary shares with a denomination of NT$10 as part of the consideration o f the SPARKLAN COMMUNICATIONS INC. The fair value of these ordinary shares determined on the date of acquisition was NT$246,332 thousand.

(III) Balance sheets of subsidiaries on the date of business combination For the year ended 2020

For the year ended 2020
Current Assets
Cash and cash equivalents
Account receivables
Other receivables
Inventory
Others
Non-current assets
Properties, plants and equipment
Non-tangible assets
Others
Current liabilities
Contract liabilities-current
Accounts payable
Other payables
Others		 5V
TECHNOLOGIE
S, TAIWAN
LTD.
$ 97,696
28,181
195
192
7,228
2,557
8,975
813
(
5,139 )
(
105,031 )
(
12,025 )
(
6,123)
$ 17,519

－198－

For the year ended 2019

ar ended 2019
Current Assets
Cash and cash equivalents
Financial asset at fair value through
profit or loss-current
Financial assets at amortised cost－
current
Accounts receivable
Other receivables
Inventory
Others
Non-current assets
Properties, plants and equipment
Right-of-use properties
Non-tangible assets
Deferred tax assets
Others
Current liabilities
Contract liabilities-current
Accounts payable
Lease liabilities - current
Other payables
Current tax liabilities
Others
Non-current liabilities
Lease liabilities – non-current
Deferred tax liabilities		 SPARKLAN
COMMUNICAT
IONS INC.
$ 203,759
16,261
54,987
31,181
$ 2,479
42,545
6,947
858
10,335
30,459
5,943
2,548
(
12,386 )
(
17,767 )
(
4,407 )
(
25,655 )
(
10,824 )
(
1,126 )
(
5,980 )
(
1,304)
$ 328,853

The fair value of the accounts receivable obtained from these companies in the merger and acquisition transaction is near the book value of the balance sheet. As a result, there are no presumed uncollectible amount from the date of business combination.

(IV) Goodwill from business combination For the year ended 2020

5V TECHNOLOGIE S, TAIWAN LTD.

－199－

Consideration Transferred

Add: Non-controlling interest
Less: Fair value of identifiable
net assets acquired
(
Goodwill from business
combination
 $ 90,000
364

17,519)
$ 72,845

For the year ended 2019

SPARKLAN COMMUNICAT IONS INC. Consideration Transferred $ 358,570 Less: Fair value of identifiable net assets acquired ( 328,853 ) Goodwill from business combination $ 29,717

Goodwill is the control premium obtained during business combination. In addition, the consideration paid for the combination effe ctively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

  • (V) Net cash outflow on acquisition of subsidiaries

For the year ended 2020

Cash and cash equivalent balances acquired Less: Consideration paid in cash

5V TECHNOLOGIE S, TAIWAN LTD. $ 97,696 ( 90,000 ) $ 7,696

－200－

For the year ended 2019

For the year ended 2019
Consideration paid in cash
Less:Cash and cash equivalent balances
acquired		 S P A R K L A N
COMMUNICAT
I O N S I N C .

(
(		 $ 112,238
203,759)
$ 91,521)

(VI) Impact of acquisitions on the results of the Company

For the year ended 2020

The operation results of 5V TECHNOLOGIES, TAIWAN LTD. since the acquisition date included in the consolidated statements of comprehensive income were as follows:

were as follows:
Operating income
Net loss		 5V
TECHNOLOGIE
S, TAIWAN
LTD.

(		 $ 201,272
$ 9,124)

Had the business combination of 5V TECHNOLOGIES, TAIWAN LTD. been in effect on the date of acquisition, the Company’s net revenue and net income for the year ended 2020 would have been NT$19,950,496 thousand and NT$1,404,504 thousand, respectively. This pro-forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Company that actually would have been achieved had the acquisition been completed on the date of acquisition, nor is it intended to be a projection of future results. The aforementioned pro-forma net revenue and net income were calculated based on the fair value of assets acquired and liabilities assumed at the date of acquisition.

－201－

For the year ended 2019

The operation results of SPARKLAN COMMUNICATIONS INC. since the acquisition date included in the consolidated statements of comprehensive income were as follows:

were as follows:
Operating income
Net profit/loss		 SPARKLAN
COMMUNICAT
IONS INC.

(		 $ 78,894
$ 66)

Had the business combination of SPARKLAN COMMUNICATIONS INC. been in effect on the date of acquisition, the Company’s net revenue and net income for the year ended 2019 would have been NT$18,247,376 thousand and NT$211,400 thousand, respectively. This pro-forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Company that actually would have been achieved had the acquisition been completed on the date of acquisition, nor is it intended to be a projection of future results. The aforementioned pro-forma net revenue and net income were calculated based on the fair value of assets acquired and liabilities assumed at the date of acquisition.

XXVIII.DISPOSAL OF SUBSIDIARY

On JUNE 09, 2020, the Board of Directors of the Group approved the disposal of AMPAK Technology Inc.‘s stock release. Accordingly, in August 2020, 41.51% shareholding was fully transferred, and the Group lost controlling interest over AMPAK Technology Inc. As a result, the financial reports of AMPAK Technology Inc. and its subsidiaries were excluded from the consolidated financial reports of the Group in addition to being recognized by investment in subsidiaries and associates accounted for using equity method thereafter. The original accounting treatment of

－202－

the disposal of AMPAK Technology Inc.is only tentative on the balance sheet date. At the date of the approval of this consolidated financial report, the required market evaluation and other calculations have not yet been completed. Therefore, the tentative possible value is only determined based on the best estimate of the management of the Group.

  • (I) Consideration received from the disposal

Total consideration received

AMPAK Technology Inc. and its subsidiaries $ 1,296,102

  • (II) Analysis of assets and liabilities over which the control was lost
Current assets
Cash and cash equivalents
Financial assets measured at amortised cost-current
Accounts receivable
Inventory
Others
Non-current assets
Financial assets measured at other comprehensive
profit and loss measured at fair value
Financial assets measured at amortised cost-
non-current
Property, plant, and equipment
Right-of-use assets
Non-tangible assets
Others
Current liabilities
Short-term borrowings
Accounts payable
Others
Lease liabilities - current
Non-current liabilities
Lease liabilities - current
Others
Net asset disposed		 AMPAK
Technology Inc.
and its
subsidiaries
$ 818,738
52,001
548,633
246,581
43,242
60,846
4,343
15,228
12,079
446,267
41,578
( $ 117,920 )
(
348,684 )
(
190,997 )
(
8,158 )
(
4,001 )
(
8,542)
$ 1,611,234

－203－

(III) Gain/loss on disposal of subsidiary

Net consideration received
Net assets disposed
Non-controlling interests
Accumulated exchange differences
of net asset gains or losses
from equity reclassification due to
loss of interest control over
subsidiary
Fair value of residual interest
Gain on disposal		 AMPAK
Technology Inc.
and its
subsidiaries
$ 1,296,102
( 1,611,234 )
307,367
(
3,908 )
1,045,230
$ 1,033,557
  • (IV) Net cash inflow arising from disposal of subsidiary
Net cash inflow arising from disposal of subsidiary
Consideration received in cash or
cash equivalent
Less:Cash
and
cash
equivalent
balances disposed		 AMPAK
Technology Inc.
and its
subsidiaries

(
 $ 1,296,102

818,738)
$ 477,364

XXIX.NON-CASH TRANSACTIONS

For the years ended December 31, 2020 and 2019, the Group entered into the following non-cash investment activities:

  • (I) On June 9, 2020, the annual shareholders meeting of the Group resolved the proposed issuance of 4,000 thousand shares of New Employee Restricted Stock, totaling NT$40,000 thousand, which was then approved by the board of directors on August 7, 2020. The cost of the 2020 New Employee Restricted Stock was NT$22,649 thousand.

－204－

  • (II) The Group did not recognize long-term equity investment NT$(12,102) thousand in accordance with the shareholding ratio in 2019.

XXX.CAPITAL RISK MANAGEMENT

In consideration of the industry dynamics and future developments, as well as external environment factors, the Group maintains an optimal capital structure to enhance long-term shareholder value by managing its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, research and development activities, dividend payments, and other business requirements for continuing operations and to reward shareholders and take into consideration the interests of other stakeholders.

Key management personnel of the Group review the capital structure periodically. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Group may adjust the amount of dividends paid to shareholders and the amount of new debt issued or existing debt redeemed.

XXXI. FINANCIAL INSTRUMENTS

  • (I) Fair value of financial instruments that are measured at fair value on a recurring basis

  • Fair value hierarchy

December 31, 2020

December 31, 2020
Financial assets at
FVTPL
Securities listed
in ROC
 Level 1
$ 120,131		 Level 2
$ -		 Level 3
$ -		 Total
$ 120,131

－205－

Convertible
options
Financial
products
Convertible
bond

Total

Financial assets at
FVTOCI
Equity instrument
investment
－Domestic and
overseas listed
stock

－Domestic and
overseas
unlisted stock
Total

Financial liabilities at
FVTPL
Forward
Exchange
Contract
 -
-

-

$ 120,131

$ 739,406

-

$ 739,406

$ -
840

23,745

-

$ 24,585

$ -

-

$ -

$ 7,278
-

-

15,592

$ 15,592

$ -
185,882

$ 185,882

$ -
840

23,745

15,592
$ 160,308
$ 739,406
185,882
$ 925,288
$ 7,278

December 31, 2019

Financial assets at
FVTPL
Domestic listed
stock

Trust beneficiary
certificate
Financial
products

Total

Financial assets at
FVTOCI
Equity instrument
investment
－Domestic and
overseas listed		 Level 1
$ 110,990
15,007

-

$ 125,997

$ 810,737		 Level 2
$ -

-

10,486

$ 10,486

$ -		 Level 3
$ -

-

-

$ -

$ -		 Total















$ 110,990

15,007

10,486
$ 136,483
$ 810,737

－206－

stock －Domestic and overseas unlisted stock - - 377,252 377,252 Total $ - $ 810,737 $ $ 377,252 1,187,989 Financial liabilities at FVTPL Forward Exchange Contract $ - $ 3,423 $ - $ 3,423 Convertible - - options 2,640 2,640 Total $ - $ 6,063 $ - $ 6,063

There were no transfers between Levels 1 and 2 in 2020 and 2019.

  1. Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement
fair value measurement
Financial Instruments
Derivatives - foreign
currency forward
contracts and financial
products
Derivatives- convertible
options		 Valuation Techniques and Inputs
Discounted cash flow: Future cash flows are
estimated based on observable forward
exchange rates at the end of the reporting
period and contract forward rates,
discounted at a rate that reflects the credit
risk of various counterparties.
Binomial Tree Model for Convertible Bonds
Pricing: Evaluated based on the volatility of
the conversion price, the risk-free interest
rate, the risk of discount rate, and the years
until maturity.
  1. Valuation techniques and inputs applied for Level 3 fair value measurement

For stocks of unlisted companies without an active market, their fair value is assessed by using the market method and the income method.

－207－

The market approach refers to the market price and related information of listed companies that share a similar background as the unlisted stock in order to estimate its fair value; the income approach uses the discounting cash flow method to calculate the present value of the expected return from holding the investment target.

Hybrid financial assets - Convertible corporate bonds have no market price for reference. The Company’s evaluation of fair value is based on the Binomial Tree Model for Convertible Bond Pricing, which factors in the volatility of the conversion price, the risk-free interest rate, the risk of discount rate, and the periods until maturity.

(II) Categories of financial instrument


Financial assets
Fair value through profit or loss
Fair value after amortized cost
（Note 1）
Fair
value
through
other
comprehensive income
Financial liabilities
Fair value through profit or loss
Fair value after amortized cost
（Note 2）		 December 31, 2020
$ 160,308
8,184,615
925,288
7,278
7,959,756		 December 31, 2019
$ 136,483
7,076,698
1,187,989
6,063
5,421,412

  • Note 1: Financial assets measured at fair value after amortized cost include cash and cash equivalents, notes and accounts receivable, accounts receivables-related parties, other receivables, and refundable deposits etc.

  • Note 2: Financial liabilities measured at fair value after amortized cost include short-term loans, notes and accounts payables, accounts payables -related parties, other payables, refundable deposits, and bonds payable etc.

－208－

(III) Financial risk management objective and policies

The Group’s major financial instruments include equity instrument investment, accounts receivable, accounts payable, bonds payable, loans and lease liabilities. The Group’s Financial Department provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

The Group’s Finance Department seeks to mitigate the effect of these risks by using derivative financial instruments to hedge risk exposures under the policies approved by the board of directors. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Group’s management monitors and reviews the financial activities in accordance with procedures required by relevant regulations and internal controls.

If the Finance Department should engage in derivative transactions, the results are reported to the Board of Directors on a regular basis.

1. Market Risk

The Group’s operating activities exposed it primarily to the financial risks arising from changes in foreign currency exchange rates (see (1) below) and interest rates (see (2) below):

There had been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.

(1) Foreign Currency Risk

The Group engages in foreign currency-denominated sales and purchase transactions, therefore exposing the Group to foreign currency fluctuation risks.

－209－

The carrying amounts of the significant monetary assets and liabilities not denominated in functional currency (including those eliminated on consolidation) at the end of the reporting period are set out in Note 36.

Sensitivity analysis

The Group was mainly exposed to the USD.

The following table details the Group’s sensitivity to a 1% increase and decrease in the New Taiwan dollars (the functional currency) against the relevant foreign currencies. If the loss of the financial asset measured at fair value through profit and loss reaches the 3% cap as laid out in the contract, the situation must be reported to the management, and a reassessment of the exchange rate fluctuation should be made. The sensitivity analysis included only outstanding foreign currency denominated monetary items plus forward exchange contracts designated as a cash flow hedge, and their translations are adjusted at the end of the reporting period for a 1% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit associated with New Taiwan dollars strengthen 1% against the relevant currency; a negative number below indicates a decrease in pre-tax profit associated with New Taiwan dollars weakens 1% against the relevant currency.

Profit or Loss

Impact of USD
For the year 2020
$ 66,925		 For the year 2019
$ 21,170

The impact of foreign currencies on profit and loss listed in the above table mainly derived from the USD-denominated non-derivative financial assets and liabilities of the Group that are still in circulation on the balance sheet date and have not undergone cash flow hedging.

－210－

There was no significant changes in the sensitivity analysis of the current year’s foreign exchange rates when compared to the previous year.

(2) Interest rate risk

The Group is exposed to interest rate risk arising from borrowing at both fixed and floating interest rates.

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

s:

Fair value interest rate
risk
－Financial assets
－Financial liabilities
Cash flow interest rate
risk
－Financial assets
－Financial liabilities		 December 31, 2020
$ 82,364
2,261,397
1,884,043
-		 December 31, 2019
$ 1,528,120
1,523,882
1,280,899
93,000

Sensitivity analysis

The sensitivity analysis below was determined based on the Group’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 100 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2020 and 2019 would increase by NT$18,840 thousand and NT$11,879 thousand, respectively. The main reason for the above derived from the net

－211－

position of bank deposits and borrowings that are exposed to fluctuating interest rate risks and redeemable bonds attributable to the Group that are measured at fair value.

There was no significant changes in the sensitivity analysis of the current year’s interest rates when compared to the previous year.

(3) Other market price risk

Equity price risk exposure arises from the Group’s investments in domestic and foreign listed stocks, unlisted stocks, and convertible bonds. The Group assigns relevant personnel to monitor price flucutations and evaluate the timing to increase hedge positions.

Sensitivity analysis

The sensitivity analysis below was determined based on the Group’s exposure to equity price risks at the end of the reporting period.

If equity prices of financial assets at FVTPL had been 1% higher/lower, profit or loss for the years ended December 31, 2020 and 2019 would increase/decrease by $1,201 thousand and $1,260 thousand, respectively. If equity prices of financial assets at FVTOCI had been higher/lower, other comprehensive income (loss) for the years ended December 31, 2020 and 2019 would increase/decrease by $9,253 thousand and $11,880 thousand, respectively.

There was no significant changes in the sensitivity analysis of the current year’s equity prices when compared to the previous year.

2. Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. As of the end of the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure of counterparties to discharge

－212－

an obligation and financial guarantees provided by the Group could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets.

The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

Except for Company A, the largest customer of the Group, the Group does not have other sources of credit risk exposure from one or many counterparties that are grouped by similar characteristics. Associates of the Group are considered counterparties with similar characteristics.

The Group’s concentration of credit risk of 60.38% and 38.63% of total accounts receivables as of December 31, 2020 and 2019, respectively, were related to the Group’s largest customers A, B, and C.

3. Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a substantial source of liquidity. The detailed information of the Group’s unused financing facilities as of December 31, 2020 and 2019 is further stated in (3) financing facilities below.

(1)Liquidity and interest risk tables for non-derivative financial liabilities The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be

－213－

required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates.

For interest cash flows paid at floating interest rates, the undiscounted amount of interest can be inferred by the yield curve on the balance sheet date.

December 31, 2020

Non-derivative
financial
liabilities
Non-interest
bearing

Lease liabilities
Fixed interest
rate liabilities
 On Demand
or Less than
1 Month

$ 3,950,761

254
881,296

$ 4,832,311		 1-3 Months
$ 1,936,013


763
2,293,484

$ 4,230,260

Further information on the lease liability maturity analysis is as follows:

==> picture [354 x 26] intentionally omitted <==

December 31, 2019

On Demand or Less than 3 Months 1 Month 1-3 Months -1 Year 1-5 Years Non-derivative financial liabilities Non-interest $ 3,111,150 $ 414,464 $ 278,887 $ -

－214－

==> picture [352 x 91] intentionally omitted <==

Further information on the lease liability maturity analysis is as follows:

==> picture [354 x 26] intentionally omitted <==

The aforementioned non-derivative financial liabilities were caluculatedby floating interest rates, therefore the results may differ from the interest rate accounted for the balance sheet date.

(2) Liquidity and interest risk tables for derivative financial liabilities

For the liquidity analysis of derivative financial instruments, for derivative instruments that are settled on a net basis, they are compiled on the basis of undiscounted contract net cash inflows and outflows; for derivatives that are settled on a gross basis, they are compiled on the basis of undiscounted net cash inflows and outflows. It is prepared based on the current total cash inflows and outflows. When the amount payable or receivable is not fixed, the amount disclosed is determined based on the interest rate estimated by the yield curve on the balance sheet date.

December 31, 2020

Netting
settlement
Forward
exchange
 On
Demand
or Less
than 1
Month		 1-3
Months		 3 Months
-1 Year
 3 Months
-1 Year
 1-5 Years 1-5 Years Above 5
Years
( $ 7,278)
 $ -
 $ -
 $ -
 $ -

－215－

December 31, 2019

Netting
settlement
Forward
exchange
 On
Demand
or Less
than 1
Month		 1-3
Months		 3 Months
-1 Year
 3 Months
-1 Year
 1-5 Years 1-5 Years Above 5
Years
( $ 3,423)
 $ -
 $ -
 $ -
 $ -
  • (3) Financing facilities Credit Lines

December 31, 2020 December 31, 2019

Unsecured bank Loan
facility
－Amount used

－Amount unused


Secured Bank Loan
Facilities
－Amount used

－Amount unused

 $ 1,082,240

2,661,360

$ 3,743,600

$ -

-

$ -
 $ 454,800
3,903,580
$ 4,358,380
$ -
30,000
$ 30,000

XXXII. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

  • (I) Name of the related parties and relationship

Name of related party Relationship with the Group AMPAK Technology Inc. Associates（AMPAK Technology Inc. was a former subsidiary of Gemtek Technologies Co., Ltd. and became an associate on August 10, 2020.） SparkLAN Communications, Inc. Associates（SparkLAN Communications, Inc. was a former subsidiary of Gemtek Technologies Co., Ltd. and became an associate on August 10, 2020.）

－216－

BROWAN Associates
COMMUNICATIONS
INCORPORATION
ANTEK NETWORKS INC.
Associates
BandRich Inc. Associates
(II) Sales Revenue
Type/Name of related party
Associate
Others		 For the year ended
2020
$ 352,971		 For the year ended
2019		 For the year ended
2019
$ 185,680

Sales prices and payment terms for related parties were not significantly different from those for sales to non-related parties.

(III) Purchase and Processing Fee

Purchase and Processing Fee
Type/Name of related party
Associate
Others		 For the year ended
2020
$ -		 For the year ended
2019
$ 7,714

The sales prices and trade term with related parties are not comparable to those with thirdparty customers for certain transactions due to different product specifications; other than that, the determination of sales prices and payment terms for related parties were not significantly different from those for sales to non-related parties.

(IV) Receivables from related parties

Account
Accounts
receivables –
related parties
 Type/Name of related
party
Associates
BROWAN
COMMUNICATI
 December 31,
2020
$ 91,686
 December 31,
2019
$ 53,008

－217－

ONS
INCORPORATIO
N
ANTEK
NETWORKS
INC.
Others


Notes receivables –
related parties
Associates
BROWAN
COMMUNICATI
ONS
INCORPORATIO
N
 7,929
12,922

$ 112,537

$ 11,250
 7,961
-
$ 60,969
$ -

No guarantee is received for the outstanding accounts receivable from related parties. No allowance for losses is provided for accounts receivable from related parties in 2020 and 2019.

(V) Other receivables from related parties

Other receivables from related parties
Type/Name of related party
Associates
ANTEK NETWORKS
INC.		 December 31, 2020
$ 189		 December 31, 2019
$ 23

Other receivables of the Group to be collected from related parties are the advance payments and purchases of raw materials on behalf of the related parties.

(VI) Payables to related parties

Account
Accounts
payable-relat
ed parties
 Type/Name of related
party
Associates
BROWAN
COMMUNICATI
ONS
 December 31,
2020
$ 304
 December 31,
2019		 December 31,
2019
$ -

－218－

INCORPORATI ON

No guarantees were available for outstanding accounts payables to related parties.

(VII) Other trade payables to related parties

Other trade payables to related parties
Type/Name of related party
Associates
BROWAN
COMMUNICATIONS
INCORPORATION		 December 31, 2020
$ -		 December 31, 2019
$ 10

Other payables of the Group to be paid to related parties are the advance payments made on behalf of the related parties.

(VIII) Disposal of property, plant, and equipment

Type/Name of
related party
Associates
BROWAN
COMMUNI
CATIONS
INCORPOR
ATION
 For the year For the year ended 2020
Disposal of
gain (loss)

$ -
 For the year ended 2019 ended 2019
Disposal of
proceeds		 Disposal of
proceeds

$ 359
 Disposal of
gain (loss)
$ - $ 359
  • (IX) Other trades with related parties
Type/Name of related party
Rent income
Associates
AMPAK Technology Inc.
BROWAN
COMMUNICATIONS
INCORPORATION
Others
Other income
Associates
AMPAK Technology Inc.		 For the year ended
2020
$ 1,772
213

252
$ 2,237
$ 251		 For the year ended
2019		 For the year ended
2019






$ -
258
215
$ 473
$ -

－219－

Research & development fee Associates Others $ - $ 3

Rental income of the Group collected from associates were based on the market price.

(X) Compensation of key management personnel

Short-term employee benefits
Post-employment benefits		 For the year ended
2020
$ 41,165

771
$ 41,936		 For the year ended
2019		 For the year ended
2019




$ 54,014
1,121
$ 55,135

The remuneration of directors and key executives was determined by the remuneration committee based on the performance of individuals and market trends.

XXXIII. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were pledged or mortgaged as collateral for tariffs on imported raw materials:

December 31, 2020 December 31, 2019 Pledged bank deposits (included in financial assets measured at amortized cost) $ 43,274 $ 80,248

  • XXXV. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

－220－

The following information was aggregated by the foreign currencies other than functional currencies of the Group and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

December 31, 2020

Foreign currency
asset
Monetary items
USD

USD


Non-monetary items
Investments
accounted for
using equity
method
USD

Financial asset
measured at fair
value through
other
comprehensive
income
USD

Financial
asset
measures
at
amortized cost
USD



Foreign currency
liabilities
Monetary items

USD

USD

 Foreign
Currencies
$ 315,929
239,820
1,317
6,692
4,658
205,324
115,437		 Exchange Rate
28.48(USD:NTD)

6.5249(USD:RMB)

28.48(USD:NTD)

28.48(USD:NTD)
28.48(USD:NTD)


28.48(USD:NTD)

6.5249(USD:RMB)
 Carrying
Amount








$ 8,997,667
6,830,084
$15,827,751
$ 37,494
190,594
132,652
$ 360,740
$ 5,847,622
3,287,639
$ 9,135,261

－221－

December 31, 2019

Foreign currency
asset
Monetary items
USD

USD


Non-monetary items
Investments
accounted for
using equity
method
USD

Financial asset
measured at fair
value through
other
comprehensive
income
USD

Financial asset
measured at
amortized cost
USD


Foreign currency
liabilities
Monetary items

USD

USD

 Foreign
Currencies
$ 176,365
107,295
1,625
11,883
4,709
125,003
88,043		 Exchange Rate
29.98(USD:NTD)

6.9762(USD:RMB)


29.98(USD:NTD)

29.98(USD:NTD)
29.98(USD:NTD)


29.98(USD:NTD)

6.9762(USD:RMB)

 Carrying
Amount








$ 5,287,415
3,216,711
$ 8,504,126
$ 48,715
356,266
141,167
$ 546,148
$ 3,747,594
2,639,521
$ 6,387,115

The significant realized and unrealized foreign exchange gains (losses) were as follows:

Foreign
Currencies
NTD
RMB		 Forthe yearended2020
ExchangeRate
Net Foreign
Exchange Gain
(Loss)
1（NTD:NTD）$ 11,288
4.3648（RMB:NTD）(
62,220)
($ 50,932)		 Forthe yearended2020
ExchangeRate
Net Foreign
Exchange Gain
(Loss)
1（NTD:NTD）$ 11,288
4.3648（RMB:NTD）(
62,220)
($ 50,932)		 Forthe yearended2019 Forthe yearended2019 Forthe yearended2019
ExchangeRate
1（NTD:NTD）
4.3648（RMB:NTD）
ExchangeRate

1（NTD:NTD）
4.2975（RMB:NTD）
Net Foreign
Exchange Gain
(Loss)

(
(		 (

(		 $ 63,687 )
20,374
$ 43,313)

－222－

XXXVI. SEPARATELY DISCLOSED ITEMS

  • (I) Information About Significant Transactions and (II) Investees:

  • Financing provided to others. (Table 1)

  • Endorsements/guarantees provided. (None)

  • Marketable securities held (excluding investment in subsidiaries, associates and joint ventures). (Table 2)

  • Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the share capital. (Table 3)

  • Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)

  • Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)

  • Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4)

  • Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)

  • Trading in derivative instruments. (Note 7 and 31)

  • Other: Intercompany relationships and significant intercompany transactions. (Table 8)

  • Information on investees. (Table 6)

  • (III) Information on investments in mainland China:

  • Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 7)

  • Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: (Tables 4, 5, 7, and 8)

－223－

  • (1) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year.

  • (2) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year.

  • (3) The amount of property transactions and the amount of the resultant gains or losses.

  • (4) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes.

  • (5) The highest balance during the year, the end of year balance, the interest rate range, and total current year interest with respect to financing of funds.

  • (6) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receipt of services.

  • (IV)Information on significant shareholders: The name, number of shares held, and shareholding percentage of shareholders who possess 5% or more of the total number of shares. (None)

XXXVII.SEGMENT INFORMATION

  • Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on types of goods or services delivered or provided. The Group’s reportable segment is the wireless telecommunication products department.

  • (I) Segment revenues and results The following was an analysis of the Group’s revenue and results from continuing operations by reportable segment:

Segment Profit

Segment Revenue

－224－

Wireless
telecommunication
products department
Central administration cost
Interest income
Other income
Other gains and losses
Finance cost
Share
of
profit
of
associates accounted for
using the equity method
Profit before tax		 For the year
ended 2020
$ 19,929,372		 For the year
ended 2019
$ 18,057,131


 For the year
ended 2020
$ 1,001,225

533,312 )
27,033
117,205
960,490

30,843 )
31,374
$ 1,573,172
 For the year
ended 2019


(
(
(



(
(
 $ 562,472

510,973 )

43,839

54,105

219,506

54,964 )
31,430)
$ 282,555

Segment revenues reported above represents revenue generated from external customers. There were no inter-segment sales during the years ended December 31, 2020 and 2019.

