HannsTouch - Annual Report 2020 | FinancialReports.eu

Stock ID: 3049

HannsTouch Solution Inc. 2020 Annual Report

Publication date: April 19, 2021

Annual report available at:

Market Observation Post System of Taiwan Stock Exchange Corporation: http://mops.twse.com.tw
Company website: http://www.hannstouch.com

------Disclaimer----

This is a translation of the 2020 Annual Report of HannsTouch solution Inc.. The translation is for Reference only. If there is any discrepancy between the english version and chinese version, The chinese version shall prevail

1. Name, title, contact number, and e-mail of spokesperson and acting spokesperson:

Spokesperson: Vice Director Chen Chun-Yuan

Acting Spokesperson: (Not available)

TEL: (02)5555-3377

E-mail: [email protected]

2. Address and contact number of the headquarter, branches and plant sites:

Headquarter: No. 7, Beiyuan 1st Road (Southern Taiwan Science Park), Shanhua District, Tainan City 74149 TEL: (06)505-3959

Taipei Office: 5F, No. 21, Lane 168, Xingshan Road, Neihu District, Taipei City 11469

TEL: (02)5555-3377

3. Name, address, website, and contact number of stock transfer agency:

Name: Share Administration Office, HannsTouch Solution Inc.

Address: 8F, No. 398, Xingshan Road, Neihu District, Taipei City 11469

Website: http://stock.walsin.com TEL: (02)2790-5885

4. Name of CPA and the name, address, website and contact number of the accounting firm for the latest financial

report:

Auditors: CPA Ching-Chang Chen, CPA Kevin Lin

Name of accounting firm: PwC Taiwan

Address: 27F, No. 333, Section 1, Keelung Road, Taipei City

Website: http://www.pwc.tw

TEL: (02)2729-6666

5. Name of overseas exchange where securities are listed, and method of inquiry: Not applicable

6. Company website: http://www.hannstouch.com

HannsTouch Solution Inc.

Table of Content

	Table of Content
One.	Report to Shareholders ................................................................................................................................	1
Two.	Company Profile ...........................................................................................................................................	8
Three. Corporate Governance Report
	1. Organization .................................................................................................................................................. .	11
	2. Background information of directors, supervisors, the President, vice presidents, assistant vice presidents,
	and heads of various departments ..................................................................................................................... .	13
	3. Compensation paid to directors, supervisors, the President, and vice presidents in the last year .................. .	19
	4. Corporate governance ....................................................................................................................................	24
	5. Disclosure of audit fees ..................................................................................................................................	58
	6. Change of CPA ...............................................................................................................................................	58
	7. Any of the Company’s Chairperson, President, or any manager involved in financial or accounting affairs
	being employed by the accounting firm or any of its affiliated company within the most recent year ..............	58
	8. Details of shares transferred or pledged by directors, supervisors, managers, and shareholders with more
	than 10% ownership interest in the last year, up till the publication date of this annual report ..........	59
	9. Relationships characterized as spouse or second-degree relatives or closer among top-ten shareholders .....	60
	10. Investments jointly held by the Company, the Company's directors, supervisors, managers, and enterprises
	directly or indirectly controlled by the Company; disclose shareholding in aggregate of the above parties ......	60
Four.	Capital Overview
	1. Capital and outstanding shares .......................................................................................................................	61
	2. Disclosure relating to corporate bonds (including offshore corporate bonds) ................................................	67
	3. Preferred shares ..............................................................................................................................................	67
	4. Depository receipts .........................................................................................................................................	67
	5. Employee warrants .........................................................................................................................................	67
	6. Issuance of new shares for business acquisitions or share exchange .............................................................	67
	7. Progress on planned use of capital .................................................................................................................	67
Five.	Operational Overview
	1. Business activities ..........................................................................................................................................	68
	2. Market, production and sales overview ..........................................................................................................	76
	3. Employee information in the last 2 years up till the publication date of this annual report ...........................	81
	4. Contribution to environmental protection ......................................................................................................	81
	5. Labor-management relations ..........................................................................................................................	82
	6. Major contracts ...............................................................................................................................................	85
Six.	Financial Overview

	1. Summary balance sheet and statement of comprehensive income for the last 5 years ...................................	86
	2. Financial analysis for the last 5 years .............................................................................................................	90
	3. Audit Committee's review report on the latest financial statements ...............................................................	94
	4. Latest consolidated financial statements ........................................................................................................	95
	5. Latest standalone financial statements ...........................................................................................................	95
	6. Financial distress encountered by the Company and affiliated enterprises in the last year, up till the
	publication date of this annual report .................................................................................................................	95
Seven. Review and Analysis of Financial Position and Business Performance, and Risk Management Issues
	1. Financial position ...........................................................................................................................................	96
	2. Financial performance ....................................................................................................................................	97
	3. Cash flow .......................................................................................................................................................	97
	4. Material capital expenditures in the last year and impact on business performance ......................................	98
	5. Investment policy in the most recent year, causes of profit or loss incurred, and any improvements or
	investments planned for the next year ................................................................................................................	98
	6. Analysis and assessment of risk issues ...........................................................................................................	99
	7. Other material issues ......................................................................................................................................	102
Eight. Special Disclosure
	1. Information of affiliated companies ...............................................................................................................	103
	2. Private placement of securities in the last year up till the publication date of this annual report ...................	106
	3. Holding or disposal of the Company's shares by subsidiaries in the last financial year, up till the publication
	date of this annual report ....................................................................................................................................	106
	4. Other supplementary information...................................................................................................................	106
Nine.	Occurrences of Significant Impact on Shareholders' Equity or Security Prices
	Occurrences significant to shareholders' interests or securities price, as defined in Subparagraph 2, Paragraph
	2, Article 36 of the Securities and Exchange Act, in the last year up till the publication date of annual report .	107
Appendix 1. Consolidated Financial Statements and Independent Auditor's Report of the Most Recent Year ..........		108
Appendix 2. Standalone Financial Statements and Independent Auditor's Report of the Most Recent Year .............		190

One. Report to Shareholders

Ladies and gentlemen:

2020 continued to be a year of transformation for HannsTouch Solution Incorporated. We proactively sought breakthroughs by advancing the process yield rate and improving the uptime of production lines despite the impacts from COVID-19. We expedited the development of high-end technologies and were devoted to improving the market share of new products. With the macro strategy adjusted, we managed to reinforce the control over the internal cost, stabilize the throughput and revenue, optimize the overall financial structure and solvency, and continue to optimize the operational efficacy while moving towards smart manufacturing, technological rotting, and diversified transformation.

Since it was first established, with “being the best partner in the smart life of mankind and becoming a world-class outstanding company” as the vision, HannsTouch has placed its focus on touch application and TFT backplane solutions. It is a professional manufacturer of AMOLED high-end touch panel sensors and has taken “becoming a long-term trust-worthy partner of the global touch industry” as its important mission.

Under the efforts of everyone, HannsTouch was rated by the CommonWealth Magazine as one of the “100 Fastest Growing Companies” and “Top 10 Fastest Growing Profits” among all the small-to-mediumsized enterprises in Taiwan in 2020. In 2021, the growth continued towards diversification of customers and expansion of the fields where products are applicable in order to decentralize risks and to accommodate seasonal variations while shifting towards high value-added fields and creating the maximum operational efficacy.

In 2021, new flagship mobile phones introduced by big international grands were primarily 5G devices, confirming the arrival of a 5G mobile phone era and it is expected that the replacement with 5G phones makes additional growths of OCTA products possible. The growing stream in the market share of AMOLED in mobile phones will remain unchanged and become the mainstream in the use of displays of international big brands. Besides Rigid AMOLED to continue to secure its market share of mid-to-high-end mobile phones, IT products such as tablets and notebooks will be the focuses, too, in order to further enhance the penetration of IT products and to further promote the scope of application of AMOLED products.

HannsTouch, being technology-oriented, develops a diversified categories of product applications and types of customers so that throughput allocation may be optimized; maximum output efficacy may be created; and corporate sales and operational performance may be superior. We are devoted to the enhancement of the value of the core business and continue to develop high-end HIAA, full screens with a high screen-to-body ratio, and TDDI for the sake of satisfying the needs of AMOLED manufactures of different generation lines. End products are applicable for major mobile brand manufacturers to make the Company a leading technical

supplier of touch products.

Besides the mainstream touch panel sensors, for the application of the array technology, the niche product market has been the target. HannsTouch completed related technologies and products of electronic self label (ESL) back panels that is has developed for years and came up with the high electron mobility technology to go with the relatively low-photomask process adopted in the industry. Starting from the first quarter 2021, it has been qualified by primary customers one after another and will begin to contribute to the operation from the second quarter onwards. Impacts from the pandemic, however, expedited the willingness and speed of customers to get the replacement. It is expected that the demand for ESL back panels will continue to climb.

In addition, for the time being, generation 5.5 production line is also in line with the Company’s longterm developmental strategy, production of thin film transistor (TFT) back panels has become locally in order to satisfy the needs of new customers. We have further developed flexible TFT back panels and optical fingerprint sensors in an effort to increase the market shares for ESF, industrial engineering, car-borne, and other professional display touch applications.

Hanns House, the reinvested business that belongs to Glorystone Inc. was one of the quarantine hotels in response to the government’s policy while the world fights against the pandemic in honor of its corporate social responsibilities. Meanwhile, despite the sluggish global economy and tourism industry, with joint efforts throughout the Company, profits were fulfilled for the year. In the future, based on the lodging business, services will be expanded to include dining and new retails for a whole-day living circle and for increased growths in momentum.

Employees, customers, and business partners have always been important stakeholders of HannsTouch. We constantly advance care for employees and customer service and are proactively giving back to society through actual action. While pursuing revenue and profits, we are paying careful attention to environmental sustainability issues and living up to our green commitment towards the economy and a sustainable environment. It is our hope that the operational performance can continue to be enhanced for 2021 and that we can jointly render outstanding results with customers and share the operational accomplishments with shareholders.

Finally, I would like to wish each of you good health and the best in all of your endeavors and prosperous business.

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I. 2020 business report

(I) Outcome of the business plan:

HannsTouch is a manufacturer of high-end AMOLED touch sensors dedicated to the development of new production technology, strengthening of cost control capability, enhancement of production efficiency and management of delivery, product quality and yield, thus providing customers with the best technology and services. In the first half of 2020, for the overall mobile phone market, due to the COVID19 pandemic, which caused a shortage in material supplies and production labor in factories, the launching of new models was postponed and the utilization of production capacity dropped. The mobile phone market has been in decline, causing the demand for AMOLED touch sensors to fall as well. Since the third quarter of 2020, the shipments of HannsTouch have been climbing up. The shipments in the fourth quarter have returned to normal. For 2020, due to the pandemic, the year-on-year comparison for shipments and revenue dropped by 30%.

International brands have consistently introduced the technology of AMOLED panels into their products. The trend of high-end mobile phones remains unchanged. The overall market share of AMOLED panel continues to grow. As the market demand continues to increase, the Company shall consistently refine its production yield, improve the utilization rate, and develop more advanced technologies to satisfy the future needs of customers.

The Company shall further enhance the operating performance and the change of seasonal demands, maintain a high utilization rate of equipment so as to fully make use of the functions of new equipment, continue to develop new manufacturing and product technologies and build new product platforms to increase operational benefits to realize the long-term profitability goals. In the first quarter of 2021, HannsTouch has successfully integrated its backplane for electronic shelf label (ESL) display with the design-in of many new customer products and has since embarked on the experimental stage. In the second quarter, it is expected to increase the operational contribution. Hopefully, in 2021, it can continue to increase the operating performance when the pandemic is under control. Further, under a stable and ethical business foundation, the Company can create good results with our customers and share the fruit of the business performance with shareholders.

(II) Revenues, expenses, and profitability analysis:

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Assessment \ Year 2019 2020
Financial Debt to assets ratio 43.43 44.29
position
(%) Long-term capital to property, plants and equipment 104.02 142.67
Current ratio 95.26 294.16
Solvency
(%) Quick ratio 81.64 283.52
Return on assets 6.79 2.48
Return on shareholders’ equity 11.74 3.62
Profitability
(%) Net profit margin 23.12 11.34
Earnings per share (NTD) 1.35 0.43
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In 2020, the Company mainly engaged in the development, research, manufacturing and sales of touch sensors. The net operating revenue for 2020 amounted to NT$3,086,399 thousand. The operating costs amounted to NT$2,375,024 thousand. The gross profit amounted to NT$711,375 thousand. The gross profit margin amounted to 23%. The operating profit amounted to NT$418,842 thousand. The operating profit margin amounted to 14%. The total comprehensive income amounted to NT$353,289 thousand.

(III) Research and development:

HannsTouch Solution possesses the generation 5.5 OCTA touch sensor (1300x1500mm) manufacturing plant that can fabricate products that come in different sizes, such as smartwatches, smartphones, notepads. In the meantime, via flexible designing and production, it can satisfy the demands of different production lines of multiple generation AMOLED plants, creating optimal benefit. The main sizes of touch-control products manufactured correspond to the high-end smartphones and

wearable products with AMOLED. It contains characteristics such as narrow linewidth, narrow bezel, high transmittance. The Company shall continue to develop advanced Hole in Active Area (HIAA), fullscreen display smartphone and Touch and Display Driver Integration (TDDI) and other technical applications on smartphones, collaborating with main customers in satisfying their requirements and developing touch-control products with low-impedance

Apart from the main touch-control glass sensing products, the Company primarily targets the niche product market for application technology and develops the relevant technologies and products for the backplane for ESL display with thin-film transistors (TFT). For technology-wise, the Company has successfully developed the high electron mobility technology, which can effectively improve TFTs' functions and is beneficial to the design of high-resolution products and give rise to a low energy consumption advantage. For products wise, the Company makes good use of its packing technology and manages to launch backplane for ESL display, demonstrating the cutting rate advantage (1300x1500mm) of generation 5.5.

For industrial touch sensors not under the OCTA product line, the Company has developed several types of industrial computer application touch-control products. The mass production of this series of products has been quite stable. Moreover, the Company is making plans to venture into high-end aerial touch-control application products, which will continue to be tested by the end customers, so as to increase the value-add of the products.

Further, under the foundation of highly automated and precise equipment, the Company has developed a new fabrication technology for flexible TFTs and backplane for ESL display in 2020, building a new generation of flexible products and technology platforms, thus increasing the diversified development of products.

II. Summary of 2021 business plan

Looking ahead, in 2021, with the ubiquity of vaccination, the COVID-19 pandemic will be under control. Compounded by the new 5G smartphone launches of many international brands that are foreseen to drive up purchases of new phones, the sales of OCTA products are expected to have much room for growth. Also, for the ESL market, due to the pandemic driving the will and upping the speed of end customers changing their equipment, the demand for a backplane for ESL displays will continue to grow. The Company shall focus on actively making preparations to embrace the coming recovery.

In 2020, international brands were turning to set 5G smartphones as their signature products, thus fortifying the 5G smartphone era. In 2021, the trend of the increasing market share of smartphones using AMOLED remains unchanged. Apart from solidifying its position in the medium to high-end smartphone market, Rigid AMOLED is also heading toward application in tablet and notebook, increasing AMOLED's penetration rate in the IT products and further enhancing the scope of product application of AMOLED.

HannsTouch Solution has been deepening its effort in ESL display products for many years and thus, is able to secure customer orders. Via reducing production capacity that is subject to the cyclical effect in seasonal demand fluctuation, which in turn will affect the utilization rate, it is expected that the sales percentage of subsequent newly added product platform can enable the optimization of production capacity and full utilization of equipment capacity, hence improving the Company’s sales, operating performance and profitability.

Further, for the application market of industrial and automobile professional display and touchcontrol solutions, the Company has been working closely with customers in its endeavor in technology development. In 2020, its long-term revenue growth was evident, and the development diversity is promising. HannsTouch Solution shall consistently deepen its roots in technology and diversity developments.

(I) Operational guidelines:

The main product line of HannsTouch Solution comprises high-end AMOLED touch sensors. The Company shall continue to upgrade its products and technical specifications. Via the expansion of production capacity, the Company shall actively secure new market share. Further, via its advantage in high precision equipment, the Company shall develop new production and product technologies, build new product lines, increase and improve product application combinations, thus increasing the overall operating performance and the return on equity.

The Company has consistently developed the technologies and market of touch sensors and display products in professional sectors to enhance the technological value-add and business diversity of the Company.
With fulfilling customer satisfaction as its management philosophy, the Company provides a complete series of services and technologies for touch-control products, from development and design to fabrication, so as to cater to customer needs in production flexibility, steady supply, diversity in product series and cost competitiveness, thus enhancing the Company’s competitive advantage in production.
Using TFT backplane technology as the new technology platform, the Company develops related new products, such as the backplane for ESL display and optical fingerprint on display, providing customers with more comprehensive solutions.
Building a business with sustainable and steady development for shareholders.

(II) Key production/sales policies:

Apart from supplying OCTA products to the existing AMOLED customers, the generation 5.5 production line also coordinates with the Company’s long-term development strategy in partially manufacturing TFT backplane products, satisfying the needs of new customers. In 2021, the Company will head toward diversifying customer base and developing product application so as to mitigate risks, adjust for seasonal demand change, stabilize revenue stream and continue to expand market share in major customers, as well as consistently developing the scope of new product applications.

Meanwhile, to cater to the demand for new product lines, the Company will evaluate the additional purchase of bottleneck equipment, expand production capacity, provide technologies, products and services for new application fields, develop the market needs in professional sectors and satisfy customer needs.

III. Future strategies, impacts of the competitive environment, regulatory environment, and the overall business environment

(I) Competitive advantages of HannsTouch Solution:
High quality automated professional production lines

The Company is one of the few businesses globally that has fully automated production plants for manufacturing touch sensors. The building design of the production plants took into consideration accommodating the equipment capacity for fabricating high-end TFT and automated production lines so as to satisfy customer needs for high yield and quality in AMOLED touch sensors and TFT backplane, thus guaranteeing a reliable and steady supply to customers.

To cater to the rapid demand change in technology and markets, the Company shall introduce AI in the production scheduling and quality enhancement systems, thus increasing the management capacity of production lines. Using a production model that can fabricate diversified products in small quantities, the Company is able to increase the customers' capability in responding to market change.

Competitive advantage in cost reduction

Manufacturing high-quality products and constantly improving yield are fundamental commitments of HannsTouch Solution to its customers. Apart from consistently optimizing the parameters of production allocation and materials, the Company also expand its production capacity to further the production efficiency and increase the overall competitive advantage.

In addition to the touch-control technology, the Company also seeks to develop the fabrication technology of TFT components superior to other foundries, allowing new product platforms to gain more competitive advantages and secure new business opportunities in the application market.

The Company shall develop relationships with suppliers of new materials to ensure diversification in high quality and steady supplies, reduce production cost and create better profitability. With more experience and capabilities in maintaining its own production facilities, the Company is able to achieve proper cost control.

High value-adding technology platform

Apart from generation 5.5 glass backplane with a thickness of 0.25mm, the Company has also

managed to make use of narrow linewidth, narrow bezel, high transmittance technology for massproducing OCTA, realizing the application of OCTA for high-end products. Currently, the Company is also providing customers with various verification platforms for new product technologies, assisting the technology development of verification to satisfy the need for product diversification, product specifications of different customers, and the glass of different generations to provide further production technology services.

Meanwhile, under the foundation of highly automated and precise equipment, in 2021, with the fabrication technology and product platform of TFT components, the Company shall continue to develop the related flexible product technology platform, widening the product application.

4. High-efficiency operation management

The Company has gained years of experience working with many international mega brands and possesses the most professional fabrication technology and manufacturing management capabilities. The Company has been consistently engaging in quality improvement. Apart from complying with ISO9001 regulations, the factory has implemented fully automated functional testing in a scrupulous manner and shall continue to add in more testing equipment with functions strengthened so as to ensure the utmost quality for the fabrication of products. The Company will continue to strengthen smart management, preventive management, energy conservation, and carbon reduction in the future. Via a consistent effort to optimize production efficiency and cost reduction and introduce AI smart production and management system software and hardware in 2020, the overall operation efficiency is further improved.

(II) Future business development strategy:

1. Operating model

With a steady customer group and demand, HannsTouch Solution is able to put in place equipment capacity that can cater to product lines of generation 4.5, 5.5 and 6, striving to become a manufacturer of OCTA touch sensors that caters to professional sectors and the sole business that provides AMOLED production lines of multiple generations to customers, thus securing a key role in the supply chain of OCTA market.

To lower the cyclical effect in seasonal demand fluctuation of the consumer smartphone market, increase operating performance and build a steady long-term profitability profile, under the foundation of highly automated and precise equipment, the Company shall develop new TFT components and their fabrication technology and build various new product platforms to add new value to customers.

Further, via internal and external resources and collaboration, the Company widens product applications, expands the industrial and automobile application markets, develops new application scopes for professional displays, provides more diversified technologies, products and services, heads toward providing comprehensive solutions, and becomes a supplier of professional sensors and display solutions, thus improving the internal value-add and adding value to customers. Meanwhile, the Company invested in Glorystone Inc. to enter the hospitality industry. Through the new business model developed closer to consumers, it answers to each of the other sectors that the Group is in for defining a more valuable ecology.

2, Technology development

Apart from leading in the mass production of 0.25mm slimmed glass substrate and production capability of refined line width and narrow bezel products, HannsTouch Solution shall continue to develop advanced HIAA technology and full-screen display smartphones. TDDI and other smartphone technology applications have passed the customers’ verification and gone into mass production. The end product applications are adopted by the world’s main smartphone brands, becoming the leading supplier in touch-control products. For the backplane market for electronic ink label, the Company is on par with its industry counterparts in using a lower photomask fabrication method, and the products have passed the customers’ verification. Thus, the market share is expected to increase gradually.

Further, under the foundation of highly automated and precise equipment, the Company has developed new fabrication technology and product platform for TFT components. In 2021, the Company shall use the product platform and further develop the backplane for flexible TFT components and optical fingerprint on display sensors, adding value to products. In the future, the Company shall coordinate the aforementioned technologies to further develop new optical and medical sensor technology. The

Company shall also deepen its research in the technological fields and diversified development to servicing a more diversified clientele.

3. Service model

To cater to product development diversification, the Company shall adjust its customer service system to strengthen customer relationships. In addition to shortening the delivery period and enhancing yield, the Company shall also focus on sales and marketing strategy, crystallize the direction of product development, and searching for new niche markets to satisfy new operation strategy development. Further, the Company shall also expand the scope of technological service, determine the direction of technology development, add new value to the product platform for customers, foster a more steadfast and trusting relationship with customers so as to increase the long-term operating performance of the Company.

The Company will continue to optimize the product development process to cater to the needs for the diversification of product platforms, shorten the time for product development and delivery, satisfy the needs of customers in shortening the time for a fast-paced cyclical product launch and the design verification of end product brands, provide a comprehensive production profile and secure key parameters of production and products for quick retrospective tracing and feedback.

To cater to product diversification, the Company shall continue to strengthen the training of professional personnel in product management and customer service to improve the product design development, mass production and after-sales service, expedite the response to customers and execution of solutions to problems, establish timely reporting mechanism, build a trusting and interactive rapport, understand the production problem facing customers and provide timely and necessary services. While providing products and services to customers, via the collaborative processes, the Company can consistently improve its own capabilities and play key roles in the supply chain, thus becoming a trusting business partner that can gain customers’ approval.

Two. Company Profile

Date of establishment: September 18, 1999

2. Company history:

any history:
September 1999	:	The Company was founded at 9F, No. 108, Chenggong Road, Hukou Township,
		Hsinchu County, with an initial capital of NT$200 million.
October 1999	:	Signed a technology transfer contract with IBM Japan for generation 3.0 color filter.
December 1999	:	Obtained approval letter from the Industrial Development Bureau, Ministry of
		Economic Affairs, to postpone public offering.
		Obtained approval letter from Hsinchu Government for plant construction.
March 2000	:	Raised additional share capital to a total of NT$798,800,000.
April 2000	:	Raised additional share capital to a total of NT$1,600,000,000.
		Signed ISO counseling contract with Kind Consulting Company.
May 2000	:	Obtained approval letter from the Industrial Development Bureau, Ministry of
		Economic Affairs, for conformity with standards as a key technology business.
October 2000	:	Raised additional share capital to a total of NT$3,600,000,000.
November 2000	:	Mass production ceremony for generation 3.0 production line.
		Passed certification for ISO9002.
December 2000	:	Received investment from HannStar Display.
January 2001	:	Obtained Facility Registration Certificate from the Ministry of Economic Affairs.
March 2001	:	Received investment from Dai Nippon Printing (DNP).
April 2001	:	Received approval from Securities and Futures Institute for public offering on April
		6, 2001.
August 2001	:	Generation 3.5 CF commenced mass production.
November 2001	:	"Advanced Color Filter Photo Spacer Development Project for 17-inch TFT-LCD and
		Above" received NT$17.65 million of Dominant New Product Development Subsidy
		from the Industrial Development Bureau, Ministry of Economic Affairs.
December 2001	:	Raised additional share capital to a total of NT$4,000,000,000.
		DNP made additional investments and held more than 10% of the Company's shares.
		Passed certification for ISO14000.
January 2002	:	The Company was listed on the Emerging Stock Market on January 2, 2002.
March 2002	:	Passed preliminary review of the Industrial Development Bureau, Ministry of
		Economic Affairs, for eligibility as a technology business.
May 2002	:	Applied for listing with Taiwan Stock Exchange Corporation.
September 2002	:	The Company's shares were listed for trading on September 27, 2002.
December 2002	:	Generation 4.0 commenced mass production.
February 2002	:	Founded Sintek Photronic Corp.
March 2003	:	Issued US$50 million of offshore convertible bonds.
July 2003	:	Named outstanding importer/exporter for 2002.
		Capitalized earnings and capital reserves, increasing paid-up capital to
		NT$5,068,966,000.
March 2004	:	Issued new shares for the exercising of convertible bonds, increasing paid-up capital
		to NT$6,151,943,000.
April 2004	:	Issued US$120 million of offshore convertible bonds.
June 2004	:	Signed an NT$2-billion syndicated loan agreement lead-arranged by Taishin Bank.
April 2005	:	Issued new shares for the exercising of convertible bonds, increasing paid-up capital
		to NT$7,176,638,000.
May 2005	:	Subscribed to a 36% shareholding in Helix Technology Inc. through private
		placement.
September 2005	:	Acquired and re-organized Sintek Photronic Corp. into the Company's Tainan
		Branch. Paid-up capital increased to NT$8,449,295,000.
October 2005	:	Invested into a Mainland-based backlight module through a third location.
November 2005	:	Capitalized earnings and capital reserves, increasing paid-up capital to
		NT$9,276,939,000.
June 2006	:	Elected new board members, during which Hua Li Investment acquired 4 director
		seats, Li Yi Investment acquired 1 director seat and 2 independent director seats, and

HannStar Display acquired 1 supervisor seat. DNP (a 10% major shareholder) reported share transfer.
September 2006 : Ho Tung transferred shares of HannsTouch to Hua Li Investment, and sold Hua Li Investment to FAE Holdings (B.V.I.) Limited.
November 2006 : Hua Li Investment reappointed representative at the Company's board of directors. December 2007 : HannStar Display acquired 100% ownership in Hua Li Investment and reappointed representative at the Company's board of directors, making HannStar Display the largest shareholder of the Company. Passed certifications for ISO14000, ISO 9001, and OHSAS 18001.
April 2008 : Sold Hukou Plant buildings and machinery to Chunghwa Picture Tubes Ltd. June 2008 : Reduced capital against cumulative losses NT$3,154,159,000.
January 2009 : Invested into the production of solar cell modules and touch panels. June 2009 : After re-election of directors and supervisors on June 16, 2009, HannStar Display gained control over the Company.
July 2009 : Obtained certification for Windows 7.
October 2009 : Capitalized earnings and capital reserves, increasing paid-up capital to NT$6,635,897,000.
December 2009 : Issued new shares for cash, increasing paid-up capital to NT$8,435,897,000. January: Employee warrants were exercised for new shares, increasing paid-up capital to
October 2010 NT$8,785,878,000. January-July : Employee warrants were exercised for new shares, increasing paid-up capital to 2011 NT$8,839,508,000.
February 2011 : Signed technology cooperation and supply agreement for LTPS production line with Samsung Mobile Display.
June 2013 : Re-election of directors on June 18, 2012 resulted in a change of Chairman and more than one-third of board members, causing HannStar Display Corporation to lose control over the Company.
August 2013 : Signed cooperative agreement with WINTEK Corporation.
February 2014 : Sold HannsTouch Solution's first touch sensor plant in Southern Taiwan Science Park, along with equipment and other touch control facilities, to HannStar Display Corporation.
August 2014 : Issued 281,690,000 common shares for cash through private placement, increasing paid-up capital to NT$11,656,408,000.
August 2015 : Reduced capital against cumulative losses for NT$4,286,923,000, decreasing paid-up capital to NT$7,369,485,000.
September 2015 : Made 2015 first domestic private placement of unsecured ordinary corporate bonds for NT$1.8 billion.
November 2016 : Made 2016 first domestic private placement of unsecured ordinary corporate bonds for NT$1.8 billion. Made early recall and retired NT$1.8 billion of outstanding unsecured corporate bonds (2015-1).
January 2017 : Completed a short-form merger with Prancing Horse One Investment Co., Ltd., in which the Company was the surviving entity and Prancing Horse One Investment Co., Ltd. was the dissolving entity.
November 2017 : Made 2017 first domestic private placement of unsecured ordinary corporate bonds for NT$1.8 billion. Made early recall and retired NT$1.8 billion of outstanding domestic privately placed unsecured corporate bonds (2016-1).
November 2018 : The Company signed a real estate leasing agreement with Glorystone Inc. for operational use for a tenor of 15 years.
April 2019 : Subsidiary - Golden Apple Investment Corporation announced its acquisition of 100% share ownership in Chaiin Hotel Co., Ltd. The Company signed a real estate leasing agreement with JustCo (Taiwan Onshore) Ltd.
October 2019 : Made early recall and retired NT$300 million of outstanding domestic privately placed unsecured corporate bonds (2017-Tranche A).
October 2019 : Issued 70,000,000 common shares for cash through public offering, and received acknowledgment from Financial Supervisory Commission on July 8, 2019 followed by its approval on August 26, 2019 to extend the payment deadline. Paid-up capital
Made early recall and retired NT$1.8 billion of outstanding domestic privately placed unsecured corporate bonds (2016-1).

		was increased to NT$8,069,485,000.
November 2019	:	Board of directors of subsidiary - Chaiin Hotel Co., Ltd. resolved a short-form merger
		with Chaiin Finders Hotel Co., Ltd. and Chaiin Goodmore Hotel Co., Ltd.
May 2020	:	Subsidiary - Golden Apple Investment Corporation sold 8,950,500 common shares of
		Chaiin Hotel co., Ltd. (representing an 81% ownership interest) to Chu Yi Investment
		Co., Ltd., and retained a 19% ownership interest.
July 2020	:	Subsidiary - Glorystone Inc. sold 100% of common shares held in Main Lu Catering
		Co., Ltd. to Hua Li Investment Corp.
August 2020	:	The 178,091,770 common shares privately placed in 2014 were offered publicly and
		made available for trading on August 11, 2020.
August 2020	:	Made early recall and retired NT$600 million of outstanding domestic privately
		placed unsecured corporate bonds (2017-Tranche B).
November 2020 :		Sold 1F-3F of HannsTouch Solution's plant in Southern Taiwan Science Park to
		HannStar Display Corporation.

Three. Corporate Governance Report

1. Organization

(1) Organization structure:

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(2) Responsibilities of main departments:

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Department Responsibilities
 Annual audit planning.
Audit Office  Establishment and amendment of the internal control system and implementation rules
thereof.
 Support for legal issues and negotiation/resolution of disputes.
Legal & IPR Center
 Matters concerning trademarks and patents.
 Analysis and management of financial risks, capital planning, funding, and investment
Finance & Accounting management.
 Bookkeeping, tax-related affairs, and financial statement analysis.
Center
 Establishment and planning of accounting system, and supervision of accounting affairs.
 Management of share-related affairs and investor relations.
 Organizational Development and Talent Management
 Regulatory compliance relevant to human resources and corporate governance
Taipei Administrative projects
Center  Manipulation and implementation of administrative affairs and systematic
planning of Taipei Office
 Property management of Dian Shih Building
Human Resources  Planning of human resources strategy and system.
Center  Human resources management and organizational development.
 Planning and execution of environment, health, and safety tasks, and execution of work
safety precautions.
Industrial Safety Office  Planning and execution of worker health checkups and health management.
 Execution of occupational hazard prevention, environmental protection, and pollution
prevention plans.
 Establishment of human resources system and ongoing enhancement to the professional
Administration Division capacity of the workforce.
 Sundry service, general affairs, and employee management.
 Execution of administrative tasks and planning of related systems.
 Product quality check and control, reliability test.
Quality Assurance
 Establishment and maintenance of a quality system, and confirmation and creation of
Division
quality documents.
 Establishment and management of logistics system.
 Management of procurement, logistics, production, sale, warehousing, and
Operation Planning
transportation related processes.
Center
 Digitalized operations and systems management.
 Network and information security management.
 Sales target forecast and proposal of business plans.
Marketing and Sales  Product price negotiation, quotation, confirmation of delivery time, and customer
Center development.
 Creation of customer profile.
 Evaluation, design, and proof of concept for new products.
Product Development
 Evaluation and introduction of new technologies, production procedures, and materials.
Center
 Introduction of new products and yield improvement.
 Production management and yield/capacity enhancement.
 Development, planning, and integration of computer systems within the Company.
Manufacturing  Production efficiency improvement and tracking, and standardization and rationalization
Integration Center of production procedures.
 Integration, evaluation, and optimal allocation of production resources, and creation and
maintenance of cost profiles for various products.
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2. Background information of directors, supervisors, the President, vice presidents, assistant vice presidents, and heads of various departments and branches

(1) Directors' background:

																April 19,2021;unit: thousand shares;%	April 19,2021;unit: thousand shares;%	April 19,2021;unit: thousand shares;%	April 19,2021;unit: thousand shares;%	April 19,2021;unit: thousand shares;%
	Nationality			Date Service Date first			Shareholding when elected Current shareholding Shareholding of spouse and underage children Shareholding in the name of a third party									Concurrent duties in the Company and	Spouse or degree or manager,	relatives of second closer acting as director or supervisor
Title	of place of registration Name Gender			elected/appointed term/years elected			No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares							Main career (academic) backgrounds Shareholding percentage		in other companies	Title	Name	Remarks Relationship
Chairman	The Republic of China	WeiHsin Ma Female		2018.06.14	3	2015.06.03	1,830 0.25 4,699 0.58 10,741 1.33 0							0.00	Ph.D., National Tsing Hua University College of Humanities and Social Sciences; EMBA, Peking University; Department of East Asian Languages and Cultures, University of California, Berkeley Chairman of Yuanta Securities Investment Trust Co., Ltd. and HannStar Display Corporation	Chief Executive Officer of the Company Chairman of Golden Apple Technology Co., Ltd. and Glorystone Inc. Director of HannStar Display Corporation, Walsin Lihwa Corporation, and Winbond Electronics Corp. Director		YuChi Chiao	Spouse	Note 1
Director	The Republic of China	Hua Li Investment Corporation		2018.06.14	3	2006.07.01	87,377 7.50 59,440 7.37 0 0.00 0							0.00	Not applicable	Chairperson of Yueh Ma First Investment Corporation Corporate Supervisor of Info-Tek Corporation Institutional Chairman of Mianlu Dining,Inc.	None	None	None	None
	The Republic of China	Representative YuChi Chiao Male		2018.06.14	3	2012.06.18	0	0.00 10,741 1.33 4,699 0.58 0						0.00	Ph.D. in Business Administration, City University of Hong Kong; and Ph.D.in Business Administration, Fudan University Director and President of Walsin Lihwa Corporation Director of HannStar Board Co., Ltd. Supervisor of Winbond Electronics Corporation	Chairperson and President of HannStar Display Corporation Chairperson of Hua Li Investment Corporation Representative of Institutional Chairman of Mianlu Dining, Inc. Director of Bradford Ltd.`、`Hannspirit (BVI) Holding Ltd.`、`Brightpro Resources Limited and Hannspree International HoldingLtd.	Chairman	WeiHsin Ma	Spouse	None
Director	The Republic of China	TsuKang Yu	Male	2018.06.14	3	2015.06.03	0	0.00	0	0.00	0	0.00	0	0.00	Department of Business Administration, Chinese Culture University General Manager of USA International Co Ltd. (USA) and Rowin Inc (USA); Vice President of Union Group Corp. Vice President of Union Group Corporation	Chairperson of Union Group Corporation, Union Electric Corporation and Tzu Feng Cultural and Educational Foundation Director of Lunghwa University of Science and Technology Independent Director of TECO Image Systems Incorporation	None	None	None	None

Title Nationality of place of registration Name	Title Nationality of place of registration Name	Title Nationality of place of registration Name	Gender	Date elected/appointed Service term/years Date first elected	Date elected/appointed Service term/years Date first elected	Date elected/appointed Service term/years Date first elected	Shareholding when elected Curren	Shareholding when elected Curren	Shareholding when elected Curren	t shareholding Shareholding of spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	t shareholding Shareholding of spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	t shareholding Shareholding of spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	t shareholding Shareholding of spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	t shareholding Shareholding of spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	t shareholding Shareholding of spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	Concurrent duties in the Company and in other companies	Spouse or degree or manager,	relatives of second closer acting as director or supervisor Remarks Name Relationship	relatives of second closer acting as director or supervisor Remarks Name Relationship	relatives of second closer acting as director or supervisor Remarks Name Relationship
							No. of shares	Shareholding percentage No. of shares		Shareholding percentage No. of shares		Shareholding percentage No. of shares					Title	Name
Director The Republic of China		Sean Tai	Male	2018.06.14	3	2018.06.14	0	0.00 0		0.00 0		0.00 0		0.00	Masters and Ph.D. of Electrical Engineering, Yale University; and Bachelor of Electrical Engineering, National Taiwan University Operational Director of Realtek Semiconductor Corp.; Vice President and President of Silicon Touch Technology Inc.; Manager, Division Head, and Assistant Vice President of Winbond Electronics Corp.; and Technology Manager of Taiwan Semiconductor Manufacturing CompanyLimited	Chairman of Nuvoton Technology Corporation (Shanghai), Nuvoton Technology Corporation (HongKong), Nuvoton Technology Corporation (Shenzhen) Director of Songyong Investment, Winbond Electronics Corporation (Nanjing) President of Nuvoton Technology Corp.	None	None	None	None
Independent Director The Republic of China		TienShang Chang	Male	2018.06.14	3	2018.06.14	0	0.00 0		0.00 0		0.00 0		0.00	MBA, University of Pennsylvania Wharton School; Bachelor, Harvard University Director of CR Yuanta Fund Management Co., Ltd.	Representative of Corporate Chairperson of Fu Burg Industrial Co., Ltd. Supervisor of Lytone Enterprise, Inc. Representative of Institutional Supervisor of MICROTIPS TECHNOLOGY INC.	None	None	None	None
Independent Director The Republic of China		Daniel Shih	Male	2018.06.14	3	2018.06.14	0	0.00 0		0.00 0		0.00 0		0.00	Honorary doctoral degree, Alabama State University; Master of Electrical Engineering, University of Cincinnati Vice Chairman of Stella International Holdings Limited; Chairman of PepsiCo China; Vice Chairman of China Beverage Industry Association and China Association of Enterprises With Foreign Investment; CEO of Motorola (China) Electronics Ltd.; Vice President of Asia Pacific, General Electric Company (GE); Independent Director of Archer-Daniels-Midland Company; Vice Chairman of Chengdu Taiwan Business Association; and Chief Advisor of Shanghai Pilot Free Trade Zone Scientific Innovation Center	Chief Advisor of Chengdu Blue Sword Drink & Food	None	None	None	None
Independent Director	The Republic of China	Tommy S. Chao	Male	2018.06.14	3	2018.06.14	0	0.00	0	0.00	0	0.00	0	0.00	Masters Degree, Massachusetts Institute of Technology Center for Real Estate; Bachelor of Architecture with minor in Urban Development, University of California, Berkeley President of Polaris Securities (Hong Kong) Limited; Senior Assistant Vice President of Capital Markets, Polaris Securities; Senior Manager of Market Development, BasicLink Global Limited; Taiwan e-Commerce Department,Atlas Sport Co.,Ltd.	Chairman of Social Entertainment Enterprise, Hua Chuan Asset Management Co., Ltd., and Shine Vast Investment Limited Supervisor of Wan Ho Investment Co., Ltd.	None	None	None	None

Note 1: The Chairman is also the Chief Executive Officer because of the relevant background in management and leadership for the industry and the fact that a majority of the directors are not also the Company’s employees or managers. In the future, the corporate governance best practice goals will be evaluated while the disallowed dual position or increase in the ratio of independent directors are being considered.

Where the director or supervisor is a representative of corporate director, the name of the corporate shareholder, its top-10 shareholders and shareholding percentages are listed:

(1) Major shareholders of corporate shareholders

		April 19,2021 Shareholding percentage % 100
Name of corporate shareholder	Corporate shareholder's major shareholders	Shareholding percentage %
HUALI Investment Corp.	HannStar Display Corporation	100

(2) Key shareholders of major corporate shareholders listed in Table (1)

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March 27, 2021
Name of corporate Shareholding
Corporate entity's major shareholders
entity percentage %
Chin-Xin Investment Co., Ltd. 10.24
Walsin Lihwa Corporation 9.9
Winbond Electronics Corporation 4.96
HannsTouch Solution Incorporated 1.27
YuChi Chiao 1.26
Vanguard Emerging Markets Emerging Markets Stock Index Fund
Investment Account managed by the Vanguard Group in the trusteeship 1.11
HannStar Display of JPMorgan Chase Bank, N. A., Taipei Branch
Corporation Advanced Composite International Stock Index Investment Account for
a series of funds of Advanced Star Fund Manager in the trusteeship of 1.04
JPMorgan Chase Bank, N. A., Taipei Branch
Polunin Developing Countries Fund Manager Investment Account in
1.04
the trusteeship of Citibank Taiwan
Merrill Lynch International Investment Account in the trusteeship of
0.7
HSBC Taipei Branch
Capital Marathon Securities Investment Trust Account in the trusteeship
0.66
of the Trust Department of Union Bank
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(3) Directors' expertise and independence

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Having more than 5 years work experience and
professional qualifications listed below Compliance of independence (Note 1)
Criteria
Lecturer (or Judge, Commercial,
Number of
above) of prosecutor, legal, financial,
commerce, law, lawyer, accounting or positions as
finance, accountant, or other work independent
accounting, or holder of experiences director in
any subject national exam required to
1 2 3 4 5 6 7 8 9 10 11 12 other public
ts relevant to or professional perform the
the Company’s qualification assigned duties companies
Name operations in a relevant to the
public or Company's
private tertiary operations
institution
WeiHsin Ma       0
YuChi Chiao 
   0
(Note 2)
TsuKang Yu              1
Sean Tai              0
TienShang Chang              0
Daniel Shih              0
Tommy S. Chao              0
Note 1: A “  ” is placed in the box if the director met the following conditions during active duty and two years prior to the date elected.
(1) Not employed by the Company or any of its affiliated companies.
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(2) Not a director or supervisor of the Company or any of its affiliated companies (this restriction does not apply to concurrent independent director positions in the Company, its parent company, subsidiary, or another subsidiary of the parent that is compliant with the Act or local laws).
(3) Does not hold more than 1% of the Company's outstanding shares in their own names or under the name of spouse, underage children, or proxy shareholder; nor is a top-10 natural-person shareholder of the Company.
(4) Not a manager listed in (1), or a spouse, 2nd-degree relative or closer or 3rd-degree direct relative or closer to any personnel listed in (2) or (3).
(5) Not a director, supervisor or employee of any corporate shareholder that: 1. holds 5% or more of the Company's outstanding shares; 2. is a top-5 shareholder; or 3. appoints director/supervisor representative in the Company according to Paragraph 1 or 2, Article 27 of The Company Act. (This excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(6) Not a director, supervisor or employee of any other company that controls directorship in the Company or where more than half of total voting rights are controlled by a single party (this excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(7) Does not assume concurrent duty as chairman, president or equivalent role, and is not a director, supervisor, or employee of another company or institution owned by spouse. (This excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws.)
(8) Not a director, supervisor, manager, or shareholder with more than 5% ownership interest in any company or institution that has financial or business relationship with the Company (however, this excludes concurrent independent director positions held within companies or institutions that hold more than 20% but less than 50% outstanding shares of the Company, or in the Company's parent or subsidiary, or in another subsidiary of the parent that is compliant with the Act or local laws).
(9) Not a professional who provides audit service, or commercial, legal, financial, accounting or related services for an accumulated sum of less than NT$500,000 in the last 2 years, to the Company or its affiliate, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides such services to the Company or its affiliated companies. This excludes roles as Remuneration Committee, Public Acquisition Review Committee or M&A Special Committee member appointed in accordance with the Securities and Exchange Act or Business Mergers And Acquisitions Act.
(10) Not a spouse or relative of second degree or closer to any other directors.
(11) Does not meet any of the conditions stated in Article 30 of The Company Act.
(12) Not elected as a government or corporate representative according to Article 27 of The Company Act.
Note 2: Mr. YuChi Chiao was the representative of Hua Li Investment Corp., one of the Company's corporate directors.

(2) Profiles of the President, vice presidents, assistant vice presidents, and managers:

April 19, 2021; unit: thousand shares; %

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Spouse or relatives of
Shareholding in the
Shares held by spouse and second degree or
Current shareholding name of a third
underage children closer acting as
Title Nationality Name Gender Date party Main career (academic) backgrounds Concurrent positions in other managers Remarks
elected/appointed companies
No.
No. of shares [Shareholding ] No. of shares [Shareholding ] of Shareholding Title Name the
percentage percentage percentage Company
shares
Ph.D., National Tsing Hua University Chairman of the Company
College of Humanities and Social Sciences; Chairman of Golden Apple
EMBA, Peking University; Department of Technology Co., Ltd. and
CEO ROC WeiHsin Ma Female April 30, 2019 4,699 0.58 10,741 1.33 - - East Asian Languages and Cultures, Glorystone Inc. None None None Note 6
University of California, Berkeley Director of HannStar Display
Chairman of Yuanta Securities Investment Corporation, Walsin Lihwa
Trust Co., Ltd. and HannStar Display Corporation, and Winbond
Corporation Electronics Corp.
Master of Engineering Management,
University of Technology Sydney
President ROC WEN Male November 1, 100 0.01 - - - - Assistant Vice President and Plant Manager None None None None None
Jinxiang 2018 of Winbond Electronics Corp.
Vice President of Nuvoton Technology
Corp.
Department of Accounting, National
Chengchi University; Master of Finance,
The TSAI The City University of New York
Vice
Republic Jungtsung Male 2020.01.17 - - - - - - AICPA certified None None None None None
President
of China (Note 1) Head of Finance and Accounting Center and
Chief Auditor of HannStar Display
Corporation
Department of Electronic Engineering,
Chung Yuan Christian University
Plant Manager of Chi Mei Optoelectronics
Assistant
Vice ROC Lien-Hsiang Male November 2, 100 0.01 - - - - Corporation None None None None None
Chiang 2015 Plant Manager of HannStar Display
President
Corporation
Deputy Manager of Taiwan Semiconductor
Manufacturing Company Limited
Master of Comparative Law, Indiana
Assistant The Po-Chiang
Vice Republic Huang Male November 6, - - - - - - University None None None None None
2019 Vice President of Legal Affairs of HTC
President of China (Note 2)
Corporation
Master of International Advanced
Assistant The YANG Management Program of National Sun Yat-
Vice Republic Yutze Female May 8, 2020 - - - - - - sen University None None None None None
President of China (Note 3) Director of Legal Affairs, HannStar Display
Corporation
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Title	Nationality Name	Nationality Name	Gender	Date elected/appointed	Current shareholding Shares held by spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	Current shareholding Shares held by spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	Current shareholding Shares held by spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	Current shareholding Shares held by spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	Current shareholding Shares held by spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	Current shareholding Shares held by spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	Current shareholding Shares held by spouse and underage children Shareholding in the name of a third party Main career (academic) backgrounds No. of shares Shareholding percentage No. of shares Shareholding percentage No. of shares Shareholding percentage	Concurrent positions in other companies	Spouse or relatives of second degree or closer acting as managers Remarks Title Name the Company	Spouse or relatives of second degree or closer acting as managers Remarks Title Name the Company	Spouse or relatives of second degree or closer acting as managers Remarks Title Name the Company	Spouse or relatives of second degree or closer acting as managers Remarks Title Name the Company
					No. of shares	Shareholding percentage No. of shares		Shareholding percentage No. of shares					Title Name
Assistant Vice President	The Republic of China	Tai-Yuan Chen (Note 4)	Male	December 29, 2020	-	-	2	- -		-	Master of Chemical Engineering, National Cheng Kung University Vice President and Head of Plant, SHENZHEN HUAKE-TEK CO., LTD. Head of Plant,Biel crystal manufactoryLtd.	None	None None		None	None
Assistant Vice President	The Republic of China	LIU Tingxian (Note 5)	Female	January 26, 2021	-	-	-	-	-	-	Master of Accounting, National Taiwan University Chief Financial Officer and Head of the Management Office, JAY TEK ENTERPRISE CORP. Head of Audit of Lite-On Technology, Chief Financial Officer of the Mobile Mechanism Business Group Chief Auditor of Compal Electronics,Inc.	None	None	None	None	None

Note 1. July 17, 2020 Vice President TSAI Jungtsung was appointed the head of finance. And was transferred within the Group on April 1, 2021 Note 2. February 17, 2021 Assistant Vice President HUANG Pochiang resigned.
Note 3. May 8, 2020 Ms. YANG Yutze was promoted as the Assistant Vice President of the Audit Office. And was transferred to another department on March 19, 2021. Note 4. December 29, 2020 CHEN Taiyuan was promoted to be the Assistant Vice President of the Product Development Center.

Note 5. January 26, 2021 LIU Dingxien was promoted to be the Assistant Vice President. And succeeded as the head of finance on April 1, 2021.

Note 6. The Chairman is also the Chief Executive Officer because of the relevant background in management and leadership for the industry and the fact that a majority of the directors are not also the Company’s employees or managers. In the future, the corporate governance best practice goals will be evaluated while the disallowed dual position or increase in the ratio of independent directors are being considered.

3. Compensation to directors, supervisors, the President, and vice presidents in the latest year

(1) Compensation to non-independent and independent directors:

				December 31,2020;unit: NTD thousands
Title	Name	Directors' compensation Sum of A, B, C and D as a percentage of net income (%) Benefits (A) Pension (B) Director remuneration (C) Fees for services rendered (D)	Compensation rec	eived as employee Sum of A, B, C, D, E, F, and G as a percentage of net income (%) Compensatio n from parent company or business investments other than subsidiaries Employee compensation (Proposed) l The Company All companies included in the financial statements The Company All companies included in the financial statements Amount paid in cash Amount paid in shares Amount paid in cash Amount paid in shares
			Salaries, bonuses, special allowances etc. (E) Severance payment and pension (F)
		The Company All companies included in the financial statements The Company All companies included in the financial statements The Company (proposed) All companies included in the financial statements The Company All companies included in the financial statements The Company All companies included in the financial statements	The Company All companies included in the financial statements The Company All companies included in the financia statements
Chairman	WeiHsin Ma	240 240 - - 858 858 60 60 0.33 0.33	8,380 8,380 - -	83 - 83 - 2.75 2.75 -
Director	Hua Li Investment	240 240 - - 857 857 - - 0.31 0.31	- - - -	- - - - 0.31 0.31 -
	Representative : YuChi Chiao	- - - - - - 50 50 0.01 0.01	- - - -	- - - - 0.01 0.01 -
Director	TsuKang Yu	240 240 - - 857 857 60 60 0.33 0.33	- - - -	- - - - 0.33 0.33 -
Director	Sean Tai	240 240 - - 857 857 40 40 0.32 0.32	- - - -	- - - - 0.32 0.32 -
Independen t Director	TienShang Chang	360 360 - - 857 857 60 60 0.36 0.36	- - - -	- - - - 0.36 0.36 -
Independen t Director	Daniel Shih	360 360 - - 857 857 60 60 0.36 0.36	- - - -	- - - - 0.36 0.36 -
Independen t Director	Tommy S. Chao	360 360 - - 857 857 30 30 0.36 0.36	- - - -	- - - - 0.36 0.36 -
	Total	2,040 2,040 - - 6,000 6,000 360 360 2.40 2.40	8,380 8,380 - -	83 - 83 - 4.82 4.82 -
1. Please explain the policy, system, standards and structure by which independent director compensation is paid, and association between the amount paid and independent directors' responsibilities, risks, and tim The Company has developed its director (including independent director) compensation policy according to The Company Act and Articles of Incorporation. Compensation package is proposed by the Remune profitability, future prospects, the industry environment, and performance of individual directors, and is executed with the approval of the board of directors. 2. Compensation received by director for providing service to any company included in the financial statements (e.g. consultancy service without the title of an employee) in the last year, except those disclosed in				e committed: ration Committee after taking into consideration the Company's operating strategies, the above table: None

Compensation range

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Name of director
Sum of first 4 compensations (A+B+C+D) Sum of first 7 compensations (A+B+C+D+E+F+G)
Range of compensation paid to directors
All companies included in the
The Company The Company All companies included in the financial statements
financial statements
Below NT$ 1,000,000 YuChi Chiao YuChi Chiao
WeiHsin Ma, ORIENTAL WeiHsin Ma, ORIENTAL
CONSORTIUM CONSORTIUM Huali Investment Huali Investment
INVESTMENT LIMITED INVESTMENT LIMITED TsuKang Yu, Sean Tai TsuKang Yu, Sean Tai
NT$ 1,000,000 (inclusive) - NT$ 2,000,000 (non-inclusive)
TsuKang Yu, Sean Tai TsuKang Yu, Sean Tai TienShang Chang, Daniel Shih TienShang Chang, Daniel Shih
TienShang Chang, Daniel Shih TienShang Chang, Daniel Shih Tommy S. Chao Tommy S. Chao
Tommy S. Chao Tommy S. Chao
NT$ 2,000,000 (inclusive) ~ 3,500,000 (non-inclusive)
NT$ 3,500,000 (inclusive) ~ 5,000,000 (non-inclusive)
NT$ 5,000,000 (inclusive) ~ 10,000,000 (non-inclusive) WeiHsin Ma WeiHsin Ma
NT$ 10,000,000 (inclusive) ~ 15,000,000 (non-inclusive)
NT$ 15,000,000 (inclusive) ~ 30,000,000 (non-inclusive)
NT$ 30,000,000 (inclusive) ~ 50,000,000 (non-inclusive)
NT$ 50,000,000 (inclusive) - NT$ 100,000,000 (non-inclusive)
NT$ 100,000,000 and above
Total 8 8 8 8
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(2) Supervisors' remuneration: not applicable since no supervisor was appointed for the Company.

(3) Compensation to the President and vice presidents:

December 31, 2020; unit: NTD thousands

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Sum of A, B, C, and D as
Bonus and special
Salary (A) Pension (B) Employee remuneration (D) (proposed) a percentage of net
allowances (C) Compensation
income (%)
from parent
company or
Title Name All companies All business
All companies All All The Company included in the companies investments
The included in The companies The companies financial statements The included in other than
included in included in
Company the financial Company the financial Company the financial Amount Amount Amount Amount Company the subsidiaries
statements statements statements paid in paid in paid in paid in financial
cash shares cash shares statements
CEO WeiHsin Ma 7,183 7,183 - - 1,197 1,197 83 - 83 - 2.42 2.42 -
President WEN Jinxiang 4,448 4,448 - - 681 681 83 - 83 - 1.49 1.49 -
Vice President TSAI Jungtsung 2,854 2,854 - - 412 412 83 - 83 - 0.96 0.96 -
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Compensation range

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Names of President and vice presidents
Range of compensation to the President and vice presidents All companies included in the
The Company
financial statements
Below NT$ 1,000,000
NT$ 1,000,000 (inclusive) ~ NT$ 2,000,000 (non-inclusive)
NT$ 2,000,000 (inclusive) ~ 3,500,000 (non-inclusive) TSAI Jungtsung TSAI Jungtsung
NT$ 3,500,000 (inclusive) ~ 5,000,000 (non-inclusive)
NT$ 5,000,000 (inclusive) ~ 10,000,000 (non-inclusive) WeiHsin Ma, WEN Jinxiang WeiHsin Ma, WEN Jinxiang
NT$ 10,000,000 (inclusive) ~ 15,000,000 (non-inclusive)
NT$ 15,000,000 (inclusive) ~ 30,000,000 (non-inclusive)
NT$ 30,000,000 (inclusive) ~ 50,000,000 (non-inclusive)
NT$ 50,000,000 (inclusive) - NT$ 100,000,000 (non-inclusive)
NT$ 100,000,000 and above
Total 3 3
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(4) Names of managers entitled to employee remuneration and amount entitled:

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March 31, 2021; unit: NTD thousands
Total as a
Amount paid
Title Name Amount paid in cash Total percentage of
in shares net income
(Proposed)
(%)
Chairman
WeiHsin Ma
CEO
President Jinxiang
Wen
Vice President
Head of finance Jung-Tsung
Tsai
(Note 2)
Assistant Vice Lien-Hsiang
President Chiang
Assistant Vice Po-Chiang
President (Note 3) Huang None 667 667 0.19
Assistant Vice YANG
President (Note 4) Yutze
Assistant Vice Tai-Yuan
President (Note 5) Chen
Assistant Vice
President LIU
Head of Finance Tingxian
(Note 6)
Head of accounting Che-Chia
Chang
Managers
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Note 1: Represents proposed amount of employee remuneration for managers that the board of directors has approved for the most recent year. Net income refers to the amount of after-tax profit shown in the Company's 2020 standalone financial statements that is attributable to the parent company.

Note 2: HUANG Pochiang resigned on February 17.

Note 3: TSAI Jungtsung succeeded as Vice President and Head of Finance on January 17, 2020. And was transferred within the Group on April 1, 2021.

Note 4: May 8, 2020 Ms. YANG Yutze was promoted to be the Assistant Vice President of Audit Office. And was transferred to another department on March 19, 2021.

Note 5: December 29, 2020 CHEN Taiyuan was promoted to be the Assistant Vice President of the Product Development Center.

Note 6: January 26, 2021 LIU Dingxien was promoted to be the Assistant Vice President. And succeeded as the head of finance on April 1, 2021.

(5) Amount of compensation paid in the last 2 years by the Company and all companies included in the consolidated financial statements to the Company's directors, supervisors, President, and vice presidents, and their respective proportions to standalone net income, as well as the policies, standards, and packages by which they were paid, the procedures through which compensations were determined, and their association with business performance and future risks:

Title	2019	2019	2020	2020
	The Company	Consolidated statement AllCompany	The Company	Consolidated statement AllCompany
Director	3.06%	3.06%	4.82%	4.82%
President and vice presidents	0.86%	0.86%	4.87%	4.87%

Note 1: The Company does not have supervisor in place.

Note 2: Net income (loss) refers to the amount of after-tax profit shown in the Company's standalone financial statements that is attributable to the parent company.

The director remuneration policy complies with the Company Act and Articles of Incorporation, takes into account the director’s performance in the comprehension of the Company’s targets, missions and duties, participation level of the management, fostering and communication of internal working relationship, professionalism and continuing

education, internal control and other factors. The Remuneration Committee shall make the proposal pertaining the director remuneration, which shall be executed after resolution passed by the board of directors. Managers' compensations are proposed by the Remuneration Committee after taking into consideration the Company's operating strategies, profitability, individual performance (e.g. problem solving capabilities, planning and organization capabilities, active participation, dedication and engagement, continuous improvements, building successful team, cross departmental communication and talent development capabilities, etc.), and the market salary, and executed with the approval of the board of directors.

The above principles may be adjusted as needed at appropriate times depending on changes in the economy and the industry after taking into consideration the Company's future prospects and profitability.