Segment profit represented the profit before tax earned by each segment without allocation of central administration costs, interest income, other income, other gains or losses, finance cost, share of profit of associates accounted for using the equity method, and income tax expense. This was the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

  • (II) Segment total assets and liabilities

The Group had not reported segment assets and liabilities information to the chief operating decision maker. Thus, no disclosure is made.

(III) Other information

Other information
Wireless
telecommunication
product department		 Depreciation and amortization
For the year ended
2020
$ 419,129		 For the year ended
2019
$ 355,987

－225－

  • (IV) Revenue from major products and services
CARD
GATEWAY
Wireless
Telecommunication
Module
Others		 For the year ended
2020
$ 2,515,961
14,924,532
1,208,154

1,280,725
$ 19,929,372		 For the year ended
2019		 For the year ended
2019






$ 449,468
13,031,635
2,003,784
2,572,244
$ 18,057,131

  • (V) Geographical information

  • The Group operates in three principal geographical areas – Taiwan, China, and the Czech Republic.

The Group’s revenue from continuing operations from external customers by location of operations was detailed below:

Taiwan
China
Vietnam
Czech Republic		 Revenues from External Customers Revenues from External Customers Revenues from External Customers
For the year ended
2020
$ 17,960,631
1,968,569
70

102
$ 19,929,372		 For the year ended
2019




$ 16,675,321
1,381,614
-

196
$ 18,057,131
  • (VI) Information about major customers

Revenues from individual customers that exceeded 10% of the Group’s revenue for the years ended December 31, 2020 and 2019:

Customer
A Company

B Company
C Company		 For the year ended 2020
Sales revenue
％of total
income
$ 4,278,475
21
2,759,107
14
2,569,367
13		 For the year ended 2019
Sales revenue
％of total
income
$ 8,023
-

3,224,002
18

5,473,384
30

－226－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIAR IES

FINANCING PROVIDED TO OTHERS

FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 1

Unit:In Thousands of New Taiwan Dollars, Unless Stated Otherwise

No. Financing
Company Name		 Borrower Financial
Statement
Account
Related
Parties
Highest
Balance for
the Period		 Ending
Balance		 Actual
Borrowing
Amount		 Interest
Rate		 Nature of
Financing
（Note
2）
Business
Transacti
on
Amount		 Reasons for
Short-term
Financing		 Allowanc
e for
Impairme
nt Loss		 Collateral Collateral Financing Limit
for Each
Borrowing
Company
(Note 1)		 Financing
Company's
Total Financing
Amount Limit
(Note 1)
Item Value
1 Gemtek
Electronics
(Suzhou)
Co.
Ltd.
Gemtek
Electronics (Ch
angShu) Co.,
Ltd.		 Short-ter
m
financi
ng		 Yes $ 52,524 $ 52,524 $ 52,524 3.60 2 $ - Operating
capital		 $ - - - $ 85,377 $ 85,377

Note 1 ： Pursuant to the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies ” of Gemtek Electronics (Suzhou) Co. Ltd., when the parent company directly and indirectly holds 100% of the voting shares of foreign companies engaged in fund loans, the aggregate amount of loans shall not exceed 100% of the lending company's net worth, and the maximum amount permitted to a single borrower shall not exceed 100% of the lending company's net worth.

Note 2 ： Nature for financing -

  1. Enter 1 for Business relationship.

  2. Enter 2 for Short-term financing purpose.

Note 3 ： Converted by the exchange rate recorded on the financial reporting date - RMB: New Taiwan Dollar = 1:4.3 77. Note 4 ： : The above transactions were eliminated during the compilation of this consolidated financial report.

－227－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 2

Unit:In Thousands of New Taiwan Dollars/ US Dollars/ RMB.Unless Stated Otherwise

Holding Company Name Type and Name of Marketable
Securities		 Relationship with the
Holding Company		 Financial Statement
Account		 Ending Balance on December 31, 2020 Ending Balance on December 31, 2020 Ending Balance on December 31, 2020 Ending Balance on December 31, 2020 Note
Shares/ Units (in
thousands)		 Carrying Value Percentage of
Ownership％		 Fair Value
Gemtek Technologies
Co.,Ltd.
Gemtek Investment Co.,Ltd		 Stock
ITEQ CORPORATION
TAI-SAW TECHNOLOGY CO.,
LTD.
Green Packet Bhd.
LIONIC CORP.
Tempo Semiconductor, Inc.
SKSpruce Holding Limited
Greenwave holding, Inc.
Stock
Sky Phy Networks Limited
Ingenu Inc.
SanJet Corp
TSKY CO., LTD.
LIONIC CORP.
Polaris Group
AIPTEK, Inc.
TAI-SAW TECHNOLOGY CO.,
LTD.
PYRAS TECHNOLOGY INC.		 The Corporation serves as
corporate director
〃
None
The Corporation serves as
corporate director
〃
None
〃
〃
〃
The Corporation serves as
corporate director
None
The Corporation serves as
corporate director
〃
None

〃
The Corporation serves as
corporate director		 Financial
assets
measured at fair value
through profit and loss
- current
Financial
assets
measured at fair value
through
other
comprehensive
income – non-current
〃
〃
〃
〃
〃
Financial
assets
measured at fair value
through
other
comprehensive
income – non-current
〃
〃
〃
〃
〃
〃
〃
〃


871



691
26,273
225
3,276
2,241
3,965



4,943
1,754
3,882
1,500
841
8,675
186
2,312
3,000		 $ 120,131
15,270
74,926
419
-
29,297
86,371
-
-
47,052
31,355
1,563
135,812
679
51,090
21,180		 0.29
0.68
2.81
1.40
-
2.81
3.30
13.82
3.99
12.33
8.49
5.25
1.33
0.16
2.26
18.45		 $ 120,131
15,270
74,926
419
-
29,297
86,371
-
-
47,052
31,355
1,563
135,812
679
51,090
21,180		 Preferred stock
Common
stock/Preferred stock
Preferred stock
Preferred stock
Preferred stock

－228－

G-Technology
Investment Co., Ltd.
Gemtek
Electronics (ChangShu)
Co., Ltd.

Gemtek
Electronics
(Suzhou) Co. Ltd.		 Convertible Bond
Greenwave Holding, Inc.
Stock
Polaris Group
Tianhan Technology（Wujiang）
Limited Company
Ingenu Inc.
UBITUS Inc.
Bond
Standard
Chartered
Bank
Subordinate Bond
Finance products
CCB Suzhou Branch “Qianyuan
Xinyi Jiangnan”

Finance products
CCB Suzhou Branch “Qianyuan
Xinyi Jiangnan”		 None
None
〃
〃
〃

〃

None

None		 Financial
assets
measured at fair value
through profit and loss
- current
Financial
assets
measured at fair value
through
other
comprehensive
income – non-current
〃
〃
〃
Financial
assets
measured at amortized
cost－non-current
Financial
assets
measured at fair value
through profit and loss
- current
Financial
assets
measured at fair value
through profit and loss
-current


-



26,467
-
860
200


-



-



-		 15,592
( USD
547 )
$ 430,274
( USD
15,108 )
-
-
-
132,652
( USD
4,658 )
437
( RMB
100 )
23,308
( RMB
5,340 )		 -
4.05
11.54
2.61
2.32
-
-		 15,592
( USD
547 )
$ 430,274
( USD
15,108 )
-
-
-
132,652
( USD
4,658 )
437
( RMB
100 )
23,308
( RMB
5,340 )		 Preferred stock

Note 1: See Tables 6 and 7 for information on investments in subsidiaries, associates and joint ventures. Note 2: Converted by the exchange rate recorded on the finan cial reporting date - USD: NTD = 1: 28.48; RMB: NTD = 1 ： 4.377

－229－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE SHARE CAPITAL FOR THE YEAR ENDED DECEMB ER 31, 2020

TABLE 3

Unit:In Thousands of New Taiwan Dollars, Unless Stated Otherwise

Company Name Type and Name of
Marketable Securities
Financial
Statement
Account		 Counterparty Relationsh
ip		 Beginning Balance Beginning Balance Acquisition Acquisition Disposal Disposal Disposal Ending Balance
Shares/Units
(In
Thousands)
Amount		 Shares/Units
(In
Thousands)
Amount
(Note 5)		 Shares/Units
(In
Thousands)
Amount
(Note 2)		 Carrying
Amount		 Gain/Loss
on Disposal		 Shares/Units
(In
Thousands)		 Amount
(Note 1)
Gemtek
Technologies
Co., Ltd.
Gemtek
Investment
Co.,Ltd		 Stock
AMPAK Technology
Inc.
AMPAK Technology
Inc.		 Investment
Accounted
for
Using
Equity
Method
Investment
Accounted
for
Using
Equity
Method
-

-		 Subsidiary
Subsidiary
36,124,794
8,975,801		 $ 950,845
242,434
20,100,595

-		 $ 1,045,230

-		 36,124,794
8,975,801		 $ 830,760
465,341		 $ 1,039,487
264,381		 $ 833,061
(Note 3)
200,496
(Note 4)
20,100,595

-		 $1,048,268
-

Note 1: The amount of long -term equity investment using the equity method in cludes investment gains and losses recognized by the equity method and adjustment items related to shareholder equity.

Note 2: The disposal price has been deducted from relevant transaction costs.

Note 3: Disposal benefits include the recognition of conver sion loss of NT$3,444 thousand from financial statements of foreign operating institutions using the equity method. Note 4: Disposal benefits include the recognition of conversion loss of NT$464 thousand from financial statements of foreign operating institutions using the equity method. Note 5: The current purchase is the fair value of the remaining equity.

－230－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE P AID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 4

Unit:In Thousands of New Taiwan Dollars, Unless Stated Otherwise

Company Name Related Party Relationship Transaction Details Transaction Details Abnormal Transaction Abnormal Transaction Notes/Accounts Receivable
(Payable)		 Notes/Accounts Receivable
(Payable)		 Note
Purchases/Sales Amount ％to Total Payment
Terms		 Unit Price Payment Terms Ending Balance % to Total
Gemtek Technologies
Co., Ltd.
Gemtek Electronics
(Kunshan) Co., Ltd.
Gemtek
Electronics (ChangSh
u) Co., Ltd.
Gemtek CZ., s.r.o.
Gemtek Vietnam Co.,
Ltd.		 Gemtek Electronics
(Kunshan) Co., Ltd.
Gemtek
Electronics (ChangSh
u) Co., Ltd.
Gemtek CZ., s.r.o.
Gemtek Vietnam Co.,
Ltd.
Gemtek Technologies
Co., Ltd.
Gemtek Technologies
Co., Ltd.
Gemtek Technologies
Co., Ltd.
Gemtek Technologies
Co., Ltd.		 Investment in subsidiary
through third region
Investment in subsidiary
through third region
Investment in subsidiary
through third region
Subsidiary
Parent company
Parent company
Parent company
Parent company		 Purchase and
processing
expenses
Purchase and
processing
expenses
Purchase and
processing
expenses
Purchase and
processing
expenses
Sale and
processing
income
Sale and
processing
income
Sale and
processing
income
Sale and
processing
income		 $ 4,758,107
3,743,950
195,307
1,613,251
( 4,758,107 )
( 3,743,950 )
( 195,307 )
( 1,613,251 )		 26%
21%
1%
9%
( 69% )
( 77% )
( 99% )
( 100% )		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1		 ( $ 2,710,405 )
( 264,649 )
9,003
1,135,169
2,710,405
264,649
( 9,003
)
( 1,135,169 )		 ( 58% )
( 6%
)
-
17%
86%
57%
( 19% )
( 71% )		 Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2

Note 1: The company purchases goods from related parties or entrusts related parties to process and repurchase fini shed products, which is a corporate strategy used for the purpose of cooperation and division of labor. The transaction price has no significant parties to compare. Payment terms are determined by the actual status of the company’s assets.

Note 2 ： Accounts receivables collected from and accounts payables paid to Gemtek Electronics (Kunshan) Co., Ltd., Gemtek Electronics (ChangShu) Co., Ltd., Gemtek CZ., s.r.o., and Gemtek Vietnam Co., Ltd. are expressed in net amount.

Note 3 ： The above transactions were eliminated during the compilation of this consolidated financial report.

－231－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID -IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 5

Unit:In Thousands of New Taiwan Dollars, Unless Stated Otherwise

Company Name Related Party Relationship Ending Balance Turnover Rate Overdue Overdue Amounts Received in
Subsequent Period
 Allowance for
Impairment
A
m
o
u
n
t		 A c t i o n s T a k e n
Gemtek
Electronics
(Kunshan) Co., Ltd
Gemtek
Electronics (ChangSh
u) Co., Ltd.
Gemtek
Technologies
Co.,Ltd.
Gemtek
Technologies
Co., Ltd.
Gemtek
Technologies
Co., Ltd.

Gemtek Vietnam Co.,
Ltd.
Parent company

Parent company

Subsidiary		 $ 2,710,405
264,649
1,135,169		 1.80
14.52
2.84		 $ -
-
-		 -
-
-		 $ 1,321,266
264,649
432,085		 $ -
-
-

Note: The above transactions were eliminated during the compilation of this consolidated financial rep ort.

－232－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIARIES INFORMATION ON INVESTEES

FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 6

Unit:In Thousands of New Taiwan Dollars/ US Dollars.Unless Stated Otherwise

Investor Company Investee Company Location Main Businesses and
Products		 Original InvestmentAmount Original InvestmentAmount As of December31, As of December31, 2020 Net Income (Loss) of the
Investee		 Share of Profit (Loss) Note
December 31, 2020 December 31, 2019 Shares/Units (In
Thousands)		 % Carrying Amount
Gemtek Technologies Co.,
Ltd.
G-Technology Investment
Co., Ltd.
Gemtek Investment Co.,Ltd		 Gemtek Investment Co.,Ltd
G-Technology Investment Co., Ltd.
Brightech International Co., Ltd.
AMPAK Technology Inc.
Wi Tek Investment Co., Ltd.
BROWAN COMMUNICATIONS
INCORPORATION
Gemtek Vietnam Co., Ltd.
Ampak International Holdings Ltd.
Gemtek CZ., s.r.o.
Primax Communication (B.V.I.) Inc.
PT. South Ocean
Free PP Worldwide Co.,Ltd.
AMPAK Technology Inc.
BROWAN COMMUNICATIONS
INCORPORATION
BandRich Inc.
5V TECHNOLOGIES, TAIWAN LTD.		 Hsinchu County, Taiwan
Cayman Islands
Republic of Mauritius
Hsinchu County, Taiwan
Cayman Islands
Hsinchu County, Taiwan
Vietnam
Independent State of
Samoa
Czech Republic
British Virgin Islands
Indonesia
Republic of Seychelles
Hsinchu County, Taiwan
Hsinchu County, Taiwan
New Taipei City, Taiwan
Taipei City, Taiwan		 Investment
Investment
Investment
Telecommunications
Investment
Telecommunications
Telecommunications
Investment
Telecommunications
Investment
Telecommunications
Investment
Telecommunications
Telecommunications

Telecommunications
Telecommunications		 $ 769,457
2,484,452
( USD
78,600 )
207,969
( USD
6,145 )
512,854
132,155
( USD
4,000 )
144,826
616,034
( USD
20,000 )
1,099,843
( USD
35,561 )
25,351
( USD
692 )
73,886
( USD
2,297 )
7,838
( USD
238 )
30,260
( USD
1,000 )
-
141,825
55,000
90,000		 $ 769,457
2,484,452
( USD
78,600 )
207,969
( USD
6,145 )
917,203
132,155
( USD
4,000 )
144,826
616,034
( USD
20,000 )
1,099,843
( USD
35,561 )
25,351
( USD
692 )
73,886
( USD
2,297 )
7,838
( USD
238 )
30,260
( USD
1,000 )
219,689
141,825
55,000
-		 76,946
78,600
6,145
20,101
4,000
11,191
-
36,000
12,000
2,297
24
1,002
-
9,826
5,500
9,000		 100.00
100.00
100.00
33.37
100.00
24.33
100.00
100.00
100.00
100.00
95.00
30.00
-
21.36
27.04
97.92		 $ 846,419
4,313,409
69,191
1,048,268
20,950
10,656
514,927
1,064,287
( USD
37,370 )
6,783
( USD
238 )
16,683
( USD
586 )
2,613
( USD
92 )
13,930
( USD
489)
-
9,335
5,389
79,052		 $ 188,980
(
31,037 )
(
619 )
286,468
(
9,621 )
6,898
53,960
18,945
( USD
721 )
4,692
( USD
161 )
(
125 )
( USD
-4 )
-
( USD
- )
(
1,404 )
( USD
-46 )
207,747
6,898
(
10,116 )
(
12,023 )		 $ 188,980
(
31,037 )
(
619 )

131,171
(Note 1)
(
9,621 )

1,678
53,960
18,945
( USD
721 )
4,692
( USD
161 )
(
125 )
( USD
-4 )
-
( USD
- )
(
421 )
( USD
-14 )
22,327

1,473
(
2,735 )
(
10,948 )
(Note 2)		 Note 3
Note 3
Note 3
Note 3
Note 3
Note 3
Note 3
Note 3

Note 1: Based on the equity holding ratio, the amount is re cognized by the net profit of the investee company NT$ 135,470 thousand, less the identifiable intangible assets adjusted amo rtization of the current period NT$4,593 thousand, and add the adjusted unrealized and realized benefits of upstream transactions N T$294 thousand.

Note 2: Based on the equity holding ratio, the amount is recognized by the net loss of the investee company NT$ 8,934 thousan d, and add the identifiable intangible assets adjusted amortization of the current period NT$2,014 thousand. Note 3: The above transactions were eliminated during the compilation of this consolidated financial report.

－233－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIARIES INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 7

Unit:In Thousands of New Taiwan Dollars/ US Dollars.Unless Stated Otherwise

Investee Company Main Businesses and
Products		 Share Capital Share Capital Method of Investment (Note 1) Accumulated Outward
Remittance for
Investment from
Taiwan as of January
01, 2020		 Accumulated Outward
Remittance for
Investment from
Taiwan as of January
01, 2020		 Investment Flow Investment Flow Accumulated Outward
Remittance for
Investment from
Taiwan as of
December 31, 2020		 Net Income (Loss) of
the Investee		 % Ownership
of Direct or
Indirect
Investment		 Investment Gain
(Loss)		 Carrying Amount as
of December 31, 2020		 Accumulated
Repatriation of
Investment Income as
of December 31, 2020		 Note
Outflow Inflow
Gemtek
Electronics
(Suzhou) Co. Ltd.
Gemtek
Electronics
(Kunshan) Co., Ltd
Browan Communications
(Xi’An) Inc.
AIPTEK
Technology
(Wujiang) Co., Ltd.
Gemtek
Electronics (ChangSh
u) Co., Ltd.
Manufacturing of
wireless
telecommunicati
on products such
as wireless
network cards
and wireless
gateways

Manufacturing
of
wireless
telecommunicati
on products such
as
wireless
network
cards
and
wireless
gateways

R&D,
production,
sales
and
provision
of
technical
consulting
and
related
services
for
wireless
network products

Manufacturing of
digital products
R&D,
production,
sales
and
provision
of
technical
consulting
and
related services
for
wireless
network
products		 $ ( USD





( USD







( USD
( USD






( USD		 237,808

8,350 )
427,200

15,000 )
113,920

4,000 )
444,288

15,600 )
1,025,280

36,000 )		 Indirect investment in Mainland
China through a holding
company established in other
countries－Brightech
International Co Ltd及Primx
Communication (BVI) Inc
Indirect investment in Mainland
China through a holding
company established in other
countries－G-Technology
Investment Co Ltd.
Indirect investment in Mainland
China through a holding
company established in other
countries－Wi Tek
Investment Co Ltd.
Indirect investment in Mainland
China through a holding
company established in other
countries－G-Technology
Investment Co Ltd
Indirect investment in Mainland
China through a holding
company established in other
countries－G-Technology
Investment Co Ltd
$ 236,925
( USD
8,319 )
427,200
( USD
15,000 )
113,920
( USD
4,000 )
25,632
( USD
900 )
1,025,280
( USD
36,000 )		 $ -
-
-
-
-		 $ -
-
-
-
-		 $ 236,925
( USD
8,319 )
427,200
( USD
15,000 )
113,920
( USD
4,000 )
25,632
( USD
900 )
1,025,280
( USD
36,000 )		 ( $ 650 )
( USD
-22 )
( $ 38,118 )
( USD
-1,279 )
( $ 9,621 )
( USD
-327 )
-
18,944
( USD
721 )		 100.00
100.00
100.00
11.54
100.00		 ( $ 650 )
( USD
-22 )
( $ 38,118 )
( USD
-1,279 )
( $ 9,621 )
( USD
-327 )
-
18,944
( USD
721 )		 $ 85,377
( USD
2,998 )
2,555,154
( USD
89,717 )
20,945
( USD
735 )
-
1,064,287
( USD
37,370 )		 $ -
-
-
-
-		 Note 3
Note 3
Note 3
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2020		 Investment Amounts Authorized by Investment
Commission, MOEA		 Upper Limit on the Amount of Investment Stipulated by
Investment Commission, MOEA
$ 1,844,934
USD
64,780（Note 1）		 $ 1,844,934
USD
63,780		 $ 5,630,402

Note 1: (1) The investment amount remitted at the end of the period exceeds the USD 1,000 thousand investment amount approved by the Investment Commission of the Ministry of Economic Affairs.

The remittance was made by AMPAK Technology Inc., the parent company of Gemtek Electronics (ChangShu) Co., Ltd., Ltd. from the previous period.

(2) In July 2009, the Company acquired 100% shareholding of AMPAK International Holdings Ltd., an overseas holding company of Gemtek Electronics (ChangShu) Co., Ltd., through an overseas company G-Technology Investment Co., Ltd. for US$561,000 (NT$17,413 thousand), which has been approved by the Investment Commission of the Ministry of Economic Affairs Letter-2 No. 09800283840.

(3) The conversion rate is based on the average spot buying/selling exchange rate of the Bank of Taiwan on December 31, 2020.

Note 2: See Tables 4, 5 and 6 for the information about significant transactions with investees in the mainland China, either directly or indirectly through a third area.

Note 3: Amount was recognized based on the audited financial statements of the investee as of December 31, 2020

－234－

GEMTEK TECHNOLOGIES CO., LTD. AND SUBSIDIARIES

THE BUSINESS RELATIONSHIP BETWEEN THE PARENT AND THE SUBSIDIARIES AND BETWEE EACH SUBSIDIARY, AND THE CIRCUMSTANCES AND AMOUNTS OF ANY SIGNIFICANT TRANSACTIONS BETWEEN THEM FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 8

Unit:In Thousands of New Taiwan Dollars.Unless Stated Otherwise

No. Name of Company Engaged in
Business Transaction		 Counterparty Relationship Business Transaction Status Business Transaction Status
Account Amount Transaction Terms % to Total Asset
0
1		 January 01, 2020 to
December 31, 2020
Gemtek Technologies Co., Ltd.
AMPAK Technology Inc.		 Gemtek Electronics (ChangShu) Co.,
Ltd.
Gemtek Electronics (Kunshan) Co.,
Ltd
Gemtek CZ., s.r.o.
Gemtek Vietnam Co., Ltd.
Gemtek Technologies Co., Ltd.
Gemtek Electronics (ChangShu) Co.,
Ltd.		 Parent company to
subsidairy
Parent company to
subsidairy
Parent company to
subsidairy
Parent company to
subsidairy
Subsidiary to parent
company
Subsidiary to subsidiary		 Sales revenue－processing
expense
Accounts payable
Sales revenue－processing
expense
Accounts payable
Sales revenue－processing
expense
Other receivables
Sales revenue－processing
expense
Accounts receivable
Sales revenue－processing
expense
Sales revenue－processing
expense		 $ 3,743,950
264,649
4,758,107
2,710,405
195,307
9,003
1,613,251
1,135,169
16,524
169,843		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1		 34%
2%
33%
17%
1%
-
8%
6%
-
1%

Note 1: The company purchases goods from related parties or entrusts related parties to process and repurchase finishe d products, which is a corporate strategy used for the purpose of cooperation and division of labor. The transaction price has no significant partie s to compare. Payment terms are determined by the actual status of the company’s assets.

Note 2: The above transactions were eliminated during the compilation of this consolidated financial report.

－235－

V.Individual Financial Statement

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders

Gemtek Technologies Co., Ltd.

Opinion

We have audited the accompanying individual financial statements of Gemtek Technologies Co., Ltd. (the “Company”), which comprise the individual balance sheets as of December 31, 2020 and 2019, and the individual statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the individual financial statements, including a summary of significant accounting policies (collectively referred to as the “individual financial statements”).

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

Basis for Opinion

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

－236－

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company’s individual financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the individual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We hereby summarize the Key Audit Matters of the 2020 Individual Financial Statements of the Company as follows:

Revenue Recognition

The 2020 operating income of Gemtek Technology Co., Ltd. is NT$16,484,007 thousand, in which NT$4,278,268 thousand sales revenue is attributed to the sale of a major customer product, accounting for 26% of the operating income. Due to the fact that the sales revenue makes up a consequential part of the operating income in contrast to the year 2019, the operating income for the sale to the specific customer product is listed as a Key Audit Matter. For related accounting policies pertaining to revenue recognition, please refer to Note 4 and 21.

Main Audit Procedures conducted by the CPA are as follows:

1.Assess the quality of composition and implementation of the Company’s Internal Control Policy that are related to sales income conjointly with the Company’s Sales Revenue Recognition Policy.

2.Conduct inspections on selected materials acquired from income reports that are related to sales transactions and receivables, etc. to verify whether the origins of the operating income are documented truthfully.

3.Verify whether the customer has received any substantial sales return or discounts after the transaction.

Additional Matters:

As of December 31, 2020, in relation to investee companies that have adopted the equity method for investments, due to the differences in the respective financial reporting structures, the audit engagement for the financial statements of Gemtek Vietnam Co., Ltd. was performed by a separate CPA firm other than us. The financial statements of Gemtek Vietnam Co., Ltd. was

－237－

audited by a designated CPA in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Therefore, our opinion for the financial statements of Gemtek Vietnam Co., Ltd. derives from the audit report given by its designated CPA where the equity method had been applied to investments and recognized comprehensive income. The total amount of investments by investee companies that have adopted the equity method as of December 31, 2020 was NT$514,927 thousand, accounting for 3% of the total assets of the individual. The recognized comprehensive income of investments by investee companies as of December 31, 2020 was NT$53,960 thousand, accounting for 5% total comprehensive income of the individual.

Duties and Responsibilities of Management and Corporate Governance

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

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

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

Auditors’ Responsibilities for the Audit of the Individual Financial Statements

Our objectives are to obtain reasonable assurance about whether the individual 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 individual financial statements.

－238－

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 individual 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 individual 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 individual financial statements, including the disclosures, and whether the individual financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

－239－

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 individual financial statements for the year ended December 31, 2020 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.