4. Corporate governance

(1) Functionality of board of directors:

A total of 8 Board meetings (A) were held in 2020; directors' attendance records are summarized below:

Title Name Number of in- person attendance (B) Number of proxy attendance In-person attendance rate (%) [B/A] Remarks
Chairman WeiHsin Ma 8 0 100%
Chairman Hua Li Investment Corp. Representative: YuChi Chiao 7 1 88%
Director TsuKang Yu 8 0 100%
Director Sean Tai 6 2 75%
Independent Director TienShang Chang 8 0 100%
Independent Director Daniel Shih 8 0 100%
Independent Director Tommy S. Chao 5 3 63%
Other mandatory disclosures:
1. Board meeting-related disclosures required by Article 14-3 of the Securities and Exchange Act and any documented
objection or reservation made by independent directors against board of directors' resolutions; state the date and details
of the resolution, the meeting session, the independent directors’ opinions and how the Company has responded:
(1) Conditions described in Article 14-3 of the Securities and Exchange Act: Please refer to "Major board of directors
resolutions and execution" in page 54 of this annual report.
(2) Any other documented objections or reservations raised by independent director against board resolution in relation
to matters other than those described above: None.
2. Disclosure regarding avoidance of interest-conflicting motions, including the names of directors concerned, the motions,
the nature of conflicting interests, and the voting process:
(1) Discussions in board meeting dated 2020.01.17 - 2019 second-half manager performance evaluation, 2019 year-end
bonus for Chairman/CEO, and 2019 year-end bonus for managers: Chairman WeiHsin Ma concurrently served as
CEO of the Company, whereas Director YuChi Chiao was identified as Ma's spouse; for this reason, the two parties
above had recused from discussion and Director TienShang Chang was designated as acting chairperson for the
motions, which were passed as proposed without objection from attending directors upon inquiry.
(2) Discussion in board meeting dated 2020.03.20 - proposal to lend capital to Glorystone Inc.: Chairman WeiHsin Ma
concurrently served as Chairman of Glorystone, whereas Director YuChi Chiao was identified as Ma's spouse; for
this reason, the two parties above had recused from discussion and Director TienShang Chang was designated as
acting chairperson for the motion, which was passed as proposed without objection from attending directors upon
inquiry.
(3) Discussion in board meeting dated 2020.05.08 - allocation of 2019 employee remuneration for managers: Chairman
WeiHsin Ma concurrently served as CEO, whereas Director YuChi Chiao was identified as Ma's spouse; for this
reason, the two parties above had recused from discussion and Director TienShang Chang was designated as acting
chairperson for the motion, which was passed as proposed without objection from attending directors upon inquiry.

(4) Discussion in board meeting dated 2020.08.05 - allocation of 2019 employee remuneration for managers: Chairman WeiHsin Ma concurrently served as CEO, whereas Director YuChi Chiao was identified as Ma's spouse; for this reason, the two parties above had recused from discussion and Director TienShang Chang was designated as acting chairperson for the motion, which was passed as proposed without objection from attending directors upon inquiry.
(5) Discussion in board meeting dated 2020.11.05 - proposal to dispose 1F, 2F, and 3F of the Company's plant in Southern Taiwan Science Park: Director Chiao served as Chairman of HannStar Display Corporation, whereas Chairman Ma was identified as Chiao's spouse; for this reason, the two parties above had recused from discussion and Director TienShang Chang was designated as acting chairperson for the motion, which was passed as proposed without objection from attending directors upon inquiry.
(6) Discussion in board meeting dated 2020.12.29 - The Board of Directors discussed the acquisition of common stock shares from HannStar Display Corporation. Because Director CHIAO is the chairman of HannStar Display Corporation and Chairman MA is his spouse, a recusal was required by law due to conflicting interests and TienShang Chang was assigned to be the acting chairperson; the case was approved as is unanimously among attending directors.
(7) Discussion in board meeting dated 2021.01.26 - The Board of Directors discussed the year-end bonus for the Chairman and Chief Executive Officer of the Company for 2020. Because Chairman MA is also the Chief Executive Officer and Chairman CHIAO is her spouse, a recusal was required by law due to conflicting interests and TienShang Chang was assigned to be the acting chairperson; the case was approved as is unanimously among attending directors.
Enhancements to the functionality of board of directors in the current and most recent year, and progress of such enhancements:
(1) The Company assembled an Audit Committee on June 3, 2015 in an attempt to improve corporate governance and board function. The committee convenes meetings at least once per quarter, and operates primarily to oversee the following matters:
1. Fair presentation of the Company's financial statements.
Appointment and dismissal of financial statement auditors, and evaluation of their independence and

performance.

  3. Implementation of the Company's internal control system.

  4. The Company's compliance with relevant regulations and rules.

  5. Control over the Company's existing or potential risks.

(2) The Company has "Director and Manager Ethics Guidelines," "Director Salary, Benefit, and Performance Evaluation Policy," "Manager Compensation Policy" and “Corporate Governance Best Practice Principles” in place to enhance board functions.
(3) Aside from Audit Committee, the Company also has a Remuneration Committee available to assist the board of directors with compensation management. Please refer to the Corporate Governance chapter of this annual report for performance information of the committee.
(4) The Company encourages board members to undergo continuing education as a way to develop professional knowledge and legal awareness, and thereby improve corporate governance practices. The Company also provides directors and supervisors with timely updates on training courses and regulatory amendments.

Independent directors' attendance in 2020 board meetings:  in-person attendance ◎proxy attendance *no attendance

Name/Date	January 17, 2020	March 20, 2020	May 5, 2020	August 5, 2020	November 5,2020	December 29,2020	January 26, 2021	March 19, 2021
TienShang Chang								
Daniel Shih								
Tommy S. Chao	◎	◎			◎			

2020 Board of Directors Performance Evaluation Implementation status:

	Board of Directors Performance Evaluation Implementation status	Board of Directors Performance Evaluation Implementation status
Evaluation Cycle	 The self-assessment is performed once a year, including the Board of Directors self-assessment, the Functional Committee self-assessment, and the self-assessment among the Board members, and peer assessment  An assessment shall be performed once every three years by an external independent professional institution or a group of external experts and scholars.
Evaluated period	January 1 through December 31, 2020
Scope of evaluation	Performance evaluations of the Board of Directors and the functional committees
Evaluation method	 Self-assessment (Board members, Board of Directors and Functional Committees)  An assessment shall be performed by an external independent professional institution or a group of external experts and scholars.
Highlights of evaluation	I. Board members: Keeping track of the Company’s goals and missions, awareness of the duties of directors, involvement in the Company’s operation, internal relations management and communication, professional and continuing education for directors, internal control, other items. II. Board of Directors and Functional Committees: Involvement in the Company’s operation, awareness of duties, improvement of decision-making quality, composition and structure, election and continuing education, internal control, other items.
Assessment outcome	 	Assessment outcome: According to the findings in the assessment of the performance of the Board of Directors for 2020, the Board of Directors was generally working well. For 2021, the findings from the 2020 evaluation will be followed to continue reinforcing the Board of Directors and to enhance corporate governance efficacy. The performance appraisal of directors was conducted by theTaiwan Institute of Ethical Business and Forensic.The organization and the experts who conducted the appraisal is independent from the Company’s business and submitted the appraisal on March 9, 2021. On March 19, 2021, the report was discussed on the board meeting. The observation and recommendations for improvement are as follows: 1. Chairman also serving as the highest-ranking manager: in light of the fact that the incumbent Chairman has abundant experience in the industry,Chairman also serves as the highest-

Board of Directors Performance Evaluation Implementation status ranking manager in order to take part in leading and running the Company and there are fewer than one-third of the board members who are also managers at the moment. It is advised that with the business scale increasing each day, the principles defined in the Corporate Governance Best Practice Principles may be referred to, depending on the operational scale of the Company in the future, while whether the best practice goal of the Chairman not serving as the highest-ranking manager may be fulfilled or not is being evaluated. 2. Adjustment of whistle-blowing guidelines and establishment of whistle-blowing channel for external people: Despite the fact that the Company has the “Corporate Governance Best Practice Principles” and the “Ethical Code of Conduct for Directors and Managers” in place, there are no regulations governing how an investigation shall proceed and how related reporting may take place once a case reported is entered for processing. It is advised to define such regulations. The Company may also consider outsourcing whistle-blowing to an independent external institution that will provide the exclusive email or hotline for whistleblowing purpose. 3. Reinforced establishment of a professional human resources bank: It is advised that the Board of Directors of the Company may make decisions regarding the strategic directives for the talent echelons that may be established in the future and such directives are to be handed to the management team for implementation so that the management at different departments may take over the assignments successfully. 4. Reinforced emphasis of the Board of Directors over the issue of corporate social responsibilities: The Company has already linked corporate social responsibilities (CSRs) with its daily business activities and is fulfilling CSR goals while pursuing business profits. It is devoted to bringing consistency between the operational behavior and its own business purpose and core corporate values. The Company has issued the CSR Report for the fourth year in a row to stakeholders know major issues that the Company is concerned about and related risk assessments. In light of the fact that some of the directors interviewed believed that there is still room for improvement and development with regard to the planning of and strategy about corporate social responsibilities of the Company at present, however, considerations in the future may be placed on the discussion about corporate social responsibilities within the Board of Directors in order to obtain more diversified perspectives and to help with innovative thinking. 5. Continuing education available in the industry: In order for the Board directors of the Company to better keep track of the economic situation facing it and to analyze trends in the industry, it is advised that the Company may make further planing reflective of the operational direction of the four corporate groups being evaluated and the developmental trends in the industry and holds its own industry-specific courses so that Board directors from different industries can have knowledge of the industry that the Company is in and it helps all Board members keep track of the competition and trends in the industry.

(2) Involvement of Audit Committee members or supervisors in board of directors’ meetings:

(1) Functionality of the Audit Committee:

A total of 7 Audit Committee meetings (A) were held in 2020; independent directors' attendance records are summarized below:

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Number of in- In-person attendance
Number of proxy
Title Name person attendance rate Remarks
attendance
(B) (%)(B/A)
Convener TienShang Chang 7 0 100%
Committee
Daniel Shih 7 0 100%
member
Committee
Tommy S. Chao 4 3 57%
member
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 Duties of the Audit Committee:
1. Defining or revision of the internal control system in compliance with Article 14-1 of the Securities and Exchange Act.
2. Evaluation of the effectiveness of the internal control system
3. Revision or amendment of the procedures for acquiring or disposing of assets, lending funds, and endorsements/guarantees as
required by Article 36-1 of the Securities and Exchange Act
4. Matters involving the interests of the Board directors
5. Transaction of major assets or lending of funds, and endorsements/guarantees
6. Raising, release, or private placement of equity securities
7. Evaluation of the assignment, dismissal, compensation, and independence and suitability of certified public accountants
8. Appointment or dismissal of the heads of finance, accounting, or internal audit
9. Annual Financial Statements signed or sealed by the Chairman , managers, and head of accounting
10. Other important matters as specified by the Company or the competent authority
 Highlights of Tasks throughout the Year:
1. Perform audit on financial statements, accounting policies and procedures.
2. Oversee the internal control system, the related policies and procedures.
3. Oversee major asset transactions.
4. Oversee major funds lending.
5. Oversee public offering or issuance of securities.
6. Oversee legal compliance.
7. Oversee transactions of employees, managers, and directors with related parties, if any, and possible conflicts of interest.
8. Devise fraud prevention plan and compose fraud investigation report.
9. Evaluate the qualification, independence and performance of independent auditors.
10. Oversee the engagement, discharge or fees of independent auditors.
11. Oversee the appointment or dismissal of the heads of finance, accounting, or internal audit.
12. Oversee the execution of the Audit Committee’s duties.
13. Conduct the internal self-assessment and external assessment questionnaires pertaining to the performance of the Audit Committee.
 Other matters and implementation status:
1. For Audit Committee meetings that meet any of the following descriptions, state the date and session of board of directors meeting
held, the discussed topics, the Audit Committee's resolution, and how the Company has responded to Audit Committee's opinions.
(1) Conditions described in Article 14-5 of the Securities and Exchange Act:

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How opinions from the
Historical Decisions Made Audit Committee are
addressed
1. Intended hiring of Mr. TSAI Jungtsung as the Vice President of No members
the Company’s Finance & Accounting Center expressed opinions
2020.01.17 2. Intended proposal of Mr. TSAI Jungtsung as the head of finance and the cases were
The 10 [th] meeting of of the Company submitted to the
the second intake Board of Directors
for a decision and
were approved.
1. 2019 Business Report and Financial Statements
2. Declaration on Internal Control based on the findings from the
internal control self assessment of 2019
3. 2019 Distribution of Earnings
4. Intended capital increase in cash for issuance of common stock
No members
through private placement or public offering or the combination of
the two expressed opinions
March 20, 2020 5. Intended lending of funds to Glorystone Inc. and the cases were
The 11 [th] meeting of 6. 2020 CPA assignment and independence assessment submitted to the
the second intake Board of Directors
7. Intended revision of the “internal control system” and “Internal
for a decision and
Audit Enforcement Rules”.
8. Intended revision of the Regulations Governing the Acquisition were approved.
and Disposal of Assets
9. Intended revision of the Operating Procedure for Lending of
Funds and Endorsement/Guarantee
10. Intended revision of the Audit Committee Organic Rules
1. The Consolidated Financial Statement for the first quarter of 2020 No members
2. Supplementary public offering for the private placement of expressed opinions
May 8, 2020 and the cases were
common stock and the application for being traded on the market
The 12 [th] meeting of submitted to the
3. Intended revision of some of the articles in the Internal Control
the second intake Board of Directors
System regarding “criteria and regulations of the internal control for a decision and
system of the service unit” were approved.
1. Consolidated Financial Statement for the second quarter of 2020 No members
2. Appropriation of 2020 first-half earnings expressed opinions
August 5, 2020 and the cases were
The 13 [th] meeting of submitted to the
the second intake Board of Directors
for a decision and
were approved.
1. Revision of the “Hierarchical Responsibility Principles” No members
2. Intended stipulation of the 2021 Internal Audit Plan expressed opinions
November 5, 2020 3. Consolidated Financial Statement for the third quarter of 2020 and the cases were
The 14 [th] meeting of 4. Intended disposal of the first, second, and third floors of the plant in submitted to the
the second intake the Tainan Science Park Board of Directors
for a decision and
were approved.
1. Intended acquisition of common stock shares of HannStar Display No members
Corporation expressed opinions
December 29, 2020 2. Intended stipulation of the 2021 Operation Plan and the cases were
The 15 [th] meeting of 3. Discussion of the promotion of Special Assistant CHEN Taiyuan submitted to the
the second intake at the Product Development Center to be the Assistant Vice Board of Directors
President for a decision and
were approved.
1. 2020 Business Report and Financial Statements
2. Declaration on Internal Control based on the findings from the
internal control self assessment of 2020
3. 2020 Distribution of Earnings No members
4. Intended capital increase in cash for issuance of common stock expressed opinions
March 19, 2021 through private placement or public offering or the combination of and the cases were
The 16 [th] meeting of the two submitted to the
the second intake 5. 2021 CPA assignment and independence assessment Board of Directors
6. Intended lending of funds to Glorystone Inc. for a decision and
7. Hiring of the head of audit were approved.
8. Appointment of the head of finance
9. Intended revision of the “internal control system” and “Internal
Audit Enforcement Rules”.
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(2) Other than those described above, any resolutions unapproved by the Audit Committee	but passed by more than two-thirds	but passed by more than two-thirds
of directors: None.
2. Avoidance of conflicting-interest motions by independent directors: None.
3. Communication between independent directors and internal/external auditors:
(1). Communication between independent directors and internal/external auditors
1. The Company not only has an internal audit team that presents audit reports and audit findings tracking		reports to
independent directors on a monthly basis, the chief internal auditor also updates	independent directors on the audit
tasks performed, the findings discovered, and follow-up actions during Audit Committee meetings, which are
convened at least once per quarter.
2. Financial statement auditors report to independent directors during quarterly Audit Committee meetings on various
issues, including: review/audit findings on quarterly financial statements of the Company and subsidiaries, outcome
of internal control audit, IFRSs amendments and their effects, and other matters	required by law. The auditors also
communicate with independent directors on the use of adjusting entries and whether changes in law would affect the
ways accounts are presented.
3. The chief internal auditor, CPA, and independent directors are able to contact each other directly at any time using
open communication channels.
(2) Summary of previous communications between independent directors and internal auditors
Independent directors' opinions on audit execution and performance: Issues were adequately communicated; the		following
is a summaryof keyissues communicated in 2020:
Date Highlights of the meeting/communication	Advice and Outcome
March 20, 2020 The 11thmeeting of the second intake 1. Audit Implementation Report of December 2019 through February 2020. 2. Improvement Progress and Tracking Report for Deficiencies Found during the Audit. 3 Issuance of the 2019 Internal Control System Declaration. 4. Revision of the “internal control system” and “Internal Audit Enforcement Rules”.	No objections. Approved by the Audit Committee and submitted to the Board of Directors for a decision and approval and was
May 8, 2020 The 12thmeeting of the second intake 1. Audit Implementation Report of March 2020 through April 2020. 2. Improvement Progress and Tracking Report for Deficiencies Found during the Audit. 3. Revision of some of the articles in the Internal Control System regarding “criteria and regulations of the internal control system of the service unit”.	announced and declared as scheduled.
August 5, 2020 The 13thmeeting of the second intake 1. Audit Implementation Report of May 2020 through July 2020. 2. Improvement Progress and Tracking Report for Deficiencies Found duringthe Audit.
November 5, 2020 The 14thmeeting of the second intake 1. Audit Implementation Report of August 2020 through October 2020. 2. Improvement Progress and Tracking Report for Deficiencies Found during the Audit. 3. Revision of the “Hierarchical Responsibility Principles”. 4. Stipulation of the 2021 Audit Plan.
The 15thmeeting of the second intake
1. Audit Implementation Report of November 2020 through February
2021.
March 19, 2021 2. Improvement Progress and Tracking Report for Deficiencies Found
during the Audit.
3. Revision of the “internal control system” and “Internal Audit
Enforcement Rules”.
(3). Summary of previous communications between independent directors and financial statement auditors
Independent directors had made progressive communication with the financial statement auditors; the following is a
summary of key issues communicated in 2020:
Date Highlights of the meeting/communication	Management of implementation results
March 20, 2020 Audit Committee Discussed and communicated about the audit findings of the Consolidated and Individual Financial Statements and the Internal Audit Report of 2019 as well as applicability of some accounting principles and impacts of newlyrevised laws and regulations.	Submitted to the Board of Directors after review and approval

May 8, 2020	Audit Committee Discussed and communicated about the review findings of the Consolidated Financial Statement and the Internal Audit Report for the first quarter of 2020 as well as the impacts of some newly revised laws and regulations.	Submitted to the Board of Directors after review and approval
August 5, 2020	Audit Committee Discussed and communicated about the approval findings of the Consolidated Financial Statement and the Internal Audit Report for the second quarter of 2020 as well as applicability of some accounting principles and impacts of newlyrevised laws and regulations.	Submitted to the Board of Directors after review and approval
November 5, 2020	Audit Committee Discussed and communicated about the approval findings of the Consolidated Financial Statement and the Internal Audit Report for the third quarter of 2020 as well as applicability of some accounting principles and impacts of newly revised laws and regulations.	Submitted to the Board of Directors after review and approval
March 19, 2021	Audit Committee Discussed and communicated about the audit findings of the Consolidated and Individual Financial Statements and the Internal Audit Report of 2020 as well as applicability of some accounting principles and impacts of newly revised laws and regulations.	Submitted to the Board of Directors after review and approval

Note: The in-person attendance rate is calculated based on the number of Audit Committee meetings held and the number of in-person attendances made during active duty.

(2) Supervisors' involvement in board of directors’ meetings: The Company does not have supervisors, hence not applicable.

(3) Deviation and causes of deviation from Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies:

Companies:
		Actualgovernance Deviation and
Assessment criteria	Yes No	causes of deviation from Corporate Governance Best- Practice Principles for TWSE/TPEX Listed Companies Summary
1. Has the Company established and disclosed its corporate governance principles based on "Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies"?		The Company has established its own Corporate Governance Code of Conduct based on "Corporate Governance Best-Practice Principles for TWSE/TPEX Listed Companies," which was approved in the board of directors meetingheld on November 5,2020. No material deviation is found
2. Shareholding structure and shareholders' interests (1) Has the Company implemented a set of internal procedures to handle shareholders' suggestions, queries, disputes and litigations? (2) Is the Company constantly informed of the identities of its major shareholders and the ultimate controller? (3) Has the Company established and implemented risk management practices and firewalls for companies it is affiliated with? (4) Has the Company established internal policies that prevent insiders from trading securities against non-public information?	   	(1) The Company has a Share Service Department that handles shareholders' recommendations, queries, and disputes in accordance with "Regulations Governing the Administration of Shareholder Services of Public Companies" and Internal Control System, Standards, and Rules for Share Service Department. (2) The Company discloses the identities of its major shareholders and the ultimate controller in a manner that complies with laws. (3) Management responsibility and authority between the Company and affiliated enterprises are clearly distinguished; dealings between affiliated enterprises are carried out in compliance with the Internal Control System and relevant rules. (4) The Company has "Material Insider Information Handling and Insider Transaction Prevention Procedures" in place to serve as guidance for compliance; the details of which have been published on the Company's Documents Center and made accessible to employees. The Company has also been disseminating the procedures to directors and insiders in electronic form since October 28, 2020 topromote awareness. No material deviation is found
3. Composition and responsibilities of the board of directors (1) Has the board devised and implemented policies to ensure diversity of its members?		(1) Board diversity has been essential to the Company as it improves board performance and ensures sustainable growth. Members of the board are chosen using objective standards that emphasize solely on candidates' skills and capacity without limitation on gender, age, culture, education, ethnicity, religion, or philosophical belief. Diversityof the current(8th)board of directors:	No material deviation is found

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(2) Apart from the Remuneration Committee and Audit Committee, has the Company assembled other functional committees at its own discretion? (3) Has the Company established standards and method for evaluating the performance of the Board of Directors, and does the Company implement the performance evaluation periodically and submit results of the performance evaluation to the Board of Directors, and use them for reference while deciding compensation and rewards for individual directors and nominating them for a second term in office?? (4) Are external auditors' independence assessed on a regular basis?	 		1 of the directors concurrently served as employee, and female directors accounted for 14% of the board. The Company has 3 independent directors that represent 42.8% of the board. All independent directors have served less than 3 years on the board; please refer to Appendix 1 in (page 37 of the annual report) for more details on the enforcement of diversity policy. (2) Given its current scale and operations, the Company has so far assembled a Remuneration Committee and an Audit Committee only, and has no plan to establish other functional committees at this point. (3) The Company has stipulated the “Regulations Governing the Review of Compensation and Remuneration for and Performance of Board Directors” and the external evaluation of the performance of the Board of Directors was completed in early March 2021 (For the evaluation findings, refer to Page 26 of this Annual Report) and submitted to the Board of Directors on March 19, 2021. Directors' performance evaluation results are used as reference in decisions such as compensation and renewal of service. (4) The Company assesses the independence and competency of its financial statement auditors once a year. Indicators such as: existence of financial stake/business interest between the accounting firm and the Company, term and competency of the financial statement auditors, audit team members' shareholding interest in the Company, and existence of borrowing/lending relationship are taken into consideration during assessment. Meanwhile, the CPAs have complied with CPA code of ethics of the Republic of China, maintained independence from the Company, and issued their declaration of independence. The 2020 evaluation result was passed in the Audit Committee meeting held on March 19, 2021 and reported to the board of director on March 19, 2021, during which the board resolved the conclusion that: CPA Ching-Chang Chen and CPA Kevin Lin of PwC Taiwan were found to have met the independence

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Actual governance Deviation and
causes of
deviation from
Corporate
Assessment criteria
Yes No Summary Governance Best-
Practice Principles
for TWSE/TPEX
Listed Companies
requirements to serve as the Company's financial
statement auditors.
4. Has the TWSE/TPEX listed As of the date the Annual Report was printed, the Configured on
company allocated adequate Company has not set up an exclusive (inclusive) unit for May 5, 2021.
number of competent  corporate governance and the head of corporate
corporate governance staff governance. Respective corporate governance affairs,
and appointed a corporate however, are to be handled in compliance with
governance officer to oversee applicable laws and regulations. Refer to Exhibit 3
corporate governance affairs (Page 39 of the Annual Report).
(including but not limited to
providing
directors/supervisors with the
information needed to
perform their duties, assisting
directors/supervisors with
compliance issues,
convention of board meetings
and shareholder meetings,
and preparation of
board/shareholder meeting
minutes)?
5. Has the Company provided proper The Company maintains open communication channel
communication channels and created  with stakeholders including suppliers, customers, No material
dedicated sections on its website to address employees, and investors. The Company also has a deviation is found
corporate social responsibility issues that stakeholder section created on its website, with contact
are of significant concern to stakeholders information disclosed to serve as communication
(including but not limited to shareholders, channel with the Company.
employees, customers and suppliers)?
6. Does the Company engage a share service  The Company handles shareholder service on its own.
No material
agency to handle shareholder meeting
deviation is found
affairs?
7. Information disclosure
(1) Has the Company established a website that  (1) The Company has an investor section created on its No material
discloses financial, business, and corporate website (www.hannstouch.com) to disclose deviation is found
governance-related information? financial, business, and corporate governance
 information.
(2) Has the Company adopted other means to (2) The Company maintains an English website, assigns
disclose information (e.g. English website, dedicated personnel to collect and disclose relevant
assignment of dedicated personnel to collect information, and enforces a spokesperson system.
and disclose corporate information, Details of any investor conference held are also
implementation of a spokesperson system,  disclosed on the Company's website and on "Market
and broadcasting of investor conferences via Observation Post System."
the Company website)?
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Assessment criteria		Actualgovernance Deviation and causes of deviation from Corporate Governance Best- Practice Principles for TWSE/TPEX Listed Companies Summary	Actualgovernance Deviation and causes of deviation from Corporate Governance Best- Practice Principles for TWSE/TPEX Listed Companies Summary
	Yes No
(3) Does the Company publish and make official filing of annual financial report within two months after the end of an accounting period, and publish/file Q1, Q2 and Q3 financial reports along with monthly business performance before the required due dates?		(3) Although the Company currently does not publish annual financial reports within two months after the end of a financial year, it does update financial information on a quarterly basis and operations on a monthly basis before the due dates required by law.
8. Does the Company have other information that enables a better understanding of the Company's corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders' interests, continuing education of directors/supervisors, implementation of risk management policies and risk measurements, implementation of customer policy, and liability insurance for directors and supervisors)? 		(1) Employee rights and employee care: The Company values and enforces employees' rights. In addition to providing mandatory benefits such as group insurance and pension fund contributions, the Company also arranges annual employee health checkups and maintains open communication channels to create a harmonic work environment that supports various work activities. (2) Investor relations: The Company has an investor section created on its website to disclose financial and business-related information. (3) Supplier relations and stakeholders' interest: The Company maintains productive relationship with suppliers and stakeholders, and engages them in financial and business dealings out of fairness to the best interest of bothparties. No material deviation is found
		(4) Purchase of director liability insurance: The Company has purchased liability insurance for directors, managers, and key staff for the protection of shareholders' interest. (5) Execution of customer policy: The Company respects and protects customers' technologies, documents, and information, and has measures in place to ensure confidentiality of customers' information. (6) As a principle, directors of the Company attend board meetings in-person except under special circumstances. (7) The Company has an environmental safety unit that supports government agencies and the industrial park administration in promoting proper awareness, and executing tasks relating to public safety, environmental protection, and beautification in the local area. (8) The Company has implemented a set of customer complaint procedures to help identify issues and areas of responsibility. Customers' claims are responded	No material deviation is found

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Actual governance Deviation and
causes of
deviation from
Corporate
Assessment criteria
Yes No Summary Governance Best-
Practice Principles
for TWSE/TPEX
Listed Companies
quickly and proactively with effective measures, and
followed up with preventive and improvement actions
where appropriate. Senior managers would pay visit
to customers personally to communicate on issues
concerning production capacity, yield, delivery etc.,
and aim toward zero customer complaint.
(9) For details on directors’ education, please see
Appendix 2 (page 38 of the annual report).
(10) For the risk management policy, please refer to Page
99 of this Annual Report.
9. Please explain the improvements made, based on the latest Corporate Governance Evaluation results published by TWSE Corporate
Governance Center, and propose enhancement measures for any issues that are yet to be rectified.
Below is a summary of high-scoring areas and improvements made:
Question Company-wide
Indicator Improvements
No. score/percentage
Does the company issue the English version meeting notice 30 days prior to the annual
1.9 55% Proposal for improvement.
general meeting?
Are the chairman and the general manager, or the equivalent position holder (the highest
2.3 52% Proposal for improvement.
management position) the same person or spouses, or first-degree relatives?
The disclosure was only made in
the annual reports for 2019.
Do the Remuneration Committee members attend two meetings or more, and regularly
Information for the first half of the
2.13 disclose and review the performance appraisal of directors, supervisors and managers, the 51%
year for 2020 was not disclosed.
remuneration policy, system, standard and structure?
Improvement measure has been
made.
The disclosure was only made in
Does the company make disclosure on the communication between independent directors, the annual reports for 2019.
head of internal auditor, and external auditors (e.g. the communication method, issues and Information for the first half of the
2.15 60%
results on the company financial reports, as well as the financial and business status) on year for 2020 was not disclosed.
the company website? Improvement measure has been
made.
3.12 Is the dividend policy disclosed in the annual reports? 60% Proposal for improvement.
Does the company volunteer the information on the non-audit fees paid to independent
3.15 72% Proposal for improvement.
auditors, accounting firms, and affiliated companies in the annual reports?
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Appendix 1: Board Diversity Policy and Execution

 Board diversity policy:

According to Article 20 (Capabilities of the board of directors) of Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies:

The board of directors of a TWSE/TPEX listed company shall exercise guidance over corporate strategies, supervise the management, and be held responsible to the company and its shareholders. The company shall adopt various processes and arrangements as part of its corporate governance system to ensure that the board of directors performs duties in accordance with laws, the Articles of Incorporation, and shareholders' resolutions.

Board of directors of a TWSE/TPEX listed company shall be structured based on the company's size and major shareholders' holding position. There should be five director seats or more, adjustable depending on the company's practical requirements.

Board members should be diversified in a manner that supports the Company's operations, business activities, and growth requirements, provided that the number of directors who concurrently hold managerial positions do not exceed one-third of the board. The diversification policy should include, but is not limited to, the following two principles:

Background and value: Gender, age, nationality, culture etc.
Knowledge and skills: Career background (e.g. law, accounting, industry, finance, marketing, or technology), professional skill, and industry experience.

All board members shall possess the knowledge, skills, and characters needed to exercise their duties. In order to fulfill the ideal goals for corporate governance, the Board of Directors as a whole shall be capable of the following: making judgment about operations, accounting and financial analyses, operational management, crisis management, industrial knowledge, international market views, leadership, and decision-making.

 Diversity of the current (8th) board of directors:

A. Board directors who are not employees: Target: 7; Actual: 6. The fulfillment rate is 86%.
B. Ratio of female board directors: Target 3; Actual 1. The fulfillment rate is 33%.
C. Industrial experience: Target_Electronics 5, Finance 3; Actual_Electronics 5, Finance 3. The fulfillment rate is 100%.
D. Professional distribution: Target_Accounting 5, Legal 2, Marketing 3; Actual_Accounting 4, Legal 1, Marketing 2. The fulfillment rate is 70%.
E. Distribution of ages of board directors: 40~50 ages x 1; 50~60 ages x 3; 60~70 ages x 3
F. Independent directors: Target 4; Actual 3. The fulfillment rate is 75%.

The independent directors account for 42.8%; female directors: 14.3%; directors who are also employees: 14.3%, independent directors having served a term less than 3 years: 100%, directors aged 46 to 55: 29%, 56-65: 29%, and 66-70: 42%. They are listed separately as follows:

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Concurrent Terms and Crisis and Global Leadership
Title Name Gender Age Nationality employment independent years as managementOperational Accounting and finance risk vision of the decision-and
position director management industry making
WeiHsin
Chairman Female 51 TW  N/A     
Ma
YuChi
Director Male 56 TW N/A     
Chiao
Director TsuKang Male 66 TW N/A    
Yu
Director Sean Tai Male 56 TW N/A    
Independent TienShang Male 68 TW 3 Years     
Director Chang
Independent Daniel Male 68 TW 3 Years    
Director Shih
Independent Tommy S. Male 47 TW 3 Years   
Director Chao
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Appendix 2: Directors' education in the last 2 years:

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Course date Total hours
Course trained
Name From to Organizer Course name hours during the
year
Director/Supervisor Liabilities and Risk
2020/10/23 2020/10/23 Taiwan Corporate Governance Association Management Conference by Fubon 3
Insurance
6
Audit Transformation and Value Adding
2020/04/10 2020/04/10 Taiwan Corporate Governance Association - From Big Data Auditing to Smart Risk 3
WeiHsin Ma Dashboard
2019/06/27 2019/06/27 Taiwan Corporate Governance Global Economic Trends and 3
Association Opportunities for Taiwan
Patent Landscape Analysis at Product 6
2019/06/27 2019/06/27 Taiwan Corporate Governance Association Development Stage; A.I. Prospects and 3
Application
2020/09/11 2020/09/11 Taiwan Association of Board Second Board Governance Efficiency 3
Governance Forum
2020/10/27 2020/10/27 Taiwan Corporate Governance ESG Trends and Social Responsibility 3
YuChi Chiao Association Investment (SRI) 9
Director/Supervisor Liabilities and Risk
2020/10/23 2020/10/23 Taiwan Corporate Governance Association Management Conference by Fubon 3
Insurance
2020/07/29 2020/07/29 Chinese National Association of Future Trends of AI in Corporate Digital 3
Industry and Commerce, Taiwan Transformation
Augmented Reality Technologies in 6
2020/04/23 2020/04/23 Taiwan Corporate Governance Association Smart Manufacturing; Growth of Sino- 3
American Silicon Group through M&A
TsuKang Yu
Seminar on Effective Enforcement of
2019/11/21 2019/11/21 Taiwan Stock Exchange Corporation Director Duties 3
2019 Compliance Seminar on Share 6
2019/07/17 2019/07/17 Securities & Futures Institute Transfers by Insiders of Public-listed 3
Companies
New Digital Reality of the Post-pandemic
2020/08/06 2020/08/06 Taiwan Corporate Governance Association Era; Latest AIoT Trends and Application 3
in Smart Manufacturing
Evolutionary Algorithms: Evolution of
2020/08/06 2020/08/06 Taiwan Corporate Governance Association AI; Pursuit for Co-prosperity Multi- 3 9
generation Leadership
Augmented Reality Technologies in
2020/04/23 2020/04/23 Taiwan Corporate Governance Association Smart Manufacturing; Growth of Sino- 3
Sean Tai American Silicon Group through M&A
2019 Compliance Seminar on Share
2019/07/17 2019/07/17 Securities & Futures Institute Transfers by Insiders of Public-listed 3
Companies
2019/06/27 2019/06/27 Taiwan Corporate Governance Global Economic Trends and 3 9
Association Opportunities for Taiwan
Patent Landscape Analysis at Product
2019/06/27 2019/06/27 Taiwan Corporate Governance Association Development Stage; A.I. Prospects and 3
Application
2020/07/22 2020/07/22 Taiwan Academy of Banking and Corporate Governance and Sustainable 3
Finance Management Workshop
6
Chinese National Association of
TienShang Chang 2020/07/21 2020/07/21 Industry and Commerce, Taiwan AML/CTF Regulations and Practices 3
2019/11/07 2019/11/07 Taiwan Corporate Governance Boosting Profitability through Innovation 3 3
Association in the Digital Era
2020/07/29 2020/07/29 Chinese National Association of Future Trends of AI in Corporate Digital 3
Industry and Commerce, Taiwan Transformation
Augmented Reality Technologies in 6
2020/04/23 2020/04/23 Taiwan Corporate Governance Association Smart Manufacturing; Growth of Sino- 3
Daniel Shih American Silicon Group through M&A
2019/06/27 2019/06/27 Taiwan Corporate Governance Global Economic Trends and 3
Association Opportunities for Taiwan
Patent Landscape Analysis at Product 6
2019/06/27 2019/06/27 Taiwan Corporate Governance Association Development Stage; A.I. Prospects and 3
Application
Corporate Governance and Business
2020/10/16 2020/10/16 Taiwan Stock Exchange Corporation Integrity Seminar for Directors and 3
Supervisors of TWSE-listed Companies
Tommy S. Chao 2020 6
2020/05/22 2020/05/22 Accounting Research and Development Key Amendments of IFRS and Common 3
Foundation of the R.O.C. Defects in Financial Report Preparation
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Exhibit 3: Scope of responsibilities of the head of corporate governance, highlights of business operations for the year,

and continuing education

I. Configuration of the position of head of corporate governance: Configured on May 5, 2021.
II. Appointment of head of corporate governance: He/She shall be a qualified lawyer or CPA or has worked in the managerial position in legal affairs, compliance, Internal Audit, finance, stock affairs, or corporate governance-related positions for at least three years years in compliance with Article 21.
III. Main responsibilities of the head of corporate governance: To protect shareholder equity and reinforce the function of the Board of Directors, including, without limitation, the following:
Help independent directors and general directors perform their function by providing the required materials and arrange continuing education for them:
- A. Provide the latest revisions made to and developments of laws and regulations concerning the scope of operation of the Company and corporate governance to the members of the Board of Directors and update them from time to time.
- B. Review the related information confidentiality class and provide directors with required information about the Company to keep the communications and exchange with heads of respective operations smooth.
- C. Help and arrange individual meetings between independent directors and the head of internal audit or the CPA in order to know the financial operations in the Company.
- D. Help independent directors and general directors prepare the annual continuing education program and arrange courses reflective of the characteristics of the industry that the Company is in and the education and experience of the directors.
Help with the procedures, resolutions, and compliance of the Board of Directors’ meetings and shareholders’ meetings:
- A. Report to the Board of Directors, independent directors, and Audit Committee operational status of corporate governance and confirm that the shareholders’ meetings and Board of Directors’ meetings called for are in compliance with applicable laws and corporate governance principles and regulations.
- B. Help and remind directors of the laws and regulations that they should follow while performing duties or making official decisions of the Board of Directors and adequately providing advice in the Board of Directors’ meeting.
- C. Enclose details about the announcement of important decisions made by the Board of Directors or release of important news in order to ensure the adequacy and correctness of the contents and to protect symmetry of correct trading information provided to investors.
Prepare the Board of Directors’ meeting agenda and notify directors of it seven days in advance. Convene the meeting and provide meeting materials. If recusal of interest is required, remind the specific director in advance and complete the meeting minutes within 20 days after the meeting.

Register the date of the shareholders’ meeting in advance as required by law, prepare the notice, the rules of procedure, the Annual Report, and the minutes of the meeting within the regulatory timeframe and complete change registration after the Articles of Incorporation are revised or after the directors are re-elected.
IV. Continuing education for the head of corporate governance: Configured through the Board of Directors’ meeting on May 5 this year and hence no information on continuing education was available yet as of the date this Annual Report was released.
(4) Composition, responsibilities, and functionality of the Remuneration Committee:

(1) Information of Remuneration Committee members:

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Has at least five years of relevant working
Criteria
experience and the following professional Independence Criteria (Note 1)
qualifications
Lecturer (or Judge, Commercial,
above) of prosecutor, legal,
commerce, lawyer, financial,
Number of
law, accountant, or accounting
finance, holder of or other positions as
Remuneration
accounting, national exam work
Identity Committee Remarks
or any or professional experience
member in
subjects qualification required to
relevant to relevant to the perform the 1 2 3 4 5 6 7 8 9 10 other public
the Company's assigned companies
Company’s operations duties
operations
in a public
or private
Name tertiary
institution
Independent TienShang           
0 Conformed
Director Chang
Independent Daniel           
0 Conformed
Director Shih
Independent Tommy S.           
0 Conformed
Director Chao
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Note: Members who meet the following conditions at any time during active duty and two years prior to the date of appointment will have a "V" placed in the corresponding boxes.

(1) Not employed by the Company or by any of its affiliated companies.

(2) Not a director or supervisor of the Company or any of its affiliated companies (this restriction does not apply to concurrent independent director positions in the Company, its parent company, subsidiary, or another subsidiary of the parent that is compliant with the Act or local laws).

(3) Does not hold more than 1% of the Company's outstanding shares in their own names or under the name of spouse, underage children, or proxy shareholder; nor is a top-10 natural-person shareholder of the Company.

(4) Not a manager listed in (1), or a spouse, 2nd-degree relative or closer or 3rd-degree direct relative or closer to any personnel listed in (2) or (3).
(5) Not a director, supervisor or employee of any corporate shareholder that: 1. holds 5% or more of the Company's outstanding shares; 2. is a top-5 shareholder; or 3. appoints director/supervisor representative in the Company according to Paragraph 1 or 2, Article 27 of The Company Act. (This excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act local laws).
(6) Not a director, supervisor, or employee of any other company that controls directorship in the Company or where more than half of total voting rights are controlled by a single party (this excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(7) Does not assume concurrent duty and is not a spouse to the Company's Chairman, President or equivalent role, and is not a director, supervisor or employee of another company or institution. (This excludes concurrent independent director positions held within the Company and its parent/subsidiary, or in other subsidiary of the parent company that are compliant with the Act or local laws).
(8) Not a director, supervisor, manager, or shareholder with more than 5% ownership interest in any company or institution that has financial or business relationship with the Company (however, this excludes concurrent independent director positions held within companies or institutions that hold more than 20% but less than 50% outstanding shares of the Company, or in the Company's parent or subsidiary, or in another subsidiary of the parent that is compliant with the Act or local laws).
(9) Not a professional who provides audit service, or commercial, legal, financial, accounting or related services for an accumulated sum of less than NT$500,000 in the last 2 years, to the Company or its affiliate, nor is an owner, partner, director, supervisor, or manager, or the spouse of any of the above, of a sole proprietorship, partnership, company, or organization that provides the above service to the Company or its affiliated companies. This excludes roles as Remuneration Committee, Public Acquisition Review Committee or M&A Special Committee member appointed in accordance with the Securities and Exchange Act or Business Mergers And Acquisitions Act. .
(10) Does not meet any of the conditions stated in Article 30 of The Company Act.

(2) Functionality of the Remuneration Committee:
The Company's Remuneration Committee consists of 3 members.
Duration of service: from June 14, 2018 to June 13, 2021. The Remuneration Committee held 8 meetings (A) in 2020; details of members’ eligibility and attendance are as follows:

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Number of in- Number of proxy In-person
Title Name person attendance attendance attendance rate Remarks
(B) (%) [B/A]
Convener TienShang Chang 8 0 100%
Committee member Daniel Shih 8 0 100%
Committee member Tommy S. Chao 5 2 63%
Other mandatory disclosures:
1. In the event where the Remuneration Committee's proposal is rejected or amended in a board of directors meeting, please describe
the date and session of the meeting, details of the motion, the board's resolution, and how the Company had handled the
Remuneration Committee's proposals (describe the differences and reasons, if any, should the board of directors approve a
solution that was more favorable than the one proposed by the Remuneration Committee):
How decisions and opinions of the
Historical date Contents of the proposal
members are addressed
1. Appointment and remuneration of Mr. TSAI Jungtsung as
the Vice President of Company’s Finance & Accounting
The proposal was approved as is
2020.01.17 Center by all attending members and
The 8 [th] meeting of 2. Managerial performance evaluation for the second half of was approved by the Board of
the Fourth Intake Directors.
2019
Member Comment: None
3. Chairman and CEO Year-end Bonus of 2019
4. Managerial Year-end Bonus of 2019
The proposal was approved as is
1. Distribution of the remuneration for employees and that
March 20, 2020 by all attending members and
for directors of 2019
The 9 [th] meeting of was approved by the Board of
2. Intended revision of the “Compensation and Remuneration
the Fourth Intake Directors.
Committee Organic Rules”
Member Comment: None
The proposal was approved as is
1. Discussion of Director YANG Yutze of the Audit Office
May 8, 2020 by all attending members and
being promoted to be the Assistant Vice President
The 10 [th] meeting of was approved by the Board of
2. Distribution of the remuneration for directors for 2019
the Fourth Intake Directors.
3. Allocation of 2019 employee remuneration for managers
Member Comment: None
The proposal was approved as is
August 5, 2020 by all attending members and
The 11 [th] meeting of 1. Allocation of 2019 employee remuneration for managers was approved by the Board of
the fourth intake Directors.
Member Comment: None
The proposal was approved as is
November 5, 2020 by all attending members and
1. Proposal to amend the Company's "Director Salary,
The 12 [th] meeting of was approved by the Board of
Benefit, and Performance Evaluation Policy"
the fourth intake Directors.
Member Comment: None
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December 29, 2020 The 13thmeeting of the fourth intake	1. Discussion of the promotion of Special Assistant CHEN Taiyuan at the Product Development Center to be the Assistant Vice President	The proposal was approved as is by all attending members and was approved by the Board of Directors. Member Comment: None
January 26, 2021 The 14thmeeting of the Fourth Intake	1. Discussion of the 2020 managerial performance evaluation 2. Discussion of Chairman and CEO Year-end Bonus for 2020 3. Please discuss the 2020 managerial year-end bonus. 4. Discussion of Project Director LIU Dingxian at the Chairman’s Office being promoted to be the Assistant Vice President	The proposal was approved as is by all attending members and was approved by the Board of Directors. Member Comment: None
March 19, 2021 The 15thmeeting of the Fourth Intake	1. Discussion of the remuneration for directors and that for employees for 2020. 2. Hiring of the head of audit.	The proposal was approved as is by all attending members and was approved by the Board of Directors. Member Comment: None

Should any member object or express reservations to the resolution made by the Remuneration Committee, whether on-record or in writing, please describe the date and session of the meeting, details of the motion, the entire members' opinions, and how their opinions were addressed:

None.

(3) Functionality of the Remuneration Committee:

According to the Company's "Remuneration Committee Charter," the Remuneration Committee is required to convene meetings at least twice a year. The committee reports to the board of directors, proposes recommendation for discussion in board meetings, and holds the following responsibilities:

I. Regular review of performance evaluation standards, performance targets, and salary/compensation policy, system, standard, and structure for directors and managers.
II. Regular assessment of directors' and managers' performance targets and accomplishment, and setting performance indicators and targets based on assessment outcome.

III. Other responsibilities authorized by the board of directors.

While performing the functions mentioned in the preceding article, the following principles shall be followed:

I. The director and managerial performance evaluation and compensation and remuneration shall take reference of the general criteria for the payment in the industry and take into consideration the legitimate correlation with personal performance, operational performance of the Company, and risks in the future.
II. Directors and managers shall not be misled to engage in behavior that exceeds the risk appetite of the Company for the pursuit of their compensation and remuneration.
III. The ratio of the bonus issued to directors and senior managers for their short-term performance and the payment schedule of some of the variable compensation and remuneration shall take into consideration the characteristics of the industry and the nature of operation of the Company before a decision is made.
IV. Members of the Committee may not take part in the discussion and voting of a decision on their personal compensation and remuneration.

The so-called compensation and remuneration in the preceding two paragraphs include compensation in cash, stock option, stock bonus, pension benefits or severance pay, a variety of allowances, and other measures with substantial rewards. The scope shall be consistent with the remuneration stated for directors and managers in the Guidelines for Matters to be Included in the Annual Reports of Public Companies.

While discussing suggestions provided by the Compensation and Remuneration Committee, the Board of Directors shall comprehensively take into consideration the value of the compensation and remuneration, the payment method, and risks for the Company in the future, etc.

To not adopt or revise the suggestions provided by the Compensation and Remuneration Committee, it shall be supported by approval of a majority of the attending directors that account for two-thirds or more of all directors and comprehensively take into consideration as indicated in the preceding paragraph in its decision and provide substantial information on whether or not the approved compensation or remuneration is superior to that advised by the Compensation and Remuneration Committee.

If the compensation or remuneration approved by the Board of Directors is superior to that advised by the Compensation and Remuneration Committee, besides specifying the difference and cause in the minutes of the Board of Directors’ meeting, such information shall be announced and declared on the information disclosure website designated by the competent authority within two days from the date of approval by the Board of Directors.

For the compensation and remuneration for directors and managers of the subsidiaries of the Company, if approval by the Board of Directors of the Company is required before decisions are made hierarchically, suggestions shall be provided to the Committee first before they are turned into the Board of Directors for discussion.

(5) Fulfillment of social responsibilities and deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies

			Actual governance (Note 1)	Deviation and
Assessment criteria	Yes	No	Summary (Note 2)	causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies
1. Has the Company conducted risk assessment on environmental, social, and corporate governance issues that are relevant to its operations, and implemented risk management policies or strategies based on principles of materiality?			Corporate governance issues are handled according to internal audit and internal control systems. The Work Safety Office/Human Resources Department manages environmental and social risks through disclosure of corporate social responsibility information. For risk-related disclosures, please see page 99 of this annual report.	No material deviation is found.
2. Does the Company have a unit that specializes (or is involved) in CSR practices? Is the CSR unit run by senior management and does the unit report its progress to the board of directors?			An Audit Committee and a Remuneration Committee have been assembled under the board of directors to help supervise the internal audit/control system and corporate management. A Work Safety Office has been created directly under the President to oversee environment, safety,and health issues.	No material deviation is found.
3. Environmental issues (1) Has the Company developed an appropriate environmental management system, given its distinctive characteristics? (2) Is the Company committed to achieving efficient use of resources, and using renewable materials that produce less impact on the environment? (3) Does the Company assess potential risks and opportunities associated with climate change, and undertake measures in response to climate issues? (4) Does the Company maintain statistics on greenhouse gas emission, water usage, and total waste volume in the last two years, and implementpolicies aimed at reducingenergy,			The Company devotes significant attention to environmental protection issues, and has adopted relevant measures to support green product management in response to EU's and customers' green product requirements. The Company plans to address the global warming phenomenon through introduction of greenhouse gas reduction/control systems in the future, and will strive to promote sound corporate image and raise competitiveness in the field of environmental protection. 1. Implementation of the ISO14001 Environmental Management System and the ISO45001 Occupational Safety and Health Management System 2. The Companyis dedicated topollution control.	No material deviation is found.

				Actual governance (Note 1)	Deviation and
Assessment criteria	Yes	No		Summary (Note 2)	causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies
carbon, greenhouse gas, water and waste?			3. 4. 5. 6.	Ongoing improvements are being made to in- plant air pollution control equipment, as well as emission monitoring, wastewater treatment, and waste disposal processes to mitigate environmental impact. The Company organizes energy conservation and resource reuse campaigns to minimize waste and promote recycling and reuse of resources. Meanwhile, employees are encouraged to take part in energy conservation and environmental protection. If products contain hazardous substances, they pose threats to the earth, the environment, and human health. As such, the Company introduced QC 080000 in as early as 2011, the management system for procedures involving hazardous substances, which has been qualified and performs monitoring continuously. The Company obtained Carbon Footprint Verification Statement in 2013. For more detailed information, please visit the CSRsection on the Company's website http://www.hannstouch.com.
4. Social issues (1) Has the Company developed its policies and procedures in accordance with laws and International Bill of Human Rights? (2) Has the Company developed and implemented reasonable employee welfare measures (including compensation, leave of absence, and other benefits), and appropriately reflected business performance or outcome in employees' compensations?	 		The Company has developed management systems and measures in accordance with the Labor Standards Act; it also has policies in place to protect employees' interests with respect to job assignment, dismissal, compensation, and performance evaluation. The Company offers reasonable compensation, leave of absence, and welfare at levels that are comparable to peers and compliant with laws. Employees' performance is evaluated on a regular		No material deviation is found.

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	Yes	No	Summary (Note 2)	Best Practice Principles for TWSE/TPEX Listed Companies

(3) Does the Company provide employees with a safe and healthy work environment? Are employees trained regularly on safety and health issues? (4) Has the Company implemented an effective training program that helps employees develop skills over their career? (5) 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? (6) Has the Company implemented a supplier management policy that regulates suppliers' conducts with respect to environmental protection, occupational safety and health, or work rights/human rights issues, and tracked suppliers' performance on a regular basis?	 		basis, and additional bonuses are paid depending on the Company's business performance and employees' individual performance. The Company organizes operating environment inspections, emergency response drills, self- examinations, environmental safety and health training, and practices plant-wide chemical management at regular intervals as required by law. Protective gears are distributed to employees for use with various operations, and annual plans on work analysis, machinery inspection, emergency response drill, self-examination, medical care, health management etc. are devised and executed for employees' safety. 1. Internal training: The Company makes yearly plans to bring employees a variety of training courses that are suitable for their career development. Instructors from within or outside the organization are invited to assist employees with skill and career development. Courses can be classified into general categories including orientation, specialist, administration, and compliance. 2. External training: Employees are given opportunities, subject to line managers' recommendation, to participate in training courses organized by external institutions, where they are able to further expand their career vision and improve professional skills to the next level. The Company markets and labels its products and services duly in compliance with laws and international standards. The Company expands its CSR philosophy and practices to the supply chain, and works with suppliers to protect the environment and improve the safety and health of employees. The Company has not established a supplier management policy, but would adjust supply sources if suppliers violate anyof the agreed

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Actual governance (Note 1) Deviation and
causes of
deviation from
Corporate
Social
Assessment criteria Responsibility
Yes No Summary (Note 2) Best Practice
Principles for
TWSE/TPEX
Listed
Companies
terms.
5. Does the Company prepare corporate social The Company's corporate social responsibility No material
responsibility report or any report of non-  report has been prepared based on the "core" deviation is
found.
financial information based on international option of the G4 guidelines introduced by Global
reporting standards or guidelines? Are the Reporting Initiative; it discloses the Company's
abovementioned reports supported by strategies, philosophy, actions, and performance
assurance or opinion of a third-party certifier? with respect to corporate social responsibilities.
The Company currently has no plan to obtain
third-party assurance.
6. If the Company has established CSR principles in accordance with "Corporate Social Responsibility Best Practice Principles for
TWSE/TPEX Listed Companies," please describe its current practices and any deviations from the Best Practice Principles:
The Company has established its own corporate social responsibility policy according to "Corporate Social Responsibility Best
Practice Principles for TWSE/TPEX Listed Companies"; there was no deviation in actual governance from policy requirements.
7. Other information useful to the understanding of corporate social responsibilities:
 The "Corporate Social Responsibility Report" can be found in the CSR section on the Company's website
http://www.hannstouch.com.
 HannsTouch cares for and tends to the voices of different groups of people. It pays close attention to the needs of the society,
participates in charity, and provides emergency aid to victims of natural disaster for an inclusive and diverse society.
The Company actively addresses the interests of its stakeholders and fulfills corporate social responsibilities. In light of the
COVID-19 pandemic, HannsTouch reached out to non-profit organizations such as United Way of Taiwan and The Mustard Seed
Mission to donate unclaimed concessions from this year's annual general meeting as a small gesture of relief. 2,000 pieces of
scented soap were donated to 9 social welfare organizations as a result.
Name of organization Donated amount
Ay-Shin TZWU Charity Association Kaohsiung City 100
Yunsen Foundation 120
Foundation Julin Nursing Private Institution in Yilan 100
Taiwan International Workers' Association 240
Taiwan Sunshine Women Association 240
Ping Tung Association of Social Worker 200
The Mustard Seed Mission (Neighbours' Day) - Taipei
350
Bus Station
The Mustard Seed Mission (Neighbours' Day) -
400
Kaohsiung Bus Station
The Mustard Seed Mission (Neighbours' Day) -
250
Hualien Bus Station
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Assessment criteria	Actual governance (Note 1) Deviation and causes of deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEX Listed Companies Yes No Summary (Note 2)
As infections surged in Europe and USA in the first half of the year, the Central Epidemic Command Center (CECC) placed more countries on level 3 alert, causing a spike in demand for quarantine hotels and a shortage of rooms. Furthermore, due to the difference in needs between European/American business travelers and general tourists, the CECC called for an expansion of quarantine hotels. As the pandemic escalated, some European and American schools suspended classes or transitioned toward online instruction, causing more overseas students to return to the home country. Combined with the fact that business travelers were still coming into Taiwan, there was a need to prepare hotels for incoming visitors who have been instructed to serve quarantine notice. In an attempt to accommodate the large number of travelers serving quarantine notice and prevent them from compromising epidemic control, Taipei City Government acted ahead of time and coordinated with the Department of Information and Tourism, Department of Health, Department of Environmental Protection, and Police Department to introduce quarantine hotels, which made Taipei the nation's first city to develop a full-fledged quarantine hotel system. Hanns House, a hotel located at the heart of Xinyi District and run by one of HannsTouch's business investments - Glorystone Inc., targets elite business travelers and had just commenced trial operation at the end of 2019; due to the fact that its facilities conformed with the requirements of a quarantine hotel, Hanns House responded to the government's first call and signed up as Taipei City's first publicly named quarantine hotel, taking part in the care for public health. After one week of counseling, Hanns House was certified by relevant authority for conformity with quarantine hotel SOP and related standards, and offered 100 guest rooms to accommodate quarantined travelers. By the end of 2020, Hanns House had accommodated more than one thousand travelers through their 14-day quarantine. Hanns House appreciates all employees and business partners for their relentless support to the nation's epidemic control efforts. They have shown compassion for the quests and proven themselves capable of upholding service quality and attending to details while delivering top-quality experience under such a desperate time. Their contributions and efforts have earned Hanns House a Commemorative Medal of Epidemic Control in August 2020.

Assessment criteria

Actual governance (Note 1)
Deviation and
causes of
deviation from
Corporate
Social
Responsibility
Best Practice
Principles for
TWSE/TPEX
Listed
Companies
Yes
No
Summary (Note 2)

As infections surged in Europe and USA in the first half of the year, the Central Epidemic Command Center (CECC)
placed more countries on level 3 alert, causing a spike in demand for quarantine hotels and a shortage of rooms.
Furthermore, due to the difference in needs between European/American business travelers and general tourists, the
CECC called for an expansion of quarantine hotels.
As the pandemic escalated, some European and American schools suspended classes or transitioned toward online
instruction, causing more overseas students to return to the home country. Combined with the fact that business
travelers were still coming into Taiwan, there was a need to prepare hotels for incoming visitors who have been
instructed to serve quarantine notice. In an attempt to accommodate the large number of travelers serving quarantine
notice and prevent them from compromising epidemic control, Taipei City Government acted ahead of time and
coordinated with the Department of Information and Tourism, Department of Health, Department of Environmental
Protection, and Police Department to introduce quarantine hotels, which made Taipei the nation's first city to develop
a full-fledged quarantine hotel system. Hanns House, a hotel located at the heart of Xinyi District and run by one of
HannsTouch's business investments - Glorystone Inc., targets elite business travelers and had just commenced trial
operation at the end of 2019; due to the fact that its facilities conformed with the requirements of a quarantine hotel,
Hanns House responded to the government's first call and signed up as Taipei City's first publicly named quarantine
hotel, taking part in the care for public health. After one week of counseling, Hanns House was certified by relevant
authority for conformity with quarantine hotel SOP and related standards, and offered 100 guest rooms to
accommodate quarantined travelers.
By the end of 2020, Hanns House had accommodated more than one thousand travelers through their 14-day
quarantine.
Hanns House appreciates all employees and business partners for their relentless support to the nation's epidemic
control efforts. They have shown compassion for the quests and proven themselves capable of upholding service
quality and attending to details while delivering top-quality experience under such a desperate time. Their
contributions and efforts have earned Hanns House a Commemorative Medal of Epidemic Control in August 2020.