Deloitte & Touche Taiwan Deloitte & Touche Taiwan Certified Public Accountant Certified Public Accountant Ching-zen Yang Jing-ting Yang

Securities and Futures Commission Approved Document Number: 6-0920123784

Securities and Futures Commission Approved Document Number: 6-0930128050

Date: March 25, 2021

－240－

GEMTEK TECHNOLOGY CO., LTD. Parent Company Only Balance Sheets December 31,2020and 2019

(Expressed in thousands of New Taiwan Dollars)


1100
1110
1150
1160
1170
1180
1200
1210
1220
130X
1470
11XX

1517
1535
1550
1600
1755
1840
1990
15XX
1XXX

2100
2120
2130
2150
2170
2180
2219
2230
2280
2321
2399
21XX

2530
2580
2570
2670
25XX
2XXX

3110
3200
3310
3320
3350
3300
3490
3XXX
 ASSETS
CURRENT ASSETS
Cash and cash equivalents（note 4 and 6）
Financial assets at fair value through profit or loss - current（note 4 and
7）
Notes receivable（note 4、10 and 21）
Notes receivable from related parties , net（note 4、21 and 30）
Accounts receivable, net（note 4、10 and 21）
Accounts receivable from related parties（note 4、21 and 30）
Other receivables
Other receivables from related parties（note 4 and 30）
Current tax assets（note 4 and 23）
Inventories（note 4 and 11）
Other current assets（note 4 and 15）
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income -
non-current（note 4 and 8）
Financial assets at amortized cost - non-current（note 4、9 and 31）
Investments accounted for using the equity method（note 4 and 12）
Property, plant and equipment（note 4、13 and 30）
Right-of-use assets（note 4 and 14）
Deferred tax assets（note 4 and 23）
Other non-current assets（note 4、15 and 19）
Total non-current assets
Total assets
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings（note 16）
Financial liabilities at fair value through profit or loss - current（note 4
and 7）
Contract liabilities - current（note 4 and 21）
Notes payable
Accounts payable
Accounts payable to related parties（note 30）
Other payables（note 18 and 30）
Current tax liabilities（note 4 and 23）
Current lease liabilities（note 4 and 14）
Current portion of bonds payable（note 17）
Other current liabilities（note 18）
Total current liabilities
NON-CURRENT LIABILITIES
Bonds payable（note 17）
Non-current lease liabilities（note 4 and 14）
Deferred tax liabilities（note 4 and 23）
Other non-current liabilities（note 18）
Total non-current liabilities
Total liabilities
EQUITY（note 4、17and 20）
Share capital
Ordinary shares
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Total equity
Total liabilities and equity		 December 31,2020
AMOUNT
％
$ 855,028
5
120,971
1
-
-
11,250
-
5,468,334
32
1,327,557
8
66,284
-
9,516
-
1,236
-
787,994
4
121,574

1
8,769,744
51
206,283
1
40,000
-
6,823,820
39
1,321,057
8
7,705
-
37,713
-
127,235

1
8,563,813
49
$ 17,333,557
100
$ 1,082,240
6
7,278
-
191,941
1
-
-
1,714,603
10
2,975,357
17
474,098
3
51,830
-
2,746
-
1,179,157
7
56,499

1
7,735,749
45
-
-
4,161
-
208,820
1
824

-
213,805

1
7,949,554
46
3,575,905
21
4,606,007
26
750,939
4
559,574
3
1,273,304

8
2,583,817
15
1,381,726)
(
8)
9,384,003
54
$ 17,333,557
100		 December 31,2019 December 31,2019
AMOUNT
$ 855,028
120,971
-
11,250
5,468,334

1,327,557
66,284
9,516
1,236
787,994
121,574

8,769,744

206,283
40,000
6,823,820

1,321,057
7,705
37,713
127,235

8,563,813

$ 17,333,557

$ 1,082,240
7,278
191,941
-
1,714,603

2,975,357

474,098
51,830
2,746
1,179,157
56,499

7,735,749

-
4,161
208,820
824

213,805

7,949,554

3,575,905

4,606,007

750,939
559,574
1,273,304

2,583,817

1,381,726)

9,384,003

$ 17,333,557
 AMOUNT
$ 1,158,589
110,990
43,346
-
3,333,540

68,754
20,567
20,779
5,165
655,721
99,423

5,516,874

326,649
20,000
6,672,832

1,131,078
1,838
62,638
113,436

8,328,471

$ 13,845,345

$ 299,800
6,063
230,022
21,345
352,776
2,827,444

286,661
-
1,851
-
31,291

4,057,253

1,162,082
-
208,462
29

1,370,573

5,427,826

3,568,835

4,761,281

730,820
375,960
203,733

1,310,513

1,223,110)

8,417,519

$ 13,845,345
 ％
















(















(

 8
1
-
-
24
1
-
-
-
5

1
40
2
-
48
8
-
1

1
60
100
2
-
2
-
3
20
2
-
-
-

-
29
8
-
2

-
10
39
26
34
5
3

2
10
(
9)
61
100

The accompanying notes are an integral part of the par ent company only financial statements.

－241－

GEMTEK TECHNOLOGY CO., LTD.

Parent Company Only Statements of Comprehensive Income

For the Years Ended December 31,2020and 2019

(Expressed in thousands of New Taiwan Dollars, Except Earnings Per Share)

4000
Operating revenue（note 4、21 and
30）

5000
Operating costs（note 11、19、22
and 30）

5900
Gross profit


Operating expenses（note 19、22
and 30）
6100
Selling expenses

6200
General and administrative
expenses
6300
Research and development
expenses
6000
Total operating
expenses

6900
Profit/(Loss) from operations


Non-operating income and
expenses
7100
Interest income（note 22）
7010
Other income（note 22 and
30）
7020
Other gains and losses（note
22 and 30）
7050
Finance costs

7070
Share of profit of subsidiaries
and associates（note 4 and
12）
7000
Total non-operating
income and expenses		 2020

（ Continued ）

－242－

7900
Profit before income tax


7950
Income tax（note 4 and 23）


8200
Net profit for the period


Other comprehensive income
/(loss)
8310
Items that will not be reclassified
subsequently to profit or loss
8311
Remeasurement of defined benefit
plans（note 19）
8316
Unrealized loss on investments in
equity instruments at fair value
through other comprehensive
income
8330
Share of other comprehensive loss
of subsidiaries and associates
accounted for using the equity
method
8360
Items that may be reclassified
subsequently to profit or loss
8361
Exchange differences on
translation of the financial
statements of foreign operations
8370
Share of other comprehensive loss
of subsidiaries and associates
accounted for using the equity
method
8300
Other comprehensive loss


8500
Total comprehensive income


Earnings per share（note 24）
9750
Basic earnings per share

9850
Diluted earnings per share
 2020

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

－243－

GEMTEK TECHNOLOGY CO., LTD

Parent Company Only Statements of Changes in Equity

For the Years Ended December 31,2020and 2019

(Expressed in thousands of New Taiwan Dollars)


A1
BALANCE AT JANUARY 1, 2019
Appropriation of 2018 earnings
B3
Legal reserve
C5
Equity component of convertible bonds
issued by the Company
C7
Changes in equity of subsidiaries and
associates accounted for using the
equity method
D1
Net profit for the year ended December
31, 2019
D3
Other comprehensive loss for the year
ended December 31, 2019
D5
Total comprehensive income/(loss) for
the year ended December 31, 2019
I1
Convertible bonds converted to ordinary
shares
M7
Changes in percentage of ownership
interests in subsidiaries
Q1
Disposal of investments in equity
instruments at fair value through other
comprehensive income
Z1
BALANCE AT DECEMBER 31, 2019
Appropriation of 2019 earnings
B1
Legal reserve
B3
Special reserve
B5
Cash dividends to shareholders
Total
C15
Cash distribution from capital surplus
D1
Net profit for the year ended December
31, 2020
D3
Other comprehensive loss for the year
ended December 31, 2020
D5
Total comprehensive income/(loss) for
the year ended December 31, 2020
L1
Buy-back of ordinary shares
L3
Cancelation of treasury shares
M3
Disposals of subsidiaries
N1
Issuance of restricted share plan for
employees
T1
Share-based payment expenses
Q1
Disposal of investments in equity
instruments at fair value through other
comprehensive income
Z1
BALANCE AT DECEMBER 31, 2020		 Share Capital（note17 and 20）

Shares
（in thousands）
Common Stock
Advance Receipts
for Share Capital


351,162
$ 3,511,620
$ 53,920

-

-

-

-

-

-

-

-

-
-
-
-

-

-

-

-

-

-

5,722

57,215
(
53,920)

-

-

-

-

-

-

356,884

3,568,835

-
-
-
-
-
-
-

-

-

-

-

-

-

-

-

-
-
-
-

-

-

-

-

-

-

-

-

-
(
3,293)
(
32,930)

-

-

-

-

4,000

40,000

-

-

-

-

-

-

-

357,591
$ 3,575,905
$ -		 Share Capital（note17 and 20）

Shares
（in thousands）
Common Stock
Advance Receipts
for Share Capital


351,162
$ 3,511,620
$ 53,920

-

-

-

-

-

-

-

-

-
-
-
-

-

-

-

-

-

-

5,722

57,215
(
53,920)

-

-

-

-

-

-

356,884

3,568,835

-
-
-
-
-
-
-

-

-

-

-

-

-

-

-

-
-
-
-

-

-

-

-

-

-

-

-

-
(
3,293)
(
32,930)

-

-

-

-

4,000

40,000

-

-

-

-

-

-

-

357,591
$ 3,575,905
$ -		 Share Capital（note17 and 20）

Shares
（in thousands）
Common Stock
Advance Receipts
for Share Capital


351,162
$ 3,511,620
$ 53,920

-

-

-

-

-

-

-

-

-
-
-
-

-

-

-

-

-

-

5,722

57,215
(
53,920)

-

-

-

-

-

-

356,884

3,568,835

-
-
-
-
-
-
-

-

-

-

-

-

-

-

-

-
-
-
-

-

-

-

-

-

-

-

-

-
(
3,293)
(
32,930)

-

-

-

-

4,000

40,000

-

-

-

-

-

-

-

357,591
$ 3,575,905
$ -		 Capital Surplus
（note4、17 and 20）
$ 4,669,276

-

45,527
(
6,513)
-

-

-

2,475

50,516

-

4,761,281
-
-

-

-
(
177,911)
-

-

-

-
(
35,837)

-

58,474

-

-
$ 4,606,007		 Retained Earnings（note20） Retained Earnings（note20） Retained Earnings（note20） Retained Earnings（note20）
Unappropriated
Earnings

$ 180,682

180,682)
-

6,422)
201,193

4,088)
197,105
-
-
13,050
203,733

20,119 )

183,614 )
-

203,733)
-
1,370,155

1,855)
1,368,300
-
-

4,636)
-
-

90,360)
$ 1,273,304		 Other Equity（note4and 20） Other Equity（note4and 20） Total

$ 738,463)
-
-
833
-

470,081)

470,081)
-

2,349)

13,050)

1,223,110)
-
-
-
-
-
-

181,695)

181,695)
-
-
8,544

98,474)
22,649
90,360
$ 1,381,726)		 Treasury Shares
$ -
-

-

-
-

-

-

-

-

-

-
-
-

-

-

-
-

-

-
(
68,767)

68,767

-

-

-

-
$ -		 Total Equity
Exchange
Differences on
Translation of the
Financial

Statements of

Foreign
Operations

($ 351,769)

-

-

833
-
(
143,797)
(
143,797)

-
(
2,349)

-
(
497,082)
-
-

-

-

-
-
(
21,779)
(
21,779)

-

-

3,908

-

-

-
($ 514,953)		 Unrealized
Valuation
Gain/(Loss) on
Financial Assets at
Fair Value
Through Other

Comprehensive
Income

($ 386,694)

-

-

-
-
(
326,284)
(
326,284)

-

-
(
13,050)
(
726,028)
-
-

-

-

-
-
(
159,916)
(
159,916)

-

-

4,636

-

-

90,360
($ 790,948)		 Unearned
Employee
Compensation
$ -
-

-

-
-

-

-

-

-

-

-
-
-

-

-

-
-

-

-

-

-

-
(
98,474)

22,649

-
($ 75,825)
Shares
（in thousands）


351,162

-

-

-
-

-

-

5,722

-

-

356,884
-
-

-

-

-
-

-

-

-
(
3,293)

-

4,000

-

-

357,591		 Common Stock

$ 3,511,620

-

-

-
-

-

-

57,215

-

-

3,568,835
-
-

-

-

-
-

-

-

-
(
32,930)

-

40,000

-

-
$ 3,575,905		 Legal Reserve
$ 730,820
-
-
-
-
-
-
-
-
-
730,820
20,119
-
-
20,119
-
-
-
-
-
-
-
-
-
-
$ 750,939		 Special Reserve
$ 195,278
180,682
-
-
-
-
-
-
-
-
375,960
-
183,614
-
183,614
-
-
-
-
-
-
-
-
-
-
$ 559,574
















(















(





(


(








(



(










































(

(
(





(
(

(

(



(


(
 (



(
(

(

(



(
(






(		 (



(
(


(
(



(
(






(
















(


(		 (



(
(

(
(
(



(
(



(


(













(


(
(
(






(
(

(





 $ 8,603,133
-
45,527

12,102)
201,193

474,169)

272,976)
5,770
48,167
-
8,417,519
-
-
-
-

177,911)
1,370,155

183,550)
1,186,605

68,767)
-
3,908
-
22,649
-
$ 9,384,003

The accompanying notes are an integral part of the parent company only fin ancial statements.

－244－

GEMTEK TECHNOLOGY CO., LTD

Parent Company Only Statements of Cash Flows

For the Years Ended December 31,2020and 2019

(Expressed in thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
A00010
Income before income tax

A20010
Adjustments for:
A20100
Depreciation expense
A20200
Amortization expense
A20400
Net (gain)/loss on fair value changes
of financial [assets/liabilities] at
fair value through profit or loss
A20900
Finance costs
A21200
Interest income

A21300
Dividend income

A21900
Share-based payment expenses
A22400
Share of profit of subsidiaries and
associates

A22500
Gain on disposal of property, plant
and equipment

A23200
Gain on disposal of subsidiaries

A23800
(Reversal of) write-down of
inventories

A24100
Net gain on foreign currency
exchange

A30000
Changes in operating assets and liabilities
A31115
financial assets at fair value through
profit or loss

A31130
Notes receivable
A31140
Notes receivable from related parties
A31150
Accounts receivable

A31160
Accounts receivable from related
parties

A31180
Other receivables

A31200
Inventories

A31240
Other current assets

A31990
Prepaid pension

A32125
Contract liabilities

A32130
Notes payable

A32150
Accounts payable
A32160
Accounts payable to related parties
A32180
Other payables
A32230
Other current liabilities

（Continued）		 2020
$ 1,459,640

85,173
51,308
9,201

30,356

5,720 )

4,491 )
22,649

334,512 )

113 )

833,061 )

3,121 )

2,772 )

17,967 )
43,346

11,250 )

2,191,227 )

1,317,036 )

34,706 )

129,152 )

22,350 )

2,246 )

14,743 )

21,345 )
1,388,758
208,585

187,965
27,603
 2019

(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(


(



(

(
(
(

(
(
(		 $ 202,071
79,239
48,091

127,483 )
53,361

7,977 )

5,839 )
-

204,489 )

242 )

-

8,427

13,908 )

105,365
4,636

-

1,965,066

56,539 )

1,721

470,903 )

10,784 )

2,278 )

144,879

2,366 )
146,173

64,018 )
42,127
16,764)

－245－

A33000
Cash generated from/(used in) operations

A33100
Interest received
A33200
Dividends received
A33300
Interest paid

A33500
Income tax paid

AAAA
Net cash generated from/(used in) operating
activities


CASH FLOWS FROM INVESTING ACTIVITIES
B00010
Purchase of financial assets at fair value through
other comprehensive income

B00020
Proceeds from sale of financial assets at fair value
through other comprehensive income
B00040
Purchase of financial assets at amortized cost

B01800
Acquisition of investments accounted for using the
equity method
B02400
Capital reduction in subsidiary and refund to
shareholders
B02700
Payments for property, plant and equipment

B02300
Net cash inflow on disposal of subsidiary
B02800
Proceeds from disposal of property, plant and
equipment
B03700
Decrease (Increase) in refundable deposits
B05350
Payments for right-of-use assets

B06700
Increase in other non-current assets

B07600
Dividends received from subsidiaries

BBBB
Net cash generated from investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
C00100
Increase（Decrease）short-term borrowings
C01200
Proceeds from issuance of convertible bonds
C04020
Repayment of the principal portion of lease
liabilities

C04300
Increase（Decrease）in other non-current liabilities
C04500
Cashdividends paid

C04900
Payments for buy-back of ordinary shares

CCCC
Net cash generated from/(used in) financing
activities


EEEE
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS


E00100
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE YEAR


E00200
CASH AND CASH EQUIVALENTS AT THE END OF
THE YEAR
 2020
$ 1,431,228 )
5,972
4,491

13,437 )
8,443)

1,442,645)


22,953 )
7

20,000 )
-

-

278,072 )
830,760
6,381
737


943 )

65,526 )
151,422

601,813

786,370

-

3,216 )
795


177,911 )
68,767)

537,271


303,561 )
1,158,589

$ 855,028
 2019
(
(
(
(
(
(
(
(
(


(
(
(

(
(
(



(
(
(

(


(
(
(


(


 $ 1,817,566
7,663
5,839

40,499 )
4,009)
1,786,560

-
8,484

-

61,690 )
289,206

38,581 )
-
2,101

30 )

-

106,572 )
44,035
136,953

2,352,300 )
1,197,316

3,533 )

1 )

-
-
1,158,518)

764,995
393,594
$ 1,158,589

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

－246－

GEMTEK TECHNOLOGIES CO., LTD.

NOTES TO INDIVIDUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED

DECEMBER 31, 2020 AND 2019

(Expressed In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

I. COMPANY HISTORY

Gemtek Technologies Co., Ltd. (the “Company”) was incorporated on June 29, 1988. It researches, develops, manufactures, purchases, sells, exports, and imports electronic components, semi-finished products, finished products, computer software, hardware and peripheral equipment. The Company’s shares were listed on the Taipei Exchange (OTC) in January of 2002, and have been listed on the Taiwan Stock Exchange (TWSE) since June 30, 2003.

The individual financial statements of Gemtek Technologies Co., Ltd. are presented in the Company’s functional currency, the New Taiwan dollar.

II. APPROVAL OF FINANCIAL STATEMENTS

The individual financial statements were approved by the board of directors and authorized for issuance on March 25, 2021.

III. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

  • (1) Initial application of the amendments to 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) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies:

－247－

  • (2) New, Amended and Revised Standards and Interpretions of IFRSs endorsed and issued into effect by the FSC

New, Amended and Revised Standards and Interpretions

Amendments to IFRS 4--Extension of the Temporary Exemption from Applying IFRS 9 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16--Interest Rate Benchmark Reform — Phase 2

Amendments to IFRS 9 --Covid-19-Related Rent Concessions

Effective Date per IASB Effective per announcement date The amendment is effective for annual reporting periods beginning on or after January 01, 2021 The amendment is effective for annual reporting periods beginning on or after June 01, 2020

As of the date that the accompanying individual financial statements were approved and authorized for issue, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the above standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.

  • (3) New, Amended and Revised Standards and Interpretions of IFRSs Announced by the IASB but not yet endorsed and issued into effect by the FSC

New, Amended and Revised Standards Effective Date per IASB and Interpretions (Note1) Annual Improvements to IFRS Standards January 01, 2022 (Note 2) 2018–2020 Amendments to IFRS 3 -- Reference to the January 01, 2022 (Note 3) Conceptual Framework Amendments to IFRS 10 and IAS 28 --Sale or To be determined Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 17 Insurance Contracts January 01, 2023 Amendments to IFRS 17 January 01, 2023 Amendments to IAS 1 -- Classification of January 01, 2023 Liabilities as Current or Non-current

－248－

New, Amended and Revised Standards Effective Date per IASB and Interpretions (Note1) Annual Improvements to IFRS Standards January 01, 2022 (Note 2) 2018–2020 Amendments to IFRS 3 -- Reference to the January 01, 2022 (Note 3) Conceptual Framework Amendments to IFRS 10 and IAS 28 --Sale or To be determined Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 17 Insurance Contracts January 01, 2023 Amendments to IAS 1 and IFRS Practice January 01, 2023 (Note 6) Statement 2IAS 1 -- Disclosure of Accounting Policies Amendments to IAS 8 -- Definition of January 01, 2023 (Note 7) Accounting Estimates Amendments to IAS 16 -- Property, Plant and January 01, 2022 (Note 4) Equipment — Proceeds before Intended Use Amendments to IAS 37 -- Onerous Contracts — January 01, 2022 (Note 5) Cost of Fulfilling a Contract

  • Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

  • Note 2: The Group shall apply IFRS9 amendments prospectively for annual reporting periods beginning on or after January 01, 2022; the Group shall apply IAS41 amendments prospectively for annual reporting periods beginning on or after January 01, 2022; the Group shall apply IFRS1 amendments prospectively for annual reporting periods beginning on or after January 01, 2022.

  • Note 3: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 01, 2022 and to asset acquisitions that occur on or after the beginning of that period.

  • Note 4: The Company shall apply these amendments retrospectively for annual reporting periods beginning on or after January 01, 2021.

  • Note 5: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 01, 2022.

  • Note 6: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 01, 2023.

  • Note 7: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 01, 2023.

－249－

As of the date the accompanying individual financial statements were authorized for issue, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.

IV.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(I)Statement of Compliance

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

(II)Basis of Preparation

The individual financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

  1. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

  2. Level 2 inputs are 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); and

  3. Level 3 inputs are unobservable inputs for the asset or liability.

When preparing its financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in its financial statements to be the same as the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for by using the equity method, share of profit or loss of subsidiaries and associates, share of other comprehensive income of subsidiaries and associates and related equity items, as appropriate, in these financial statements.

  • (III) Classification of current and non-current assets and liabilities Current assets include:

  • Assets held primarily for the purpose of trading;

  • Assets expected to be realized within twelve months after the reporting period; and

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  1. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

  1. Liabilities held primarily for the purpose of trading;

  2. Liabilities due to be settled within twelve months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are authorized for issue; and

  3. Liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

(IV) Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer’s previously held equity interests in the acquire over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

For each business combination, the Company measures the non-controlling interests at either fair value or the share in the recognized amounts of the acquiree’s identifiable net assets. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets, in the event of liquidation, may be initially measured at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of the measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement period or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognized as of that date.

(V) Foreign Currencies

In preparing the financial statements, transactions in currencies other than the Company’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

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Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, and in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting individual financial statements, the functional currencies of the Company and the group entities (including subsidiaries and associates in other countries that use currencies that are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign operation, or a disposal involving the loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

(VI) Inventories

Inventories consist of raw materials, supplies, finished goods and work in process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the end of reporting period.

(VII)Investment in subsidiaries

Subsidiaries are the entities controlled by the Company. Investments in subsidiaries are accounted for by the equity method.

Under the equity method, the investment is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company's share of the profit or loss and other comprehensive income of the subsidiary after the date of acquisition. Besides,

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the Company also recognizes the Company’s share of the change in other equity of the subsidiary.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company’s loss of control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amounts of the investment and the fair value of the consideration paid or received is recognized directly in equity.

When the Company’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary (which includes any carrying amount of the investment in subsidiary accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides this, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Company directly disposed of the related assets or liabilities.

Profit or loss resulting from downstream transactions is eliminated in full only in the parent company only financial statements. When the Company transacts with its subsidiaries, profits and losses resulting from the transactions with the subsidiaries are recognized in the Company’s parent company only

(VIII)Investments in associates and joint ventures

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. A joint venture is a joint arrangement

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whereby the Company and other parties that have joint control of the arrangement have rights to the net assets of the arrangement.

The Company uses the equity method to account for its investments in associates and joint ventures.

Under the equity method, investments in an associate and joint venture are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Group also recognizes the changes in the Company’s share of the equity of associates and joint ventures.

Any excess of the cost of an acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of the acquisition, after reassessment, is recognized immediately in profit or loss.

When the Company subscribes for additional new shares of an associate and joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in that associate and joint venture. The Company records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus - changes in the Company’s share of equity of associates and joint ventures. If the Company’s ownership interest is reduced due to its additional subscription of the new shares of the associate and joint venture, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as would be required had the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by using the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture (which includes any carrying amount of the investment accounted for by using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the associate and joint venture), the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate and joint venture.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

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(IX)Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

Depreciation is recognized using the straight-line method with their estimated useful lives. Each significant part is depreciated separately. If the lease term is shorter than its estimated useful life, an item of property, plant and equipment is depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at least once at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

(X) Impairment of tangible assets (property, plant, and equipment), right-of-use assets, and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets (property, plant and equipment), right-of-use assets, and other intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Company assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of an asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (less amortization expenses or depreciation expenses) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

(XI) Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are

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added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1.Financial assets

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

(1)Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI.

A.Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 29.

B.Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

a.The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

b.The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, note receivables, account receivables, account receivables-related party, other receivables, other receivables-related party, financial asset measured at amortized cost, and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

a.Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

b.Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Evidence of impairment may include indications that the debtor is experiencing significant financial difficulty, default or delinquency in interest or principal payments, indications that the debtor or issuer will probably enter bankruptcy or other financial reorganization, and the disappearance of an active market for that financial asset because of financial difficulties

Cash equivalents include time deposits and bank acceptances with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

C.Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

(2)Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivables).

The Company always recognizes lifetime expected credit losses (ECLs) for accounts receivables. For all other financial instruments, the Company recognizes lifetime ECLs

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when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. The Company recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

For internal credit risk management purposes, the Company determines that the following situation indicate that a financial asset is in default (without taking into account any collateral held by the Company):

A.Internal or external information shows that the debtor is unlikely to pay its creditors. B.When a financial asset is more than 365 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

The Company recognizes an impairment loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investmens in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in the other comprehensive income and does not reduce the carrying amount of the financial assets.

(3)Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2. Equity instruments

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

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

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The repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Company’s own equity instruments.

3. Financial liabilities

(1)Subsequent measurement

All the financial liabilities are measures at amortized cost using the effective interest method.

Financial liabilities at FVTPL.

Financial liabilities are classified as at FVTPL when such financial liabilities are held for trading.

Financial liabilities held for trading are stated at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The fair value is determined in the manner described in Note 29.

(2)Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

4. Convertible bonds

The component parts of compound instruments (i.e. convertible bonds) issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

On initial recognition, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or upon the instrument’s maturity date. Any embedded derivative liability is measured at fair value.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised; in which case, the balance recognized in equity will be transferred to capital surplus - share premiums. When the conversion option remains unexercised at maturity, the balance recognized in equity will be transferred to capital surplus - share premiums.

Transaction costs that relate to the issuance of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds.

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Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component.

5. Derivative financial instruments

The Company enters into foreign exchange forward to manage its exposure to foreign exchange rate risks.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately. When the fair value of derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instrument is negative, the derivative is recognized as a financial liability.

(XII)Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

Revenue from the sale of goods

Revenue from the sale of goods comes from sales of wireless gateways and wlan cards. Sales of wireless gateways and wlan cards are recognized as revenue when the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. The transaction price received is recognized as a contract liability until the customer acquires control of the good.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

(XIII)Leasing

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

For a contract that contains a lease component and non-lease components, the Company allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately.

1.The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

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Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operatin leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2.The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the individual balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, and variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the individual balance sheets.

(XIV)Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

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Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the year in which they are incurred.

(XV)Government grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related cost for which the grants are intended to compensate.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit of loss in the period in which they become receivable.

(XVI) Employee benefits

1.Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2.Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service costs, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service costs and net interest on the net defined benefit liability (asset) are recognized as an employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

The net defined benefit liability (asset) represents the actual deficit (surplus) in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plan or reductions in future contributions to the plan.

(XVII)Share-based payment arrangements

Restricted stock units

The fair value at the grant date of the restricted stock units is expensed on a straight-line basis over the vesting period, based on the Company’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding adjustment in other equity items –unearned compensation; it is recognized as an expense in full at the grant date if vested immediately. The grant date for the company’s cash capital increase

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reserved for employee subscription was approved by the board of directors on August 7, 2020.

At the end of each reporting period, the Company revises its estimates of the number of employee restricted stock units expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus- employee restricted stock units.

(XVIII)Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1.Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous years.

According to the Income Tax Law, an additional tax of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2.Deferred tax

Deferred tax is recognized on temporary differences between the consolidated financial statement carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards and unused tax credits for research and development expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. For deferred tax assets arising from deductible temporary differences associated with such investments and equity, the interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously

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unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3.Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, and in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity.

V. ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Company takes the economic impact caused by the COVID-19 into consideration as part of a key source of estimation uncertainty. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

VI. CASH AND CASH EQUIVALENTS
Cash on hand
Checking accounts and demand
deposits
Cash equivalents
Time deposits with original
maturities of less than 3
months		 December 31, 2020
$ 1,624
831,519
21,885
$ 855,028		 December 31, 2019
$ 1,812
375,532
781,245
$1,158,589

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Market rate intervals of cash in banks at the end of the reporting period 0.001%~2.75% 0.001%~2.90%

VII. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

December 31, 2020 December 31, 2019 Financial assets - current Derivative instruments（nonhedge accounting） －Convertible option 840 - Non-derivative financial assets － Domestic listed shares $ 120,131 $ 110,990 $ 120,971 $ 110,990 Financial liabilities - current Held for trading Derivative instruments（nonhedge accounting） － Foreign Exchange Forward Contract $ 7,278 $ 3,423 －Convertible option - 2,640 $ 7,278 $ 6,063

(I)At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting for the balance sheet were as follows:

December 31,
2020
Sell
Sell
December 31,
2019
Sell		 Currency
USD/NTD
USD/NTD
Currency		 MaturityDate
2020.11.05~2021.01.11

2020.11.19~2021.01.25

MaturityDate

2019.12.02~2020.01.06
 Notional Amount
（In Thousands）
USD 20,000/NTD 571,840
USD 10,000/NTD 285,060
Notional Amount
（In Thousands）
USD/NTD USD 10,000/NTD 304,870

The Company entered into foreign exchange forward contracts to manage exposures due to exchange rate fluctuations of foreign currency denominated assets and liabilities.

－265－

VIII. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - OTHERS

December 31, 2020 December 31, 2019

Non-current
Domestic Investments
Listed shares
Unlisted shares
Total
Overseas Investment
Listed shares
Unlisted shares
Total



$ 15,270

419
15,689

74,926
115,668

190,594

$ 206,283		 $ 17,964
0
17,964
127,498
181,187
308,685
$ 326,649

Foreign investments are held for medium- to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes.

IX.FINANCIAL ASSETS MEASURED AT AMORTIZED COST

Non-current
Time deposits with original
maturities of more than 3
months
Interest Rate		 December 31, 2020
$ 40,000
0.18%~0.35%		 December 31, 2019 December 31, 2019
$ 20,000
0.48%

Please see Note 31 for more details on financial assets pledged as collateral measured at amortized cost.

X.NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

December 31, 2020 December 31, 2019 Notes Receivable - Arising from operations $ $ 43,346

－266－

Accounts Receivables
At Amortized Cost

Less: Allowance for impairment loss
(
 $ 5,468,843


509)
(
$5, 468,334
 $3,334,049

509)
$3, 333,540

Trade receivables measured at amortized cost.

The average credit period on sales of goods is 90 days with no accrued interest. The allowance for doubtful receivables was assessed by referring to the collectability of receivables based on an individual trade term analysis, aging analysis, the historical payment behavior and current financial condition of customers.

The Company measures the loss allowance for accounts receivables at an amount equal to lifetime expected credit losses.The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company’s different customer base.

In the event there is an evidence indicating that the customer is under severe financial difficulty and the Company cannot reasonably estimate the recoverable amounts, the Company writes off relevant accounts receivable. However, the Company continues to engage in enforcement activity to attempt to recover the receivables which are due. Where recoveries are made, the recoverable amounts are recognized in profit or loss.

The following table details the loss allowance of note receivables and accounts receivables based on the Company’s provision matrix.

－267－

December 31, 2020

December 31, 2020
Expected Credit Loss Rate
Gross carrying amount

Loss allowance (Lifetime
ECL）

Amortized cost

December 31, 2019
Expected Credit Loss Rate
Gross carrying amount

Loss allowance (Lifetime
ECL）

Amortized cost
 Less than
180 Days		 181～365 Days
0.33%
$ 304

(
1)

$ 303

181～365 Days
0.28%
$ 1,792

(
5)

$ 1,787
 Over
366 Days		 Total

(
 0.01%
$ 5, 468,472
441)
$ 5, 468,031

Less than
180 Days
(
 100.00%
$ 67
67)
$ -
Over
366 Days
(
 $ 5, 468,843
509)
$ 5, 468,334
Total

(
 0.01%
$ 3,375,536
437)
$ 3,375,099
(
(
 100.00%
$ 67
67)
$ -
(
 $ 3,377,395
509)
$ 3,376,886

The movements of the loss allowance of account receivables were as follows:

December 31, 2020 December 31, 2019 Balance, beginning of year and end of year $ 509 $ 509

XI. INVENTORIES

Finished goods
Work in process
Raw materials and supplies		 December 31, 2020
$ 6,039
211,369
570,586
$ 787,994		 December 31, 2019 December 31, 2019






$ 32,013
22,244
601,464
$ 655,721

As of December 31, 2020 and 2019, the cost of inventories recognized as cost of goods sold were NT$14,915,008 thousand and NT$13,350,544 thousand, respectively. Loss (gain) on reversal of write-downs were $(3,121) thousand and $8,427 thousand, respectively. Increase in net realisable value of inventories was due to inventory write-off.

－268－

XII.INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investment in subsidiaries
Investment in associates		 December 31, 2020
$ 5,764,896
1,058,924
$ 6,823,820		 December 31, 2019 December 31, 2019




$ 6,663,527
9,305
$ 6,672,832

(I) Subsidiaries

AMPAK Technology Inc.
Gemtek Investment Co.,Ltd.
G-Technology Investment
Co.,Ltd.
Gemtek Vietnam Co., Ltd.
Brightech International Co.,
Ltd.
Wi Tek Investment Co., Ltd		 December 31, 2020
$ -
846,419
4,313,409
514,927
69,191

20,950
$ 5,764,896		 December 31, 2019 December 31, 2019






$ 950,844
791,526
4,332,992
484,140
73,749

30,276
$ 6,663,527

Proportion of ownership and voting rights:

Subsidiaries
AMPAK Technology Inc.
Gemtek Investment Co.,Ltd.
G-Technology Investment
Co.,Ltd.
Brightech International Co.,
Ltd.
WiTek Investment Co., Ltd.
Gemtek Vietnam Co., Ltd.		 December 31, 2020
-
100%
100%
100%
100%
100%		 December 31, 2019
59.98%
100%
100%
100%
100%
100%

On June 9, 2020, the shareholders meeting of the Company passed the resolution proposed by the Company and Gemtek Investment Co.,Ltd. to release a total of 25,000 thousand shares from AMPAK Technology Inc. In August 2020, 26.61% and 14.90% of

－269－

the shareholdings of AMPAK Technology Inc. were sold respectively, and the subscription of shares was completed, decreasing its shareholding ratio from 74.88% to 33.37%. As a result, the Group lost control over AMPAK Technology Inc. and its subsidiaries, hence, the above companies are excluded from the combined entity. Please see Note 26 for more details regarding equity shares of AMPAK Technology Inc.

In August 2019, Ampak Technology Inc. obtained 100% shareholdings of SparkLAN Communications Inc. by means of cash and issuance of equity instrument; in November 2019, issued new stocks due to employees exercising stock options. However, the Company did not subscribe for the new shares issued by Ampak Technology Inc. based on the shareholding ratio, as a result, its comprehensive shareholding ratio decreased from 76.79% to 59.98% as of December 31, 2019.

The investments in subsidiaries accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the year ended December 31, 2020 and 2019 was based on the subsidiaries’ financial statements which have been audited for the same year.

(II) Investments in associates

vestments in associates

Investor has significant influence
over associate
AMPAK Technology Inc.
Investor as no significant influence
over associate
BROWAN
COMMUNICATIONS
INCORPORATION		 December 31, 2020
$ 1,048,268

10,656
$1, 058,924		 December 31, 2019




$ -
9,305
$ 9,305

－270－

1. Investor has significant influence over associate：

or has significant influence over associate：
Company Name
AMPAK
Technology
Inc.		 Proportion of
ownership and voting
rights
December 31, 2020
33.37%

For more information regarding the nature of activities, principal place of business 。 and country of incorporation of the associates, please refer to Table 6.

In August 2020, the Company sold 26.61% of the shareholdings of AMPAK Technology Inc., its shareholding ratio was decreased to 33.37% as a result. The dramatic change in ownership percentage is presumed to have significant influence over the investee, therefore the change of percentage was included in the investment in associates using the equity method.

Summarized financial information in respect of each of the Company’s material associates is set out below. The summarized financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRSs adjusted by the Company for equity accounting purposes.

AMPAK Technology Inc.

MPAK Technology Inc.
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Proportion of the Group’s
ownership
Equity attributable to the
Group
Goodwill
Carrying amount		 December 31, 2020
$ 1,336,964
524,035
(
619,704 )
(
8,511)
$ 1,232,784
33.37%
$ 411,397

636,871
$ 1,048,268

（ Continued）

－271－

（ Continued）

ed）
Operating revenue
Net profit for the year
Other comprehensive income
Total comprehensive income
for the year
Equity obtained from AMPAK
Technology Inc.		 December 31, 2020




$ 2,417,460
$ 286,468
4,158
$ 290,626
$ 40,201
  1. Investor has no significant influence over associate ：
Shares attributable to the Company
Total comprehensive income
for the year		 2020
$ 1,678		 2019
( $ 8,992)

BROWAN COMMUNICATIONS INCORPORATION, an investee of the Company, increased its capital by NT$60,000 thousand in cash in January 2019. The Company did not participate in the subscription of shares based on its existing shareholding proportion, resulting in the shareholding percentage to decrease to 24.33%.

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments attributable to the Company for the year ended December 31, 2020 and 2019 were based on the associates’ financial statements which have been audited for the same year.

XIII.PROPERTY, PLANT AND EQUIPMENT

Cost

Balance on January 01,
2019

Additions		 Land
$ 259,279
-		 Buildings
$ 1,417,864

-		 Machinery and
Equipment
$ 257,920

2,496		 Miscellaneous
Equipment
$ 365,742

26,745		 Construction
in progress
$ -

9,340		 Total
$ 2,300,805

38,581

－272－

Disposals

Balance on December
31, 2019
Accumulated
depreciation
Balance on January 01,
2019

Disposals
Depreciation expenses

Balance on December
31, 2019

Net value on December
31, 2019


Cost

Balance on January 01,
2020

Additions
Disposals
Reclassification of
construction in
progress

Balance on December
31, 2020

Accumulated
depreciation
Balance on January 01,
2020
Disposals

Depreciation expenses

Balance on December
31, 2020

Net value on December
31, 2020
-

$ 259,279
$ -
-

-

$ -

$ 259,279

$ 259,279
-
-

-

$ 259,279

$ -
-

-

$ -

$ 259,279
 (
3,489)

$ 1,414,375
$ 585,787
(
3,240 )

44,693

$ 627,240

$ 787,135

$ 1,414,375

18,748
(
1,990 )

16,248

$ 1,447,381

$ 627,240
(
1,990 )

37,172

$ 662,422

$ 784,959
 (
8,376)

$ 252,040
$ 221,577
(
7,760 )

9,754

$ 223,571

$ 28,469

$ 252,040

161,672
(
74,775 )

-

$ 338,937

$ 223,571
(
69,630 )

16,337

$ 170,278

$ 168,659
 (
26,950)

-

$ 365,537
$ 9,340-
$ 323,392 $ -
(
25,956 )
-

21,246

-

$ 318,682
$ -

$ 46,855
$ 9,340

$ 365,537 $ 9,340

79,445
18,207
(
19,818 )
-

7,330
(
23,578)

$ 432,494
$ 3,969

$ 318,682 $ -
(
18,695 )
-

28,316

-

$ 328,303
$ -

$ 104,191
$ 3,969
 (
38,815)
$ 2,300,571
$ 1,130,756
(
36,956 )

75,693
$ 1,169,493
$ 1,131,078
$ 2,300,571

278,072
(
96,583 )

-
$ 2,482,060
$ 1,169,493
(
90,315 )

81,825
$ 1,161,003
$ 1,321,057











The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of the asset:

Building
Main buildings 50 years
Others 5~50 years
Machinery and equipment 2~6 years
Miscellaneous equipment 2~5 years

－273－

XIV.LEASE ARRANGEMENTS

  • (I) Right-of-use Assets

December 31, 2020 December 31, 2019

Carrying amounts Building $6,893 $1,380 Transportation equipment 812 458 $ 7,705 $ 1,838 For the Year Ended For the Year Ended December 31, 2020 December 31, 2019 Additions to right-of-use assets $ 9,215 $ - Depreciation charge for right-of-use assets Buildings $ 2,759 $ 2,761 Transportation equipment 589 785 $ 3,348 $ 3,546

  • (II) Lease Liabilities

December 31, 2020 December 31, 2019 Carrying amounts Current $ 2,746 $ 1,851 Non-current $ 4,161 $ -

Range of discount rate for lease liabilities was as follows: December 31, 2020 December 31, 2019 Buildings 0.79%~1.39% 1.39% Transportation equipment 0.79%~1.39% 1.39% (III) Other lease information For the year ended For the year ended, 2020 2019 Total cash outflow for leases ( $ 3,254) ( $ 3,585 )

  • (III) Other lease information

XV.OTHER ASSETS

HER ASSETS
Current
Prepaid expenses
Prepayments
Excess business tax paid (or Net
Input VAT)		 December 31, 2020
$ 11,273
3,168
97,606		 December 31, 2019
$ 10,311
1,754
76,944

－274－

Temporary debits
9,527
10,414
$ 121,574 $ 99,423
Non-current
Net defined benefit asset(Note19) $ 10,596 $ 10,278
Overdue receivables 196,741 196,741
Allowance for uncollectible
accounts－Overdue
receivables ( 196,741 ) ( 196,741 )
Deferred expenses 85,085 97,145
Other
31,554
6,013
$ 127,235 $ 113,436

XVI.BORROWINGS

Short-term borrowings

Short-term borrowings
Unsecured borrowings
Line of credit borrowings
Rate of interest per annum (%)		 December 31, 2020
$ 1,082,240
0.64%~0.75%		 December 31, 2019
$ 299,800
2.15%

XVII.BONDS PAYABLE

ONDS PAYABLE
5thDomestic unsecured
convertible bonds
Due within 1 year		 December 31, 2020
$ 1,179,157
(1,179,157)
$ -		 December 31, 2019

(


$ 1,162,082
-
$ 1,162,082

On March 15, 2019, the Company issued its 5th domestic unsecured convertible bond in the amount of $1,200,000 thousand at 100.2% of its par value for 12 thousand units, in which the denomination for the bond is NT$100 thousand. The maturity period is 3 years, with a zero coupon rate.

On December 31, 2020, the conversion price was NT$26.3 per common share, conversion period was from June 16, 2019 to March 15, 2022. After the convertible bonds are issued for 2 years, bondholders may request the Company to redeem the convertible bonds in cash at 100.5% of the bond's face value per sale base date. After 3 months following the offering date of the convertible bonds and up until 40 days prior to its maturity date, if the closing price of the Company’s common stock

－275－

exceeds the current conversion price by 30% (inclusive) for 30 consecutive business days, the Company may, based on the face value of the bond, exercise its rights to redeem all convertible bonds in cash. After 3 months following the offering date of the convertible bonds and up until 40 days prior to its maturity date, if the outstanding balance of the convertible bonds is less than 10% of the total amount issued, the Company may, based on the face value of the bond, exercise its rights to redeem all convertible bonds in cash. Except for conversions into common stock and early redemptions made by the Company, a lump-sum payment will be given in cash upon maturity.

This convertible bond includes liability and equity components. The equity components are expressed as capital reserve-stock options under equity. The effective interest rate originally recognized for the liability component is 1.46%.

Proceeds from issuance (Less: NT$5,084 thousand
transaction cost) $ 1,197,316
Equity component (Less: NT$193 thousand transaction cost
allocated to equity component) (
45,527 )
Financial liabilities at fair value through profit or loss－
current (Less: NT$13 thousand transaction cost) ( 3,107)
Liability component at issue date (Less: NT$4,878 thousand
transaction cost allocated to liability component) 1,148,682
Interest charged at Effective interest rate 1.46% 13,400
Liability component on December 31, 2019 1,162,082
Interest charged at Effective interest rate 1.46% 17,075
Liability component on December 31, 2020 $ 1,179,157

On March 15, 2016, the Company issued its 4th domestic unsecured convertible bond in the amount of $1,000,000 thousand, in which the denomination for the bond is NT$100 thousand. The maturity period is 3 years, with a zero coupon rate.

On December 31, 2018, the conversion price was NT$17.6 per common share, conversion period was from March 15, 2016 to March 15, 2019. After the convertible bonds are issued for 2 years, bondholders may request the Company to redeem the convertible bonds in cash, based on the bond's face value per sale base

－276－

date. After 1 month following the offering date of the convertible bonds and up until 40 days prior to its maturity date, if the closing price of the Company’s common stock exceeds the current conversion price by 30% (inclusive) for 30 consecutive business days, the Company may, based on the face value of the bond, exercise its rights to redeem all convertible bonds in cash. After 1 month following the offering date of the convertible bonds and up until 40 days prior to its maturity date, if the outstanding balance of the convertible bonds is less than 10% of the total amount issued, the Company may, based on the face value of the bond, exercise its rights to redeem all convertible bonds in cash. Except for conversions into common stock and early redemptions made by the Company, a lump-sum payment will be given in cash upon maturity.

This convertible bond includes liability and equity components. The equity components are expressed as capital reserve-stock options under equity. The effective interest rate originally recognized for the liability component is 1.87%.

Proceeds from issuance (Less: NT$4,829 thousand
transaction cost) $ 994,920
Equity component (Less: NT$220 thousand transaction cost
allocated to equity component) ( 43,080 )
Financial liabilities at fair value through profit or loss－
current (Less: NT$31 thousand transaction cost) ( 6,169)
Liability component at issue date (Less: NT$4,829 thousand
transaction cost allocated to liability component) 945,671
Interest charged at Effective interest rate 1.87% 31,621
Gain on valuation of financial asset ( 748 )
Bonds payable converted to common shares ( 970,836)
Liability component on December 31, 2018 5,708
Interest charged at Effective interest rate 1.87% 62
Bonds payable converted to common shares ( 5,770)
Liability component on December 31, 2019 $ -

XVIII.OTHER LIABILITIES

OTHER LIABILITIES
Other payables-current
Payables for salaries and
bonuses
Payables for other expenses
Other payables – related
parties (Note 30)		 December 31, 2020
$ 340,147
131,769

2,182		 December 31, 2019



$ 203,764
80,747

2,150

－277－

$ 474,098 $ 286,661 － Other liabilities current Temporary credits $ 47,583 $ 21,319 Others 8,916 9,972 $ 56,499 $ 31,291 Other liabilities－non-current Deposits received $ 824 $ 29

XIX.RETIREMENT BENEFIT PLANS

(I)Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (LPA). Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

(II) Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”) and the Company has no right to influence the investment policy and strategy.

The amounts included in the individual balance sheets in respect of the Company’s defined benefit plans were as follows:

－278－

Present Value of the Defined
Benefit Obligation
Fair Value of the Plan Assets
Net Defined Benefit Asset		 December 31, 2020
$ 64,604
(75,200)
($ 10,596)		 December 31, 2019 December 31, 2019

(
(
(
(		 $ 62,877
73,155)
$ 10,278)

Movements in net defined benefit assets were as follows:

Balance on January 01, 2019

Service cost
Current service cost
Interest expense(Income)

Recognized in profit or loss

Remeasurement
Return on plan assets
Actuarial gains and losses
－changes in
demographic
assumptions
－changes in financial
assumptions
－experience
adjustments
Recognized in other
comprehensive income
Contributions from the
employer
Balance on December 31, 2019
Service cost
Current service cost
Interest expense(income)

Recognized in profit or loss

Remeasurement
Return on plan assets
Actuarial gains and losses
－changes in
demographic
assumptions
－changes in financial
assumptions
－experience
 Present Value
of the Defined
Benefit
Obligation
$ 55,622

570

626


1,196

-


318
1,590

4,151

$ 6,059


-


62,877

573

503


1,076

-

444
2,219

1,578
 Fair Value of
the Plan Assets
($ 67,440)

-
(
774)

(
774)

(
2,241 )
-
-

-

($ 2,241)

(
2,700)

(
73,155)


-
(
585)

(
585)

(
2,313 )

-

-

-
 Net Defined
Benefit Asset











($ 11,818)
570
(
148)

422
(
2,241 )
318
1,590

4,151
$ 3,818
(
2,700)
(
10,278)

573
(
82)

491
(
2,313 )

444

2,219

1,578

－279－

adjustments
Recognized in other
comprehensive income

Contributions from the
employer

Benefits paid
(
Balance on December 31, 2020		 4,241
(

-
(

3,590)

$ 64,604
(		 2,313)


2,737)
(

3,590

$ 75,200)
(		 1,928

2,737)

-
$ 10,596)

The amounts of defined benefit plans recognized in profit or loss by function were as follows:

Operation cost
Promotion expense
Management expense
R&D expense		 December 31, 2020
$ 154
36
104

197
$ 491		 December 31, 2019 December 31, 2019




$ 126
31
98
167
$ 422

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

  1. Investment risk: The plan assets are invested in domestic/and foreign/equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau of Labor Funds, Ministry of Labor or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

  2. Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

  3. Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

－280－

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate
Expected rates of future salary
increase		 December 31, 2020
0.350%
3.250%		 December 31, 2019
0.800%
3.250%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate
Increase 0.25%
Decrease 0.25%
Expected rates of future salary
increase
Increase 0.25%
Decrease0.25%		 December 31, 2020
($ 1,254)
$ 1,298
$ 1,227
($ 1,193)		 December 31, 2019 December 31, 2019
(


(		 (


(		 $ 1,245)
$ 1,288
$ 1,223
$ 1,189)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

assumptions may be correlated.
The expected contributions to
the plan for the next year
The average duration of the
defined benefit obligation		 December 31, 2020
$ 2,737
12years		 December 31, 2019
$ 2,700
12 years

－281－

XX.EQUITY

  • (I) Share capital

Common stock

Common stock
Authorized shares（in
thousands）
Authorized capital
Issued and paid shares (in
thousands)
Issued capital		 December 31, 2020

500,000
$ 5,000,000

357,591
$ 3,575,905		 December 31, 2019






500,000
$ 5,000,000
356,884
$ 3,568,835

A holder of issued ordinary shares with par value of NT$10 is entitled to the proportional rights to vote and to dividends.

Bondholders had exercised the right to convert the Company’s 4th domestic unsecured convertible bonds, the number of ordinary shares exchanged were 5,722 thousand shares, 2,125 thousand shares, 4,722 thousand shares and 23,595 thousand shares, in which the capital increase base dates were on March 21, 2019, November 8, 2018, August 10, 2018, and March 19, 2018, respectively..

On June 09, 2020, the Company’s regular shareholders’ meeting approved the issuance of employee restricted stock at an estimated total of 4,000 thousand shares, with a par value of NT$10, which the total amount is NT$40,000 thousand.The above transaction was approved by the FSC, under Authorization Letter Jinguanzheng Fazi No. 1090349323 effective on July 14, 2020, and the subscription base date was to be set on August 07, 2020 as determined by the Board of Directors. In addition, on August 7, 2020, the Company's Board of Directors resolved to reduce capital by cancelling 3,293 thousand treasury shares. The base date for capital reduction was on August 7, 2020.

(II) Capital Surplus

Capital Surplus
Shares premium from issuance
Conversion premium
Recognition of changes in
ownership
interests
in		 December 31, 2020
$ 1,448,441
2,846,020
50,516		 December 31, 2019
$ 1,662,189
2,846,020
50,516

－282－

subsidiaries
Recognition of changes in
investment in subsidiaries
and associates by using the
equity method
Share option
Employee restricted stock
Expired share option
Others

 5,990
45,527
58,474
150,566
473

$ 4,606,007
 5,990
45,527
-
150,566
473
$ 4,761,281

The capital surplus arising from shares issued in excess of par value (including share premium from issuance of ordinary shares), and donations may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).

The capital surplus arising from investments, employee share options, and convertible bonds options accounted for equity method may not be used for any purpose.

(III) Retained earnings and dividends policy

Under the dividends policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For information on the accrual basis of the employees’ compensation and remuneration of directors and the actual appropriations, refer to Note 22-8 employee benefits and remuneration of directors.

－283－

Appropriation of earnings to legal reserve shall be made until the reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash

Under FSC Authorization Letters Jinguanzheng Fazi No. 1010012865 and No. 1010047490, and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Company should appropriate or reverse to a special reserve.

The appropriation of earnings for 2019 and 2018 were approved by the shareholders’ general meetings on June 09, 2020 and June 18, 2019, respectively. The appropriations were as follows:

Legal reserve
Special reserve		 Appropriation of Earnings Appropriation of Earnings
For the year ended
2019
$ 20,119
183,614		 For the year ended
2018
$ -
180,682

In addition, the shareholders’ meeting on June 09, 2020 resolved to distribute NT$177,911 thousand capital reserve, and to allocate NT$0.5 per share in cash.

The appropriation of the 2020 earnings had been proposed by the Company’s board of directors on March 25, 2021. The appropriation and dividends per share were as follows:

Legal reserve
Special Reserve
Cash dividend		 Appropriation of
Earnings
$ 127,330
746,328
357,666		 Dividends per share
(NT$)
$ 1

The Company’s board of directors proposed to issue cash dividends from capital surplus of $357,666 thousand, and to allocate NT$1 per

－284－

share. The appropriations of earnings for 2020 are subject to the resolution of the shareholders’ meeting that is to be held on June 18, 2021.

(IV) Special reserve

Special reserve
Beginning balance
Appropriated special reserve
Other deducted equity items
Ending balance		 For the year ended
2020
$ 375,960
183,614
$ 559,574		 For the year ended
2019




$ 195,278
180,682
$ 375,960

Upon the initial adoption of the IFRSs, the reversal of special reserve appropriated due to exchange differences resulting from translation of financial statements of a foreign operation (including subsidiaries) shall be based on the Company’s disposal of ownership. In the event that the Company loses significant influence, the special reserve will be fully reversed. When distributing the earnings, the difference between the net deduction of other shareholders’ equity and the special reserve appropriated during the initial adoption of the IFRSs should be added to the special reserve at the end of the reporting period. Thereafter, earnings may be distributed based on the reversal of the deduction balance of other shareholders' equity.

(V)Other equity items

1. Exchange differences on translating the financial statements of foreign

operations

operations
Beginning balance
Recognized for the year
Exchange differences
on translating the
financial statements
of foreign		 For the year ended
2020
( $ 497,082 )
(
21,747 )		 For the year ended
2019
( $ 351,769 )
(
142,959 )

－285－

operations
Changes in
investments in
subsidiaries - ( 2,349 )
Share of subsidiaries
and associates
accounted for using
the equity method ( $ 32 ) ( $ 838 )
Changes in
investments in
subsidiaries and
associates
accounted for using
the equity method - 833
Disposal of
subsidiaries 3,908 -
Ending balance ($ 514,953) ($ 497,082)
  1. Unrealized gain (loss) on financial assets at FVTOCI (fair value through other comprehensive income)
comprehensive income)
Beginning balance
Recognized for the year
Unrealized gain or loss
Equity instruments
Share of subsidiaries
and associates
accounted for using
the equity method
Disposal of
subsidiaries
Cumulative unrealized loss
of equity instruments
transferred to retained
earnings due to disposal
Ending balance		 For the year ended
2020
( $ 726,028 )
(
143,312 )
(
16,604 )
4,636

90,360
($ 790,948)		 For the year ended
2019
( $ 386,694 )
(
10,967 )
(
315,317 )
-
(
13,050)
($ 726,028)

3. Unearned compensation

On June 9, 2020, the shareholders' meeting resolved to issue employee restricted stocks. Please see Note 25 for more details.