(6) Enforcement of business integrity, deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed Companies

			Actualgovernance(Note)	Deviation and
Assessment criteria	Yes	No	Summary	causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
1. Establishment of integrity policies and solutions (1) Has the Company established a set of board-approved business integrity policy, and stated in its Memorandum or external correspondence about the polices and practices it implements to maintain business integrity? Are the board of directors and the senior management committed to fulfilling this commitment? (2) Has the Company developed systematic practices for assessing integrity risks? Does the Company perform regular analyses and assessments on business activities that are prone to higher risk of dishonesty, and implement preventions against dishonest conducts that include at least the measures mentioned in Paragraph 2, Article 7 of "Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies"? (3) Has the Company defined and enforced operating procedures, behavioral guidelines, penalties, and grievance systems as part of its preventive measures against dishonest conducts? Are the above measures reviewed and revised on a regular basis?			(1) The Company's "Work Rules" and "Director and Manager Ethics Guidelines" outline codes and behavioral guidelines for maintaining business secrets. Meanwhile, employees and directors are urged to perform their duties strictly in accordance with integrity principles. (2) Avoidance of directors' involvement in conflicting interest discussions has been outlined in "Board of Directors Conference Rules" and is being duly enforced. Duty of confidentiality, fairness of information disclosure, and penalty for violations have been outlined in "Material Insider Information Handling and Insider Transaction Prevention Procedures." (3) The Company has established effective accounting policies and internal control system to enforce business integrity throughout the organization. Internal auditors are assigned to conduct regular audits to ensure compliance of the abovementionedpolicies/system.	No material deviation is found.
2. Enforcement of business integrity (1) 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? (2) Does the Company have a unit that enforces business integrity directly under the board of directors? Does this unit report its progress (regarding implementation of business integrity policy and prevention against dishonest conducts) to the board of directors on a regular basis (at least once a year)? (3) Does the Company have any policy that prevents conflict of interest,and channels that facilitate the report of			(1) Most contracts signed between the Company and vendors contain integrity and anti-commission clauses, which the counterparties are instructed to comply. (2) The Company currently does not have any unit that specializes (or is involved) in business integrity management; instead, business integrity is managed by individual departments within their respective duties and guidelines. (3)The Companyhas stakeholders' contact	No material deviation is found.

Assessment criteria			Actualgovernance(Note)	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
conflicting interests? (4) Has the Company implemented effective accounting policy and internal control system to maintain business integrity? Has an internal or external audit unit been assigned to devise audit plans based on the outcome of integrity risk assessment, and to audit employees' compliance with various preventions against dishonest conduct? (5) Does the Company organize internal or external training on a regular basis to maintain business integrity?			information and e-mail address published on website, which insiders and outsiders may use to express opinions or reflect issues to the Company or the management, whether anonymously or named. (4) The Company has robust accounting policies and internal control system in place, and assigns internal auditors to design and execute comprehensive audits over internal systems on a yearly basis, thereby ensure that policy design and execution remain effective over time. Outcomes of the internal audit are reported to the board of directors. (5) The Company promotes employees' awareness on professional ethics and business integrity on a regular basis, and demands strict compliance with relevant rules.
3. Whistleblowing system (1) Does the Company provide incentives and means for employees to report misconducts? Does the Company assign dedicated personnel to investigate the reported misconducts? (2) Has the Company implemented any standard procedures for handling reported misconducts, and subsequent actions and confidentiality measures to be undertaken upon completion of an investigation? (3) Does the Company have appropriate measures in place to protect whistleblowers from retaliation?			(1) The Company has introduced a reward/disciplinary system as part of its "Work Rules," and details of which have been conveyed to employees. Grievance mailboxes have been set up at the Audit Office and on the Company's website, which insiders and outsiders may use to report any conduct in violation of integrity principles. (2) All reports and investigations of misconduct are handled in strict confidentiality and in a manner that protects the privacy of all parties involved. (3) The Company handles all misconduct reports in the utmost fairness, honesty, and confidentiality; measures are taken to prevent unfair treatment or retaliation against theparties involved.	No material deviation is found.

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Actual governance (Note) Deviation and
causes of
deviation from
Ethical
Corporate
Assessment criteria Management
Yes No Summary
Best Practice
Principles for
TWSE/TPEX
Listed
Companies
4. Enhanced information disclosure
Has the Company disclosed its integrity principles and The Company has not disclosed business No material
progress onto its website and MOPS? integrity code of conduct and progress on its deviation is

website or on Market Observation Post System, found.
but does disclose the progress of its integrity
management efforts in annual reports.
5. If the Company has established business integrity policies in accordance with "Ethical Corporate Management Best Practice Principles
for TWSE/TPEX-Listed Companies," please describe its current practices and any deviations from the Best Practice Principles: The
Company plans to develop its own Business Integrity Code of Conduct and Business Integrity Procedures and Behavioral Guidelines
and present them for discussion at board of directors meeting before the end of 2021. These policies will support the underlying
values of Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed Companies and serve as guidance to all
employees. No material deviation is found.
6. Other information relevant to understanding the Company's business integrity: (e.g. review of business integrity principles)
None
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(7) If the Company has established corporate governance principles or other relevant guidelines, references to such principles must be disclosed:

The Company has not established its own Corporate Governance Code of Conduct, but does have other similar policies in place. Furthermore, the Company prepares corporate social responsibility reports and places them on website where shareholders may access at any time: http://www.hannstouch.com.

(8) Other important information material to the understanding of corporate governance within the Company:

The Company has established a set of "Material Insider Information Handling and Insider Transaction Prevention Procedures" to serve as guidance over how material insider information should be handled and disclosed, thereby preventing improper leakage of information while ensuring consistency and accuracy of information disclosed to the public. These procedures have been posted onto intranet and internet websites, where employees may access for their own compliance.
With regard to the Company’s “Board member diversification policy and implementation”, “continuing education for the board directors in the past two years”, and “scope of function of the head of corporate governance, highlights of operations for the year and continuing education”, refer to Paged 38 to 39 of this Annual Report.
Market Observation Post System: http://mops.twse.com.tw
Company website: http://www.hannstouch.com

(9) Internal control:
Declaration of Internal Control System:

HannsTouch Solution Inc.

Declaration of Internal Control System

Date: March 19, 2021

The following declaration has been made based on the 2020 self-assessment of the Company’s internal control system:

The Company acknowledges and understands that establishment, implementation, and maintenance of the internal control system are the responsibility of the board of directors and managers, and that such a system has been implemented within the Company. The purpose of this system is to provide reasonable assurance in terms of business performance and efficiency (including profitability, performance, asset security etc), reliable, timely, and transparent financial reporting, and regulatory compliance.
There are inherent limitations to even the most well-designed internal control system. As such, an effective internal control system can only reasonably assure achievement of the three goals mentioned above. Furthermore, changes in the environment and circumstances may all affect the effectiveness of the internal control system. However, internal control system of the Company features a self-monitoring mechanism that enables immediate rectification of deficiencies upon discovery.
The Company evaluates the design and execution of its internal control system based on the criteria specified in "Regulations Governing Establishment of Internal Control Systems by Public Companies" (hereinafter referred to as "The Governing Principles") to determine whether the existing system continues to be effective. Assessment criteria introduced by "The Governing Principles" consisted of five main elements, each representing a different stage of internal control: 1. Control environment; 2. Risk evaluation and response; 3. Procedural control; 4. Information and communication; and 5. Supervision. Each element further encompasses several sub-elements. Please refer to “The Governing Principles” for details.
The Company has adopted the abovementioned criteria to validate the effectiveness of its internal control system design and execution.
Based on the assessments described above, the Company considers the design and execution of its internal control system to be effective as at December 31, 2020. This system (including the supervision and management of subsidiaries) has provided assurance with regards to the Company's business results and target accomplishment, reliability, timeliness and transparency of reported financial information, and its compliance with relevant laws.
This declaration constitutes part of the Company's annual report and prospectus, and shall be disclosed to the public. Any illegal misrepresentation or omission in the public statement above are subject to the legal consequences described in Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
This Declaration was approved at the meeting of the Company's Board of Directors on March 19, 2021 with no directors expressing dissent out of the 7 directors in attendance (including through proxies). All agreed on the contents of this Declaration. Please take note of this Declaration.

HannsTouch Solution Incorporated

Chairman: Wei Hsin Ma (signature/seal) President: Jinxiang Wen (signature/seal)

If the internal control system was reviewed by an external CPA, the result of such review must be disclosed: None.
(10) Penalties imposed against the Company for regulatory violation, or penalties against employees for violation of internal control system, in the most recent year up till the publication date of annual report that may significantly impact shareholders' interest or security price; describe details of the penalty, areas of weakness and any corrective actions taken: None
(11) Major resolutions passed in shareholder meetings and board of directors’ meetings held in the last year up till the publication date of this annual report:

Major resolutions passed in annual general meetings and the execution progress:

Date	Major resolutions and execution
2020.06.16 Annual general meeting	Acknowledgments: 1. Acknowledgment of 2019 business report and financial statements. Resolution and execution: acknowledged. Announced on MOPS. 2. Acknowledgment of loss reimbursement and reporting of cash dividend distribution for 2019. Resolution and execution: acknowledged. Announced on MOPS.
	Discussions: 1. Proposal to issue common shares for cash through private placement, public offering, or a combination of both Resolution and execution: Passed cash issue at NT$700 million. The application has not been submitted to the competent authority to date and hence it is reported in the Board of Directors’ meeting on March 19, 2021 not to continue for the remainder of the period and it was brought forth as a new case for discussion. 2. Proposal to amend the Company's "Asset Acquisition and Disposal Procedures" Resolution and execution: passed. Executed according to the amended procedures. 3. Proposal to amend the Company's "Lending, Guarantee and Endorsement Procedures." Resolution and execution: passed. Executed according to the amended procedures. 4. Proposal to amend the Company's "Shareholders Conference Rules." Resolution and execution:passed. Executed accordingto the amended conference rules.

Date

Major resolutions and execution

2020.06.16
Annual general
meeting

Acknowledgments:
1. Acknowledgment of 2019 business report and financial statements.
Resolution and execution: acknowledged. Announced on MOPS.
2. Acknowledgment of loss reimbursement and reporting of cash dividend distribution for 2019.
Resolution and execution: acknowledged. Announced on MOPS.

Discussions:
1. Proposal to issue common shares for cash through private placement, public offering, or a
combination of both
Resolution and execution: Passed cash issue at NT$700 million. The application has not been
submitted to the competent authority to date and hence it is reported in the Board of Directors’
meeting on March 19, 2021 not to continue for the remainder of the period and it was brought
forth as a new case for discussion.
2. Proposal to amend the Company's "Asset Acquisition and Disposal Procedures"
Resolution and execution: passed. Executed according to the amended procedures.
3. Proposal to amend the Company's "Lending, Guarantee and Endorsement Procedures."
Resolution and execution: passed. Executed according to the amended procedures.
4. Proposal to amend the Company's "Shareholders Conference Rules."
Resolution and execution:passed. Executed accordingto the amended conference rules.

Major board of directors resolutions and execution:

Date/session	Major resolutions	Objections or reservations from independent directors Conditions described in Article 14-3 of the Securities and Exchange Act	Objections or reservations from independent directors Conditions described in Article 14-3 of the Securities and Exchange Act
2020.01.17 12th meeting of the 8th board	1. Proposal to apply for credit facilities with financial institutions 2. Proposal of the Company's 2020 business plan 3. Appointment of Mr. Jung-Tsung Tsai as Vice President for the Company's Finance and Accounting Center, and salary-setting 4. Proposal to remove restrictions imposed against the Company's managers for involving in competing businesses 5. Proposal to appoint Mr. Jung-Tsung Tsai as the Company's head of finance 6. 2019 second-halfperformance evaluation for managers of the Company	None None None None None None None	  

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Objections Conditions
or described in
reservations Article 14-3
Date/session Major resolutions
from of the
independent Securities and
directors Exchange Act
7. 2019 year-end bonus for Chairman and CEO of the Company None
8. 2019 year-end bonus for managers of the Company
1. Presentation of the Company’s 2019 business report and financial statements None 
2. Declaration on Internal Control based on the findings from the internal control self None 
assessment of 2019 None
3. Allocation of 2019 employee remuneration and director remuneration None 
4. Appropriation of 2019 earnings None 
5. Proposal to issue common shares for cash through private placement, public 
offering, or a combination of both None
6. Proposal to lend capital to Glorystone Inc. None 
7. Appointment of CPA and assessment of auditor's independence for 2020 None 
March 20, 2020
8. Proposal to amend the Company's "Internal Control System" and "Internal Audit None 
13th meeting of the
Implementation Rules" None 
8th board
9. Proposal to amend the Company's "Asset Acquisition and Disposal Procedures" None 
10. Proposal to amend the Company's "Lending, Guarantee and Endorsement None 
Procedures" None
11. Proposal to amend the Company's "Audit Committee Charter" None
12. Proposal to amend the Company's "Remuneration Committee Charter" None
13. Proposal to amend the Company's "Shareholders Conference Rules"
14. Proposal to amend the Company's "Board of Directors Conference Rules"
15. Details of the 2020 annual general meeting and matters concerning shareholders'
right of motion proposal
1. Application for public offering and listing of the Company's common shares that None
were previously issued through private placement None
2. Proposal to apply for credit facilities with financial institutions None 
May 8, 2020 3. Intended revision of some of the articles in the Internal Control System regarding
14th meeting of the “criteria and regulations of the internal control system of the service unit” None 
8th board 4. Discussion to promote Yu-Tze Yang of the Audit Office to Assistant Vice None 
President None
5. Allocation of 2019 director remuneration
6. Allocation of 2019 employee remuneration for managers
1. To determine the baseline date and payment date for cash dividends in the None
second half of 2019
2. Appropriation of 2020 first-half earnings None 
August 5, 2020
3. Renewal of director liability insurance for 2020 None 
15th meeting of the
4. Proposal to apply for medium/long term credit facilities with financial None
8th board
institutions None
5. Proposal to apply for credit facilities with financial institutions None
6. Allocation of 2019 employee remuneration for managers
November 5, 2020 1. Amendment to the Company's "Approval Authority Principles" None 
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Date/session	Major resolutions	Objections or reservations from independent directors Conditions described in Article 14-3 of the Securities and Exchange Act	Objections or reservations from independent directors Conditions described in Article 14-3 of the Securities and Exchange Act
16th meeting of the 8th board	2. Establishment of the Company's 2021 audit plan 3. Establishment of the Company's "Corporate Governance Code of Conduct" 4. Proposal to apply for credit facilities with financial institutions 5. Proposal to dispose 1F, 2F, and 3F of the Company's plant in Southern Taiwan Science Park 6. Proposal to amend the Company's "Director Salary, Benefit, and Performance Evaluation Policy"	None None None None None	 
December 29, 2020 The 17thmeeting of the Eighth Intake	1. Intended acquisition of common stock shares of HannStar Display Corporation 2. Intended stipulation of the 2021 Operation Plan 3. Discussion of the promotion of Special Assistant CHEN Taiyuan at the Product Development Center to be the Assistant Vice President	None None None	
January 26, 2021 The 18thmeeting of the Eighth Intake	1. Intended acquisition of shares and equity funds from the open market to serve as short-term investments 2. Intended application for the limits of loans with financial institutions 3. 2020 Managerial performance evaluation 4. Chairman and CEO Year-end Bonus of 2020 5. Managerial Year-end Bonus of 2020 6. Promotion of Project Director LIU Dingxian at the Chairman’s Office to be the Assistant Vice President	None None None None None None
March 19, 2021 The 19thmeeting of the Eighth Intake	1. 2020 Business Report and Financial Statements 2. Declaration on Internal Control based on the findings from the internal control self assessment of 2020 3. Distribution of the remuneration for employees and that for directors of 2020 4. 2020 Distribution of Earnings 5. Intended capital increase in cash for issuance of common stock through private placement or public offering or the combination of the two 6. 2021 CPA assignment and independence assessment 7. Intended acquisition of shares and equity funds from the open market to serve as short-term investments 8. Intended lending of funds to Glorystone Inc. 9. Intended application for the limits of loans with financial institutions 10. Appointment of the head of audit 11. Appointment of the head of finance 12. Intended revision of the “internal control system” and “Internal Audit Enforcement Rules”. 13. Intended revision to the Board Directors Election Regulations 14. Intended revision to the Rules of Procedure for Shareholders’ Meetings 15. Comprehensive re-election of board directors 16. Nomination of director candidates for the ninth intake (including independent directors)	None None None None None None None None None None None None None None None None None None	        

Date/session	Major resolutions	Objections or reservations from independent directors Conditions described in Article 14-3 of the Securities and Exchange Act	Objections or reservations from independent directors Conditions described in Article 14-3 of the Securities and Exchange Act
	17. Intended lifting of the non-competition pledge obligations upon the newly elected directors of the ninth intake. 18. Related matters concerning the convening of the 2021 general shareholders’ meeting

(12) Documented opinions or declarations made by directors or supervisors against board resolutions in the most recent year, up till the publication date of this annual report: None
(13) Resignation or dismissal of the Chairman, President, head of accounting, head of finance, chief internal auditor, corporate governance officer, or head of R&D in the most recent year up till the publication date of annual report:

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Reasons for resignation or
Title Name Date onboard Date departed
departure
Head of Finance Yi-Fang Luo 2019.11.06 2020.01.17 Job rotation
Head of Internal
YANG Yutze 2019.07.19 2021.03.19 Departmental Transfer
Audit
Head of Finance TSAI Jungtsung 2020.01.17 2021.03.31 Group transferred
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5. Disclosure of audit fees

losure of audit fees
Name of accounting firm	Name	of CPA	Audit period
PwC Taiwan	Ching- Chang Chen	Kevin Lin	2020.01.01-2020.12.31

Unit: NTD thousands

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Fee category Non-auditing
Auditing fee Total
Amount range fee
1 Below NT$2,000,000 － 233 233
2 NT$2,000,000 (inclusive) - NT$4,000,000 2,600 － 2,600
3 NT$4,000,000 (inclusive) - NT$6,000,000 －－－
4 NT$6,000,000 (inclusive) - NT$8,000,000 －－－
5 NT$8,000,000 (inclusive) - NT$10,000,000 －－－
6 NT$10,000,000 and above －－－
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(1) Disclosure of audit fee and non-audit fee paid to the auditor, accounting firm, and affiliated companies, and details of non-audit services:

Unit: NTD thousands

			Non-auditingfee	Non-auditingfee	Non-auditingfee	Non-auditingfee	Non-auditingfee	Non-auditingfee
Name of accounting firm	Name of CPA	Auditing fee	System design Business registration Human resources			Period of audit service Others Subtotal			Remarks
PwC Taiwan	Ching-Chang Chen Kevin Lin	2,600	-	51	182	-	233
								2020.01.01~
								2020.12.31

(2) Change of accounting firm that resulted in the reduction of audit fee from the previous year; disclose audit fee before and after the change and the cause of such change: None
(3) Any reduction in audit fee by more than 10% compared to the previous year; state the amount, the percentage and reason of such variation: None

6. Change of CPA: The Company’s CPAs were not replaced in 2020. As part of the internal

organizational adjustment of the accounting firm, CPAs for the audit (review and approval) will be changed from CHEN Jinchang and LIN Junyao to CHEN Jinchang and LIAO Fuming starting in 2021.

7. Disclosure of any of the Company’s Chairman, President, or managers responsible for financial or accounting affairs being employed by the CPA’s firm or any of its affiliated company in the last year, including their names, job titles, and the periods during which they were employed by the CPA’s firm or any of its affiliated company: None.

8. Details of shares transferred or pledged by directors, supervisors, managers, and shareholders with more than 10% ownership interest in the last year, up till the publication date of this annual report:

(1) Change of shareholding of directors, supervisors, managers and major shareholders:

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Unit: shares
2020 2021 up to March 31
Increase Increase
Title Name Increase Increase
(decrease) (decrease) in
(decrease) in (decrease) in
in shares shares
shares held shares held
pledged pledged
Chairman/CEO WeiHsin Ma 203,000 0 0 0
Hua Li Investment
0 0 0 0
Corporation
Director
Representative: YuChi 0 0 0 0
Chiao
Director TsuKang Yu 0 0 0 0
Director Sean Tai 0 0 0 0
Independent
Director TienShang Chang 0 0 0 0
Independent
Daniel Shih 0 0 0 0
Director
Independent Tommy S. Chao 0 0 0 0
Director
President WEN Jinxiang 0 0 0 0
Vice President
Jung-Tsung Tsai (Note 5) 0 0 0 0
Head of Finance
Assistant Vice
Lien-Hsiang Chiang 0 0 0 0
President
Assistant Vice
President Po-Chiang Huang (Note 4) 0 0 0 0
Assistant Vice
President Yu-Tze Yang (Note 1) 0 0 0 0
Assistant Vice
CHEN Taiyuan (Note 2) 0 0 0 0
President
Assistant Vice
President LIU Dingxian (Note 3) NA NA 0 0
Head of Finance
Head of accounting Che-Chia Chang 0 0 0 0
Major shareholder HannStar Display 0 0 0 0
Corporation
----- End of picture text -----

Note 1: May 8, 2020 Ms. YANG Yutze was promoted to be the Assistant Vice President.

Note 2: December 29, 2020 CHEN Taiyuan was promoted to be the Assistant Vice President of the Product Development Center.

Note 3: January 26, 2021 LIU Dingxien was promoted to be the Assistant Vice President. And succeeded as the head of finance on April 1, 2021.

Note 4: HUANG Pochiang resigned on February 17.

Note 5: TSAI Jungtsung group transferred on April 1, 2021.

(2) Transfer of shares by directors, supervisors, managers, and major shareholders to related parties: None.

(3) Pledge of shares by directors, supervisors, managers and major shareholders to related parties: None.

9. Relationships characterized as spouse or second-degree relatives or closer among top-ten shareholders:

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April 19, 2021; unit: thousand shares; %
Names and relationships
Shares held in own Shares held by spouse and Shares held in the of top-10 shareholders
name underage children names of others characterized as spouse or
Name relative of second degree Remarks
or closer
No. of shares Shareholding percentage % No. of shares Shareholding percentage % No. of shares percentage %Shareholding Name Companythe
Parent
Hua Li company of
HannStar Display 214,639 26.60 - - - - Investment HUALI None
Corporation Corporation Investment
Corp.
HannStar Subsidiary of
Hua Li Investment 59,440 7.37 - - - - Display HannStar None
Corporation Display
Corporation
Corporation
Investment account of
Kaitou Asset Holding Co., 19,485 2.41 - - - - None None None
Ltd. in the trusteeship of
Yuanta Bank
Chairman of
Hua Li
Huali
Investment
Investment
YuChi Chiao 10,741 1.33 4,699 0.58 - - CorporationHannStar Chairman of HannStar None
Display
Display
Corporation
WeiHsin Ma Corporation
Spouse
Vanguard Emerging
Markets Emerging
Markets Stock Index Fund 7,036 0.87 None None
Account in the trusteeship
of Chase Bank
Advanced Star Composite
International Stock Index 5,980 0.74 - - - - None None None
in the trusteeship of Chase
Bank
JP Morgan in the
trusteeship of JPMorgan 5,786 0.72 - - - - None None None
Chase Bank, N. A. Taipei
Branch
HannStar
Director of
WeiHsin Ma 4,699 0.58 10,741 1.33 - - Display HannStar None
Corporation
YuChi Chiao Spouse
Norges Bank Investment
Account in the trusteeship 4,564 0.57 None None
of Citibank
HUANG Gaolin 4,500 0.56 - None None None
----- End of picture text -----

10. Investments jointly held by the Company, the Company's directors, supervisors, managers, and enterprises directly or indirectly controlled by the Company; disclose shareholding in aggregate of the above parties:

			March 31,2021;unit: thousand shares;%	March 31,2021;unit: thousand shares;%	March 31,2021;unit: thousand shares;%	March 31,2021;unit: thousand shares;%
Business investments (Note 1)	Held by	the Company	Held by directors, supervisors, managers, and directly or indirectly controlled enterprises Aggregate ownership
	No. of shares	Shareholding percentage	No. of shares	Shareholding percentage	No. of sharesShareholding percentage
Richest Investment Ltd.	4,500	100.00%	0	0%	4,500	100.00%
Golden Apple Investment Corporation	15,000	100.00%	0	0%	15,000	100.00%
Glorystone Inc.	22,000	42.31%	0	0%	22,000	42.31%

Note 1: Long-term investment accounted by the Company using the equity method.

Four. Capital Overview

1. Capital and outstanding shares

(1) Source of capital:

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Authorized capital Paid-up capital Remarks
Issued
Year / No. of No. of Paid in
month NTDprice (thousand shares Amount (NTD (thousand shares Amount (NTD Sources of share capital other than properties Others
shares) thousand) shares) thousand) cash
Jing-(088)-Shang-
1999.09 10 80,000 800,000 20,000 200,000 Initial share capital None 088135069 dated
September 18, 1999
Technology Jing-(089)-Shang-
1999.11 10.2 80,000 800,000 79,880 798,800 Cash issue 5,880,000 shares in lieu of 089106477 dated March
capital 3, 2000
Jing-(089)-Shang-
2000.03 12 400,000 4,000,000 160,000 1,600,000 Cash issue 801,200 None 089110824 dated April
13, 2000
Jing-(089)-Shang-
2000.10 15 400,000 4,000,000 360,000 3,600,000 Cash issue 2,000,000 None 089140240 dated
October 31, 2000
(90)-Tai-Cai-Zheng-(1)-
2001.12 20 600,000 6,000,000 400,000 4,000,000 Cash issue 400,000 None 160107 dated September
26, 2001
Capitalization of retained
earnings NT$668,965,000
Jing-Shou-Shang-
2003.07 10 800,000 8,000,000 506,896 5,068,965 (includes employee profit None 09201206040 dated July
sharing of NT$68,965,520)
10, 2003
Capitalization of capital
reserves NT$400,000,000
Jing-Shou-Shang-
2003.07 15.3 800,000 8,000,000 520,009 5,200,098 Corporate bond conversion None 09201222990 dated July
131,133,000
24, 2003
Jing-Shou-Shang-
2003.10 15.3 800,000 8,000,000 610,672 6,106,724 Corporate bond conversion None 09201303500 dated
906,626,000
October 29, 2003
Jing-Shou-Shang-
2004.01 15.3 800,000 8,000,000 612,933 6,129,333 Corporate bond conversion None 09301000850 dated
22,609,000
January 8, 2004
Jing-Shou-Shang-
2004.05 15.3 800,000 8,000,000 615,194 6,151,942 Corporate bond conversion None 09301077870 dated May
22,609,000
3, 2004
Jing-Shou-Shang-
2004.07 15.3 1,500,000 15,000,000 617,455 6,174,552 Corporate bond conversion None 09301135650 dated July
22,610,000
29, 2004
Capitalization of retained
earnings NT$514,500,000
Tai-Cai-Zheng-I-
2004.07 10 1,500,000 15,000,000 715,045 7,150,452 (includes employee profit None 0930119916 dated May
sharing of NT$53,100,000)
12, 2004
Capitalization of capital
reserves NT$461,400,000
Jing-Shou-Shang-
2005.04 13.21 1,500,000 15,000,000 717,664 7,176,634 Corporate bond conversion None 09401072470 dated
26,182,000
April 27, 2005
Share exchange for merger Share Jing-Shou-Shang-
2005.09 10 1,500,000 15,000,000 844,930 8,449,295 with Sintek Photronic exchange 09401184100 dated
1,272,661,000 for merger September 26, 2005
Capitalization of retained
earnings NT$470,122,000
Jing-Shou-Shang-
2005.11 10 1,500,000 15,000,000 927,694 9,276,939 (includes employee profit None 09401220820 dated
sharing of NT$41,095,000)
November 3, 2005
Capitalization of capital
reserves NT$357,522,000
Approved under Letter
Capital reduction against
2008.08 10 1,500,000 15,000,000 612,277 6,122,780 previous losses None 0970019225 dated No. Nan-Shang-
NT$3,154,159,000
August 15, 2008
2008.12 10 1,500,000 15,000,000 603,574 6,035,739 Retirement of treasury stock None Nan-Shang-0970029660
NT$87,041,000 dated December 9, 2008
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				April 19,2021;unit: shares	April 19,2021;unit: shares
Share category			Authorized capital
		Outstandingshares		Unissued shares	Total
Common shares	Listed	Unlisted	Total	1,193,051,471	2,000,000,000
	806,948,529	0	806,948,529

◎The 178,091,770 common shares privately placed in 2014 have been publicly offered following Financial Supervisory

Commission's acknowledgment on August 4, 2020, and were listed for trading on August 11, 2020.

Information relevant to the aggregate reporting policy: Not applicable.

(2) Shareholders structure:

(2) Shareholders structure:	(2) Shareholders structure:	(2) Shareholders structure:	(2) Shareholders structure:	(2) Shareholders structure:	(2) Shareholders structure:	(2) Shareholders structure:
April 19,2021
Shareholders Count Government institutions Financial institutions Other juridical persons Individuals Foreign institutions and foreigners Total
Persons	0 8 257 72,287 111 72,663
Shares held (shares)	0 3,704,577 278,875,972 447,645,455 76,722,525 806,948,529
Shareholding percentage %	0	0.46	34.56	55.47	9.51	100.00

(3) Diversity of ownership:

1. Common shares:

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Face value: NT$10; April 19, 2021
Number of shares Shareholding
Shareholding range Shareholder count
held percentage %
1 to 999 shares 31,246 6,429,548 0.80
1,000 to 5,000 shares 26,876 62,478,457 7.74
5,001 to 10,000 shares 7,278 557,652,558 7.14
10,001 to 15,000 shares 2,077 26,399,731 3.27
15,001 to 20,000 shares 1,585 29,777,868 3.69
20,001 to 30,000 shares 1,151 29,641,626 3.67
30,001 to 40,000 shares 610 21,903,893 2.71
40,001 to 50,000 shares 395 18,584,533 2.30
50,001 to 100,000 shares 691 50,643,523 6.28
100,001 to 200,000 shares 270 38,792,823 4.81
200,001 to 400,000 shares 134 37,264,421 4.62
400,001 to 600,000 shares 40 19,748,213 2.45
600,001 to 800,000 shares 14 9,557,353 1.18
800,001 to 1,000,000 shares 9 8,188,391 1.02
1,000,001 shares and above 35 389,885,591 48.32
Total 72,663 806,948,529 100.00
----- End of picture text -----

2. Preferred shares: none

(4) List of major shareholders:

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April 19, 2021; unit: shares
Shares Number of shares Shareholding
Name of major shareholder held percentage %
HannStar Display Corporation 214,639,413 26.5989
Hua Li Investment Corporation 59,439,784 7.3660
Investment account of Kaitou Asset Holding Co., Ltd. in the trusteeship of
19,485,000 2.4147
Yuanta Bank
YuChi Chiao 10,741,374 1.3311
Vanguard Emerging Markets Emerging Markets Stock Index Fund Account
7,036,115 0.8719
in the trusteeship of Chase Bank
Advanced Star Composite International Stock Index in the trusteeship of
5,980,304 0.7411
Chase Bank
JP Morgan in the trusteeship of JPMorgan Chase Bank, N. A. Taipei Branch 5,785,525 0.7170
WeiHsin Ma 4,698,825 0.5823
Norges Bank Investment Account in the trusteeship of Citibank 4,564,267 0.5656
HUANG Gaolin 4,500,000 0.5577
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(5) Information relating to market price, net worth, earnings, and dividends per share for the last 2 years:

Unit: NTD

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

Year Year-to-date March
2019 2020
Item 31, 2021
High 16.80 14.05 12.15
Market price per Low 6.92 8.05 9.35
share
Average 12.88 10.49 10.90
Before dividend 11.62 11.70 －
Net worth per share After dividend (Note 1) 11.27 11.31 －
Weighted average outstanding 806,949 －
753,916
EPS shares (in thousands)
EPS 1.35 0.43 －
Cash dividends 0.35 0.39 －
Stock From earnings －－－
Dividends per share dividen －－－
ds From capital reserves
Cumulative unpaid dividends －－－
P/E ratio (Note 2) 9.54 24.40 －
Analysis of Price to dividend ratio (Note 3) 36.80 26.90 －
investment returns
Cash dividend yield (Note 4) 0.0272 0.0372 －
----- End of picture text -----

Note 1: Calculated based on the number of outstanding shares at year-end; amount of distribution resolved in next year's shareholders meeting is presented in the table.

Note 2: P/E ratio = average closing price per share for the year / earnings per share. Note 3: Price to dividend ratio = Average closing price per share for the year / cash dividends per share. Note 4: Cash dividend yield = cash dividends per share / average closing price per share for the current year.

(6) Dividend policy and execution:
Dividend policy stated in the Company's Articles of Incorporation:
- According to the Company's Articles of Incorporation:
- Article 30 Earnings concluded in a year are first subject to taxation and reimbursement of previous losses, followed by a 10% provision for legal reserves. However, no further provision of legal reserve is required if the Company has accumulated legal reserves to an amount equal to paid-up capital. Any earnings remaining shall be added to undistributed earnings carried from previous years and distributed as shareholder dividends or retained at the Board of Directors' proposal, subject to resolution in a shareholders’ meeting. The Company may distribute all or part of its dividends, profits, capital reserves or legal reserves in cash, provided that such decision is resolved in a board meeting with at least two-thirds of directors present, supported by more than half of attending directors, and reported during a shareholders’ meeting afterwards. These decisions do not require the shareholders’ meeting resolution mentioned in the preceding Paragraph.

The Company may distribute earnings or reimburse losses at the end of each half-year, subject to compliance with The Company Act. Before interim earnings distribution, the Company shall estimate and retain the amount of taxes payable, reimburse previous losses, and make provisions for legal reserve as required by law. However, this excludes circumstances where legal reserves have accumulated to an amount equal to paid-up capital. Earnings distribution in cash is subject to board of directors' approval; distribution through issuance of new shares is subject to shareholders' resolution.

Article 31 The Company may choose to distribute all distributable earnings of the current year after

taking into account financial, business, and operational factors. Earnings can be distributed in the form of cash dividend, stock dividend, or a combination of both, provided that the cash portion amounts to no less than 20% of total dividends (cash plus stock) in the current year.

The Company may capitalize all or part of its capital reserves into share capital, subject to compliance with laws and the authority's instructions, in situations where the Company has no earning to distribute in the current year, or if the amount of earnings is far less than the amount distributed in the previous year, or for whatever financial, business, and operational concerns the Company may have.

Dividend distribution resolved by board of directors and proposed for discussion in the upcoming shareholder meeting: On March 19, 2021, the Board of Directors decided to distribute NTD 0.39 per share as the cash dividend for shareholders of 2020. The combined value of the shares distributed was NTD 314,709,926.00. NTD 0 distributed as share dividend for shareholders. The above will be introduced in the 2021 General Shareholders' Meeting.
Expected change in dividend policy: None
(7) Impacts of proposed stock dividends on the Company’s business performance and earnings per share: Not

applicable as no stock dividend was proposed

(8) Employee/director/supervisor remuneration:
Percentage and range of employee/director/supervisor remuneration stated in the Articles of Incorporation: Pursuant to the Articles of Incorporation, profits concluded by the Company are subject to employee remuneration of 0.001% to 15%, and director remuneration of no more than 2%. However, profits must first be taken to offset against cumulative losses if any.

The board of directors may resolve to distribute the abovementioned employee remuneration in cash or in shares. Payments may also be made to employees of subordinate companies that satisfy the eligibility criteria set forth by the board of directors or authorized parties thereof. The above director remuneration can only be paid in cash.

Basis of calculation for employee/director/supervisor remuneration and share-based compensations; and accounting treatments for any discrepancies between the amounts estimated and the amounts paid: Employee and director remuneration have been estimated according to the Articles of Incorporation, at 0.001% to 15% for employee remuneration and no more than 2% for director remuneration. These amounts were distinguished between operating costs and operating expenses, and presented in appropriate accounts depending on their nature. If an amount different from the figure presented on financial statements is resolved in a subsequent shareholder meeting, the difference shall be treated as a change in accounting estimates and recognized as gain or loss in the year the resolution is made.
Remuneration passed by the board of directors:
(3) Remuneration for employees and that for directors/supervisors distributed in cash or stock: NTD 25,020,244.00 for employees and NTD 6,000,000.00 for directors were distributed for 2020.
(3) Ratio of the value of remuneration for employees distributed in stock and the sum of after-tax income and total value of remuneration for employees in the entity or individual financial statement of the current term: not applicable.

Actual payment of employees'/directors'/supervisors' remuneration in the previous year (including the number of shares allocated, the sum of cash paid, and the price at which shares were issued), and any differences from the figures estimated (explain the amount, the cause, and treatment of such discrepancies):
- The Company paid NT$59,363,779 of employee remuneration and NT$17,128,187 of director remuneration in 2019, which were indifferent from the amounts previously recognized. For 2020, NTD 25,020,244.00 for employees and NTD 6,000,000.00 for directors were distributed; they did not differ from the values recognized.
(9) Buyback of the Company's shares: None had occurred in the last year up till the publication date of annual

report.

2. Corporate bonds (including offshore corporate bonds):

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

Corporate bond category 2017 first domestic private placement of unsecured ordinary corporate bonds
Issuance date November 28, 2017
Face value NT$10,000,000 per lot
Place of issuance and trade The Republic of China
Issued price Issued at 100% of face value
NT$1,800,000,000; distinguished between Tranche A, Tranche B, and Tranche C
by coupon interest.
Total value Tranche A: Issued for a total of Three Hundred Million New Taiwan Dollars
Tranche B: Issued for a total of Six Hundred Million New Taiwan Dollars
Tranche C: Issued for a total of Nine Hundred Million New Taiwan Dollars
Tranche A: Fixed at 2.1% per annum
Interest rate Tranche B: Fixed at 2.2% per annum
Tranche C: Fixed at 2.3% per annum
Tranche A: 2 years (maturity date: November 28, 2019)
Tenor Tranche B: 3 years (maturity date: November 28, 2020)
Tranche C: 5 years (maturity date: November 28, 2022)
Guarantor Not applicable
Trustee Transfer Agency Department of CTBC Bank Co., Ltd. has been commissioned to
handle principal and interest repayments.
Underwriter Not applicable
Certifying lawyer Not applicable
Certifying accountant Not applicable
Method of repayment Bullet payment at maturity
NT$900,000,000
Outstanding principal (Tranches A and B were recalled and retired prior to maturity in October 2019 and
August 2020, respectively)
The Company may exercise its right to recall part or all bonds from creditors on
the 14th calendar day of each month (the recall date) within the five months
Terms and conditions for early redemption or
before maturity for Tranche A, or within the six months before maturity for
repayment
Tranche B, or within the one year before maturity for Tranche C. The amount of
recall must be in multiples of Ten Million New Taiwan Dollars.
Restrictive clauses None
Rating agency, date of rating, and rating
awarded Not applicable
Amount of common shares, global
depository receipts, or other
securities converted (exchanged or Not applicable
Other subscribed) up till the publication
rights date of this annual report
Issuance and conversion
Not applicable
(exchange or subscription) rules
Possible dilution of equity and impact on
equity of existing shareholders due to
Not applicable
issuance or conversion, or due to subscription
or issuance terms
None
Custodian of exchanged assets
----- End of picture text -----

3. Preferred shares: None

4. Depository receipts: None

5. Employee warrants: None

6. Issuance of new shares for business acquisition or share exchange: None

7. Progress on planned uses of capital: None

Five. Operational Overview

1. Business activities

(1) Business activities:

1. Principal business activities:

The Company is primarily involved in the research, development, production, manufacturing, and sale of

projected capacitive touch sensors and TFT (thin-film transistor) arrays, and general investment.

2. 2020 product weight:

020 product weight:
Product category	Amount(NTD thousands)	Weight
Touch control solutions	2,774,175	89.88%
Others	312,224	10.12%
Total	3,086,399	100.00%

3. The Company's current products (services):

Primary products of the Company include touch sensor products and thin film transistor back panel products.

Touch sensor products include professional OEM of touch sensors or modules and design and production of touch sensors. In terms of TFT back panel products, there are the professional OEM of TFT element glass and design and production of TFT glass.

New product (service) development plans:

Touch products produced by the Company mainly consist of dimensions to accommodate the activematrix organic light-emitting diode (AMOLED) in advanced smart phones and wearable products, among others. They are known to have fine line widths, narrow frames, and high transmittance. Meanwhile, continuous efforts are devoted to the development of technologies such as high-end HIAA (Hole in Active Area), full screens with a high screen-to-body ratio, and TDDI (Touch and Display Driver Integration) for mobile phones. In addition, on the basis of existing highly automated and highly precise equipment, process technologies for new flexible TFT elements and ESL back panels were developed in 2020. This newly built flexible product and technology platform has contributed to diversified developments of the Company’s products and it is hoped to serve even more diversified customers.

(II) Industry overview:

1. Current and future industry prospects:

(1) Touch sensors:

HannsTouch focuses on the utilization of touch sensors that are built with the AMOLED. AMOLEDs are mainly applied on the market focused on smart phone consumer products. The demand as a whole will be adjusted with the AMOLED throughput and the driving demand at the customers’ end. Looking ahead, in 2021, with the ubiquity of vaccination, the COVID-19 pandemic will be under control. Compounded by the new 5G smartphone launches of many international brands that are foreseen to drive up purchases of new phones, the sales of OCTA products are expected to have much room for growth. Also, for the ESL market, due to the pandemic

driving the will and upping the speed of end customers changing their equipment, the demand for a backplane for ESL displays will continue to grow. The Company shall focus on actively making preparations to embrace the coming recovery. In 2020, international brands were turning to set 5G smartphones as their signature products, thus fortifying the 5G smartphone era. In 2021, the trend of the increasing market share of smartphones using AMOLED remains unchanged. Apart from solidifying its position in the medium to high-end smartphone market, Rigid AMOLED is also heading toward application in tablet and notebook, increasing AMOLED's penetration rate in the IT products and further enhancing the scope of product application of AMOLED. Purchase orders are gradually coming in for ESL products that HannsTouch has been working on for years to accordingly reduce the impact of the throughput subject to seasonable variation on the uptime. It is expected that the ratio of sales on the new product platform will be increased later to optimize the allocation of throughput, make the best of the equipment throughput, optimize the sales and operational performance of the Company, and contribute to the revenue. Further, for the application market of industrial and automobile professional display and touchcontrol solutions, the Company has been working closely with customers in its endeavor in technology development. In 2020, its long-term revenue growth was evident, and the development diversity is promising. HannsTouch Solution shall consistently deepen its roots in technology and diversity developments.

(2) TFT back panels:

TFT back panels can be extensively applied to TFT-LCDs, electronic paper, and medical care. TFTLCDs account for the largest portion in the industry for the time being. For electronic paper, on the other hand, an ultra-thin and ultra-light display is used. Its surface is coated with the electronic ink consisting of numerous tiny transparent particles. The particles have a diameter of several micrometers. These tiny black and white particles can sense charges and move in different directions. When they are driven to move in specific directions, the different graphics show. The color of the electronic ink is not limited to black and white. With the dyes inside particles and the colors of microparticles adjusted, the electronic ink will show different colors and graphics. By fixating the colors and graphics through the TFT back panel and the drive IC, the contents can show even if the power is disconnected.

For the ESL, the electronic paper display technique is utilized. It is known for low power consumption, wide viewing angle, and readability, among other strengths, plus the radio control system, retailers can update contents of the labels on the shelf in real time; it makes commercial operation easy. As the ESL gets popular, the demand for the contents has been reached from a simple display of the price to also include specifications, traceability, and promotional information, etc. of the product. Therefore, it needs to become larger and larger in size. In the future, for the electronic paper display, except for e-books and ESLs, credits cards, smart cards, large display boards, and electronic white-boards will be where additional potential is on the market.

Association between upstream, midstream, and downstream industry participants:

(1) Touch products:
1- 1 Touch product structure:

The modular illustration of a touch panel is provided below. The primary materials are:

A: Cover lens
B: Sensor glass or sensor film
C: Flexible printed circuit and IC
D: Display unit (TFT-LCD or AMOLED)

==> picture [311 x 193] intentionally omitted <==

1- 2 Association among Upstream, Mid-stream, and Downstream of Touch Products:

==> picture [387 x 153] intentionally omitted <==

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

Glass substrate
Reinforced glass Conducting Flexible panel IC controller
material
Control module
----- End of picture text -----

(2) TFT back panels:

They may combine the color filter to become TFT-LCDs or the FPL to become EPDs. The structure of the product is given below:

==> picture [67 x 10] intentionally omitted <==

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

TFT back panel
----- End of picture text -----

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==> picture [284 x 10] intentionally omitted <==

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

TFT display Electronic paper display
----- End of picture text -----

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==> picture [163 x 71] intentionally omitted <==

2-1 Structure of the TFT display:

The modular illustration of a TFT display is provided below. The primary materials are:

A : Color filter
B: Liquid crystal
C: TFT back panel
D: Drive IC
E: Flexible printed circuit (FPC)
F: Back light module

TFF-LCD Module Structure

==> picture [436 x 159] intentionally omitted <==

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

Drive IC
FPC
Color filter
Liquid crystal
TFT back panel
Back light module
----- End of picture text -----

2-2 Association among upstream, mid-stream, and downstream of the TFT display:

==> picture [374 x 176] intentionally omitted <==

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

Glass substrate
Liquid crystal Color filter Back light
module
TFT process
TFT back panel
TFT display module
----- End of picture text -----

2-3 Structure of the TFT display:

The modular illustration of a TFT display is provided below. The primary materials are:

A: Protective film
B: Electronic paper
C: TFT back panel
D: Drive IC
E: Flexible printed circuit (FPC)

EPD Module Structure

==> picture [341 x 108] intentionally omitted <==

==> picture [315 x 48] intentionally omitted <==

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

Protective film
Drive IC Electronic paper Glue
TFT back panel
----- End of picture text -----

2-2 Association among upstream, mid-stream, and downstream of the electronic paper:

==> picture [374 x 164] intentionally omitted <==

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

Glass substrate Electronic paper Drive IC Protective film
TFT process
TFT back panel
Electronic paper display module
----- End of picture text -----

3. Product trends:

The glass touch sensor to carry the rigid AMOLED is not only lighter, thinner, and with even narrower frames but also developing towards the new HIAA (Hole in Active Area) technology to realize the fullscreen design with the highest screen-to-body ratio in order to satisfy the ID design needs of new mobile phones. Meanwhile, the anti-corrosion special alloy conductor material is introduced comprehensively to the mobile phones of the new generation for persistent enhancement of reliable performance and for use in even wider settings. Meanwhile, the deployment targets also lowimpedance process technologies for stepping into the fields where IT products are applied. The flexible touch sensors to accommodate the flexible AMOLED, on the other hand, aim to satisfy the characteristics of flexible products in order to cope with the needs of terminal products in the future. For displays with the TFT back panel plus the electronic paper, besides continuing to reach out to foldout products, digital white boards, and large display boards over the past few years, the utilization of large display boards continues to grow due to the fact that electronic paper is known for its electricitysaving strength and its contribution to reduced infrastructure projects, particularly in Europe and Japan. In addition, recently, because of the prevalence of the Internet and unmanned stores, the demand for ESL products has surged and ESLs may be used for logistics delivery. Meanwhile, in order to strengthen the promotional effect, it is becoming more and more obvious that ESLs will become larger.

4. Market competition:

The built-in projected capacitive input sensor developed by the Company primarily goes with the AMOLED panel and is a mainstream nowadays and in the future in the industry. There are not many professional suppliers of primarily AMOLED touch sensors. HannsTouch is one of the Top 2 rigid touch sensor suppliers and the efforts in the future will be devoted to constantly improving the product trustworthiness and the cost-effectiveness. As far as the flexible touch sensor that comes with the flexible AMOLED is concerned, HannsTouch is also continuing to improve its optical efficacy in order to satisfy the specification requirements of products for the new generation.

The following are the competitive advantages of the Company in AMOLED touch sensors:

(1) High-precision exposure and other production process equipment realize the ultra narrow frame design superior to the process capability of ordinary glass touch manufacturers.

(2) Glass of 0.25t may be devoted directly to realize ultra-thinness, reduce the production cost, and to bring additional value.
(3) The most advanced HIAA (Hole in Active Area) technology and special anti-corrosion alloy conductor material technology satisfy customers’ demand for high-end process technologies and highly reliable capabilities.
(4) Bendable flexible touch sensors are developed to satisfy the new technical needs of products.

For the electronic paper display technology, after years of continuous promotion in the industry, its application has reached out from the very first e-book readers to ESL products and large-size products. For ESL products, for example, they have been widely applied to various large grocery stores throughout Europe. Recently, impacted by COVID-19, excessive demand and growths have surfaced. Through its existing production lines, HannsTouch has developed the TFT technology and qualification of the characteristics of various types of products has been quickly completed to cut into the supply chain for TFT back panels. At the moment, it can already go with TFT-LCDs and the electronic paper. The Company developed this product with the following strengths and it is full of competitive potential on the market.

The following are the competitive advantages of the Company in TFT back panels:

  - (1) Produced through the G5.5 line that is known for its high product utilization rate and the production strength in accommodating large electronic paper products.

  - (2) Idle throughput of color filter and cell lines facing ordinary LCD manufacturers is not an issue.

  - (3) New product design framework is adopted for a better price-performance ratio.

(III) Technological research and development:
R&D expenses:

&D expenses:
	Unit: NTD thousand
Item	2020
R&D expenses	40,679
Net sales revenue	3,086,399
R&D expenses as apercentage of net sales(%)	1.32%

Technologies or products successfully developed:

The development of primary product technologies of the Company is based on the two major technical platforms, namely Touch and Array sensor, which go with rigid and flexible substrates, to build technologies. Different product application technologies are developed as such, including those for smart watches, mobile phones, and tablets that vary in size ranges.

At present, primary OCTA touch technologies are applied to high-end AMOLED smart phones and wearable products. They are known to have fine line widths, narrow frames, and high transmittance. Meanwhile, continuous efforts are devoted to the development of technologies such as high-end HIAA (Hole in Active Area), full screens with a high screen-to-body ratio, and TDDI (Touch and Display Driver Integration) for mobile phones. As is needed for heavyweight customers, low-impedance medium-size touch products are researched and developed at the same time. They are mainly applied to medium-to-large IT products, such as Notebook PCs, Tablet PCs, and high-end 3C OLED electronic

products of 9~23 inches.

Besides the mainstream touch glass sensor products, based on the application of the array technology, for niche products, related technologies and products of ESL TFT back panels have been developed. High electronic mobility has been successfully developed and it has effectively boosted the performance of TFTs to favor the design of high-resolution products and to fulfill the electricity-saving strength. In terms of products, taking advantage of the close packing technology, ESL back panel products have been successfully introduced. They make the best of the optimal cutting rate of G5.5 (1300x1500mm).

In the development of industrial control products, various touch products such as 15.6 and 21.5-inch ones to be applied in various types of industrial computers have been successfully developed. Mass production has been steady for the series of products. In addition, deployment also targets high-end 20.1” and 24” touch products to be applied in aviation, which have been qualified by end-users and mass production will begin for the first half of 2020. Joint development with customers will be continued in the future to maximize the market share in the industrial control and utilization field. On the basis of existing high automation and high precision, this technical platform will be used to further develop flexible TFT substrates and optical fingerprint identification detectors in 2021 for enhanced additional value of products. In the future, the Company shall coordinate the aforementioned technologies to further develop new optical and medical sensor technology. The Company shall also deepen its research in the technological fields and diversified development to servicing a more diversified clientele.

(IV) Long and short-term business plans:

1. Short-term business plans:

(1) The Company is a professional manufacturer of touch sensors meant primarily to go with the AMOLED and G5.5 OCTA touch sensors. The customers it sells to are international big brands whose products range from smart watches, mobile phones, tablets, and notebook computers that vary in size.
(2) For rigid AMOLED OCTA touch sensors, besides production corresponding to G5.5, the scope of sales to the corresponding generation has been expanded and enhanced to a corresponding capability that matches G4.5 and G6.
(3) Flexible PI Touch Sensor qualification and production are completed and this technology has made HannsTouch a technical pioneer in the industry. In addition, to address the different needs of customers, different types of substrates are being developed, too. They can cover the fixed curvature rate so that it may be applied to more variety of products such as the foldable ones.

2. Long-term business plans:

For the development of emerging industries such as the Internet of Things and Industry 4.0 in the future, HannsTouch keeps track of the trends, too, by developing new technologies and processes and creating new product platforms. The Company develops multiple technologies at the same time:

(1) For the deployment of products, besides steadily maintaining the existing AMOLED OCTA high-end touch sensors, market development is focused also on professional fields such as industrial control and car-borne. The high-generation production technique makes the best of the cost competitive advantages and win recognition on the market. Efforts are made also to the provision of the Total Solution to hopefully serve customers in the professional utilization fields. Due to the fact that industrial control and other applications require constant accumulation of achievements, the growth remains slow over the short term.
(2) By creating new product lines, the scope of utilization for non-touch sensors is expanded. The TFT back panel technology has been successfully developed and may be applied to TFT-LCDs and go with the TFT back panel of the electronic paper.
(3) Develop the flexible TFT back panel technology to maximize the scope of utilization in the said field.
(4) Apply the successfully developed TFT back panel technology to the optical fingerprint sensor in order to replace the existing fingerprint identification technology that cannot be applied to a large area. Current screen fingerprint identification technology primarily includes the optical fingerprint identification solution and the ultrasound fingerprint identification solution. The ultrasound solution, in particular, is known for its limited penetration distance and the relatively non-competitive price because of the full screen that is used. Optical fingerprint identification is not only compatible with the rigid/flexible OLED screen but also more competitive given the larger area utilizing the TFT technology.

2. Market, production and sales overview

(I) Market analysis:
Locations where products are mainly sold:

			Unit: NTD thousand	Unit: NTD thousand
Year Sales destination	2019		2020
	Amount(Note 1)	%	Amount(Note 2)	%
Domestic sale	213,936	4.86%	359,766	11.66%
Export sale	4,189,880	95.14%	2,726,633	88.34%
Total	4,403,816	100.00%	3,086,399	100.00%

Note 1: This amount includes the sales income from the continuing operating department that is worth NTD 4,403,816,000.00 and from the discontinued department that is worth NTD 0.00.

Note 2: This amount includes the sales income from the continuing operating department that is worth NTD 3,086,399,000.00 and from the discontinued department that is worth NTD 0.00.

2. Market share and future supply, demand growth:

Primary products of the Company are touch sensors that go with G5.5 glass AMOLED. A major customer in this field is located in Korea. HannsTouch is its second largest supplier. With a robust customer base and demand, HannsTouch built its equipment that is capable of supporting G4.5, G5.5, and G6 production lines and is devoted to building a manufacturing facility meant exclusively for the production of AMOLED OCTA professional touch sensors to become the only of its kind in the world that can supply AMOLED

production lines of different generations at the same time and secure a key role in the supply chain on the AMOLED OCTA market.

In order to reduce the highs and lows in the seasonal demand for consumer mobile phones on the market, to improve the operational performance, and to secure steady profitability over the long term, on the basis of existing highly automated and highly precise equipment, new IT products and process technologies are developed; competitive TFT back panel technology is provided; various related product platforms are created; and new additional value is provided for the customers.

In addition, through resources and collaboration inside and outside the Group, the width of product application is enhanced; flexible touch sensors, industrial control and car-borne products and technologies are developed; new professional display application fields are explored; and more diversified technologies, products, and services are provided. The goal is to provide overall solutions and to become a professional sensor and display solution provider that provide new product portfolios and improve profitability.

Competitive advantage:
(1) High-quality automated professional touch production lines:

One of the few fully automated professional touch-related producers in the world that adopts the equipment equivalent to that adopted at a TFT plant and automated production line design throughout the plant to ensure that the high precision requirement of touch sensors with AMOLED is fulfilled and to accordingly provide customers with reliability and steady supply assurance. In response to the rapidly changing demand on the market, production line management continues to be reinforced. The small-quantity diversified production model improves the responsiveness of customers on the market.

(2) Technical and cost-competitive advantages:

Direct mass production and devotion of G5.5 0.25T glass, fine line width technology, mass production of 0.6 mm narrow-frame products, 92% high-penetration technology, and realization of the utilization of high-end AMOLED OCTA. The flexible thin-film touch sensor has been qualified by customers and shipment has begun to satisfy the next generation’s design ideas and requirements for terminal consumer products, that is, light-weight and foldable, for increased value for customers. Manufacturing high-quality products and constantly improving yield are fundamental commitments of HannsTouch Solution to its customers. Besides constant optimization of the production configuration and production process parameters, the throughput is expanded, too, to better optimize the production efficacy and to enhance the overall competitive advantages. Besides the existing touch technology, process technologies that are superior to those of other panel manufacturers are being developed so that the new product platform is competitive and advantageous to secure new business opportunities for it to be applied on the market. The Company shall develop relationships with suppliers of new materials to ensure diversification in high quality and steady supplies, reduce production cost and create better profitability. With more experience and capabilities in maintaining its own production facilities, the Company is able to achieve proper cost control.

(3) Different technologies and product platforms, increased product portfolios, and enhanced additional value:

On the basis of existing highly automated and highly precise equipment, the TFT process technology and product platform have been successfully developed and such a technical platform was further developed in 2020 with the flexible TFT back panel and optical fingerprint detection sensor for

enhanced additional value of products. In the future, each of the above-mentioned developed technologies will be integrated, too, and new medical sensor technologies will be developed for constant advancement and diversification in technicality and to hopefully serve more diversified customers.

Opportunities, threats, and response measures:
(1) AMOLED continues to grow. The main supplier still secures the primary supply position on the market:

HannsTouch is the second largest rigid AMOLED touch supplier on the market. Growths will continue with the increased yield rate of the AMOLED plant, throughput, and demand for IT products. Rigid AMOLEDs, however, are faced with low-price competition due to surplus in the throughput of LTPS TFT-LCDs. HannsTouch will expand its advanced collaboration with AMOLED customers and continue to develop technologies that combine other features to improve the value and competitive advantages of products.

(2) Sensor solution provider that has created multiple product lines and has grown professionally:

In order to reduce the highs and lows in the seasonal demand for consumer mobile phones on the market, to improve the operational performance, and to secure steady profitability over the long term, on the basis of existing highly automated and highly precise equipment, new process and product technologies are developed; new product platforms are created; and new additional value is provided for the customers.

(II) Main product applications and production processes:

1. Glass sensor

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2. TFT back panels

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==> picture [192 x 109] intentionally omitted <==

==> picture [192 x 96] intentionally omitted <==

(III) Supply of main materials:

Primary products of the Company are touch sensors and TFT back panels. All suppliers of the raw materials for glass sensors and TFT back panel are long-term collaborative strategic partners that can accommodate the demand for the touch technology and TFT back panel on the market. Keeping track of key materials and deploying early on help ensure the throughput.

(IV) List of main suppliers (buyers):

Names of customers with 10% or more purchases (sales) and the current value and ratio of the purchases (sales) in any of the past two years. Please also describe the reason for the increase or decrease. ：

Main suppliers in the last two years

==> picture [499 x 168] intentionally omitted <==

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

Unit: NTD thousands; %
2019 2020
As a As a
Relationship Relationship
Name percentage of percentage of
Item Amount with the Name (Note) Amount with the
(Note) annual net annual net
issuer issuer
purchases (%) purchases (%)
1 Company 533,559 50.46% None Company A 302,874 42.56% None
A
2 Company 122,771 11.61% None Company B 74,726 10.50% None
B
Company 69,967
3 108,714 10.28% None Company C 9.83% None
C
4 Others 292,372 27.65% - Others 264,105 37.11% -
Total Total 1,057,416 100% - Total 711,672 100% -
----- End of picture text -----

Note: List the names of customers accounting for at least 10% of the total purchases over the past two years and the value

and ratio of their purchases. When the names of suppliers or counterparts may not be disclosed as agreed in contracts are individuals and non-related parties, however, they may be replaced with a code.

Main suppliers in the last two years

Unit: NTD thousands; %

==> picture [497 x 164] intentionally omitted <==

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

2019 2020
As a
As a percentage Relationship Relationship
Name percentage
Item Amount of annual net with the Name (Note) Amount with the
(Note) of annual net
sales (%) issuer issuer
sales (%)
1 Company A 3,120,698 70.86% None Company A 2,096,050 67.91% None
2 Company B 548,141 12.45% None Company B 411,899 13.35% None
3 Others 734,977 16.69% - Others 578,450 18.74% -
Total Net sales 4,403,816 100.00% - Net sales 3,086,399 100.00% -
----- End of picture text -----

Note: List the names of customers accounting for at least 10% of the total sales over the past two years and the value and ratio of their sales. When the names of customers or counterparts may not be disclosed as agreed in contracts are individuals and non-related parties, however, they may be replaced with a code.