For the year ended For the year ended

－286－

Beginning balance
Issued for the year
Recognized share-based
payment expenses
Ending balance		 2020
$ -
( 98,474 )
22,649
($ 75,825)		 2019


$ -
-
-
$ -

(VI) Treasury Stock

Treasury Stock
Purpose
To maintain the company's credit and shareholders'
rights and interests
Number of shares on January 01, 2020
Increased for the period
Decreased for the period
Number of shares on December 31, 2020		 Cancelled after
repurchase
（in thousands of
shares）
(
 -
3,293

3,293)
-

In order to maintain the Company’s credit and shareholders’ rights and interests, on March 23, 2020, the Company’s board of directors decided to buy back and cancel 20,000 thousand treasury shares from the centralized securities exchange market beginning from March 24, 2020 to May 23, 2020. The repurchase price was set between NT$13.8~26 per share. In the case that the stock price should be lower than the lowest repurchase price, the company may continue to execute th e repurchasing of shares. The total amount of shares repurchased is expected to be capped at NT$5,593,801 thousand.

As of December 31, 2020, the Company has repurchased a total of 3,293 thousand shares, amounting to NT$68,767 thousand. On August 7, 2020, the board of directors resolved to cancel the 3,293 thousand treasury shares, in addition to the completion of relevant changes in registration with the authority.

－287－

According to the provisions of the Securities Exchange Law, treasury stocks cannot be pledged by the corporation, nor have the eligibility to claim dividends and voting rights

XXI.REVENUE

.REVENUE .REVENUE .REVENUE
For the year ended
2020
Revenue from contracts
Revenue from product sales
$ 16,484,007
Contract balance
December 31,
2020
December 31,
2019
Notes receivable (Note 10）$ -
$ 43,346
Notes receivable－related
parties (Note 30）
11,250
-
Account
receivable
(Note10)
5,468,334
3,333,540
Account
receivable
-
related parties (Note 30）
1,327,557

68,754
$ 6,807,141
$ 3,445,640
Contract liabilities - current
Product sales
$ 191,941
$ 230,022		 For the year ended
2019






$ 14,530,958
January 01,
2019




$ 43,346
-
3,333,540
68,754
$ 3,445,640
$ 230,022







$ 48,507
-
5,371,221

28,038
$ 5,447,766
$ 95,988

XXII. PROFIT BEFORE INCOME TAX

Net profit (loss) from continuing operations include the following items:

(I)
Interest income
Bank deposit		 For the year ended
2020
$ 5,720		 For the year ended
2019
$ 7,977

(II) Other income

－288－

Rental incomes
Dividend
Government grant
Other income		 For the year ended
2020
$ 6,122
4,491
53,402
13,855
$ 77,870		 For the year ended
2019




$ 6,699
5,839
-
11,572
$ 24,110

(III) Other gains and losses

Other gains and losses
For the year ended
2020
Gain (loss) on disposal of
property, plant and equipment
$ 113
Gain
(loss)
on
disposal
of
subsidiaries
833,061
Foreign currency exchange gain
(loss)
21,828
Gain (loss) on financial assets and
liabilities measured at FVTPL
(
9,201 )
Others
(
4,815)
$ 840,986		 For the year ended
2019
$ 242
-
(
41,995 )
127,483
(
394)
$ 85,336

(IV) Finance costs

Finance costs
Interest from bank loans
Interest from lease liabilities		 For the year ended
2020
$ 30,318
38
$ 30,356		 For the year ended
2019




$ 53,309
52
$ 53,361
  • (V) Impairment loss（ reverse）
Impairment loss（reverse）
Inventory（includes operating
cost）		 For the year ended
2020
$ 3,121)		 For the year ended
2019
( $ 8,427

(VI) Depreciation and amortization

Depreciation and amortization
Property, plant and equipment
Right-of-use assets		 For the year ended
2020
$ 81,825
3,348		 For the year ended
2019
$ 75,693
3,546

－289－

Deferred expenses


Depreciation
Expenses
by
Function
Operating costs

Operating expenses


Amortization
expenses
by
function
Operating costs

Operating expenses
51,308

$ 136,481

$ 29,819


55,354

$ 85,173

$ 345


50,963

$ 51,308
48,091
$ 127,330
$ 24,592

54,647
$ 79,239
$ 342

47,749
$ 48,091

(VII) Employee Benefits Expenses


Employee Benefits Expenses
Post-employment benefits
Defined contribution plans
Defined benefit plans (Note
19）
Share-based payments
Equity-settled
Other employee benefit
Total employee benefits
expenses
Employee benefits expense by
function
Operating cost
Operating expense		 For the year ended
2020
$ 37,160

491

37,651

22,649
1,135,277
$ 1,195,577
$ 215,152

980,425
$ 1,195,577		 For the year ended
2019
















$ 35,379
422
35,801
-
979,312
$ 1,015,113
$ 140,642
874,471
$ 1,015,113
  • (VIII) Employee compensation and Remuneration of Board of Directors In compliance with the Articles of incorporation, the Company shall, after deducting the employee bonuses and renumeration benefits of directors from the current year's pre-tax benefits, allocate at least 13.5% for employee profit sharing bonuses and no more than 1.8% for the renumeration benefits of directors. The board of directors have resolved the accrual of employee compensation and remuneration of board of

－290－

directors for the years ended December 31, 2020 and 2019 on March 25, 2021 and March 10, 2020, respectively, as follows:

Accrual Rate
Employee compensation
Remuneration of Directors
Amount
Employee compensation
Remuneration of Directors		 For the year ended
2020
13.5%
1.8%
For the year ended
2020
Cash
$ 232,646
31,019		 For the year ended
2019
13.5%
1.8%
For the year ended
2019
Cash
$ 32,207
4,294

If there is a change in the proposed amounts after the annual individual financial statements were authorized for issue, the differences are recorded as a change in accounting estimate and will be reflected in the following year.

There was no difference between the amounts of the bonus to employees and the remuneration of directors and supervisors approved in the shareholders’ meetings and the amounts recognized in the individual financial statements for the years ended December 31, 2019 and 2018.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors in 2021 and 2020 are available on the Market Observation Post System website of the Taiwan Stock Exchange.

－291－

XXIII. INCOME TAXES

(I) Major components of tax income recognized in profit or loss:

Current income tax
In respect of the current year
Adjustments for prior years

Deferred tax
In respect of the current year
Adjustments for prior years
Income tax expense recognized
in profit or loss		 For the year ended
2020
$ 60,273

3,929
64,202
7,661

17,622
$ 89,485		 For the year ended
2019



$ -

1,678
1,678
(
800 )

-
$ 878

A reconciliation of accounting profit and income tax expense is as follows:

Income before income tax from
continuing operations
Income tax expense calculated
at the statutory rate
Nondeductible
expenses
in
determining taxable income
Tax-exempt income
Unrecognized
temporary
differences
Adjustments for prior years’
tax
Income tax expense recognized
in profit or loss		 For the year ended
2020
$ 1,459,640
$ 291,928
10,775
(
232,232 )
(
2,537 )

21,551
$ 89,485		 For the year ended
2019
$ 202,071
$ 40,414
10,054
(
47,678 )
(
3,590 )

1,678
$ 878

(II) Current tax asset and liability

Current tax asset and liability
Current tax asset
Tax refund receivable
Current tax liability
Income tax payable		 For the year ended
2020
$ 1,236
$ 51,830		 For the year ended
2019


$ 5,165
$ -

－292－

(III) Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as

follows:

For the year ended December 31, 2020

Deferred taxassets
Temporary differences
Write-down of
inventories
Allowance for loss
exceeded
Loss carryforwards
Deferred tax liabilities
Temporary differences
Profit and loss from
investments in
overseas investees
accounted for using
the equity method
Unrealized exchange
gains and losses
Others

 OpeningBalance
$ 3,111
12,221
47,306
$ 62,638

$ 205,313
1,623

1,526
$ 208,462		 OpeningBalance
$ 3,111
12,221
47,306
$ 62,638

$ 205,313
1,623

1,526
$ 208,462		 Recognized in
Profit or Loss
( $ 624 )
(
6,679 )
(
17,622 )
( $ 24,925 )
$ -
(787)
1,145
$ 358		 ClosingBalance ClosingBalance ClosingBalance




$		 ( $ (
(
( $




$		 $ 2,487
5,542
29,684
$ 37,713
205,313
836
2,671
208,820
$ $

For the year ended December 31, 2019

Deferred tax assets
Temporary differences
Write-down of
inventories
Allowance for loss
exceeded
Loss carryforwards

Deferred tax liabilities
Temporary differences
Profit and loss
from investments
in overseas
investees
accounted for
using the equity
method
Unrealized
exchange gains
and losses
Others

 OpeningBalance
$ 1,426
8,246
53,199
$ 62,871
$ 205,313
3,205
977
$ 209,495		 Recognized in
Profit or Loss
$ 1,685
3,975
(5,893)
($ 233
$ -
(1,582)

549
($ 1,033		 Recognized in
Profit or Loss
$ 1,685
3,975
(5,893)
($ 233
$ -
(1,582)

549
($ 1,033		 ClosingBalance ClosingBalance






(


(		 $
$




$ 3,111
12,221
47,306
$ 62,638
$ 205,313
1,623
1,526
$ 208,462

－293－

  • (IV) Deductible temporary differences for which no deferred tax assets have been recognized in the balance sheets.
Deductible temporary
differences
Impairment loss on
financial assets
measured by cost		 As of December
31, 2020
$ 93,665		 As of December
31, 2019		 As of December
31, 2019
$ 93,665
  • (V) Details on unused loss carryforwards, unused investment tax credits, and tax exemptions.
and tax exemptions.
Loss carryforwards
2027
2029		 For the year ended
2020
$ 140,306

8,109
$ 148,415		 For the year ended
2019




$ 177,283
59,244
$ 236,527
  • (VI) The information of temporary differences associated with investments for which deferred tax liabilities have not been recognized.

As of December 31, 2020 and 2019, the taxable temporary differences associated with subsidiaries for which no deferred tax liabilities have been recognized were NT$109,181 thousand and NT$96,498 thousand, respectively.

  • (VII) Income tax assesments

The tax return filing of the Company as of 2018 and previous years have been assessed by the tax authorities.

XXIV. EARNINGS PER SHARE

Unit: NT$ Per Share

－294－

Basic earnings per share
from continuing operations
Diluted earnings per share
from continuing operations		 For the year ended
2020
$ 3.86
$ 3.36		 For the year ended
2019		 For the year ended
2019


$ 0.57
$ 0.53

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Current net income
Net income in computation of
basic earnings per share
Effect of potentially dilutive
ordinary shares:
Interest after tax for
convertible bonds
Net income in computation of
diluted earnings per share
Ordinary shares
Weighted average number of
ordinary shares in computation
of basic earnings per share
Effect of potentially dilutive
ordinary shares:
Convertible bonds
Employee restricted stock
Employee compensation
Weighted average number of
ordinary shares used in the
computation of diluted earnings
per share		 For the year ended
2020
For the year ended
2019
$ 1,370,155
$ 201,193

13,660

10,769
$ 1,383,815
$ 211,962
Unit: Thousand Shares
For the year ended
2020
For the year ended
2019
354,868
355,629
45,627
45,864
4,000
-

7,909

1,248

412,404

402,741

If the Company offered to settle compensation or bonuses paid to employees in cash or shares, the Company assumed the entire amount of the compensation or bonuses would be settled in shares and the resulting potential shares were included in the weighted

－295－

average number of shares outstanding used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

XXV.SHARE-BASED PAYMENT ARRANGEMENTS

New Employee Restricted Stock

On June 09, 2020, the annual shareholders’ meeting of the Company approved the issuance of New Employee Restricted Stocks with a total amount of NT$40,000 thousand, that is 4,000 thousand shares to be issued at issue price of NT$10 per share. Followed by the approval letter Jinguanzheng Fazi No. 1090349323 issued by the Financial Supervisory Commission, Executive Yuan on July 14, 2020, the board of directors therefore determined August 7, 2020 as the capital increase base date.

If an employee still serves the Company after the subscription of New Employee Retricted Stock, provided that the employee has not violated the Company’s labor contract, work rules, or company regulations, and under the circumstance that the overall business operations and employee performances have reached the reasonable targets set out by the Company for the preceding year, the following ratio of shares for each vesting anniversary are:

  • (I) 1[st] anniversary： 30% of subscription；

  • (II)2[nd] anniversary：30% of subscription；

  • (III)3[rd] anniversary：40% of subscription。

Vesting restrictions if conditions have not been fulfilled:

  • (I) Measures to be taken when employees fail to meet the vesting conditions:

  • Before vesting conditions are met, employee restricted stocks received by the employee are not to be sold, mortgaged, transferred, gifted, pledged, or otherwise sanctioned except in the event of inheritance.

－296－

  1. The attendance, proposal, speech, and voting rights of the shareholders meeting shall be implemented in accordance with the trust custody agreement. Any cash dividends, stock dividends, and capital reserve cash (stocks) allocated to the New Employee Restricted Stocks shall be placed under the custody of the trust. For those New Employee Restricted Stocks whom their owners have not yet fulfilled the vesting conditions, the cash dividends, stock dividends, and capital reserves (stocks) generated shall be forfeited and being reclaimed or cancelled by the Company in accordance with relevant laws and regulations.

(II) Based upon the above trust custody agreement, employees who have received New Employee Restricted Stocks are eligible to retain certain rights, including but not limited to: the right to receive dividends, bonuses, and capital reserves, the right to subscribe shares for cash increase, and voting rights, which are equivalent to the rights of common shares issued by the Company.

(III) New Employee Restricted Stocks that are issued in accordance with this arrangement shall be handled via trust and custody before vesting conditions are fulfilled.

XXVI.DISPOSAL OF INVESTMENTS IN SUBSIDIARIES – LOSS OF CONTROLLING INTEREST

Please see note 28 of the 2020 consolidated financial report for details on disposal of investments in subsidiaries.

－297－

XXVII. NON-CASH TRANSACTIONS

For the years ended December 31, 2020 and 2019, the Company entered into the following non-cash investment activities:

  • (I) On June 9, 2020, the annual shareholders meeting of the Company resolved the proposed issuance of 4,000 thousand shares of New Employee Restricted Stock, totaling NT$40,000 thousand, which was then approved by the board of directors on August 7, 2020. The co st of the 2020 New Employee Restricted Stock was NT$22,649 thousand.

  • (II) The Company did not recognize long-term equity investment NT$(12,102) thousand in accordance with the shareholding ratio in 2019.

  • (III) In 2019, the Company acquired a portion of AMPAK Technology Inc.’s shareholdings via the disposal of NT$22,218 thousand financial assets measured at fair value through other comprehensive gains and losses.

XXVIII.CAPITAL RISK MANAGEMENT

In consideration of the industry dynamics and future developments, as well as external environment factors, the Company maintains an optimal capital structure to enhance long-term shareholder value by managing its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, research and development activities, dividend payments, and other business requirements for continuing operations and to reward shareholders and take into consideration the interests of other stakeholders.

Key management personnel of the Company review the capital structure periodically. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Company

－298－

may adjust the amount of dividends paid to shareholders and the amount of new debt issued or existing debt redeemed.

XXIX. FINANCIAL INSTRUMENTS

  • (I) Fair value of financial instruments that are measured at fair value on a recurring basis

  • Fair value hierarchy

December 31, 2020

Level 1 Level 2 Level 3 Total Financial assets at FVTPL Securities listed in ROC $ 120,131 $ - $ - $ 120,131 Convertible options - 840 - 840 Total $ 120,131 $ 840 $ - $ 120,971

Financial liabilities at FVTPL Forward Exchange Contract $ - $ 7,278 $ - $ 7,278 Financial assets at FVTOCI Equity instrument investment －Domestic and overseas listed stock $ 90,196 $ - $ - $ 90,196 －Domestic and overseas unlisted stock - - 116,087 116,087 Total $ 90,196 $ - $ 116,087 $ 206,283

December 31, 2019

Level 1 Level 2 Level 3 Total Financial assets at

－299－

FVTPL Domestic listed stock $ 110,990 $ - $ - $ 110,990

Financial liabilities at

FVTPL Forward Exchange Contract $ - $ 3,423 $ - $ 3,423 Convertible - - options 2,640 2,640 Total $ - $ 6,063 $ - $ 6,063

Financial assets at FVTOCI Equity instrument investment －Domestic and overseas listed stock $ 145,462 $ - $ - $ 145,462 －Domestic and overseas unlisted stock - - 181,187 181,187 Total $ 145,462 $ - $ 181,187 $ 326,649

There were no transfers between Levels 1 and 2 in 2020 and 2019.

  1. Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement
fair value measurement
Financial Instruments
Derivatives - foreign
currency forward
contracts
Derivatives- convertible
options		 Valuation Techniques and Inputs
Discounted cash flow: Future cash flows are
estimated based on observable forward
exchange rates at the end of the reporting
period and contract forward rates,
discounted at a rate that reflects the credit
risk of various counterparties.
Binomial Tree Model for Convertible Bonds
Pricing: Evaluated based on the volatility of
the conversion price, the risk-free interest
rate, the risk of discount rate, and the years
until maturity.

－300－

  1. Valuation techniques and inputs applied for Level 3 fair value measurement

For stocks of unlisted companies without an active market, their fair value is assessed by using the market method and the income method.

The market approach refers to the market price and related information of listed companies that share a similar background as the unlisted stock in order to estimate its fair value; the income approach uses the discounting cash flow method to calculate the present value of the expected return from holding the investment target.

Hybrid financial assets - Convertible corporate bonds have no market price for reference. The Company’s evaluation of fair value is based on the Binomial Tree Model for Convertible Bond Pricing, which factors in the volatility of the conversion price, the risk-free interest rate, the risk of discount rate, and the periods until maturity.

(II) Categories of financial instrument


Financial assets
Fair value through profit or loss
Fair
value
through
other
comprehensive income
Fair value after amortized cost
（Note 1）
Financial liabilities
Fair value through profit or loss
Fair value after amortized cost
（Note 2）		 December 31, 2020
$ 120,971
206,283
7,778,988
7,278
7,426,279		 December 31, 2019
$ 110,990
326,649
4,667,330
6,063
4,950,137

－301－

  • Note 1: Financial assets measured at fair value after amortized cost include cash and cash equivalents, notes receivables, accounts receivables, notes receivables -related parties, accounts receivables -related parties ,other receivables, other receivables -related parties and refundable deposits etc.

  • Note 2: Financial liabilities measured at fair value after amortized cost include short-term loans, notes receivables, accounts receivables, notes receivables -related parties, accounts receivables -related parties ,other receivables, other receivables -related parties, and refundable deposits etc.

  • (III) Financial risk management objective and policies

The Company’s major financial instruments include equity instrument investment, accounts receivable, accounts payable, bonds payable, loans and lease liabilities. The Company’s Financial Department provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

The Company’s Finance Department seeks to mitigate the effect of these risks by using derivative financial instruments to hedge risk exposures under the policies approved by the board of directors. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Company’s management monitors and reviews the financial activities in accordance with procedures required by relevant regulations and internal controls.

If the Finance Department should engage in derivative transactions, the results are reported to the Board of Directors on a regular basis.

  1. Market Risk

－302－

The Company’s operating activities exposed it primarily to the financial risks arising from changes in foreign currency exchange rates (see (1) below) and interest rates (see (2) below):

There had been no change to the Company’s exposure to market risks or the manner in which these risks were managed and measured.

(1) Foreign Currency Risk

The Company engages in foreign currency-denominated sales and purchase transactions, therefore exposing the Company to foreign currency fluctuation risks.

The carrying amounts of the significant monetary assets and liabilities not denominated in functional currency and the carrying amounts of derivatives that are exposed to foreign currency risks at the end of the reporting period are set out in Note 33.

Sensitivity analysis

The Company was mainly exposed to the USD.

The following table details the Company’s sensitivity to a 1% increase and decrease in the New Taiwan dollars (the functional currency) against the relevant foreign currencies. If the sensitivity rate increases or decreases 3%, the situation must be reported to the core management, which also indicates that a reassessment of the exchange rate fluctuation should be made. The sensitivity analysis includes only outstanding foreign currency denominated monetary items plus forward exchange contracts designated as a cash flow hedge, and their translations are adjusted at the end of the reporting period for a 1% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit or equity associated with New Taiwan dollars strengthening 1% against the relevant currency; a negative number below

－303－

indicates a decrease in pre-tax profit or equity associated with New Taiwan dollars weakening 1% against the relevant currency.

Profit or Loss Impact of USD
For the year 2020
31,350		 For the year 2019
$ 7,807

The impact of foreign currencies on profit and loss listed in the above table mainly derived from the USD-denominated non-derivative financial assets and liabilities of the Company that are still in circulation on the balance sheet date and have not undergone cash flow hedging.

The sensitivity analysis of the current year’s foreign exchange rates has gone up when compared to the previous year due to an increase in USD-denominated account receivables.

(2) Interest rate risk

The Company is exposed to interest rate risk arising from borrowing at both fixed and floating interest rates.

The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

ows:

Fair value interest rate
risk
－Financial assets
－Financial liabilities
Cash flow interest rate
risk
－Financial assets
－Financial liabilities		 December 31, 2020
$ 61,886
2,261,397
831,518		 December 31, 2019
$ 801,245
1,461,882
375,532

－304－

Sensitivity analysis

The sensitivity analysis below was determined based on the Company’s exposure to interest rates for derivative and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 100 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2020 and 2019 would increase by NT$8,315 thousand and NT$3,755 thousand, respectively. The main reason for the above derived from the net position of bank deposits measured at fair value interest rate risk of the Company.

There was no significant changes in the sensitivity analysis of the current year’s interest rates when compared to the previous year.

(3) Other market price risk

Equity price risk exposure arises from the Company’s investments in equity securities investment. The Company assigns a designated team to monitor price flucutations and evaluate the timing to increase hedge positions.

Sensitivity analysis

The sensitivity analysis below was determined based on the Company’s exposure to equity price risks at the end of the reporting period.

If equity prices of financial assets at FVTPL had been 1% higher/lower, profit or loss for the years ended December 31, 2020 and 2019 would

－305－

increase/decrease by $1,201 thousand and $1,110 thousand, respectively. If equity prices of financial assets at FVTOCI had been higher/lower, other comprehensive income (loss) for the years ended December 31, 2020 and 2019 would increase/decrease by $2,063 thousand and $3,266 thousand, respectively.

There was no significant changes in the sensitivity analysis of the current year’s equity prices when compared to the previous year.

2. Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. As of the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation and financial guarantees provided by the Company could arise from the carrying amount of the respective recognized financial assets as stated in the balance sheets.

3. Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Company relies on bank borrowings as a substantial source of liquidity. The detailed information of the Company’s unused financing facilities as of December 31, 2020 and 2019 is further stated in (3) financing facilities below.

  • (1)Liquidity and interest risk tables for non-derivative financial liabilities

－306－

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates.

For interest cash flows paid at floating interest rates, the undiscounted amount of interest can be inferred by the yield curve on the balance sheet date.

December 31, 2020

Non-derivative
financial
liabilities
Non-interest
bearing
Lease liabilities
Fixed interest
rate liabilities
 On Demand
or Less than
1 Month

$ 815,549

233
881,296

$ 1,697,078		 1-3 Months
$ 4,044,599


698
2,293,484

$ 6,338,781

Further information on the lease liability maturity analysis is as follows:

Less than 1 year 1~5Years Lease liabilities $ 2,792 $ 4,187

－307－

December 31, 2019

Non-derivative
financial
liabilities
Non-interest
bearing
Lease liabilities
Floating interest
rate liabilities
Fixed interest
rate liabilities
 On Demand
or Less than
1 Month

$ 942,828

299
300,391

$ 1,243,518		 1-3 Months
$ 2,417,636


896

-

$ 2,418,532
 3 Months
-1 Year

$ 127,762

664

-

$ 128,426		 1-5 Years



$ -

-
1,162,082
$ 1,162,082

Further information on the lease liability maturity analysis is as follows:


Lease liabilities		 Less than 1 year
$ 1,859		 1~5Years
$ -

－308－

(2) Liquidity and interest risk tables for derivative financial liabilities

For the liquidity analysis of derivative financial instruments, for derivative instruments that are settled on a net basis, they are compiled on the basis of undiscounted contract net cash inflows and outflows; for derivatives that are settled on a gross basis, they are compiled on the basis of undiscounted net cash inflows and outflows. It is prepared based on the current total cash inflows and outflows. When the amount payable or receivable is not fixed, the amount disclosed is determined based on the interest rate estimated by the yield curve on the balance sheet date.

December 31, 2020

On Demand or Less than 1 1-3 3 Months Above 5 Month Months -1 Year 1-5 Years Years Netting settlement Forward exchange ( $ 7,278 ) $ - $ - $ - $ - December 31, 2019 On Demand or Less than 1 1-3 3 Months Above 5 Month Months -1 Year 1-5 Years Years Netting settlement Forward exchange ( $ 3,423 ) $ - $ - $ - $ -

  • (3) Financing facilities Credit Lines

December 31, 2020 December 31, 2019

Unsecured bank Loan facility －Amount used $ 1,082,240 $ 299,800 －Amount unused 2,661,360 3,488,840 $ 3,743,600 $ 3,788,640

－309－

XXX. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Company and other related parties are disclosed below.

  • (I) Name of the related parties and relationship

Name of related party Relationship with the Group AMPAK Technology Inc. Associates（AMPAK Technology Inc. was a former subsidiary of Gemtek Technologies Co., Ltd. and became an associate on August 10, 2020.） SparkLAN Communications, Inc. Associates（SparkLAN Communications, Inc. was a former subsidiary of Gemtek Technologies Co., Ltd. and became an associate on August 10, 2020.） Gemtek Electronics (Kunshan) Subsidiary Co., Ltd. Gemtek Subsidiary Electronics (ChangShu) Co., Ltd. Gemtek Vietnam Co., Ltd. Subsidiary Gemtek CZ., s.r.o. Subsidiary 5V TECHNOLOGIES, TAIWAN Subsidiary (Became an associate on LTD January 30, 2020.） BROWAN Associates COMMUNICATIONS INCORPORATION ANTEK NETWORKS INC. Associates BandRich Inc. Associates

(II) Sales Revenue

Sales Revenue
Type/Name of related party
Subsidiary
Others
Associate
Others		 For the year ended
2020
$ 171,297
297,708
$ 469,005		 For the year ended
2019




$ 46,475
182,683
$ 229,158

Sales prices and payment terms for related parties were not significantly different from those for sales to non-related parties.

  • (III) Purchase and Processing Fee

Type/Name of related party For the year ended

For the year ended

－310－

Subsidiary
Gemtek Electronics
(Kunshan) Co., Ltd.

Gemtek
Electronics (ChangShu) Co.,
Ltd.
Gemtek Vietnam Co., Ltd.
Others

Associate
Others		 2020
$ 4,758,107
3,743,950
1,613,251
195,315
10,310,623
-
$ 10,310,623		 2019








$ 5,991,826
6,132,694
-
184,916
12,309,436
1,192
$ 12,310,628

The company purchases goods from related parties or entrusts related parties to process and repurchase finished products, which is a corporate strategy used for the purpose of cooperation and division of labor. The transaction prices have no significant objects for comparison. Payment terms are determined by the actual status of the company’s assets.

(IV) Receivables from related parties

Account
Notes receivables –
related parties

Accounts
receivables –
related parties






 Type/Name of related
party
Associates
BROWAN
COMMUNICATI
ONS
INCORPORATIO
N

Subsidiary
Gemtek Vietnam
Co., Ltd.
Others


Associates
Others


 December 31,
2020
$ 11,250

$ 1,135,169
85,880
1,221,049


106,508

$ 1,327,557
 December 31,
2019		 December 31,
2019
$ -
$ -
357
357
68,397
$ 68,754





－311－

No guarantee is received for the outstanding accounts receivable from related parties. No allowance for losses is provided for accounts receivable from related parties in 2020 and 2019.

(V) Other receivables from related parties

Other receivables from related parties
Type/Name of related party
Subsidiary
Gemtek CZ., s.r.o.
Gemtek Electronics
(Kunshan) Co., Ltd.
Others
Associates
Others		 December 31, 2020
$ 9,003
-

-
9,003

513
$ 9,516		 December 31, 2019






$ 18,289
2,141
326
20,756
23
$ 20,779

Other receivables of the Company to be collected from related parties are the advance payments and purchases of raw materials on behalf of the related parties.

(VI) Payables to related parties

Account
Accounts
payable-relat
ed parties






 Type/Name of related
party
Subsidiary
Gemtek Electronics
(Kunshan) Co.,
Ltd.