(V) Production volume and value in the last two years:

Unit: pieces; NTD thousands

==> picture [497 x 108] intentionally omitted <==

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

Year 2019 2020
Production
Production Production Production
volume/value
Production value Production volume Production value
Main products capacity volume capacity
Touch control 1,551,950 1,901,157
-
2,064,600 2,467,753
solutions
Total - 2,064,600 2,467,753 1,551,950 1,901,157
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(VI) Sales volumes/values in the past two years

Unit: pieces/sets; NTD thousands

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

Year 2019 2020
Sales Domestic sale Export sale Domestic sale Export sale
volume/value
Volume Value Volume Value Volume Value Volume Value
Main products
Touch control
9,833 9,650 2,060,645 4,189,880 28,027 47,542 1,512,136 2,726,633
solutions
Others - 204,286 - - - 312,224 - -
Total 9,833 213,936 2,060,645 4,189,880 28,027 359,766 1,512,136 2,726,633
----- End of picture text -----

Note: This table shows the continuing operating departments and the discontinued departments.

3. Employee information in the last 2 years up till the publication date of this annual report

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

Year 2019 2020 2021 up till March 31
Manager and above 34 34 35
Employee Production line workers 126 129 129
count General staff 164 172 166
Total 324 335 330
Average age 36.7 36.5 36.5
Average years of service 4.18 4.43 4.35
Doctoral Degree 1.85% 1.79% 1.82%
Masters Degree 24.07% 29.85% 29.70%
Academic
Bachelors Degree 64.51% 58.81% 58.48%
background
Senior high school 8.95% 8.96% 9.39%
Below senior high school 0.62% 0.6% 0.61%
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4. Contribution to environmental protection

Air pollution control and water treatment equipment have been functioning consistently ever since the Company constructed its plant facilities in Southern Taiwan Science Park (STSP) in 2003. The Company continues to implement environmental protection and green product management practices to this date for compliance with environmental regulations and customers' requirements, and is actively involved in environmental protection initiatives. Below is a description of various accomplishments the Company has achieved in this regard:

Enforcement of environmental management and enhancement of environmental performance:

The Company's STSP Plant successfully renewed certification for ISO 14001:2015 - Environmental Management System in August 2018 and obtained ISO 14064:2006 - Greenhouse Gas Verification Statement in September 2018. Driven by the motivation to improve environmental management performance, the Company conducts regular environment audits and follow-ups, and for which it was awarded certifications for ISO 14001:2015 and ISO 14064:2006 in 2020.

Waste management:

The Company has been enforcing waste recycling practices in response to the government's green and environmental protection initiatives. Currently more than 95% of waste produced from plant is systematically recycled and reused, which will effectively reduce environmental burden and depletion of resources associated with the production process.

Capacity enhancement for pollution control equipment:

As part of the Company's corporate responsibilities, all existing air pollution control and water treatment equipment are serviced and tested regularly to ensure that they operate at optimal efficiency. The Company also makes ongoing improvements to the environment policy, including pro-active enhancements to wastewater recycling and air pollution control equipment, for the sustainability of its business.

Compliance records:

The Company was not penalized or fined by the authority for any pollution to the environment in 2020.

The Company is dedicated to controlling pollution and reducing industrial waste, and strives to promote sound corporate image and raise competitiveness in the field of environmental protection. The Company has adopted relevant measures to support green product management in response to EU's and customers' green product requirements, and will address the global warming phenomenon through introduction of greenhouse gas reduction/control systems in the future.

5. Payment of pollution prevention expenses in 2020:

Unit: NTD

				Unit: NTD
Category of pollution prevention expense	Q1	Q2 Q3		Q4
Air pollution prevention expense	945,290	220,778 572,819		970,028
Soil pollution prevention expense	5,293	4,296 5,934		12,850
Water pollution prevention expense	3,256,806	1,815,253	1,282,240	1,743,860

Investment in pollution prevention equipment, the purpose of equipment, and possible benefits:

Unit: NTD thousands

==> picture [447 x 275] intentionally omitted <==

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

Expected date
Name of Cou Cost of
of acquisition Purpose and expected benefits
equipment nt investment
(The new electric plate is located indoors (the original
CVD wash/Acid
one outdoors) and the existing control logic for the
washing tower
exhaust equipment was improved for enhanced
system 2 July 31, 2021 2,400 exhaust system operational availability. The
improvement
production equipment could continue with
project
production and no throughput was affected. Steady
(Electric plate) operation as required by law is fulfilled.
Addition of the
ultrasound flow-
meter for the 1 July 31, 2021 700
waste water
treatment system
Improvement of
aeration for the
1 June 30, 2021 400
aerobic organisms
treatment system
Addition of the
aeration pipeline 1 June 30, 2021 200
to the down spout
Installation of the
new ultraound
flow-meter for the 3 April 30, 2021 700
air-conditioning
system
----- End of picture text -----

5. Labor-management relations

(1) Availability and execution of employee welfare, education, training, and retirement policies. Elaborate on the agreements made between employers and employees, and the protection of employees’ rights:
Employee welfare measures:

Employee welfare measures are arranged by both the Company and the Employee Welfare Committee. Together, they provide employees with substantive and diverse benefits as well as the work environment needed to inspire morale and promote harmonic labor-management relations:

(1) Welfare offered by the Company:

Birthday cash, Labor Insurance, National Health Insurance, group insurance, regular health checkup, meal subsidy etc.

(2) Employee Welfare Committee:

Festive cash/voucher, wedding/funeral/celebration/childbirth/hospitalization subsidy, emergency allowances, annual employee travel subsidy, store discount, employee relations activity subsidy etc.

Employee education:

The Company has implemented "Training Management Procedures" to support the creation of an employee training system and diverse learning channels that help improve employees' skills and develop the talents needed by the Company. Employees are trained and certified according to legal requirements.

Employee training:
(1) Orientation:

Including basic training and work guide. There is also the care card to ensure sound communications between new hires and their supervisors so that the new hires may quickly adapt to the corporate culture and the nature of their work.

(2) Internal training:

The Company makes yearly plans to bring employees a variety of training courses that are suitable for their career development. Instructors from within or outside the organization are invited to assist employees with skill and career development. Professional, managerial, and regulatory courses are designed.

(3) External training:

Employees are given opportunities, subject to line managers' recommendation, to participate in training courses organized by external institutions, where they are able to further expand their career vision and improve professional skills to the next level.

Retirement system and execution:

The Company has established its own retirement system and "Employee Retirement Policy" in accordance with the "Labor Standards Act" and "Labor Pension Act." Details concerning pension contribution and payment of benefits are outlined in the policy.

Enforcement of labor agreements and employee rights:

The Company continues to listen to what their employees have to say and respond to their concerns and communicate with them in real time through a variety of employee opinion reflection channels for the promotion of labor-management harmony and for accomplishing the win-win goal for both the enterprise and its employees. The bilateral communications that are available include:

(1) The meeting between supervisors at all levels and their colleagues, such as the monthly Board of Directors’ meeting, the quarterly presidential meeting, and the care meeting for new hires.

(2) Quarterly labor-management meetings where the general corporate operational status is explained to employees; Welfare Committee routine meetings where employees are invited to take part in the discussions about employee benefits.
Establishment of employee behavioral and moral principles:

The Company has "Work Rules" and "Employee Reward and Disciplinary Policy" that provide employees with a clear understanding of their rights and behavioral guidelines that they are bound to obey.

Material insider information procedures:

The Company's "Material Insider Information Handling and Insider Transaction Prevention Procedures" have been published on the internal documentation database; key points are being conveyed to all employees, for which they are required to comply to avoid insider trading.

Work environment and implementation of employee safety and protection measures:
(1) Safety and health organization and its functions

The Company has a Work Safety Office created directly under the President's Office. Heads of plant divisions, offices, accountable departments, and workers' representatives are invited to participate in quarterly "Safety, Health, and Environmental Protection Committee Meetings," where they discussed various issues concerning performance goals, project progress, internal/external communication, environment/safety/health management plan, health promotion, and prevention of occupational illness.

(2) Occupational safety and health management system

The plant was certified by OHSAS 18001(Occupational Safety and Health International Management System) and CNS 15506 (Taiwan Occupational Safety and Health Management System, the original TOSHMS) with its occupational safety and health management system and was ISO 45001 Occupational Safety and Health Management System certified in 2020 instead of the original OHSAS 18001 management system. Practices such as goal-oriented management, risk identification and assessment, monitoring, testing, consultation, and communication have been adopted to prevent accident, minimize risk of hazard, and ultimately improve safety of the work environment and employees.

(3) Implementation of emergency response system and environment, safety, and health training

The Company has developed a comprehensive emergency response plan that covers a broad range of risks including fire, chemical and gas leakage, earthquake, flood, and malfunction of pollution control equipment. Drills are organized to familiarize employees with procedures of the emergency response plan and thereby minimize injuries and property damage in case of emergency. Meanwhile, seminars on topics such as use of protective gear, risk identification/assessment, chemical/gas hazard and protection, use of fire safety equipment, prevention of occupational illness, and health promotion are being organized on an ongoing basis to promote general safety and health knowledge as well as professional skills.

(4) Promotion of employee health

In order to effectively prevent against disorders triggered by abnormal work loads, the Company ensures safety and physical and mental health of employees while at work and plans a complete health management solution that covers annual period health checkup and various health promoting dynamic activities, risk case identification and management, abnormality tracking and management, mental health management, maternal health protection, assignment of tasks, and adaptive adjustment, etc. In addition, maternal health protection and management are provided to working moms.

(5) Ongoing monitoring and audit

For the safety of the plant, the Company not only performs thorough tests at various environments including workers' operating environment as required by law, but has also adopted robust audit procedures to support routine inspection, inspection of high-risk operations, and management inspection. The Company is also audited by third parties or customers from time to time.

(2) Actual or estimated losses arising as a result of employment dispute in the last year up till the publication date of this annual report, and any response measures taken:

The Company has maintained good labor-management relations since it was incorporated on September 18, 1999, which owed largely to the presence of open communication channels including labor-management meetings and policy seminars. The management has very high respect for workers' opinions, needs, and issues, and strives to provide the best solution and assistance possible. For these reasons, the Company has never encountered any major employment dispute since it was founded, and expects extremely low likelihood of suffering losses from employment dispute in the future, given its productive labor-management interactions.

6. Major contracts

List the parties, main details, restrictive clauses, and duration of any material contractual arrangement (that are relevant to shareholders' interest), such as supply/sale agreement, technological collaboration contract, construction contract, long-term borrowing contract etc., that is currently effective or had expired in the last year:

Nature of contract	Parties involved	Contract duration	Main details Restrictive clauses	Main details Restrictive clauses
Financing	Land Bank of Taiwan	May 21, 2018 ~ February 21, 2033	To pay off early real estate mortgage loans with the Mega Bank and MEGA BILLS from 2016 and to reduce interest expenditure. None
Lease	Glorystone Inc.	15 years from the start date	Some of the floors and the portion of land they are assigned of the building on Jilong Road are sublet to the tenant for running general hotels.	None
Lease	JustCo (Taiwan Onshore) Ltd.	10 years from the delivery date	Some of the floors of the building on Jilong Road are sublet to tenants to be used as offices.	None

Six. Financial Overview

1. Summary balance sheet and statement of comprehensive income for the last 5 years

(1) Summary consolidated balance sheet and consolidated statement of comprehensive income - IFRS-compliant

Summary consolidated balance sheet - IFRS-compliant

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

Unit: NTD thousands
Year Financial information for the last 5 years (Note 1)
Item 2016 2017 2018 2019 2020
Current assets 2,170,587 1,614,281 1,317,238 1,306,420 5,683,930
Property, plant and 10,862,154
9,605,731 9,643,017 8,831,429 14,132,137
equipment
- -
Investment property - net 5,512,906 5,492,467 5,611,958
Intangible asset 3,783 5,616 19,062 71,105 17,377
Other assets 811,588 788,575 670,565 1,532,273 866,012
Total assets 18,104,595 17,543,956 16,450,252 17,041,935 17,429,473
Before 1,932,241
3,524,092 2,530,051 1,873,641 1,371,489
Current liabilities dividend
(Note 2) After 2,246,951
3,524,092 2,530,051 1,873,641 1,653,921
dividend
Non-current liabilities 7,479,426 7,810,343 6,873,130 6,030,615 5,786,544
Before 7,718,785
11,003,518 10,340,394 8,746,771 7,402,104
Total liabilities dividend
(Note 2) After 8,033,495
11,003,518 10,340,394 8,746,771 7,684,536
dividend
Equity attributable to
7,057,708 7,203,562 7,410,090 9,379,979 9,441,094
owners of the Company
Share capital 7,369,485 7,369,485 7,369,485 8,069,485 8,069,485
Capital reserves 61,616 61,616 62,535 312,925 312,925
Before 1,065,141
Retained (370,360) (229,298) (21,930) 997,569
dividend
earnings
After 750,431
(Note 2) (370,360) (229,298) (21,930) 715,137
dividend
Other equity items (3,033) 1,759 - - (6,457)
Treasury stock - - - - -
Non-controlling equity 43,369 - 293,391 259,852 269,594
Total Before 9,710,688
7,101,077 7,203,562 7,703,481 9,639,831
shareholders' dividend
equity After 9,395,978
7,101,077 7,203,562 7,703,481 9,357,399
(Note 2) dividend
----- End of picture text -----

Note 1: All financial information from 2016 to 2020 has been audited.

Note 2: This is the intended quantity to be discussed as decided and approved by the Board of Directors on March 19, 2021.

Summary consolidated statement of comprehensive income - IFRS-compliant

Unit: NTD thousands

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

Year Financial information for the last 5 years (Note 1)
Item 2016 2017 2018 2019 2020
Operating revenues 2,732,534 2,717,922 2,843,178 4,403,816 3,086,399
Gross profit (147,030) 358,775 479,678 1,661,900 711,375
Operating profit (340,940) 81,020 171,240 1,260,940 418,842
Non-operating income
(152,812) 14,275 9,013 (83,896) 43,778
and expenses
Pre-tax profit (493,752) 95,295 180,253 1,177,044 462,620
Current net income
from continuing (494,952) 141,295 177,650 984,518 359,746
operations
Loss from
discontinued - - - - -
operations
Current net income
(494,952) 141,295 177,650 984,518 359,746
(loss)
Other comprehensive
income 9,728 4,559 1,090 1,442 (6,457)
-
(net, after tax)
Total comprehensive
income for the current (485,224) 145,854 178,740 985,960 353,289
period
Net income
attributable to owners (493,321) 141,295 183,340 1,018,057 350,004
of the Company
Net income
attributable to non- -
(1,631) (5,690) (33,539) 9,742
controlling
shareholders
Comprehensive
income attributable to
owners of the (483,953) 145,854 184,430 1,019,499 343,547
Company
Comprehensive
income attributable to -
(1,631) (5,690) (33,539) 9,742
non-controlling
shareholders
Earnings per share (0.67) 0.19 0.25 1.35 0.43
(NTD)
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Note 1: All financial information from 2016 to 2020 has been audited.

(2) Summary standalone balance sheet and standalone statement of comprehensive income - IFRS-compliant

Summary standalone balance sheet - IFRS-compliant

Unit: NTD thousands

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Year Financial information for the last 5 years (Note 1)
Item 2016 2017 2018 2019 2020
Current assets 3,025,023 1,597,393 838,168 1,075,795 5,477,964
Property, plant and 7,986,314 4,615,811
9,605,731 9,639,495 8,797,950
equipment
Investment property - - 5,729,096 5,810,132
5,492,467 5,611,958
net
Intangible asset 3,783 5,616 19,062 22,985 17,128
Other assets 1,264,971 808,589 885,784 1,186,003 1,203,193
Total assets 13,899,508 17,543,560 16,152,922 16,000,193 17,124,228
Before 3,522,374 2,529,655 1,869,702 1,196,734
Current dividend 1,896,591
liabilities
(Note 2) After 3,522,374 2,529,655 1,869,702 1,479,166 2,211,301
dividend
Non-current liabilities 3,319,426 7,810,343 6,873,130 5,423,480 5,786,543
Before 6,841,800 6,620,214
10,339,998 8,742,832 7,683,134
Total dividend
liabilities After 6,841,800 10,339,998 8,742,832 6,902,646
7,997,844
dividend
Equity attributable to
7,057,708 7,203,562 7,410,090 9,379,979 9,441,094
owners of the Company
Share capital 7,369,485 7,369,485 7,369,485 8,069,485 8,069,485
Capital reserves 61,616 61,616 62,535 312,925 312,925
Before 997,569
Retained (370,360) (229,298) (21,930) 1,065,141
dividend
earnings
After (370,360) (229,298) (21,930) 715,137
(Note 2) 750,431
dividend
- -
Other equity items (3,033) 1,759 (6,457)
Treasury stock - - - - -
Non-controlling equity - - - - -
Total Before 7,057,708 9,379,979
7,203,562 7,410,090 9,441,094
shareholders dividend
' equity After
7,057,708 7,203,562 7,410,090 9,097,547 9,126,384
(Note 2) dividend
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Note 1: All financial information from 2016 to 2020 has been audited.

Note 2: This is the intended quantity to be discussed as decided and approved by the Board of Directors on March 19, 2021.

Summary standalone statement of comprehensive income - IFRS-compliant

Unit: NTD thousands

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Year Financial information for the last 5 years (Note 1)
Item
2016 2017 2018 2019 2020
Operating revenues 2,732,534 2,717,547 2,838,549 4,248,959 2,929,250
Gross profit (147,030) 358,608 477,366 1,567,451 634,945
Operating profit (337,670) 82,785 184,478 1,310,962 422,504
Non-operating income
(154,451) 12,510 1,465 (93,589) 35,530
and expenses
Pre-tax profit from
(492,121) 95,295 185,943 1,217,373 458,034
continuing operations
Current net income
from continuing (493,321) 141,295 183,340 1,018,057 350,004
operations
Loss from discontinued
operations - - - - -
Current net income
(493,321) 141,295 183,340 1,018,057 350,004
(loss)
Other comprehensive
income 9,728 4,559 1,090 1,442 (6,457)
-
(net, after tax)
Total comprehensive
income for the current (483,593) 145,854 184,430 1,019,499 343,547
period
Earnings per share
(0.67) 0.19 0.25 1.35 0.43
(NTD)
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Note 1: All financial information from 2016 to 2020 has been audited.

(3) Names of financial statement auditors in the last 5 years and audit opinions

Names of financial statement auditors in the last 5 years and audit opinions:

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Year Name of accounting firm Name of CPA Audit opinion
2016 PwC Taiwan CPA Huei-Hsien Wang, CPA Kevin Lin Unqualified opinion
2017 PwC Taiwan CPA Ching-Chang Chen, CPA Kevin Lin Unqualified opinion
2018 PwC Taiwan CPA Ching-Chang Chen, CPA Kevin Lin Unqualified opinion
2019 PwC Taiwan CPA Ching-Chang Chen, CPA Kevin Lin Unqualified opinion
2020 PwC Taiwan CPA Ching-Chang Chen, CPA Kevin Lin Unqualified opinion
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2. Reason for change of CPA in the last 5 years:

The change of financial statement auditor in 2017 and 2021 was mainly due to organizational adjustment within the accounting firm.

2. Financial analysis for the last 5 years

(1) Consolidated financial analysis - IFRS-compliant

Analysis	Year	Financial analysis for the last 5years(Note 1)
		2016 2017 2018 2019 2020
Financial position (%)	Debt to assets ratio	60.78 58.94 53.17 43.43 44.29
	Long-term capital to property, plants and equipment	151.71 155.62 164.97 104.02 142.67
Solvency (%)	Current ratio	61.59 63.80 70.3 95.26 294.16
	Quick ratio	58.62 54.49 63.76 81.64 283.52
	Interest coverage ratio	(2.52) 1.50 2.21 8.92 5.76
Operating efficiency	Accounts receivable turnover(times)	7.23 9.02 10.3 13.86 9.41
	Average cash collection days	50.48 40.47 35.437 26.33 38.79
	Inventoryturnover(times)	12.36 12.31 12.61 16.98 11.34
	Accountspayable turnover(times)	12.56 18.79 23.84 21.99 15.60
	Average inventoryturnover days	29.53 29.65 28.95 21.49 32.19
	Property, plant,and equipment turnover(times)	0.27 0.28 0.31 0.38 0.25
	Total asset turnover(times)	0.16 0.15 0.17 0.26 0.18
Profitability	Return on assets(%)	(2.26) 1.68 1.78 6.79 2.48
	Return on equity (%)	(6.74) 1.98 2.46 11.74 3.62
	Pre-taxprofit topaid-upcapital(%)	(6.70) 1.29 2.45 14.59 5.73
	Netprofit margin(%)	(18.05) 5.20 6.45 23.12 11.34
	Earningsper share(NTD)	(0.67) 0.19 0.25 1.35 0.43
Cash flow	Cash flow ratio(%)	22.29 63.60 74.36 164.21 80.53
	Cash flow adequacyratio(%)	58.92 101.16 80.83 84.27 79.32
	Cash reinvestment ratio(%)	4.88 8.95 7.52 7.78 5.23
Degree of leverage	Operatingleverage	(3.25) 17.79 7.68 1.81 3.37
	Financial leverage	0.71 (0.74) 7.42 1.13 1.30
Description	Note 2: Information on the reason for the changes in respective financial ratios in the past two years: (the analysis may be waived if the increase/decrease falls short of 20%.) 1. The ratio of long-term capital to fixed assets increased mainly because of the expected sale of 1-3 floors of the plant in Tainan Science Park for the current term and the fact that they are listed as current assets instead. 2. The current ratio and the quick ratio increased mainly because of the expected sale of 1-3 floors of the plant in Tainan Science Park for the current term and the fact that they are listed as current assets instead. 3. The ratio of Interest protection multiples decreased mainly because of the reduced after-tax pure profit for the current term. 4. The receivable turnover ratio decreased and the receivable collection days increased mainly because of the reduction in the operating income for the current term. 5. The inventory turnover ratio decreased and the average sales days increased mainly because of the increase in the mean inventory for the current term. 6. The payable turnover ratio decreased mainly because of the reduction in the sales cost for the current term. 7. The turnover ratio of real estate, plants, and equipment and that of total assets decreased mainly because of the reduction in the operating income for the current term. 8. The return on assets, the return on equity, the ratio of pre-tax net profit to paid-in capital size, the net profit rate, and the earnings per share decreased mainly because of the reduced operating profit for the current term. 9. The cash flow ratio decreased mainly because of the reduction in the net cash flows of operating activities for the current term. 10. The operatingleverage ratio increased mainlybecause of the reduced operating profit for the current term.

Note 1: All financial information from 2016 to 2020 has been audited.

Note 2: Formulas for calculation of various analyses:

Financial structure
(1) Debt to asset ratio = total liabilities/ total assets.
(2) Long-term capital to property, plant, and equipment = (total equity + non-current liabilities) / net property, plant, and equipment.
Solvency
(1) Current ratio = current assets / current liabilities.
(2) Quick ratio = (current assets - inventory - prepayments) / current liabilities.
(3) Interest coverage ratio = earnings before interest and tax / interest expenses for the current period.
Operating efficiency

(1) Receivables turnover (including accounts receivable and notes receivable from business activities) = net sales / average receivables balance (including accounts receivable and notes receivable from business activities).

(2) Average cash collection days = 365 / receivables turnover.
(3) Inventory turnover = cost of sales/average inventory balance.
(4) Payables turnover (including accounts payable and notes payable for business activities) = cost of sales / average payables balance (including accounts payable and notes payable for business activities).
(5) Average inventory turnover days = 365 / inventory turnover.
(6) Property, plant and equipment turnover = net sales / average net property, plant and equipment balance.
(7) Total asset turnover = net sales / average total assets.
Profitability

(1) Return on assets = (net income + interest expenses x (1- tax rate)) / average asset balance.

(2) Return on equity = net income / average shareholders' equity.
(3) Net profit margin = net income / net sales.
(4) Earnings per share = (net income attributable to parent company shareholders - preferred share dividends) / weighted average outstanding shares.
Cash flow
(1) Cash flow ratio = net cash flow from operating activities / current liabilities.
(2) Cash flow adequacy ratio = net cash flow from operating activities for the previous 5 years / (capital expenditure + increase in inventory + cash dividends) for the previous 5 years.
(3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross property, plant, and equipment + long-term investments + other non-current assets + working capital).
Degree of leverage:
(1) Degree of operating leverage = (net operating revenues - variable operating costs and expenses) / operating profit
(2) Degree of financial leverage = operating profit / (operating profit - interest expense).

(2) Standalone financial analysis - IFRS-complian

Analysis	Year	Financial analysis for the last 5 years
		2016 2017 2018 2019 2020
Financial position (%)	Debt to assets ratio	49.22 58.94 54.13 41.38 44.87
	Long-term capital to property, plants and equipment	107.95 143.95 162.26 180.81 329.90
Solvency (%)	Current ratio	85.88 63.15 44.83 89.89 288.83
	Quick ratio	82.91 53.83 38.27 74.29 278.02
	Interest coverage ratio	(2.65) 1.52 2.25 9.75 5.89
Operating efficiency	Accounts receivable turnover(times)	7.23 9.02 10.29 12.87 8.02
	Average cash collection days	50.48 40.47 35.47 28.36 45.51
	Inventoryturnover(times)	12.36 12.31 12.60 16.61 10.97
	Accountspayable turnover(times)	12.56 18.79 23.82 21.69 15.28
	Average inventoryturnover days	29.53 29.65 28.97 21.97 33.27
	Property, plant, and equipment turnover (times)	0.27 0.28 0.31 0.51 0.46
	Total asset turnover(times)	0.19 0.17 0.17 0.26 0.18
Profitability Return on assets(%) Return on equity (%) Pre-tax profit to paid-up capital (%) Netprofit margin(%) Earningsper share(NTD)	Return on assets(%)	(2.61) 1.87 1.79 7.02 2.57
	Return on equity (%)	(6.76) 1.98 2.51 12.13 3.72
		(6.68) 1.29 2.52 15.09 5.68
	Netprofit margin(%)	(18.05) 5.20 6.46 23.96 11.95
	Earningsper share(NTD)	(0.67) 0.19 0.25 1.35 0.43
Cash flow	Cash flow ratio(%)	22.87 63.64 75.04 184.48 74.06
	Cash flow adequacyratio(%)	101.7 258.02 227.66 248.35 216.77
	Cash reinvestment ratio(%)	4.62 8.95 7.7 10.42 6.12
Degree of leverage	Operatingleverage	(3.28) 17.42 7.19 1.74 3.22
	Financial leverage	0.71 (0.81) 5.08 1.12 1.28
Note 2: Information on the reason for the changes in respective financial ratios in the past two years: (the analysis may be waived if the increase/decrease falls short of 20%.) 1. The ratio of long-term capital to fixed assets increased mainly because of the expected sale of 1-3 floors of the plant in Tainan Science Park for the current term and the fact that they are listed as current assets instead. 2. The current ratio and the quick ratio increased mainly because of the expected sale of 1-3 floors of the plant in Tainan Science Park for the current term and the fact that they are listed as current assets instead. 3. The ratio of Interest protection multiples decreased mainly because of the reduced after-tax pure profit for the current term. 4. The receivable turnover ratio decreased and the receivable collection days increased mainly because of the reduction in the operating income for the current term. 5. The inventory turnover ratio decreased and the average sales days increased mainly because of the increase in the mean inventory for the current term. 6. The payable turnover ratio decreased mainly because of the reduction in the sales cost for the current term. 7. The turnover ratio of total assets decreased mainly because of the reduction in the operating income for the current term. 8. The return on assets, the return on equity, the ratio of pre-tax net profit to paid-in capital size, the net profit rate, and the earnings per share decreased mainly because of the reduced operating profit for the current term. 9. The cash flow ratio and the cash reinvestment ratio decreased mainly because of the reduction in the net cash flows of operating activities for the current term. 10. The operatingleverage ratio increased mainlybecause of the reduced operating profit for the current term.

Note 1: All financial information from 2016 to 2020 has been audited.

Note 2: Formulas for calculation of various analyses:

Financial structure
(1) Debt to asset ratio = total liabilities/ total assets.
(2) Long-term capital to property, plant, and equipment = (total equity + non-current liabilities) / net property, plant, and equipment.
Solvency
(1) Current ratio = current assets / current liabilities.
(2) Quick ratio = (current assets - inventory - prepayments) / current liabilities.
(3) Interest coverage ratio = earnings before interest and tax / interest expenses for the current period.
Operating efficiency
(1) Receivables turnover (including accounts receivable and notes receivable from business activities) = net sales / average receivables balance (including accounts receivable and notes receivable from business activities).
(2) Average cash collection days = 365 / receivables turnover.
(3) Inventory turnover = cost of sales/average inventory balance.
(4) Payables turnover (including accounts payable and notes payable for business activities) = cost of sales / average payables balance (including accounts payable and notes payable for business activities).
(5) Average inventory turnover days = 365 / inventory turnover.
(6) Property, plant and equipment turnover = net sales / average net property, plant and equipment balance.
(7) Total asset turnover = net sales / average total assets.
Profitability
(1) Return on assets = (net income + interest expenses x (1- tax rate)) / average asset balance.
(2) Return on equity = net income / average shareholders' equity.
(3) Net profit margin = net income / net sales.
(4) Earnings per share = (net income attributable to parent company shareholders - preferred share dividends) / weighted average outstanding shares.
Cash flow
(1) Cash flow ratio = net cash flow from operating activities / current liabilities.
(2) Cash flow adequacy ratio = net cash flow from operating activities for the previous 5 years / (capital expenditure + increase in inventory + cash dividends) for the previous 5 years.
(3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross property, plant, and equipment + long-term investments + other non-current assets + working capital).
Degree of leverage:
(1) Degree of operating leverage = (net operating revenues - variable operating costs and expenses) / operating profit
(2) Degree of financial leverage = operating profit / (operating profit - interest expense).

3. Audit Committee's review report on the latest financial statements

Audit Committee’s Report

We have reviewed the Company's 2020 business report, financial statements, and earnings appropriation proposal prepared by the board of directors. The financial statements have been audited by CPA Ching-Chang Chen and CPA Kevin Lin of PriceWaterhouseCoopers Taiwan, to which the auditors have issued an independent auditor's report. The Audit Committee found no misstatement in the above Business Report, Financial Statements or Earnings Appropriation Proposal and hereby issues its report as presented above in accordance with the Securities and Exchange Act and the Company Act.