Others



Associates
Others


 December 31,
2020
$ 2,710,405


264,649

2,975,054


303

$ 2,975,357
 December 31,
2019		 December 31,
2019








$ 2,576,352
251,092
2,827,444
-
$ 2,827,444

No guarantees were available for outstanding accounts payables to related parties.

(VII) Other trade payables to related parties

－312－

Type/Name of related party
Subsidiary
Gemtek Electronics
(Kunshan) Co., Ltd.
Associates
BROWAN
COMMUNICATIONS
INCORPORATION
Others		 December 31, 2020
$ 2,182

-
$ 2,182		 December 31, 2019 December 31, 2019
$ 2,141


9
$ 2,150

Other payables of the Company to be paid to related parties are the advance payments made on behalf of the related parties.

(VIII) Acquired property, plant, and equipment

Type/Name of
related party
Subsidiary
Gemtek
Electronics (
ChangShu) C
o., Ltd.
Gemtek
Electronics
(Kunshan)
Co., Ltd.		 Acquired Proceeds Proceeds
For the year ended 2020
$ 1,738

4,534
$ 6,272		 For the year ended 2019




$ 2,296
755
$ 3,051

(IX)Disposal of property, plant, and equipment

Type/Name of
related party
Subsidiary
Gemtek
Electronics (C
hangShu) Co.,		 Disposal of proceeds
For the year
ended 2020
For the year
ended 2019
$ -
$ 1,085		 Disposal of gain (loss)
For the year
ended 2020
$ -
For the year
ended 2020
$ -
For the year
ended 2019
$ -

－313－

Ltd.
Gemtek
Vietnam Co.,
Ltd.
Gemtek
Electronics
(Kunshan)
Co., Ltd.

Associates
BROWAN
COMMUNIC
ATIONS
INCORPORA
TION

 1,236

5,145

6,381

-

$ 6,381
 631

26

1,742

359

$ 2,101
 114

-

114

-

$ 114
 137

26
163

359
$ 522
  • (X) Other trades with related parties
Type/Name of related party
Rent income
Subsidiary
AMPAK Technology Inc.
Others
Associates
AMPAK Technology Inc.
Others
Other income
Subsidiary
Associates
Type/Name of related party
Research & development fee
Associates
Others		 For the year ended
2020
$ 2,487

181
2,668
1,772

465
$ 4,905
$ 352

251
$ 603
For the year ended
2020
$ -		 For the year ended
2019		 For the year ended
2019







For






For		 $ 5,616
-
5,616
-
473
$ 6,089
$ 603
-
$ 603
the year ended
2019
$ 3

－314－

Rental income of the Company collected from associates were based on the market price.

(XI) Compensation of key management personnel

Short-term employee benefits
Post-employment benefits		 For the year ended
2020
$ 40,325
771
$ 41,096		 For the year ended
2019




$ 42,984
856
$ 43,840

The remuneration of directors and key executives was determined by the remuneration committee based on the performance of individuals and market trends.

XXXI. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were pledged or mortgaged as collateral for tariffs on imported raw materials:

Pledged bank deposits
(included in financial assets
measured at amortized cost)		 December 31, 2020
$ 40,000		 December 31, 2019 December 31, 2019
$ 20,000

XXXII.SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Company as of the balance sheet date were as follows:

As of the year December 31, 2020 and 2019, the financial guarantee for tariff covenants were NT$40,000 thousand and NT$20,000 thousand, respectively.

－315－

XXXIII.SIGNIFICANT FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Company and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

December 31, 2020
Foreign
Currencies
Foreign currency
asset
Monetary items
USD
$ 311,474
Non-monetary items
Investments
accounted for
using equity
method
USD
$ 172,699
Financial asset
measured at fair
value through
other
comprehensive
income
USD

6,692


Foreign currency
liabilities
Monetary items

USD

201,393		 Exchange Rate
28.48(USD:NTD)

28.48(USD:NTD)

28.48(USD:NTD)


28.48(USD:NTD)
 Carrying
Amount

Foreign currency
asset
Monetary items
USD

Non-monetary items
Investments
accounted for
using equity
method
USD

Financial asset
measured at fair
value through
other
comprehensive
income
USD



Foreign currency
liabilities
Monetary items

USD




$ 8,870,768
$ 4,918,477
190,594
$ 5,109,071
$ 5,735,670

－316－

December 31, 2019

Foreign currency
asset
Monetary items
USD

Non-monetary items
Financial asset
measured at fair
value through
other
comprehensive
income
USD

Financial asset
measured at
amortized cost
USD


Foreign currency
liabilities
Monetary items

USD
 Foreign
Currencies
$ 140,328
164,148
10,296
114,288		 Exchange Rate
29.98(USD:NTD)

29.98(USD:NTD)

29.98(USD:NTD)


29.98(USD:NTD)
 Carrying
Amount




$ 4,207,035
$ 4,921,157
308,685
$ 5,229,842
$ 3,426,356

The significant realized and unrealized foreign exchange gains (losses) were as follows:

Foreign
Currencies
USD		 Forthe yearended2020
ExchangeRate
Net Foreign
Exchange Gain
(Loss)
28.48（USD:NTD） $ 21,828		 Forthe yearended2020
ExchangeRate
Net Foreign
Exchange Gain
(Loss)
28.48（USD:NTD） $ 21,828		 Forthe yearended2019 Forthe yearended2019 Forthe yearended2019
ExchangeRate
28.48（USD:NTD）		 ExchangeRate
29.980（USD:NTD）		 Net Foreign
Exchange Gain
(Loss)
( $ 41,995)

－317－

XXXIV. SEPARATELY DISCLOSED ITEMS

  • (I) Information About Significant Transactions and (II) Investees:

  • Financing provided to others. (Table 1)

  • Endorsements/guarantees provided. (None)

  • Marketable securities held (excluding investment in subsidiaries, associates and joint ventures). (Table 2)

  • Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the share capital. (Table 3)

  • Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)

  • Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)

  • Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4)

  • Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)

  • Trading in derivative instruments. (Note 7 and 29)

  • Information on investees. (Table 6)

  • (III) Information on investments in mainland China:

  • Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 7)

  • Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: (Tables 4, 5, and 7)

    • (1) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year.

－318－

  • (2) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year.

  • (3) The amount of property transactions and the amount of the resultant gains or losses.

  • (4) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes.

  • (5) The highest balance during the year, the end of year balance, the interest rate range, and total current year interest with respect to financing of funds.

  • (6) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receipt of services.

  • (IV)Information on significant shareholders: The name, number of shares held, and shareholding percentage of shareholders who possess 5% or more of the total number of shares. (None)

－319－

GEMTEK TECHNOLOGIES CO., LTD.

FINANCING PROVIDED TO OTHERS

FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 1

Unit:In Thousands of New Taiwan Dollars, Unless Stated Otherwise

No. Financing
Company Name		 Borrower Financial
Statement
Account
Related
Parties
Highest
Balance for
the Period		 Ending
Balance		 Actual
Borrowing
Amount		 Interest
Rate		 Nature of
Financing
（Note
2）
Business
Transacti
on
Amount		 Reasons for
Short-term
Financing		 Allowanc
e for
Impairme
nt Loss		 Collateral Collateral Financing Limit
for Each
Borrowing
Company
(Note 1)		 Financing
Company's
Total Financing
Amount Limit
(Note 1)
Item Value
1 Gemtek
Electronics
(Suzhou)
Co.
Ltd.
Gemtek
Electronics (Ch
angShu) Co.,
Ltd.		 Short-ter
m
financi
ng		 Yes $ 52,524 $ 52,524 $ 52,524 3.60 2 $ - Operating
capital		 $ - - - $ 85,377 $ 85,377

Note 1 ： Pursuant to the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies ” of Gemtek Electronics (Suzhou) Co. Ltd., when the parent company directly and indirectly holds 100% of the voting shares of foreign companies engaged in fund loans, the aggregate amount of loans shall not exceed 100% of the lending company's net worth, and the maximum amount permitted to a single borrower shall not exceed 100% of the lending company's net worth.

Note 2 ： Nature for financing -

  1. Enter 1 for Business relationship.

  2. Enter 2 for Short-term financing purpose.

Note 3 ： Converted by the exchange rate recorded on the financial reporting date - RMB: New Taiwan Dollar = 1:4.3 77.

－320－

GEMTEK TECHNOLOGIES CO., LTD. MARKETABLE SECURITIES HELD

FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 2

Unit:In Thousands of New Taiwan Dollars/ US Dollars/ RMB.Unless Stated Otherwise

Holding Company Name Type and Name of Marketable
Securities		 Relationship with the
Holding Company		 Financial Statement
Account		 Ending Balance on December 31, 2020 Ending Balance on December 31, 2020 Ending Balance on December 31, 2020 Ending Balance on December 31, 2020 Note
Shares/ Units (in
thousands)		 Carrying Value Percentage of
Ownership％		 Fair Value
Gemtek Technologies
Co.,Ltd.
Gemtek
Investment
Co.,Ltd.		 Stock
ITEQ CORPORATION
TAI-SAW TECHNOLOGY CO.,
LTD.
Green Packet Bhd.
LIONIC CORP.
Tempo Semiconductor, Inc.
SKSpruce Holding Limited
Greenwave holding, Inc.

Stock
Sky Phy Networks Limited
Ingenu Inc.
SanJet Corp
TSKY CO., LTD.
LIONIC CORP.
Polaris Group
AIPTEK, Inc.
TAI-SAW TECHNOLOGY CO.,
LTD.
PYRAS TECHNOLOGY INC.		 The Corporation serves as
corporate director
〃
None
The Corporation serves as
corporate director
〃
None
〃
〃
〃
The Corporation serves as
corporate director
None
The Corporation serves as
corporate director
〃
None

〃
The Corporation serves as		 Financial
assets
measured at fair value
through profit and loss
- current
Financial
assets
measured at fair value
through
other
comprehensive
income – non-current
〃
〃
〃
〃
〃
Financial
assets
measured at fair value
through
other
comprehensive
income – non-current
〃
〃
〃
〃
〃
〃
〃
〃


871



691
26,273
225
3,276
2,241
3,965



4,943
1,754
3,882
1,500
841
8,675
186
2,312
3,000		 $ 120,131
15,270
74,926
419
-
29,297
86,371
-
-
47,052
31,355
1,563
135,812
679
51,090
21,180		 0.29
0.68
2.81
1.40
-
2.81
3.30
13.82
3.99
12.33
8.49
5.25
1.33
0.16
2.26
18.45		 $ 120,131
15,270
74,926
419
-
29,297
86,371
-
-
47,052
31,355
1,563
135,812
679
51,090
21,180		 Preferred stock
Common
stock/Preferred stock
Preferred stock
Preferred stock
Preferred stock

－321－

G-Technology
Investment Co., Ltd.
Gemtek
Electronics (ChangShu)
Co., Ltd.

Gemtek
Electronics
(Suzhou) Co. Ltd.		 Convertible Bond
Greenwave Holding, Inc.
Stock
Polaris Group
Tianhan Technology（Wujiang）
Limited Company
Ingenu Inc.
UBITUS Inc.
Bond
Standard
Chartered
Bank
Subordinate Bond
Finance products
CCB Suzhou Branch “Qianyuan
Xinyi Jiangnan”

Finance products
CCB Suzhou Branch “Qianyuan
Xinyi Jiangnan”		 corporate director
None
None
〃
〃
〃

〃

None

None		 Financial
assets
measured at fair value
through profit and loss
- current
Financial
assets
measured at fair value
through
other
comprehensive
income – non-current
〃
〃
〃
Financial
assets
measured at amortized
cost－non-current
Financial
assets
measured at fair value
through profit and loss
- current
Financial
assets
measured at fair value
through profit and loss
-current


-



26,467
-
860
200


-



-



-		 15,592
( USD
547 )
$ 430,274
( USD
15,108 )
-
-
-
132,652
( USD
4,658 )
437
( RMB
100 )
23,308
( RMB
5,340 )		 -
4.05
11.54
2.61
2.32
-
-		 15,592
( USD
547 )
$ 430,274
( USD
15,108 )
-
-
-
132,652
( USD
4,658 )
437
( RMB
100 )
23,308
( RMB
5,340 )		 Preferred stock

Note 1: See Tables 6 and 7 for information on investments in subsidiaries, associates and joint ventures.

Note 2: Converted by the exchange rate recorded on the finan cial reporting date - USD: NTD = 1: 28.48; RMB: NTD = 1 ： 4.377

－322－

GEMTEK TECHNOLOGIES CO., LTD.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE SHARE CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 3

Unit:In Thousands of New Taiwan Dollars, Unless Stated Otherwise

Company Name Type and Name of
Marketable Securities
Financial
Statement
Account		 Counterparty Relationsh
ip		 Beginning Balance Beginning Balance Acquisition Acquisition Disposal Disposal Disposal Ending Balance
Shares/Units
(In
Thousands)
Amount		 Shares/Units
(In
Thousands)
Amount
(Note 5)		 Shares/Units
(In
Thousands)
Amount
(Note 2)		 Carrying
Amount		 Gain/Loss
on Disposal		 Shares/Units
(In
Thousands)		 Amount
(Note 1)
Gemtek
Technologies
Co., Ltd.
Gemtek
Investment
Co.,Ltd.		 Stock
AMPAK Technology
Inc.
AMPAK Technology
Inc.		 Investment
Accounted
for
Using
Equity
Method
Investment
Accounted
for
Using
Equity
Method
-

-		 Subsidiary
Subsidiary
36,124,794
8,975,801		 $ 950,845
242,434
20,100,595

-		 $ 1,045,230

-		 36,124,794
8,975,801		 $ 830,760
465,341		 $ 1,039,487
264,381		 $ 833,061
(Note 3)
200,496
(Note 4)
20,100,595

-		 $1,048,268
-

Note 1: The amount of long -term equity investment using the equity method includes investm ent gains and losses recognized by the equity method and adjustment items related to shareholder equity.

Note 2: The disposal price has been deducted from relevant transaction costs.

Note 3: Disposal benefits include the recognition of conversion loss of N T$3,444 thousand from financial statements of foreign operating institutions using the equity method. Note 4: Disposal benefits include the recognition of conversion loss of NT$464 thousand from financial statements of foreign operating institutions using the equity method. Note 5: The current purchase is the fair value of the remaining equity.

－323－

GEMTEK TECHNOLOGIES CO., LTD.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID -IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 4

Unit:In Thousands of New Taiwan Dollars, Unless Stated Otherwise

Company Name Related Party Relationship Transaction Details Transaction Details Abnormal Transaction Abnormal Transaction Notes/Accounts Receivable
(Payable)		 Notes/Accounts Receivable
(Payable)		 Note
Purchases/Sales Amount ％to Total Payment
Terms		 Unit Price Payment Terms Ending Balance % to Total
Gemtek Technologies
Co., Ltd.
Gemtek Electronics
(Kunshan) Co., Ltd.
Gemtek
Electronics (ChangSh
u) Co., Ltd.
Gemtek CZ., s.r.o.
Gemtek Vietnam Co.,
Ltd.		 Gemtek Electronics
(Kunshan) Co., Ltd.
Gemtek
Electronics (ChangSh
u) Co., Ltd.
Gemtek CZ., s.r.o.
Gemtek Vietnam Co.,
Ltd.
Gemtek Technologies
Co., Ltd.
Gemtek Technologies
Co., Ltd.
Gemtek Technologies
Co., Ltd.
Gemtek Technologies
Co., Ltd.		 Investment in subsidiary
through third region
Investment in subsidiary
through third region
Investment in subsidiary
through third region
Subsidiary
Parent company
Parent company
Parent company
Parent company		 Purchase and
processing
expenses
Purchase and
processing
expenses
Purchase and
processing
expenses
Purchase and
processing
expenses
Sale and
processing
income
Sale and
processing
income
Sale and
processing
income
Sale and
processing
income		 $ 4,758,107
3,743,950
195,307
1,613,251
( 4,758,107 )
( 3,743,950 )
( 195,307 )
( 1,613,251 )		 26%
21%
1%
9%
( 69% )
( 77% )
( 99% )
( 100% )		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1		 ( $ 2,710,405 )
( 264,649 )
9,003
1,135,169
2,710,405
264,649
( 9,003
)
( 1,135,169 )		 ( 58% )
( 6%
)
-
17%
86%
57%
( 19% )
( 71% )		 Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2

Note 1: The company purchases goods from related parties or entrusts related parties to process and repurchase finished produ cts, which is a corporate strategy used for the purpose of cooperation and division of labor. The transaction prices have no significant objects for comparison. Payment term s are determined by the actual status of the company’s assets.

Note 2 ： Accounts receivables collected from and accounts payables paid to Gemtek Electronics (Kunshan) Co., Ltd., Gemtek Electronics (ChangShu) Co., Ltd., Gemtek CZ., s.r.o., and Gemtek Vietnam Co., Ltd. are ex pressed in net amount.

－324－

GEMTEK TECHNOLOGIES CO., LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID -IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 5

Unit:In Thousands of New Taiwan Dollars, Unless State d Otherwise

Company Name Related Party Relationship Ending Balance Turnover Rate Overdue Overdue Amounts Received in
Subsequent Period
 Allowance for
Impairment
A
m
o
u
n
t		 A c t i o n s T a k e n
Gemtek
Electronics
(Kunshan) Co., Ltd
Gemtek
Electronics (ChangSh
u) Co., Ltd.
Gemtek
Technologies
Co.,Ltd.
Gemtek
Technologies
Co., Ltd.
Gemtek
Technologies
Co., Ltd.

Gemtek Vietnam Co.,
Ltd.
Parent company

Parent company

Subsidiary		 $ 2,710,405
264,649
1,135,169		 1.80
14.52
2.84		 $ -
-
-		 -
-
-		 $ 1,321,266
264,649
432,085		 $ -
-
-

－325－

GEMTEK TECHNOLOGIES CO., LTD. INFORMATION ON INVESTEES

FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 6

Unit:In Thousands of New Taiwan Dollars/ US Dollars.Unless Stated Otherwise

Investor Company Investee Company Location Main Businesses and
Products		 Original InvestmentAmount Original InvestmentAmount As of December31,2020 As of December31,2020 As of December31,2020 Net Income (Loss) of the
Investee		 Share of Profit (Loss) Note
December 31, 2020 December 31, 2019 Shares/Units (In
Thousands)		 % Carrying Amount
Gemtek Technologies Co.,
Ltd.
G-Technology Investment
Co., Ltd.
Gemtek Investment Co., Ltd.		 Gemtek Investment Co.,Ltd.
G-Technology Investment Co., Ltd.
Brightech International Co., Ltd.
AMPAK Technology Inc.
Wi Tek Investment Co., Ltd.
BROWAN COMMUNICATIONS
INCORPORATION
Gemtek Vietnam Co., Ltd.
Ampak International Holdings Ltd.
Gemtek CZ., s.r.o.
Primax Communication (B.V.I.) Inc.
PT. South Ocean
Free PP Worldwide Co.,Ltd.
AMPAK Technology Inc.
BROWAN COMMUNICATIONS
INCORPORATION
BandRich Inc.
5V TECHNOLOGIES, TAIWAN LTD.		 Hsinchu County, Taiwan
Cayman Islands
Republic of Mauritius
Hsinchu County, Taiwan
Cayman Islands
Hsinchu County, Taiwan
Vietnam
Independent State of
Samoa
Czech Republic
British Virgin Islands
Indonesia
Republic of Seychelles
Hsinchu County, Taiwan
Hsinchu County, Taiwan
New Taipei City, Taiwan
Taipei City, Taiwan		 Investment
Investment
Investment
Telecommunications
Investment
Telecommunications
Telecommunications
Investment
Telecommunications
Investment
Telecommunications
Investment
Telecommunications
Telecommunications

Telecommunications
Telecommunications		 $ 769,457
2,484,452
( USD
78,600 )
207,969
( USD
6,145 )
512,854
132,155
( USD
4,000 )
144,826
616,034
( USD
20,000 )
1,099,843
( USD
35,561 )
25,351
( USD
692 )
73,886
( USD
2,297 )
7,838
( USD
238 )
30,260
( USD
1,000 )
-
141,825
55,000
90,000		 $ 769,457
2,484,452
( USD
78,600 )
207,969
( USD
6,145 )
917,203
132,155
( USD
4,000 )
144,826
616,034
( USD
20,000 )
1,099,843
( USD
35,561 )
25,351
( USD
692 )
73,886
( USD
2,297 )
7,838
( USD
238 )
30,260
( USD
1,000 )
219,689
141,825
55,000
-		 76,946
78,600
6,145
20,101
4,000
11,191
-
36,000
12,000
2,297
24
1,002
-
9,826
5,500
9,000		 100.00
100.00
100.00
33.37
100.00
24.33
100.00
100.00
100.00
100.00
95.00
30.00
-
21.36
27.04
97.92		 $ 846,419
4,313,409
69,191
1,048,268
20,950
10,656
514,927
1,064,287
( USD
37,370 )
6,783
( USD
238 )
16,683
( USD
586 )
2,613
( USD
92 )
13,930
( USD
489)
-
9,335
5,389
79,052		 $ 188,980
(
31,037 )
(
619 )
286,468
(
9,621 )
6,898
53,960
18,945
( USD
721 )
4,692
( USD
161 )
(
125 )
( USD
-4 )
-
( USD
- )
(
1,404 )
( USD
-46 )
207,747
6,898
(
10,116 )
(
12,023 )		 $ 188,980
(
31,037 )
(
619 )

131,171
(Note 1)
(
9,621 )

1,678
53,960
18,945
( USD
721 )
4,692
( USD
161 )
(
125 )
( USD
-4 )
-
( USD
- )
(
421 )
( USD
-14 )
22,327

1,473
(
2,735 )
(
10,948 )
(Note 2)		 Note 3
Note 3
Note 3
Note 3
Note 3
Note 3
Note 3
Note 3

Note 1: Based on the equity holding ratio, the amount is recognized by the net profit of the investee company NT$ 135,470 thousand, less the i dentifiable intangible assets adjusted amortization of the current period NT$4,593 thousand, and add the adjusted unrealized and realized benefits of upstream transactions NT$294 thousand.

Note 2: Based on the equity holding ratio, the amount is recognized by the net loss of the investee company NT$ 8,934 thousan d, and add the identifiable intangible assets adjusted amortization of th e current period NT$2,014 thousand.

－326－

GEMTEK TECHNOLOGIES CO., LTD.

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020

TABLE 7

Unit:In Thousands of New Taiwan Dollars/ US Dollars.Unless Stated Otherwise

Investee Company Main Businesses and
Products		 Share Capital Share Capital Method of Investment (Note 1) Accumulated Outward
Remittance for
Investment from
Taiwan as of January
01, 2020		 Accumulated Outward
Remittance for
Investment from
Taiwan as of January
01, 2020		 Investment Flow Investment Flow Accumulated Outward
Remittance for
Investment from
Taiwan as of
December 31, 2020		 Net Income (Loss) of
the Investee		 % Ownership
of Direct or
Indirect
Investment		 Investment Gain
(Loss)		 Carrying Amount as
of December 31, 2020		 Accumulated
Repatriation of
Investment Income as
of December 31, 2020		 Note
Outflow Inflow
Gemtek
Electronics
(Suzhou) Co. Ltd.
Gemtek
Electronics
(Kunshan) Co., Ltd
Browan Communications
(Xi’An) Inc.
AIPTEK Technology
(Wujiang) Co., Ltd.
Gemtek
Electronics (ChangSh
u) Co., Ltd.
Manufacturing of
wireless
telecommunicati
on products such
as wireless
network cards
and wireless
gateways

Manufacturing
of
wireless
telecommunicati
on products such
as
wireless
network
cards
and
wireless
gateways

R&D,
production,
sales
and
provision
of
technical
consulting
and
related
services
for
wireless
network products
Manufacturing of
digital products
R&D,
production,
sales
and
provision
of
technical
consulting
and
related services
for
wireless
network
products		 $ ( USD





( USD







( USD
( USD






( USD		 237,808

8,350 )
427,200

15,000 )
113,920

4,000 )
444,288

15,600 )
1,025,280

36,000 )		 Indirect investment in Mainland
China through a holding
company established in other
countries－Brightech
International Co Ltd及Primx
Communication (BVI) Inc
Indirect investment in Mainland
China through a holding
company established in other
countries－G-Technology
Investment Co Ltd.
Indirect investment in Mainland
China through a holding
company established in other
countries－Wi Tek
Investment Co Ltd.
Indirect investment in Mainland
China through a holding
company established in other
countries－G-Technology
Investment Co Ltd
Indirect investment in Mainland
China through a holding
company established in other
countries－G-Technology
Investment Co Ltd
$ 236,925
( USD
8,319 )
427,200
( USD
15,000 )
113,920
( USD
4,000 )
25,632
( USD
900 )
1,025,280
( USD
36,000 )		 $ -
-
-
-
-		 $ -
-
-
-
-		 $ 236,925
( USD
8,319 )
427,200
( USD
15,000 )
113,920
( USD
4,000 )
25,632
( USD
900 )
1,025,280
( USD
36,000 )		 ( $ 650 )
( USD
-22 )
( $ 38,118 )
( USD
-1,279 )
( $ 9,621 )
( USD
-327 )
-
18,944
( USD
721 )		 100.00
100.00
100.00
11.54
100.00		 ( $ 650 )
( USD
-22 )
( $ 38,118 )
( USD
-1,279 )
( $ 9,621 )
( USD
-327 )
-
18,944
( USD
721 )		 $ 85,377
( USD
2,998 )
2,555,154
( USD
89,717 )
20,945
( USD
735 )
-
1,064,287
( USD
37,370 )		 $ -
-
-
-
-		 Note 3
Note 3
Note 3
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2020		 Investment Amounts Authorized by Investment
Commission, MOEA		 Upper Limit on the Amount of Investment Stipulated by
Investment Commission, MOEA
$ 1,844,934
USD
64,780（Note 1）		 $ 1,844,934
USD
63,780		 $ 5,630,402

Note 1: (1) The investment amount remitted at the end of the period exceeds the USD 1,000 thousand investment amount approved by the Investment Commission of the Ministry of Economic Affairs.

The remittance was made by AMPAK Technology Inc., the parent company of Gemtek Electronics (ChangShu) Co., Ltd., Ltd. from the previous period.

(2) In July 2009, the Company acquired 100% shareholding of AMPAK International Holdings Ltd., an overseas holding company of Gemtek Electronics (ChangShu) Co., Ltd., through an overseas company G-Technology Investment Co., Ltd. for US$561,000 (NT$17,413 thousand), which has been approved by the Investment Commission of the Ministry of Economic Affairs Letter-2 No. 09800283840.

(3) The conversion rate is based on the average spot buying/selling exchange rate of the Bank of Taiwan on December 31, 2020.

Note 2: See Tables 4, 5 and 6 for the information about significant transactions with investees in the mainland China, either directly or indirectly through a third area.

Note 3: Amount was recognized based on the audited financial statements of the investee as of December 31, 2020.

－327－

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM STATEMENT INDEX

MAJOR ACCOUNTING ITEMS IN ASSETS,
LIABILITIES AND EQUITY
STATEMENT OF CASH AND CASH 1
EQUIVALENTS
STATEMENT OF ACCOUNTS RECEIVABLE 2
STATEMENT OF INVENTORIES 3
STATEMENT OF OTHER CURRENT ASSETS 15
STATEMENT OF CHANGES IN FINANCIAL 4
ASSETS AT FAIR VALUE THROUGH
OTHER COMPREHENSIVE
INCOME-NON-CURRENT
STATEMENT OF CHANGES IN 5
INVESTMENTS ACCOUNTED FOR USING
EQUITY METHOD
STATEMENT OF CHANGES IN 13
ACCUMULATED DEPRECIATION AND
ACCUMULATED IMPAIRMENT OF
PROPERTY, PLANT AND EQUIPMENT
STATEMENT OF CHANGES IN PROPERTY, 13
PLANT AND EQUIPMENT
STATEMENT OF DEFERRED TAX ASSETS 23
STATEMENT OF OTHER NON-CURRENT 15
ASSETS
STATEMENT OF SHORT-TERM 6
BORROWINGS
STATEMENT OF ACCOUNTS PAYABLE 7
STATEMENT OF DEFERRED TAX 23
LIABILITIES
STATEMENT OF OTHER NON-CURRENT 18
LIABILITIES
MAJOR ACCOUNTING ITEMS IN PROFIT OR
LOSS
STATEMENT OF OPERATING REVENUE 8
STATEMENT OF OPERATING COSTS 9
STATEMENT OF SELLING EXPENSES 10
STATEMENT OF GENERAL AND 11
ADMINISTRATIVE EXPENSES
STATEMENT OF RESEARCH AND 12
DEVELOPMENT EXPENSES
STATEMENT OF EMPLOYEE BENEFITS, 13
DEPRECIATION AND AMORTIZATION

－328－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT1

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item
Cash on hand
Checking accounts and
demand deposits
Time deposits		 Description
note 1
note 2
note 3		 Amount


$ 1,624
831,519
21,885
$ 855,028

Note 1: Foreign currency included and their exchange rates were as follows:

Foreign
Currency		 Amount Exchange Rate
USD $ 19thousand USD: NTD=1 : 28.48
RMB $ 36 thousand RMB: NTD=1 : 4.377
EUR $ 21 thousand EUR: NTD=1 : 35.02
JPY $ 15 thousand JPY: NTD=1 : 0.276
VND $ 26,500 thousand VND: NTD=1 : 0.001
Total
Amount in $1,491 thousand
NTD

－329－

Note 2: Foreign currency included and their exchange rates were as follows:

Foreign
Currency		 Amount Exchange Rate
USD $ 774thousand USD: NTD=1 : 28.48
RMB $ 245 thousand RMB: NTD=1 : 4.377
CZK $28,544 thousand CZK: NTD=1 : 1.332
EUR $ 1,925 thousand EUR: NTD=1 : 35.02
JPY $ 7 thousand JPY: NTD=1 : 0.276
Total
Amount in $128,552 thousand
NTD

Note 3: Foreign currency included and their exchange rates were as follows:

Foreign Amount Exchange Rate Currency RMB $ 5,000 thousand RMB: NTD=1 : 4.377 Total Amount in $21,885 thousand NTD

－330－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT2

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Customer Name
Non-Related Parties－
Compamy A
Compamy B
Compamy C
Compamy D
Others（note）
Less：Loss allowance
Related Parties－
Gemtek Vietnam Co., Ltd.
5V Technologies, Taiwan Ltd.
Browan Communications
Incorporation
Others（note）		 Description
Sale of goods
Sale of goods
Sale of goods
Sale of goods
Sale of goods
Sale of goods
Sale of goods
Sale of goods
Sale of goods		 Amount



(



 $ 1,630,544
1,104,040
693,895
483,409
1,556,955

509)
$ 5,468,334
$ 1,135,169
85,880
91,686
14,822
$ 1,327,557

Note: The amount for each individual client does not exceed 5% of the account balance.

－331－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT3

STATEMENT OF INVENTORIES DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item
Raw materials

Work in progress

Finished goods

Less：provision for
inventory devaluation
loss		 Description
PCB & IC

CARD & GATEWAY
CARD & GATEWAY

 Cost
$ 581,968

212,409
6,054

12,437)

$ 787,994
 Net Realizable
Value		 Net Realizable
Value

(

$ 570,586
211,369
6,039
-
$ 787,994

－332－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT4

STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME-NON-CURRENT

FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, In Thousands Shares/Units)

Name
TAI-SAW Technology Co., Ltd
Green Packet Bhd.
Wakom Semiconductor Corporation
Golana Technology Corporation
Lionic Corporation
Tempo Semiconductor, Inc.
SKSpruce Holding Limited
Greenwave Holding Inc.		 Balance , January 1,2020
Shares/Units
Fair Value
691
$ 17,964
26,273
127,498
64
-
-
-
225
-
3,276
-
1,107
38,708
3,965

142,479
$ 326,649		 Balance , January 1,2020
Shares/Units
Fair Value
691
$ 17,964
26,273
127,498
64
-
-
-
225
-
3,276
-
1,107
38,708
3,965

142,479
$ 326,649		 Additions（note 1）
Shares/Units
Amounts
-
$ -
-
-
-
-

-
-
-
-
-
-
1,134
22,953
-

-
$ 22,953		 Additions（note 1）
Shares/Units
Amounts
-
$ -
-
-
-
-

-
-
-
-
-
-
1,134
22,953
-

-
$ 22,953		 Decrease（note 2）
Shares/Units
Amounts
-
$ -

-
-

(
64 ) (
7 )
-
-
-
-
-
-
-
-

-

-

($ 7)
 Decrease（note 2）
Shares/Units
Amounts
-
$ -

-
-

(
64 ) (
7 )
-
-
-
-
-
-
-
-

-

-

($ 7)
 Evaluation of
Profit or
(Loss)
( $ 2,694 )
(
52,572 )

7
-
419
-
(
32,364 )
(
56,108)
($ 143,312)		 Balance , December 31,2020

Shares/Units
Fair Value

691
$ 15,270

26,273
74,926
-
-
-
-
225
419
3,276
-

2,241
29,297
3,965

86,371
$ 206,283		 Balance , December 31,2020

Shares/Units
Fair Value

691
$ 15,270

26,273
74,926
-
-
-
-
225
419
3,276
-

2,241
29,297
3,965

86,371
$ 206,283
Collateral
None
〃
〃
〃
〃
〃
〃
〃		 Note
Shares/Units
691

26,273
64
-
225
3,276
1,107
3,965

 Shares/Units
-

-
-
-
-
-
1,134
-

 Shares/Units
-

-
(
64 )
-
-
-
-
-

 Shares/Units

691


26,273
-
-
225
3,276

2,241
3,965





(

(		 (
(

(
(
(

Note 1: The increase derives from the purchase of SKSpruce Holding Limited preferred stock

Note 2: The decrease derives from the selling of 100% shareholdings from Wakom Semiconductor Corporation and Golana Technology Corporation.

－333－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT5

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, In Thousands Shares/Units)


Investee
Gemtek Investment Co.,Ltd.
G-Technology Investment Co.,
Ltd.
Brightech International Co., Ltd.
Ampak Technology, Inc.
Wi Tek Investment Co., Ltd.
Browan Communications
Incorporation
Gemtek Vietnam Co., Ltd.		 Balance , January 1,2020
Shares/Units
Amounts

76,946
$ 791,526
78,600
4,332,992

6,145
73,749
36,125
950,844
4,000
30,276
11,191
9,305
-

484,140
$ 6,672,832		 Balance , January 1,2020
Shares/Units
Amounts

76,946
$ 791,526
78,600
4,332,992

6,145
73,749
36,125
950,844
4,000
30,276
11,191
9,305
-

484,140
$ 6,672,832		 Additions（note 3）
Shares/Units
Amounts

-
$ -
-
-
-
-
20,101
1,045,231

-
-
-
-
-

-
$ 1,045,231		 Additions（note 3）
Shares/Units
Amounts

-
$ -
-
-
-
-
20,101
1,045,231

-
-
-
-
-

-
$ 1,045,231		 Decrease（note 4）
Shares/Units
Amounts
-
( $ 111,221 )
-
-
-
-
(
36,125 ) ( 1,079,688 )
-
-
-
-
-

-

($ 1,190,909)
 Capital
Surplus
$ -

-

-


-
-

-
-

$ -
 Investment
Profit or Loss
（note 1）
$ 188,980

(
31,037 )
(
619 )
131,171

(
9,621 )
1,678


53,960

$ 334,512
 Conversion
Adjustment
（note 1）
$ 145


1,002

1,011

(
268 )

295
(
327 )
(
23,173)

($ 21,315)
 Fair Value
through Other
Comprehensive
income
（note 1）
( $ 23,011 )
10,452
(
4,950 )

978
-

-

-

($ 16,531)
 Others
（note4）
$ -
-

-
-
-
-
-
$ -		 Balance , December 31,2020
Shares/Units
％of
ownership
Amounts
76,946
100.00
$ 846,419
78,600
100.00
4,313,409
6,145
100.00
69,191
20,101
33.37
1,048,268
4,000
100.00
20,950
11,191
24.33
10,656
-
100.00

514,927
$ 6,823,820		 Balance , December 31,2020
Shares/Units
％of
ownership
Amounts
76,946
100.00
$ 846,419
78,600
100.00
4,313,409
6,145
100.00
69,191
20,101
33.37
1,048,268
4,000
100.00
20,950
11,191
24.33
10,656
-
100.00

514,927
$ 6,823,820		 Balance , December 31,2020
Shares/Units
％of
ownership
Amounts
76,946
100.00
$ 846,419
78,600
100.00
4,313,409
6,145
100.00
69,191
20,101
33.37
1,048,268
4,000
100.00
20,950
11,191
24.33
10,656
-
100.00

514,927
$ 6,823,820		 Market Value or Net Assets
Value（note 2）
Unit Price
（NT）
Total
Amounts
11.00
$ 846,419
54.88
4,313,409
11.26
69,191
67.6
1,358,828
5.24
20,950
0.95
10,656

514,927
$ 7,134,380		 Market Value or Net Assets
Value（note 2）
Unit Price
（NT）
Total
Amounts
11.00
$ 846,419
54.88
4,313,409
11.26
69,191
67.6
1,358,828
5.24
20,950
0.95
10,656

514,927
$ 7,134,380		 **Collateral **
Shares/Units
76,946

78,600


6,145
36,125
4,000
11,191
-

 Shares/Units
-

-
-
20,101

-
-
-

 Shares/Units
-

-
-
(
36,125 )
-
-
-

 Shares/Units
76,946
78,600
6,145
20,101
4,000
11,191
-		 ％of
ownership
100.00

100.00

100.00
33.37

100.00
24.33
100.00

 Unit Price
（NT）
11.00

54.88

11.26
67.6

5.24
0.95




















None
〃
〃
〃
〃
〃
〃

Note 1. Amount was recognized based on the audited financial statements of the investee as of December 31, 2020. Note 2. Equity holding ratio is based on the shareholding percentages as stated in the financial reports of the investee and the Company. Note 3. The increase derives from the disposal of the remaining equity interest of Ampak Technology, Inc. measured at fair value Note 4. The decrease derives from the acquisition of stock dividends from Gemtek Investment Co.,Ltd. and Ampak Technology, In c., plus the disposal of stock dividends from Ampak Technology, Inc.

－334－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT6

STATEMENT OF SHORT-TERM BORROWINGS

DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Type
Unsecured borrowings
KGI Bank
HSBC Bank
Land Bank of Taiwan
Land Bank of Taiwan
E. Sun Bank		 Balance,
End of The Year
$ 370,240
284,800
28,480
113,920

284,800
$ 1,082,240		 Contract Period
109.12.07~110.01.07
109.12.07~110.03.03
109.12.29~110.03.29
109.12.29~110.02.01
109.12.31~110.01.29		 Range of Interest Rates
（％）
0.75%
0.70%
0.70%
0.65%
0.64%		 Loan
Commitments
$ 400,000
284,800
650,000
650,000

300,000
$ 2,284,800		 Collateral




None
〃
〃
〃
〃

－335－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT7

STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Vendor Name
Non-Related Parties
Compamy A
Others（note）
Related Parties
Gemtek Electronics
(Kunshan) Co., Ltd.
Gemtek Electronics
(ChangShu) Co., Ltd.
Others		 Description
Purchase of goods
Purchase of goods
Purchase of goods
Purchase of goods
Purchase of goods		 Amount





$ 429,414
1,285,189
$ 1,714,603
$ 2,710,405
264,649
303
$ 2,975,357

Note: The amount for each individual client does not exceed 5% of the account balance.

－336－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT8

STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ITEM
GATEWAY
CARD
Others		 Quantity
(in thousands)
10,345
8,566
34,686		 Amount


$ 14,732,805
417,971
1,333,231
$ 16,484,007

－337－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT9

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ITEM
Raw materials
Add: Raw materials, beginning of the
year
Purchase
Less：Raw materials, end of the year
Others
Direct labor
Manufacturing expenses
Manufacturing cost
Add：Work in progress, beginning of the year
Purchase
Less：Transferred to expense and scrapped the
inventory
Work in progress, end of the year
Cost of finished goods
Add：Finished goods, beginning of the year
Purchase
Less：Transferred to expense and scrapped the
inventory
Finished goods, end of the year
Inventory devaluation loss
Others
Total		 Amount
$ 608,871
3,024,488
(
581,968 )
(
2,142)
3,049,249
60,931

245,396
3,355,576
23,340
65,197
(
9,907 )
(
212,409)
3,221,797
39,068
11,031,553
(
4,668 )
(
6,054 )
(
3,121 )

636,433
$ 14,915,008

－338－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT10

STATEMENT OF SELLING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ITEM
Salary
Export expense
Certification fee
Others（note）		 Amount




$ 172,493
40,740
18,007
73,797
$ 305,037

Note: The amount for each individual client does not exceed 5% of the account balance.

－339－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT11 STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ITEM
Salary
Others（note）		 Amount


$ 182,581
84,742
$ 267,323

Note: The amount for each individual client does not exceed 5% of the account balance.

－340－

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT12 STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ITEM
Salary
Depreciation and amortization
Others（note）		 Amount


$ 549,929
78,356
137,446
$ 765,731

Note: The amount for each individual client does not exceed 5% of the account balance.

－341－

STATEMENT13

GEMTEK TECHNOLOGY CO., LTD.

STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION FOR THE YEAR ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Employee benefits（note）
Salary
Share-based payment expenses
Labor and health insurance
Pension
Remuneration of directors
Others
Depreciation
Amortization		 Year Ended December 31,2020 Ended December 31,2020 Total
$ 988,772
22,649
69,970
37,651
31,019
45,516
$ 1,195,577
$ 85,173
$ 51,308		 Year Ended December 31,2019 Ended December 31,2019
Classified as
Operating Costs
$ 169,391
793
14,656
6,048
-

24,264
$ 215,152
$ 29,819
$ 345		 Classified as
Operating
expenses
$ 819,381
21,856
55,314
31,603
31,019

21,252
$ 980,425
$ 55,354
$ 50,963		 Classified as
Operating Costs
$ 116,257
-
11,878
4,811
-

7,696
$ 140,642
$ 24,592
$ 342		 Classified as
Operating
expenses
$ 762,631
-
55,599
30,990
4,294

20,957
$ 874,471
$ 54,647
$ 47,749		 Total
























$ 878,888
-
67,477
35,801
4,294
28,653
$ 1,015,113
$ 79,239
$ 48,091

Note 1: For the year ended December 31, 2020 and 2019, the average number of Company Employees are 958 and 915, respectively, which include 5 directors who are non-employees for both years.

  • Note 2: The average amount of Employee Benefit Expenses for the years 2020 and 2019 were NTD 1,221 thousand and NTD 1,111 thousand, respectively. The average amount of Salary for the years 2020 and 2019 were NTD 1,060 thousand and NTD 966 thousand, respectively. The average salary increased by 8% year over year.

Note 3: The Company no longer appoints supervisors as members of the Board, in which an audit committee shall be assigned to replace the role of the supervisor as required by law.

Note 4: Compensation and Remuneration of Employees and Directors:

  • (I) Directors

Pursuant to Article 20 of the Article of Incorporation, the Company shall, after deducting the employee bonuses and renumeration benefits of directors from the current year's pre-tax benefits, allocate

13.5% for employee profit sharing bonuses and 1.8% for the renumeration benefits of directors and supervisors. The aforementioned percentages shall be resolved by a majority vote at a meeting attended by more than two thirds of the total number of directors, and such distribution shall be reported at the shareholders' meeting. Remuneration of Directors shall be determined by the Company’s “Self-Evaluation of the Board of Directors of Gemtek Technology Co., Ltd”.

  • (II) Managers

The average salary of the company’s managers provided must be competitive in the industry in order to attract outstanding professionals and increase employee loyalty. Managerial remuneration is determined by the scope of personal responsibilities and performances while taking into account the company's long-term and short-term goals.

  • (III) Employees

The overall salary of the company's employees is based on the principle of internal fairness and external competitiveness, including both fixed salary and variable salary. Bonuses are provided to attract, motivate and retain talents. According to the Company’s Articles of Incorporation, the total amount of employee remuneration is distributed by deducting the employee bonuses and renumeration benefits of directors from the current year's pre-tax benefits prior to the allocation of 13.5% for employee profit sharing bonuses. Employee remuneration is determined by the level of personal responsibilities and professional skills. Bonuses and employee compensations are incentives to encourage higher levels of performances and contributions.

  • 342 -

VII.Review and Analysis of Financial Position, Financial Performance, and Risk Management

I. FINANCIAL POSITION ANALYSIS (CONSOLIDATED) - IFRS

Unit: NT$, All in thousands

Year
Items
Dec. 31, 2020		 Dec. 31, 2019 Difference (%)
Current assets 12,673,645
9,548,019
3,125,626
32.74
Long-term equityinvestment 2,209,103
1,427,796
781,307
54.72
Property, plant, and equipment 3,325,158
2,867,476
457,682
15.96
Otherassets 448,470 856,445 (407,975) (47.64)
Total assets 18,656,376
14,699,736
3,956,640
26.92
Currentliabilities 9,043,613 4,613,772
4,429,841
96.01
Non-current liabilities 228,628
1,398,089
(1,169,461)
(83.65)
Total liabilities 9,272,241
6,011,861
3,260,380		 54.23
Share capital 3,575,905
3,568,835
7,070
0.20
Capital surplus 4,606,007
4,761,281
(155,274)
(3.26)
Retained earnings 2,583,817 1,310,513 1,273,304
97.16
Other items under equity (1,381,726)
(1,223,110)
(158,616)
12.97
Non-controllinginterests 132
270,356		 (270,224) (99.95)
Total equity 9,384,135
8,687,875
696,260
8.01
Analysis of Deviation over 20%
1. The increase in current assets totaling NT$3,125,626 thousand was mainly due to increase in
inventory and cash equivalents and accounts receivable.
2. The increase in long-term investments totaling NT$781,307 thousand was mainly due to
disposal of 41.51% of AMPAK Technology Inc.’s equity. The remaining equity will be
recognized by fair value.
3. The decrease in other assets totaling NT$407,975 thousand was mainly due to loss of control in
AMPAK Technology Inc. AMPAK was therefore excluded from the Group’s consolidated
financial report, resulting in the decrease in goodwill.
4. The increase in current liabilities totaling NT$4,429,841thousand was mainly due to increase in
accounts payable, short-term loans, and corporate bonds maturing within one year reclassified to
current liabilities.
5. The decrease in non-current liabilities totaling NT$169,461 thousand was mainly due to
corporate bonds maturing within one year reclassified to current liabilities
6. The increase in retained earnings totaling NT$1,273,304 thousand was mainly due to increase in
current net income.
7. The decrease in non-controlling interest totaling NT$270,224 thousand was mainly due to loss
of control in AMPAK Technology Inc. AMPAK was therefore excluded from the Group’s
consolidated financial report.
  • 343 -

II.FINANCIAL PERFORMANCE (I)Financial Performance Analysis

Unit: NTD, All in thousands

Year
Items		 2020 2019 Difference (%)
Net operating income
Operating cost
Gross profit
Operating expenses
Operating profit
Non-operating income and
expenses
Income before taxation
Income tax expense
Net profits of the current year
Other comprehensive loss
Total comprehensive income		 19,929,372
(17,663,796)
18,057,131

(16,284,640)
1,872,241

(1,379,156)
10.37

8.47

27.82

4.46

808.59
378.35

456.77

128.15



570.36
(61.25)
(560.98)
2,265,576
(1,797,663)
1,772,491

(1,720,992)
493,085

(76,671)
467,913
1,105,259
51,499
231,056
416,414
874,203
1,573,172
(165,598)
282,555

(72,582)
1,290,617

(93,016)
1,407,574
(184,190)
1,223,384


209,973
(475,358)
(265,385)


1,197,601
291,168
1,488,769
Analysis of Deviation over 20%
1.The increase in gross profit totaling NT$493,085 thousand was mainly due to increase in current
revenue.
2.The increase inoperating incometotaling NT$416,414 thousand was mainly due to increase in gross
profit.
3.The increase innon-operating incometotaling NT$874,203 thousand was mainly due to profit from
disposal of AMPAK Technology Inc.’s partial equity.
4.The increase in income tax totaling NT$93,016 thousand was mainly due to increase in net income.
5.To summarize the above, total net income increased by NT$1,197,601 thousand.
6.The increase in other comprehensive gain and loss totaling NT$291,168 thousand was mainly due to
recognization of financial assets unrealized profit measured by fair value through other comprehensive
gain and loss.
7.To summarize the above, total comprehensive gain and loss increased by NT$1,488,769 thousand.
  • 344 -

(II)Gross Profit Variance Analysis:

Unit: NTD, All in thousands

Product Factor Analysis Year 2020/2019 Year 2020/2019 Year 2020/2019 Year 2020/2019
Wireless
Gateway		 (I)Revenue Variance Analysis:
P(Q’－Q)
Q(P’－P)
(P’－P)(Q’－Q)
P’Q’－PQ
(II)Cost Variance Analysis:
P(Q’－Q)
Q(P’－P)
(P’－P)(Q’－Q)
P’Q’－PQ
(III) Difference:		 2,804,469
416,765
100,737
3,321,971
2,597,529
389,073
94,043
3,080,645
241,326
Wireless
Network Card		 (I) Revenue Variance Analysis:
P(Q’－Q)
Q(P’－P)
(P’－P)(Q’－Q)
P’Q’－PQ
(II) Cost Variance Analysis:
P(Q’－Q)
Q(P’－P)
(P’－P)(Q’－Q)
P’Q’－PQ
(III) Difference:		 25,187,628
(405,358)
(22,715,776)
2,066,494
20,635,963
(334,380)
(18,738,222)
1,563,361
503,133
Wireless
Modules		 (I) Revenue Variance Analysis:
P(Q’－Q)
Q(P’－P)
(P’－P)(Q’－Q)
P’Q’－PQ
(II) Cost Variance Analysis:
P(Q’－Q)
Q(P’－P)
(P’－P)(Q’－Q)
P’Q’－PQ
(III)Difference:		 (897,671)
184,853
(82,812)
(795,630)
(789,766)
62,587
(28,038)
(755,217)
(40,413)
Others Difference: (210,961)
Total 493,085

Note: P’Q’: Current year’s price and quantity ; P Q: Prior year’s price and quantity

 Wireless Gateway

From the year 2019 to 2020, the Company’s sales volume increased, resulting in favorable sales volume variance of NT$ 2,804,469 thousand, favorable sales price variance of NT$ 416,765 thousand, and the favorable sales mix variance was NT$ 100,737 thousand. The unfavorable cost-volume variance derived from price changes was NT$ 2,597,529 thousand, the unfavorable price variance was NT$ 389,073 thousand, and the unfavorable mix variance was NT$ 94,043 thousand. To summarize the above, the gross profit of wireless gateway sales in 2020 compared with that in 2019 increased by NT$241,326 thousand.

  • 345 -

 Wireless Network Card

For the year 2019, due to sales volume increase, resulting in favorable sales volume variance of NT$ 25,187,628 thousand, unfavorable sales price variance of NT$ 405,358 thousand, and the favorable sales mix variance was NT$ 22,715,776 thousand. The unfavorable cost-volume variance derived from sales volume-cost was NT$ 20,635,963 thousand, the favorable cost-price variance was NT$ 334,380 thousand, and the favorable mix variance was NT$ 18,738,222 thousand. To summarize the above, the gross profit of wireless gateway sales in 2020 compared with that in 2019 increased by NT$503,133 thousand.

 Wireless Modules

For the year 2019, due to sales volume decrease, resulting in unfavorable sales volume variance of NT$897,671 thousand, favorable sales price variance of NT$ 184,853 thousand, and the unfavorable sales mix variance was NT$ 82,812 thousand. The favorable cost-volume variance derived from sales volume-cost was NT$ 789,766 thousand, the unfavorable cost-price variance was NT$ 62,587 thousand, and the favorable mix variance was NT$ 28,038 thousand. To summarize the above, the gross profit of wireless gateway sales in 2020 compared with that in 2019 decreased by NT$40,413 thousand.

  • 346 -

III.CASH FLOW

1.Cash Flow Analysis

SH FLOW
Cash Flow Analysis
Year
Items
2020		 2019 (%)
Cash flow ratio (10.03) 60.60 (116.55)
Cash flow adequacy ratio 40.41 163.63 (75.30)
Cash flow reinvestment
ratio		 (8.35) 21.47 (138.89)

Analysis of Deviation:

(1)In 2020, due to increase in net cash outflow from operating activites, resulting in 2019 cash flow ratio, cash flow adequacy ratio, and cash re-investment ratio decrease by 117%, 75%, and 139% respectively.

(2)Remedial Actions for Liquidity Shortfall: As a result of positive operating cash flows and cash on-hand, remedial actions are not required.

(3)Cash Flow Projection for Next Year:

Unit: NTD, All in Thousand

Beginning Cash
Balance (A)		 Cash Flow from
operating activities
(B)		 Cash Outflow
(C)		 Cash Surplus
(Deficit)
(A)+(B)-(C)		 Remedies for Cash Deficit Remedies for Cash Deficit
Investment
Plans		 Financing
Plans
1,925,250 336,456 1,924,798 336,908 - -

Analysis of Cash Flow:

(1)Operating Activities: Projected cash inflow from operatin activities is NT$336,456 thousand.

(2)Investment and Financing Plans: In the coming year, the Company is expected to invest approximately NT$338,446 thousand in Taipei Zhonghe District office, equipment, and software deferred assets, obtain long-term investment of NT$280,000 thousand, repay bank loans of NT$560,000 thousand, and issue cash dividends of NT$746,352 thousand.

IV.Impact of major capital expenditures on the Company’s financial operations for the most recent fiscal year: As of the date of this annual report’s publication, there are no major capital expenditures.

  • 347 -

V. REINVESTMENT POLICIES, MAIN REASONS FOR PROFITS/LOSSES GENERATED, IMPROVEMENT PLANS, AND INVESTMENT PLANS FOR THE COMING YEAR:

Reinvestment Analysis

Unit: NTD/US, All in thousands

Investee Plan Long-term
Investment
Carrying
Amount		 Policy Main Reasons for
Profit/Loss		 Improvement
Plans
Future
Invest
ment
Plans
Gemtek Investment
Co.,Ltd.		 Investment 846,419
Expand
investments in
telecommunicatio
ns industry and
relatedfields		 Profit from financial
investment.
Maintain
initial
investments		 -
G-Technology
Investment Co.,Ltd.		 Investment 4,313,409
Reinvest in
subsidiaries
located in the
Mainland Area		 Recognition of -

profit and loss due
Maintain
to reinvestment in
initial
subsidiaries located
investments
in the Mainland
Area
Brightech
International Co.,
Ltd		 Investment 69,191
Reinvest in
subsidiaries
located in the
Mainland Area		 Recognition of -

profit and loss due
Maintain

to reinvestment in
initial
subsidiaries located
investments
in the Mainland
Area
Ampak
Technology, Inc.		 Packaging and testing
of high-frequency
wireless
communication
modules		 1,048,268
Expand
distribution
channel		 Continuous -
manufactu
Achieved expectd ring

profit
process
developme
nt
Wi Tek Investment
Co.,Ltd		 Investment 20,950
Reinvest in
subsidiaries
located in the
MainlandArea		 -
Maintain
Focuses on research
initial
and development.
investments
Browan
Communications
Incorporation		 Telecommunications
Industry		 10,656 Strategical
alliance		 Sales performances Maintain -

yet to be		 initial

improved.		 investments
Gemtek Vietnam
Co., Ltd.		 Telecommunications
Industry		 514,927
Part of corporate
strategy to
enhance
competitiveness
via business
expansion,
satisfying
customer
demands, and
acquiring
cost-effective
labor and
manufacturing
plant.		 -
Maintain
Profit yet to be
initial

realized.
investments
  • 348 -

VI.Organizational Risk Management

Risk Management Framework

Over the years, Gemtek has continued to strengthen its corporate risk management framework by adopting internal control practices that involve risk detection, evaluation, reporting, and handling.The Internal Control System developed by Gemtek is implemented on two levels. Corporate divisions and members form the Primary Level, which is the first line of defense, is to identify underlying risks, and to assess and manage ongoing risk mitigation policies. The Advanced Level consists of individuals from the upper level of the management hierarchy (i.e. Deputy General Manager and above) who are in charge of evaluating the feasibility of business and its risk factors, while final decisions are subject to the consideration of the chairman of the board.

Despite having comprehensive risk control measures in place, the Company has not established a permanent risk management division to overlook relevant matters. The plan is for all employees to be aware of risks and escalate matters at all times to prevent any avoidable events. In cases of emergencies, the Company shall activate its Business Continuity Management Plan to support business operations. The Company’s risk management framework is as illustrated in the following chart.

Risk Management Framework

Evaluation of Risk Factors Direct Risk Management
(Divisions)
(PrimaryLevel)		 Risk Assessment and Control
(Advanced Level)
I. Climate change
II. Impact on production capacity
caused by natural disasters
III.Fire emergencies and power
outages
IV. Terrorist attack
V. Supply shortages
VI. Financial risks
VII. High-risk investments,lending
funds to other parties, and
derivative transactions
VIII. Investment in the Mainland area
and subsidiaries
IX. Expansion of manufacturing plant
andproduction		 Corporate Efficiency
Division
(Factory anagement, Human
Resources, General
Management, Corporate
Safety)
Manufacturing Division,
Information Division
Logistics Division,
Human Resources Division
Logistics Division
Finance Division
Finance Division
Finance Division
Factory Management
Division		 Activation of Business
Continuity Management Plan
and Implementation:
(General Manager, COO,
Manufacturing Division, Sales
Division, Logistics Division,
Human Resources Division,
General Management
Division, Factory
Management Division,
Corporate Safety Division
etc.)
Final conclusions of the
chairman shall be reported to
the board of directors
  • 349 -

Risk Management and Assessment:

(I) Impacts of interest and foreign exchange rate fluctuations and inflation on the Company’s profit and loss, and countermeasures:

(1)Interest Rate

In March 2020, in response to the Covid-19 global outbreak, the US FED enacted an extremely loose monetary policy with measures such as unlimited quantitative easing and reduced interest rates. The FED had lowered interest rates twice by 100 basis points in an effort to prevent the financial market from crashing. The gesture restarted its near-zero interest rate policy to spur economic activity and bring financial order back on track. In the midst of the crisis, Gemtek continues to expand its business operations by seeking various sources of funding. In addition to raising equity capital, Gemtek also tries to offset foreign currency risks for its foreign currency denominated loans by borrowing at a fixed or floating rate based on forward guidance.

The carrying amounts of financial assets and financial liabilities that are exposed to interest rate risks as of the Group’s balance sheet date are as follows:

Fair value interest rate risk
－Financial assets
－Financial liabilities
Cash flow interest rate risk
－Financial assets
－Financial liabilities		 December 31,2020
$ 82,364
2,261,397
1,884,043
-		 December 31,2019
$ 1,528,120
1,523,882
1,280,899
93,000

(2) Foreign Exchange Rate Fluctuations and Inflation

The Company’s foreign currency positions are due to the selling of goods and purchasing of supplies abroad. In order to mitigate exposures to exchange rate fluctuations and inflation, the Company uses currency swaps to hedge currency risks. If the remaining foreign currency positions are higher than expected, the cash will be sold by spot transaction. The above measures should be sufficient for the Company to mitigate exposure to foreign exchange risks.

Significant foreign exchange gain and loss (Realized and unrealized), as follows:


Foreign
Currency
NTD
RMB
 For the Year Ended December 31, 2020
Exchange Rate
Net Foreign
Exchange
Gains(Losses)
1（NTD：NTD）$ 11,288
4.3648（RMB：NTD）(
62,220)

($ 50,932)		 For the Year Ended December 31, 2020
Exchange Rate
Net Foreign
Exchange
Gains(Losses)
1（NTD：NTD）$ 11,288
4.3648（RMB：NTD）(
62,220)

($ 50,932)		 For the Year Ended December 31, 2019 For the Year Ended December 31, 2019 For the Year Ended December 31, 2019
Exchange Rate
1（NTD：NTD）
4.3648（RMB：NTD）
Exchange Rate

1（NTD：NTD）
4.2975（RMB：NTD）
Net Foreign
Exchange
Gains(Losses)

(
(		 (

(		 $ 63,687 )
20,374
$ 43,313)

The impact of foreign currencies on gain and loss listed in the above table mainly derived from the USD-denominated non-derivative financial assets and liabilities of the Group that are still in circulation on the balance sheet date and have not undergone cash flow hedging.

  • 350 -

  • (3)Countermeasures:

  • A. Accounts receivable and accounts payable are denominated in US dollars to reduce the impact of exchange rate fluctuations on overall profitability.

  • B. Derivative commodity transactions currently undertaken are to hedge assets and liabilities that are denominated in foreign currency. And in accordance with the "Procedures for Financial Derivatives Transactions", the Company conducts derivatives transactions through banks and regularly assesses the profits and losses to reduce the impact of exchange rate fluctuations on overall profitability.

  • C. The forex team collects market information on exchange rates, interest rates, and financial reports on a daily basis. Meetings are held to discuss strategies and measures to uphold movements from the market. In case of emergencies, matters are escalated immediately to senior executives to take appropriate actions.

  • D. Evaluate the interest rate of bank loans regularly. Maintain a good relationship with the bank to obtain more favorable terms or treatment with regard to rates and fees to alleviate the impact of interest rate changes on the Company's profit and loss.

  • E. In view of rising prices in raw materials, combating inflation has become a critical issue. Due to drastic changes in the market, the Company has drawn long-term plans to make advanced purchases with material suppliers in addition to finding alternative materials and implement more active procurement approaches. Since the supply chain can be threatened by the possible occurrence of a relatively longer material lead time, the question on how to satisfy soaring demands while responding to unpredictable factors, as in supply chain disruptions, shortage of labor, and cost control on various non-productive raw materials such as inventory, have become new topics for consideration. It now seems important to work with agents that are able to provide warehouse services to avoid the risks of supply shortages and cost fluctuations.

(II) Policies for high-risk, high-leverage investments, capital lending, endorsements, guarantees, and derivatives transaction, main reasons for the profits or losses generated thereby, and countermeasures:

  • (1) The Company focuses on main business operations and does not engage in high-risk, high-leverage investments.

  • (2)Loaning of funds:

Unit: NTD/US thousands Unit: NTD/US thousands Unit: NTD/US thousands Unit: NTD/US thousands Unit: NTD/US thousands Unit: NTD/US thousands
Financing Financing
Company’s
Lender Borrower Financial
Statement
Account		 Highest
Balance for
the Period		 Ending
Balance		 Actual
Amount
Borrowed		 Interest
Rate
Limit for
Each
Borrower
（note1）
Total
Financing
Amount
Limit
（note 1）
Gemtek
Electronics
(Suzhou)
Co., Ltd.		 Gemtek
Electronics
(ChangShu)
Co., Ltd.		 Short-term
borrowings		 $ 52,524
$ 52,524
$ 52,524
3.60
$85,377
$85,377
  • 351 -

(3)Endorsement: None

  • (4) The Company enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risks. The purpose of currency hedging is to mitigate the impact of possible FX losses due to rate fluctuation other than profiting from currency arbitrage. If all elements of the Company’s business operations and clients remain unchanged, the Company will continue to take similar financial measures to hedge currency risks. The Company focuses on main business operations and does not engage in other derivative transactions. The Company also abide by the “Procedures for Acquisition or Disposal of Assets” and relevant regulations to accurately disclose information on all transactions.

  • (III) Research and development (R&D) projects and estimated R&D expenditures:

  • Please see page for “Business Operation Overview – R&D”.

  • (IV)Impacts of changes in domestic and foreign government policies and laws on the Company’s financial operations, and future countermeasures:

  • The Company has gradually moved its low-margin productions to the Mainland. Due to the fact that the Mainland still imposes trade and foreign exchange controls, the Company’s Mainland operations may be at risk of being affected by possible changes from the Mainland’s policy. The Company continues to study and follow closely with the relevant laws and regulations of the Mainland to mitigate any negative impacts caused by the changes.

  • (V) Impacts of industry and technology changes to the Company’s financial operations, and future countermeasures:

    • As a sector of the high-tech industry, the rapid growth of the telecommunication industry has accelerated the innovative development and advancement of numerous wireless network communications products. Based upon this economic atmosphere, the Company should strive to keep up with the technology trends to continue to grow and expand its business. For decades, the Company’s operations were mainly focused on the research and development of wireless network communications equipment. The Company has been a leader in the field propelled by a group of dedicated professionals, backed by cutting edge manufacturing equipment and technology. The Company is now working towards a more diversified R&D approach, and has continued to innovate over the years. Technological evolution will contribute to the development of the Company’s business. However, successful business expansion must also be accompanied by a good management and cost control system, as well as a strong financial backbone to allow the Company to grow at a steady pace. Therefore, the Company has to strengthen its internal controls on all aspects to maintain business efficiency.

(VI) Impacts of changes in corporate image on the company's crisis management and future countermeasures:

The Company is dedicated to the development and manufacturing of wireless network products and has always upheld a good reputation throughout its years of doing business. The Company has no negative publicity and therefore the corporate image has never been affected.

(VII) Expected benefits and potential risks related to mergers and acquisitions: The Company has no plans for mergers and acquisitions as of the publication of this report. However, if the Company does have plans in the future, it will take proactive

  • 352 -

measures to assess whether the merger can bring synergies to the company as well as guarantee the rights and interests of shareholders.

(VIII) Expected benefits and potential risks of capacity expansion:

The Company has no plans for capacity expansion as of the date of the publication of this report.

  • (IX) Risk of procurement and sales concentration, and future countermeasures: (1)Purchases:

The Company is a supplier of wireless network equipment and products, therefore, it is relatively important to maintain a close relationship with upstream and downstream manufacturers throughout the supply chain. And due to the fact that wireless network product specifications need to be certified in particular, in the process of strategic sourcing, the Company’s main approach is to partner with the selected few who are capable of developing the necessary chip modules firsthand. The Company is well aware that the approach would result in buyer concentration in which supply disruption may be a lurking issue, therefore, inventory management and advanced preparation of supplies and raw materials are the key measures to avoid such risks.

  • (2)Sales:

The Company’s major clients at present are retail distributors located in the United States and Europe on account of the region’s soaring demand for wireless communication products. In addition, the need for embedded modules found in products such as laptop computers is equally on the rise, resulting in the increase of the Company’s worldwide OEM sales volume over the years. In order to prevent sales concentration in the market, the Company plans to take proactive measures in building new marketing channels by strengthening cooperation with manufacturers located across Japan and Asia.

  • (X) Impacts and risks arising from major transfer or replacement of shares by Directors, Supervisors, or shareholders with over 10% of shares in the Company: None

  • (XI) Impact of change in Company management and associated risks: The Company currently has 363,031,547 common shares outstanding. The total number of shares held by directors are 15,305,580 shares, accounting for approximately 4.22% of the aggregate number of issued shares. The directors of the Company are committed in ensuring the high standards and quality performance of the Company are continuously upheld and recognized by its shareholders.

(XII) Litigious or non-litigious matters:

  • (1) The major litigious, non-litigious or administrative disputes that have been concluded by means of a final and definitive judgment, or are still under litigation, where such a dispute could materially affect shareholders' equity or the prices of the company's securities, the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of printing of this annual report shall be disclosed:None (2) The major litigious, non-litigious or administrative disputes that have been concluded by means of a final and definitive judgment, or are still under litigation that involves any director, any supervisor, the general manager, any person with actual responsibility of the Company, any major shareholder holding a stake greater than 10

  • 353 -

%, and/or any company or companies controlled by Gemtek, and the status of the dispute as of the date of printing of this annual report shall be disclosed: None

(XIII) Other material risks and countermeasures:

  • (1) Macroeconomic deterioration may reduce the Company's profits

In recent years, the Company has experienced extremely high growth rates due to the rapid development of the wireless communications industry. However, in the event of economic reversal fueled by macroeconomic instability, consumer’s willingness to pay and global demands may possibly decline, which would cause direct impact to the wireless communications market and the company's profitability.

(2) Consumer acceptance and use of new technology may not be as high as expected Wireless communications is an emerging technology. The Company is a highly-dedicated wireless communications system manufacturer that focuses on the fundamental research and development of the technology as well as the creation of multiple trending products and components in the market. Nevertheless, if consumer acceptance and use of new technology does not turn out as high as expected, the market direction will bring adverse impacts to the Company’s future business performances.

(3) Price wars will affect the Company's profit.

Competition among wireless communications system manufacturers has been intense over the past years. Business competitors have been cutting prices and finding ways to scale down profit margins in order to win clients. If the price war persists, low margins will cause a long-term impact on the Company’s ability to profit.

(4) Downstream market size is relevant to the Company’s sales outcome. Embedded modules for laptop computers has contributed a fair share to the Company’s sales revenue in recent years aside from conventional wireless network cards and routers sold to existing customer base. If demands for laptop computers should drop dramatically, the ensuing effects would not be optimistic for the Company.

(5) The Company adheres to its steady operation philosophy and has been able to maintain a high level of business growth in the past three years. Nevertheless, in truth, one cannot use the Company’s past operating performances to earn a guaranteed profit from investing in the Company’s stock as the market price is constantly fluctuating under the influence of systematic risk-factors. Economic cycles and price volatility may result in unfavorable outcomes for investors.

(6) The Company needs to draw an effective talent management strategy. Talented people are the foundation of the Company’s innovative drive, allowing the Company to constantly develop, operate, and maintain competitiveness in the industry. The Company must continue to improve and enhance its employee welfare and work environment as a means to retain and attract talents, keeping the source of innovative capacity abundant and secure.

(7) Natural disasters and severe infectious diseases may cause adverse impacts on the Company’s operations

Taiwan has experienced large-scale earthquakes and severe hurricanes as well as mass infectious diseases in the past. Both natural disasters and epidemics have caused great damage to Taiwan’s overall economic environment. The recurrence of such events will bring negative impacts to the Company's operations.

(8) Intellectual property disputes

R&D capabilities and manufacturing abilities are the core of the Company's operations. Therefore, protecting intellectual property rights is extremely vital to the Company. Patents applications are filed immediately once the Company finds the

  • 354 -

results of a R&D project suitable for protection. As the number of the Company’s patents continue to increase, potential disputes over intellectual property rights with companies who have similar endeavors in the industry may begin to emerge. Litigation may have a negative effect on the Company’s bottom line. (9) Business risks in China

The Company’s manufacturing policies in recent years focuses on the development of more diversified, high value-added products made in limited quantities in Taiwan. Low-margin products are now mostly manufactured in the Mainland. In view of the unstable cross-strait relations, any deterioration of the status quo will inevitably cause an adverse effect on the Company's operations.

VII.Other Material Matters: None

  • 355 -

VIII.Special Disclosure

I.Information on the Company Affiliates

  • (1) Corporate Organization Chart

Dec. 31, 2020

==> picture [470 x 226] intentionally omitted <==

(2) Basic information on affiliates

Dec. 31, 2020; Unit: NTD/US thousands

Names of affiliates Date of
Incorporation		 Address Paid-in
Capital		 Principal business
Gemtek Investment
Co., Ltd.		 Mar 23,2001 15-1, Zhonghua Road, Hsinchu
Industrial Park, Hukou,
Hsinchu,Taiwan
NT$769,457
Investment
G-Technology
Investment Co.,
Ltd		 Oct 31,2002 PO BOX 1787, George
Town,Grand Cayman		 US$78,600 Investment
Brightech
International Co.,Ltd
Oct 11,2002		 Suite 802, St James Court St
Denis Street, Port
Louis,Mauritius		 US$6,145 Investment
Ampak International
HoldingsLtd		 Oct 12,2005 Portcullis TrustNet Chambers
P.O.Box 1225Apia,SAMOA		 US$36,000 Investment
WiTek Investment
Co., Ltd		 May 22,2007 4th Floor,Harbour
Centre,P.O.Box613,Grand
Cayman KY1-1107,Cayman
Islands		 US$4,000 Investment
Gemtek Vietnam
Co.,Ltd		 Nov 7,2018 Second Tongwen Industrial
Zone, Baishang Township,
Weixian County, Henan
Province, Vietnam		 USD20,000 Manufacturing
Gemtek CZ,s.r.o. Nov 30,2009 Chebská 555/7, 322 00
Plze-Kimice Czech Republic		 US$692 Manufacturing
  • 356 -
Names of affiliates Date of
Incorporation		 Address Paid-in
Capital		 Principal business
Free PP Worldwide
Co.,Ltd		 Mar 6,2017 No.24,Lesperance
Complex,Providence Industrial
Estate,Mahe,Seychelles
US$3,340		 Investment
Gemtek Electronics
(Suzhou) Co., Ltd		 Nov 11,2002 No. 58, Yangdong Road,
Loufeng High-tech
Development Zone, Suzhou
Industrial Park		 US$8,350 Manufacturing
Gemtek Electronics
(Kunshan) Co., Ltd.		 May 20,2004 88 Xinzhu Road, Export
Processing Zone, Kunshan
City, Jiangsu Province		 US$15,000 Manufacturing
Gemtek Electronics
(ChangShu) Co., Ltd		 Feb 17,2006 NO.1, Zheng Wen Road. New
& High Tech Industrial Park,
Changshu Economic
Development Zone , JiangSu		 US$36,000 Manufacturing
ANTEK
NETWORKS INC.		 May 18,2000 15-1, Zhonghua Road, Hsinchu
Industrial Park, Hukou,
Hsinchu, Taiwan
NT$29,000		 電器批發業
Ampak Technology,
Inc.		 Dec 14,2000 15-1, Zhonghua Road, Hsinchu
Industrial Park, Hukou,
Hsinchu, Taiwan
NT$602,329		 Packaging and
testing of
high-frequency
wireless
communication
modules
Sparklan
Communications
Inc.		 Nov 13,2002 8F., No. 257, Sec. 2, Tiding
Blvd., Neihu Dist., Taipei
City , Taiwan		 NT$102,034 Communications
industry
Browan
Communications
Incorporation		 Oct 26,1999 15-1, Zhonghua Road, Hsinchu
Industrial Park, Hukou,
Hsinchu,Taiwan
NT$460,000		 Communications
industry
Browan
Communications
(Xi’an) Inc		 Aug 24,2007 6 F, No. 72, Keji 2nd Road,
High-tech Zone, Xi'an		 US$4,000 Information
Software Service
Industry
Primax
Communication
(B.V.I.)Inc.		 Jun 1,2001 P.O.Box3444,Road
Town,Tortola,British Virgin
Islands.		 US$2,350 Investment
PT. South Ocean Mar 12,2010 Menara Karya, 28th Floor, Jl.
H.R. Rasuna Said Blok, X-5,
Kav.1-5, Jakarta, 12950
Indonesia.		 US$238 Communications
industry
BandRich Inc. Apr 11,2006 6F., No. 71, Zhouzi St., Neihu
Dist., Taipei City Taiwan		 NT$203,400 Communications
industry
5V Technologies,
Taiwan		 Mar 28,2005 6F., No. 19-9, Sanchong Rd.,
Nangang Dist., Taipei City ,
Taiwan		 NT$91,912 Communications
industry

(3) Where there is considered to be a controlled and subordinate relation, the information of the same shareholders: None.

(4) Information on directors, supervisors, and presidents of affiliate.

  • 357 -
Company name Title Names or representative Shares Ratio of
shareholding
Gemtek Investment Co., Ltd. Director Gemtek Technology Co., Ltd. : Howard Chen、Kevin Yang、Randy Hsu 76,945,670
100.00%
G-Technology Investment Co.,Ltd Director Gemtek Technology Co., Ltd. : Howard Chen 78,600,020
100.00%
Brightech International Co., Ltd Director Gemtek Technology Co., Ltd. : Jorson Tsai 6,145,000
100.00%
WiTek Investment Co.,LTD Director Gemtek Technology Co., Ltd. : Howard Chen 4,000,000
100.00%
Gemtek Vietnam Co., Ltd. Director Gemtek Technology Co., Ltd. : Randy Hsu - 100.00%
Ampak International Holdings Ltd Director G-TECHNOLOGY INVESTMENT CO., LTD : Jorson Tsai 36,000,000
100.00%
Free PP Worldwide Co.,Ltd Director G-TECHNOLOGY INVESTMENT CO., LTD : Howard Chen 1,002,000
30.00%
Gemtek Electronics (Suzhou) Co., Ltd. Director BRIGHTECH INTERNATIONAL CO.,LTD : Jorson Tsai 6,718,410
80.46%
Gemtek Electronics (Kunshan) Co., Ltd. Director G-TECHNOLOGY INVESTMENT CO., LTD : Jorson Tsai 15,000,000
100.00%
ANTEK NETWORKS INC. Director Free PP Worldwide Co.,Ltd : Howard Chen、Kevin Yang、Wala Tan 2,883,980
99.45%
Browan Communications (Xi’an) Inc Director WiTek Investment Co.,LTD : Howard Chen 4,000,000
100.00%
Ampak Technology, Inc. Director Gemtek Technology Co., Ltd. : Charlin Lin 20,100,595
33.37%
GemtekElectronics(ChangShu) Co., Ltd. Director Ampak International Holdings Ltd : Stephen Liao 36,000,000
100.00%
Browan Communications Incorporation Director Gemtek Technology Co., Ltd. : Howard Chen 21,017,219
45.69%
Gemtek CZ,s.r.o. Director G-TECHNOLOGY INVESTMENT CO., LTD 12,000,000
100.00%
Primax Communication (B.V.I.) Inc. Director G-TECHNOLOGY INVESTMENT CO., LTD: Jorson Tsai 2,297,000
100.00%
PT. South Ocean Director G-TECHNOLOGY INVESTMENT CO., LTD : Howard Chen 24,000
95.00%
BandRich Inc. Director/
Supervisors		 Gemtek Investment Co., Ltd. : Randy Hsu、Fred Yeh、Charlin Lin 5,500,000
27.04%
5V Technologies, Taiwan Director Gemtek Investment Co., Ltd. : Arena Yao、Chungen Wu、Sunrise Ho 9,000,000
97.92%
  • 358 -

II.Business Operations Overview

(1)Financial Status and Result of Affiliated Companies

Business Operations Overview
Financial Status and Result of Affiliated Companies		 Business Operations Overview
Financial Status and Result of Affiliated Companies		 Business Operations Overview
Financial Status and Result of Affiliated Companies		 Business Operations Overview
Financial Status and Result of Affiliated Companies		 Business Operations Overview
Financial Status and Result of Affiliated Companies		 Business Operations Overview
Financial Status and Result of Affiliated Companies		 Business Operations Overview
Financial Status and Result of Affiliated Companies		 Business Operations Overview
Financial Status and Result of Affiliated Companies		 Business Operations Overview
Financial Status and Result of Affiliated Companies
Dec. 31,2020 / Unit: NTD,USD,IDR,CZK thousands
Company name
Currency
Paid-in
Capital
Total assets Total liabilities Net ValueOperating
income
Operating
profit
Current period
net profit
Gemtek Investment Co., Ltd.
NTD
769,457
870,686
24,267
846,419

(229)
188,980
G-TECHNOLOGY INVESTMENT CO.,LTD
USD
78,600
151,515
61
151,454

(680)
(956)
BRIGHTECH INTERNATIONAL CO.,LTD
USD
6,145
2,429

2,429

(3)
(21)
Wi TEK INVESTMENT CO.,LTD
USD
4,000
736

736


(327)
Gemtek Vietnam Co., Ltd.
USD
20,000
78,391
60,310
18,081
180,557
2,015
1,932
AMPAK INTERNATIONAL HOLDINGS LTD.
USD
36,000
37,370

37,370


721
Gemtek Electronics (Suzhou) Co., Ltd.
RMB
68,870
19,561
1
19,560
_
(587)
(149)
Gemtek Electronics (Kunshan) Co., Ltd.
RMB
124,148
1,182,094
596,696
585,398 1,616,517
3,712
(9,131)
GemtekElectronics(ChangShu) Co., Ltd.
RMB
241,419
542,544
298,711
243,833 1,143,620
(332)
4,396
ANTEK NETWORKS INC.
NTD
29,000
5,236
46,203
(40,967)
703
(10,576)
(8,536)
Ampak Technology, Inc.
NTD
602,329
1,874,762
628,215 1,246,547 2,417,460
292,208
286,468
Sparklan Communications Inc.
NTD
102,034
369,857
49,740
320,117
256,097
78,371
66,361
Browan Communications Incorporation
NTD
460,000
165,069
121,271
43,798
417,189
10,320
6,898
Browan Communications (Xi’an) Inc
RMB
28,570
5,231
432
4,799
332
(2,259)
(2,245)
Company name Currency Paid-in
Capital		 Total assets Total liabilities Net Value Operating
income		 Operating
profit		 Current period
net profit
Gemtek Investment Co., Ltd. NTD 769,457
870,686
24,267
846,419
_
(229)
188,980
G-TECHNOLOGY INVESTMENT CO.,LTD USD 78,600
151,515
61
151,454
_
(680)
(956)
BRIGHTECH INTERNATIONAL CO.,LTD USD 6,145
2,429
_
2,429
_
(3)
(21)
Wi TEK INVESTMENT CO.,LTD USD 4,000
736
_
736
_
_
(327)
Gemtek Vietnam Co., Ltd. USD 20,000
78,391
60,310
18,081
180,557
2,015
1,932
AMPAK INTERNATIONAL HOLDINGS LTD. USD 36,000
37,370
_
37,370
_
_
721
Gemtek Electronics (Suzhou) Co., Ltd. RMB 68,870
19,561
1
19,560
_
(587)
(149)
Gemtek Electronics (Kunshan) Co., Ltd. RMB 124,148
1,182,094
596,696
585,398		 1,616,517
3,712
(9,131)
GemtekElectronics(ChangShu) Co., Ltd. RMB 241,419
542,544
298,711
243,833		 1,143,620
(332)
4,396
ANTEK NETWORKS INC. NTD 29,000
5,236
46,203
(40,967)
703
(10,576)
(8,536)
Ampak Technology, Inc. NTD 602,329
1,874,762
628,215		 1,246,547 2,417,460
292,208
286,468
Sparklan Communications Inc. NTD 102,034
369,857
49,740
320,117
256,097
78,371
66,361
Browan Communications Incorporation NTD 460,000
165,069
121,271
43,798
417,189
10,320
6,898
Browan Communications (Xi’an) Inc RMB 28,570
5,231
432
4,799
332
(2,259)
(2,245)
  • 359 -
Free PP Worldwide Co.,Ltd USD 3,340
1,637
_
1,637
_
(157)
(46)
Primax Communication (B.V.I.) Inc. USD 2,350
586
_
586
_
_
(4)
PT. South Ocean IDR 2,250,000
1,173,767
23,387		 1,150,380
_
_
_
BandRich Inc. NTD 203,400
24,170
2,615
21,555
8,882
(9,664)
(10,116)
Gemtek CZ,s.r.o. CZK 12,000
50,082
44,988
5,094
152,778
8,020
4,010
5V Technologies, Taiwan NTD 91,912
142,956
143,381
(425)
221,063
(13,088)
(12,195)

(2)Consolidated Financial Report of Affiliated Companies: Please see pages125 -235.

(3)Relationship Report of Affiliated Companies: None

III. Private placement of securities of the past year as of the publication date of this Annual Report: None.

IV.Holding or disposal of the Company's shares by the subsidiaries of the most recent year as of the publication date of this Annual Report: None.

V.Other necessary supplementary items to be included: None.

VI. Any event which has a material impact on the shareholders' equity or securities prices as prescribed in Subparagraph 2, Paragraph 2, Article

36 of the Securities and Exchange Act that has occurred in the most recent year as of the publication date of this Annual Report: None.

  • 360 -

Gemtek Technology Co., Ltd.

Chairman: Hong Wen Chen

  • 361 -

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