For

2021 Annual General Shareholders’ Meeting of HannsTouch Solution Inc.

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Audit Committee convener:

March 19, 2021

4. Consolidated Financial Statements and Independent Auditor's Report of the Most Recent Year:

Please refer to Appendix 1 (Page 108 to 189)

5. Standalone Financial Statements and Independent Auditor's Report of the Most Recent Year:

Please refer to Appendix 2 (Page 190 to 270)

6. Financial distress encountered by the Company and affiliated enterprises in the last year, up till the publication date of this annual report: None.

Seven. Review and Analysis of Financial Position and Business Performance, and Risk Management Issues

1. Financial position

Unit: NTD thousands

	Unit: NTD thousands
Year Item 2019 2020	Variation
	Amount increase (decrease) Variation (%)
Current assets 1,306,420 5,683,930 4,377,510 335.08%
Property, plant, and equipment 14,132,137 10,862,154 (3,269,983) -23.14%
Investmentproperty- net 0 0 0 0.00%
Intangible and other assets 1,603,378 883,389 (719,989) -44.90%
Total assets 17,041,935 17,429,473 387,538 2.27%
Current liabilities 1,371,489 1,932,241 560,752 40.89%
Non-current liabilities 6,030,615 5,786,544 (244,071) -4.05%
Total liabilities 7,402,104 7,718,785 316,681 4.28%
Share capital 8,069,485 8,069,485 0 0.00%
Capital reserves 312,925 312,925 0 0.00%
Retained earnings 997,569 1,065,141 67,572 6.77%
Other equityinterest 0 (6,457) (6,457) 0.00%
Non-controllingequity 259,852 269,594 9,742 3.75%
Total shareholders' equity 9,639,831 9,710,688 70,857 0.74%
For those with a difference of 20% and above and the amount involved in the variation having reached NTD 10,000,000.00 in the past two years, the explanations are provided below: 1. Current assets increased mainly because of the expected sale of 1-3 floors of the plant in Tainan Science Park for the current term and the fact that they are listed as current assets instead. 2. Real estate, plants, and equipment decreased mainly because of the expected sale of 1-3 floors of the plant in Tainan Science Park for the current term and the fact that they are listed as current assets instead. 3. Intangible assets and other assets decreased mainly because of the loss of control from the sale of shares held in Chaiin Hotel and that it is not included for the current term. 4. Current liabilities increased mainly because of the expected sale of 1-3 floors of the plant in Tainan Science Park for the current term and the fact that theyare listed as current assets instead.

2. Financial performance

	Unit: NTD thousands
Year Item 2019 2020	Variation
	Amount increase (decrease) Variation (%)
Operatingrevenues 4,403,816 3,086,399	(1,317,417) -29.92%
Operatingcosts (2,741,916) (2,375,024)	366,892 -13.38%
Grossprofit 1,661,900 711,375	(950,525) -57.20%
Operatingexpenses (400,960) (292,533)	108,427 -27.04%
Operating profit 1,260,940 418,842	(842,098) -66.78%
Non-operating income and expenses (83,896) 43,778	127,674 -152.18%
Pre-tax profit from continuing operations 1,177,044 462,620	(714,424) -60.70%
Income tax expense (192,526) (102,874)	89,652 -46.57%
Loss from discontinued operations 0 0	0 0%
Other comprehensive income 1,442 (6,457)	(7,899) -547.78%
Total comprehensive income for the currentperiod 985,960 353,289	(632,671) -64.17%
Information on the analysis of increases/decreases: 1. The difference in profits or losses between the two terms is relatively great because of the reduced operating income for the current term due to the pandemic. 2. The difference in the operating expenditure between the two terms is relatively great because of the increased income from government subsidies for the current term. 3. The difference in other comprehensive profits or losses between the two terms is relatively great because of the increased losses from the valuation of equity tools measured at fair value for the current term.

3. Cash flow

(1) Analysis of cash flow variations in the last 2 years:

Item Year	2019	2020	Variation (%)
Cash flow ratio	164.22%	80.53%	-51%
Cash flow adequacyratio	84.27%	79.32%	-6%
Cash reinvestment ratio	7.78%	5.23%	-33%
Reasons/explanations:
The cash flow ratio, the cash flow adequacy ratio, and the cash re-investment ratio decreased mainly because of the
reduction in the net cash flows of operating activities for the current term due to reduced operating income for the
current term.

(2) Improvement plans for inadequate liquidity: Not applicable

(3) Liquidity analysis for the next year:

				Unit: NTD thousands
Opening cash balance	Projected yearly net cash flow from operating activities	Expected cash outflow for the year	Expected cash surplus (deficit) +-	Financing of expected cash deficits
				Investment and financing plans
1,618,587	1,615,874	1,027,142	2,207,319	-

4. Material capital expenditures in the last year and impact on business performance

(1) Major capital spending and sources of capital:

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Unit: NTD thousands
Actual or expected source of Projected payment
Project Actual payment 2020
capital 2021
1. Purchase and improvement of
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Unit: NTD thousands	Unit: NTD thousands	Unit: NTD thousands	Unit: NTD thousands
Project Actual or expected source of capital Actual payment 2020 Projected payment 2021
1. Purchase and improvement of
workshops and machinery/equipment of the plant in Tainan Science Park (Note 1) 2. Remodeling of the building on JilongRoad (Note2)	Operating capital and long- term borrowings	365,810	255,703

(2) Expected benefits:
Note 1: The Company improved its existing equipment and enhanced its R&D skills in 2021 in response to the throughput demand of the Company in 2021.
Note 2: The Company applied the capital expenditure budget approved by the Board of Directors to the remodeling of the building on Jilong Road in order to cope with the demand for the growth in operation in the future of the Company.

5. Investment policy in the most recent year, causes of profit or loss incurred, and any improvements or investments planned for the next year

(I) Re-investment Policy: Without affecting shareholder equity, it helps integrate overall resources throughout the Company and bring down the operating cost. The Company’s investment policy is defined for the sake of making the best of diversified operational benefits through effective integration and planning of resources to cope with the rapidly changing industrial developments in the future and to enhance the competitive advantages of the Company.
(II) Profit or loss: For the profits or losses of the reinvested company, refer to “Eight. Special Notes” of this Annual Report.
(III) Causes of deficits: Glorystone Inc. suffers losses mainly because of the remodeling project of Hanns House.
(IV) Improvement plans: Glorystone Inc. started operations at the end of 2019. In light of the spread of COVID19, Hanns House has been working with the Taipei City Government as a quarantine hotel. Once the pandemic eases down in the future, operations will hopefully gradually stabilize.
(V) Investment plans for the coming year: There are no other investment plans so far. If there are new investment plans, laws and regulations will be followed while such reinvestment plans are being carefully evaluated.

6. Analysis and assessment of risk issues

(1) Impact of interest rate, exchange rate, and inflation on the Company’s earnings, and response measures:

The Company gathers information regularly to identify all risks that are likely to affect its operations and profitability, including market risk, credit risk, liquidity risk, and cash flow risk. These risks are assessed on a regular basis with response measures planned for effective follow-up. For this reason, the management has been able to respond with effective risk management strategies.

The Company adopts the following control strategies to achieve its risk management targets:

1. Interest rate risk:

The group is exposed to interest rate risks arising from long-term and short-term borrowings. Loans borrowed at floating rate give rise to interest rate risks from cash flow changes; these risks are partially but not wholly mitigated by floating rate cash and cash equivalents held on hand. The Group reduces possible impact of interest rate variation by: closely monitoring market interest rate movements, adjusting short/medium/long term loans, negotiating for the most preferential borrowing rates with banks, exercising control over accounts receivable, inventory, and fixed asset turnover rates, and anticipating the timing of cash flow changes.

2. Exchange rate risk:

The Company adopts the following strategies for exchange rate risk control:

(1) More than 90% of the Company's revenues are denominated in USD, whereas payments are made primarily in NTD, followed by USD and JPY. NTD represents the Company's functional currency, and any significant change of exchange rate against HannsTouch's favor may have adverse impact on the Company's financial position. This is why the Company pays close attention to changes in the global economy, makes capital forecasts, and adjusts USD and JPY positions accordingly. Exchange rate changes are constantly monitored in conjunction with analysis reports from banks to facilitate responses such as borrowing, undertaking of currency forwards or swaps, or outright sale of foreign currency position. Stop-loss thresholds have been established to minimize impact of currency exchange, and therefore reduce exchange rate risks.
(2) The Company has established its own "Asset Acquisition and Disposal Procedures" in accordance with "Regulations Governing the Acquisition and Disposal of Assets by Public Companies" stipulated by the Securities and Futures Bureau, Financial Supervisory Commission, to govern the trading of financial derivatives as well as risk management, supervision, and auditing related to the use of such instruments. These procedures provide the Company with additional risk control when using financial instruments for the mitigation of exchange rate risk.

3. Inflation:

Most of the Company's products are exported, therefore domestic inflation has insignificant impact on profitability. Only when inflation rises on a global scale will it affect consumers' purchasing power and confidence, and impact overall revenues and profitability of the Company. However, inflation on a global scale would have a worldwide effect and not just the Company, which governments should have the capacity to respond. The Company will focus on the research, development, and sale of competitive products while at the same time explore ways to reduce production cost and mitigate the possible impacts of inflation on profitability.

(2) Policies on high-risk and highly leveraged investments, loans to external parties, endorsements / guarantees, and trading of derivatives; describe the main causes of profit or loss incurred and future response measures:

The Company does not engage in high-risk or highly leveraged investment. All investments are executed after thorough assessment.
The Company has "Lending, Guarantee and Endorsement Procedures" and "Asset Acquisition and Disposal Procedures" in place. All matters concerning loans to others, endorsements, guarantees, and asset acquisition/disposal are executed according to relevant policies.
The Company transacts derivatives strictly in compliance with its "Asset Acquisition and Disposal Procedures." When purchasing raw materials, commodity, and machinery from foreign suppliers, the Company hedges the amount of foreign currency it needs in order to prevent any material change in purchase price due to exchange rate. The Company also tries to anticipate exchange rate movement and increase foreign currency positions where possible for natural hedge and more effective control of risk.
(3) Future research and development plans and projected expenses:

The Company will continue supporting its touch control solutions with the following research and development

projects:

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Project R&D approach
Joint research and development
Large-scale versus AMOLED product development
with customers
Joint research and development
Development of highly trustworthy touch sensor technologies
with customers
Development of new TDDI structure of touch sensor technologies [Joint research and development ]
with customers
Joint research and development
Development of industrial control Touch MDL products
with customers
Development of flexible touch sensor process technologies and Spontaneous research and
modularized products development
Development of integrated technologies combining the touch Joint development with material
feature and the circular polarizer manufacturers
Development of high-specification electronic paper TFT driving Spontaneous research and
back panel technologies development
Development of flexible electronic paper TFT driving back panel Spontaneous research and
technologies development
Development of optical fingerprint identification sensor products [Joint research and development ]
with customers
Development of AOI- AI smart detection automatic feedback Joint development with AI
systems manufacturers
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Note: TDDI -Touch and Display Driver Integration

For 2021, it is expected that around NTD 39,157,000.00 will be invested in research and development. Primary factors affecting R&D programs in the future include the R&D capabilities of the R&D team, customer demand, and market trends. The Company will continue to develop outstanding R&D talent and proactively put in R&D resources in the future in order to cope with the constantly changing market and technological dynamics and to improve the competitive advantages of the Company.

(4) Financial impacts and response measures in the event of changes in local and foreign regulations:

The Company has a Legal Affairs and IP Center that is responsible for gathering and analyzing major changes in market, policies, and regulations local and abroad, as well as proposing solutions in response. For this reason, the Company expects no material impact on financial or business performance from the above changes.

(5) Financial impacts and response measures in the event of technological or industrial changes:

The ratio of AMOLEDs in smart phones is increasing and the application has reached out from flagship devices to medium-to-high-end devices. For the matching touch technology, in rigid AMOLEDs, it is nearly 100% OnCell framework. Due to the surplus in the throughput of LTPS TFT-LCDs, however, rigid AMOLEDs will be facing the low-price competition from LTPS TFT-LCDs to slow down in growth rate. In this regard, the countermeasures are provided below:

100

With the rigid AMOLED on Cell touch, the Company is already in a favorable position in terms of developments and demand on the market in the future. Subsequently, non-mobile-phone application and optimization of cost competitiveness will continue to be developed.
The high value-added external PI flexible touch sensor satisfies the needs of manufacturers that are unable to produce flexible AMOLED touch sensors on their own or helps diversify the options available for AMOLED manufacturers to choose from.
Besides capacitive touch products, through new technologies and processes that are developed, the Company has established the TFT back panel product utilization platform that may be widely applied to TFT-LCDs or electronic paper displays, etc.
Constantly build new technologies and process platforms and continue to provide new technologies and products to be utilized in order to meet the demand on the market and become a world-class partner.
(6) Crisis management, impacts, and response measures in the event of a change in corporate image:

The Company has always upheld professionalism and integrity at the core of its business philosophy. For many years, the Company has made extensive efforts into maintaining corporate image and risk control, therefore no major crisis has occurred to date.

(7) Expected benefits, risks, and response measures in relation to mergers and acquisitions: The Company currently has no merger or acquisition plan.
(8) Expected benefits, risks, and response measures associated with plant expansions: None.
(9) Risks and response measures associated with concentrated sales or purchases:

On the sales aspect, the Company will strive to increase the weight of touch sensors in its product portfolio and diversify customers in ways that make the best use of existing production lines. As for input of key raw materials, the Company is actively exploring secondary suppliers for more diverse and stable sources of material supply, and therefore minimize concentration risks.

(10) Impacts, risks, and response measures following a major transfer of shareholding by directors, supervisors, or shareholders with more than 10% ownership interest: None.
(11) Impacts, risks, and response measures associated with a change of management: There has been no change of management within the Company.
(12) Major litigations, non-contentious cases, or administrative litigations involving the Company or any director, supervisor, President, person-in-charge or major shareholder with more than 10% ownership interest, whether concluded or pending judgment, that are likely to pose significant impact to shareholders or security prices of the Company. Disclose the nature of dispute, the amount involved, the date the litigation first started, the key parties involved, and progress as of the publication date of this annual report:
Major litigations, non-contentious cases, or administrative litigations involving the Company:
- (1) The Tainan District Prosecutors’ Office, in November 2013, prosecuted the Company and the former Chairman and head of finance of the Company for suspected falsification and exaggeration of project funds, purchase of scrapped equipment, embezzlement of deposits, and collection of kickbacks, trying to hollow out the Group’s assets, which is an breach-of-trust offense under the Securities and Exchange Act, the Criminal Code, the Business Entity Accounting Act, and the Tax Collection Act. The Tainan District Court Criminal Division already ruled in favor of the Company in December 2016. The court of second instance also maintained the guilty verdict for the other defendants in March 2019. In November 2020, the court of third instance ruled that part of the verdict reached in second instance shall be returned for reconsideration. Currently, the case is pending a verdict at the Tainan Branch of the Taiwan High Court. For the additional civil lawsuits filed against other defendants involved in the said case by the Company, the court of first instance ruled in January 2019 partially in favor or the Company and partially not. The Company has appealed as required by law and the case now is pending a verdict at the Tainan Branch of the Taiwan High Court. Projects and equipment involved in this case have all been written off in prior annual financial statements under depreciation, impairment, and recognized disposal losses. Therefore, they do not have impacts on the current financial standing of the Company.

101

(2) ICHIA Technologies Hungary Limited Liability Company filed a civil lawsuit with the Tainan District Court in June 2014 requesting payments for raw materials and supplies by the Company. It was ruled in favor of the Company in both the first instance in September 2015 and the second instance in January 2017. The verdict made by the court of third instance in October 2019 indicated that the case needed to be returned for reconsideration. The Company already settled with ICHIA Technologies Hungary Limited Liability Company and the payments settled were made in September 2020; the case was closed.
Litigations, non-contentious cases, and administrative litigations involving HannStar Display Corporation (referred to as "HannStar Display" below), a major shareholder of the Company with more than 10% ownership interest, in the last two years up till the publication date of annual report, are summarized as follows:

HannStar Display Corporation does not have lawsuits, non-lawsuits or administrative disputes without a finalized verdict or with ongoing proceedings that may significantly impact shareholder equity or prices of securities.

Litigations, non-contentious cases, or administrative litigations involving other directors, supervisors, President, person-in-charge, major shareholders with more than 10% ownership interest, or subsidiaries of the Company, whether concluded or pending judgment, in the last 2 years up till the publication date of this annual report: None.
(13) Other significant risks and response measures:

Analysis and explanation of information security risks and response measures

The Company has implemented "Information Security Policy" along with operational rules to enforce information security management. Information work plans are devised and duly executed, whereas uses, maintenance, and security of stored data are strictly managed. The Company adopts a complete range of network and terminal security protections including firewall, cloud e-mail ATP, antivirus software, and digital file management solution to control user access and record user history, which in turn reduces information security risks. These protection measures are updated and maintained on a routine basis, and the IT Division regularly conducts information security training and promotes employees' awareness on relevant issues. The following actions were taken during the year:

Information security control for computer terminals: Controls have been applied to processes such as system development, acquisition, maintenance, and processing as well as equipment including computer terminals, software, and network systems. Care has been taken to ensure that all operations conform with information security and legal requirements.
Management of confidential information: Protection of core technology and operational information is essential to strengthening the Company's competitive advantage. The Company requires all sensitive files to be password-protected, and educates employees regularly on the threat of computer virus, proper awareness toward information security, and ways to enforce information security and protect personal information for the reduction of information security risks.
IT system planning, hardware/software implementation and maintenance, database backup and recovery, and system security/protection/control: The Company adopts the use of virtual servers to reduce the number of physical servers. Doing so not only provides benefits in terms of environmental protection, energy conservation, and low maintenance cost, it also complements and enhances the Company's disaster prevention, information security, monitoring, reporting, exceptions management, and back-up practices.

7. Other important disclosures: None.

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Eight. Special Disclosure

1. Information of affiliated companies

(1) Consolidated business report of affiliated companies:
Organizational chart of affiliated companies:

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December 31, 2020
HannsTouch Solution Inc.
Golden Apple Investment Corporation GloryStone Inc.
NanJing GuanXin Co., Ltd.
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Note 1: The Company is the controller of the above companies, while the above companies are subordinates of the Company.

Note 2: Affiliated enterprises, as mentioned above, are defined according to Article 369-1 of The Company Act.

103

2. Profile of affiliated companies:

Name of entity	Date of incorporation	Address	Paid-up capital	Main business activities or products
Richest Investment Ltd.	2006.03.03	Floor 4, Willow House, Cricket Square, P O Box 2804, Grand Cayman, KY1-1112, Cayman Islands	USD 4,500,000	Investment
Golden Apple Investment Corporation	2016.01.29	5F, No. 21, Lane 168, Xingshan Road, Neihu District, Taipei City	NTD 150,000,000	Investment
Glorystone Inc.	2016.03.04	13F, No. 206, Section 1, Keelung Road, Xinyi District, Taipei City	NTD 520,000,000	Hospitality

Common shareholders in controlling and controlled companies: None.
Industries covered by affiliated companies and job specialization:
Industries: electronics, investment, hospitality, and restaurant. Job specialization: None.
Directors, supervisors, and managers of affiliated companies:

December 31, 2020

			December 31,2020	December 31,2020
Name of entity	Title	Name and the entity represented	Current shareholding
			No. of shares	Shareholding percentage
Richest Investment Ltd. (Richest Investment)	Director	Chung-Han Lin (HannsTouch Solution)	4,500,000	100%
Golden Apple Investment Corporation	Chairman	WeiHsin Ma (HannsTouch Solution)	15,000,000	100%
Glorystone Inc.	Chairman Director Director Supervisor	WeiHsin Ma (HannsTouch Solution) Yuan-Chen Li (HannsTouch Solution) Chin Hsing Investment Co., Ltd. HannStar DisplayCorporation	22,000,000 22,000,000 10,000,000 20,000,000	42.31% 42.31% 19.23% 38.46%

6. Performance of affiliated enterprises:

December 31, 2020; unit: NTD thousands

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Current period
Currenc Share Total Total Net Operating Operating
Name of entity profit/loss
y capital assets liabilities worth revenues profit
(after tax)
Richest Investment Ltd. USD 4,500 0 0 0 0 0 0
Golden Apple Investment
NTD 150,000 134,774 90 134,684 0 (1,179) (15,679)
Corporation
Glorystone Inc. NTD 520,000 1,645,036 1,177,722 467,314 213,041 12,210 16,888
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104

(2) Consolidated financial statements of affiliated companies:

HannsTouch Solution Incorporated

Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2020, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the Company that is required to be included in the consolidated financial statements of affiliates, is the same as the Company required to be included in the consolidated financial statements of parent and subsidiary companies under International Financial Reporting Standard No. 10. And if relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies, it shall not be required to prepare separate consolidated financial statements of affiliates.

Hereby declare,

HannsTouch Solution Incorporated

Representative:

March 19, 2021

(3) Affiliation report: None.

105

2. Private placement of securities in the last year up till the publication date of annual report

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2017 first domestic private placement of unsecured ordinary corporate
Item
bonds
Type of privately placed securities Unsecured ordinary corporate bonds
Date of board meeting and amount
October 27, 2017; NTD 1,800,000,000
approved
Pricing basis and rationality Not applicable
Selection of specific subscribers Proceeded as specified in Article 43-6 of the Securities and Exchange Act
Reasons for private placement To ensure the timeliness and feasibility of the Company's fund-raising plan
Payment completion date November 28, 2017
Subscription
Placee of Relationship Involvement in
amount
private Eligibility with the the Company's
(NTD
placement Company management
thousand)
Subparagraph Major
Subscriber's background
3, Paragraph 1, shareholder
HannStar
Article 43-6 of with 10% or
Display 1,800,000 Related party
the Securities higher
Corporation
and Exchange ownership
Act interest
This ordinary corporate bond was issued via private placement, hence not
Actual subscription (or conversion) price
applicable
Difference between the actual subscription
This ordinary corporate bond was issued via private placement, hence not
(or conversion) price and the reference
applicable
price
Impact of private placement on This ordinary corporate bond was issued via private placement, hence not
shareholders' equity applicable
Planned and actual usage of privately
The plan has been fully executed to date
raised capital
Benefits of the private equity placement Provision of working capital
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3. Holding or disposal of the Company's shares by subsidiaries in the last financial year, up till the publication date of this annual report: Not applicable

4. Other supplementary information: None

106

Nine. Occurrences of Significant Impact on Shareholders' Equity or Security Prices

Occurrences significant to shareholders' interests or securities price, as defined in Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act, in the last year up till the publication date of annual report: None

107

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of HannsTouch Solution Incorporated

Opinion

We have audited the accompanying consolidated balance sheets of HannsTouch Solution Incorporated and subsidiaries (the “Group”) as at December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group’s 2020 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s 2020 consolidated financial statements are stated as follows:

108

Key Audit Matter – Recognition of overseas warehouse operating revenue

Description

Refer to Note 4(32) for accounting policy on revenue recognition in the financial statements.

The Group stores inventories in the warehouses under the custody of foreign third parties. Such inventories are checked and accepted by the custodians in order to meet the requirements of overseas sales customers. The custodians regularly send inventory reports to the Group to verify the quantity, and the Group recognises operating revenue based on actual used inventories at customer side which are shown in the inventory report provided by the custodians.

As the process of revenue recognition of the Group’s foreign warehouse involves numerous manual procedures, we identified the recognition of overseas warehouse operating revenue as a key audit matter.

How our audit addressed the matter:

We performed the following audit procedures on the above key audit matter:

1. Obtained an understanding of and evaluated the Group’s procedures on overseas warehouse operating revenue, and selected samples to check the accuracy of operating revenue recognition.

2. Performed cutoff procedures on sales revenue from distribution warehouse recognised during a specific period before and after the period-end, including verifying delivery schedule of distribution warehouse and ensuring the movements of inventories contained in the statements and cost of goods sold had been recognised in the appropriate period; and

3. Performed confirmation for significant warehouses.

Key audit matter- Impairment assessment on property, plant and equipment

Description

Refer to Notes 4(19), 5(2) and 6(8) for accounting policy applied on impairment of property, plant and equipment, accounting estimates and assumptions applied on the impairment assessment of tangible assets and details of impairment.

The Group has appointed appraisers to appraise the property, plant and equipment in Taipei and to value the recoverable amount as the basis for assessing the impairment of property, plant and equipment.

The recoverable amount is calculated through income approach and comparison method. The

109

determination of the recoverable amount is subject to management judgement and uncertainty, which could have a significant impact in assessing whether there is any impairment loss on property, plant and equipment. Thus, we considered the impairment assessment of property, plant and equipment as a key audit matter.

How our audit addressed the matter:

We understood the basis and process of management’s assessment and performed the following audit procedures in respect of the above key audit matter:

Assessed the expected future income used in the experts’ appraisal report and compared with local market price and forecast documents for the industry.
Assessed the discount rate used in the experts’ appraisal report and inspected the assumptions of cost of capital with return on similar assets in the market.
Examined the parameters of valuation model in the experts’ appraisal report and setting of formulas.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of HannsTouch Solution Incorporated as at and for the years ended December 31, 2020 and 2019.

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

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

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

Those charged with governance, including the audit committee, are responsible for overseeing the

110

Group’s financial reporting process.

Auditors’ responsibilities for the audit of the consolidated financial statements

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

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

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

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

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

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

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

111

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

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

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

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

[Signature] Chen, Ching Chang	[Signature]
	Lin, Chun-Yao

For and on behalf of PricewaterhouseCoopers, Taiwan March 19, 2021

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

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

112

`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

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Assets Notes December 31, 2020 December 31, 2019
Current assets
1100 Cash and cash equivalents 6(1) $ 1,789,028 $ 402,233
1110 Financial assets at fair value through 6(2)
profit or loss - current 55,505 48,156
1136 Current financial assets at amortised 6(4)
cost, net 664,832 156,063
1170 Accounts receivable, net 6(5) 252,068 386,141
1180 Accounts receivable - related parties 7 16,894 451
1200 Other receivables 32,560 3,051
130X Inventory 6(6) 198,729 176,155
1460 Non-current assets or disposal groups 6(11)
classified as held for sale, net 2,575,574 -
1476 Other current financial assets 6(7) and 8 59,390 81,751
1479 Other current assets 39,350 52,419
11XX Total current assets 5,683,930 1,306,420
Non-current assets
1510 Non-current financial assets at fair 6(2)
-
value through profit or loss 6,560
1517 Non-current financial assets at fair 6(3)
value through other comprehensive
income 193,411 -
1600 Property, plant and equipment 6(8) and 8 10,862,154 14,132,137
1755 Right-of-use assets 6(9) 335,723 1,007,378
1780 Intangible assets 6(28) 17,377 71,105
1840 Deferred income tax assets 6(26) 333,480 436,419
1900 Other non-current assets 6(16) 3,398 81,916
15XX Total non-current assets 11,745,543 15,735,515
1XXX Total assets $ 17,429,473 $ 17,041,935
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(Continued)

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`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes December 31, 2020 6(12) `$` `-` 6(2) `1` `217` `136,660` 7 `2,486` 6(13) `372,424` 7 `1,964` `25,895` 6(9) `30,794` 6(15) `233,333` 7 `1,128,467` `1,932,241` 6(14) and 7 `900,000` 6(15) `4,526,667` 6(26) `779` 6(9) `311,971` `47,127` `5,786,544` `7,718,785` 6(18) `8,069,485` 6(19) `312,925` 6(20) `109,361` `14,100` `941,680` `(` `6,457)` `9,441,094` `269,594` `9,710,688` 9 11 `$` `17,429,473`	December 31, 2019
Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2280 Current lease liabilities 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Equity attributable to owners of parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity		`$` `30,000` `-` `1,903` `163,274` `18` `473,792` `4,015` `3,528` `83,033` `600,000` `11,926`
		`1,371,489`
		`900,000` `4,160,000` `17,908` `936,123` `16,584`
		`6,030,615`
		`7,402,104`
		`8,069,485` `312,925` `12,398` `14,100` `971,071` `-`
		`9,379,979` `259,852`
		`9,639,831`
		`$` `17,041,935`

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

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`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019`

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

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Year ended December 31
Items Notes 2020 2019
4000 Sales revenue 6(21) and 7 $ 3,086,399 $ 4,403,816
5000 Operating costs 6(6)(25) and 7 ( 2,375,024)( 2,741,916)
5950 Net operating margin 711,375 1,661,900
Operating expenses 6(25) and 7
6100 Selling expenses ( 27,311)( 53,680)
6200 General and administrative
expenses ( 224,588)( 303,634)
6300 Research and development
expenses ( 40,679)( 43,498)
6450 Impairment loss (impairment 12(2)
gain and reversal of impairment
loss) determined in accordance
with IFRS 9 45 ( 148)
6000 Total operating expenses ( 292,533)( 400,960)
6900 Operating profit 418,842 1,260,940
Non-operating income and
expenses
7100 Interest income 6(22) 3,463 2,884
7010 Other income 6(23) 153,745 36,931
7020 Other gains and losses 6(24) and 7 ( 16,183) 24,825
7050 Finance costs 7 ( 97,247) ( 148,536)
7000 Total non-operating income
and expenses 43,778 ( 83,896)
7900 Profit before income tax 462,620 1,177,044
7950 Income tax expense 6(26) ( 102,874)( 192,526)
8200 Profit for the year $ 359,746 $ 984,518
8311 Actuarial gains on defined 6(16)
-
benefit plans $ $ 1,803
8316 Unrealised gains (losses) from 6(3)
investments in equity
instruments measured at fair
value through other
-
comprehensive income ( 8,071)
8349 Income tax related to 6(26)
components of other
comprehensive income that will
not be reclassified to profit or
loss 1,614 ( 361)
8500 Total comprehensive income for
the year $ 353,289 $ 985,960
Profit (loss), attributable to:
8610 Owners of the parent $ 350,004 $ 1,018,057
8620 Non-controlling interest $ 9,742 ($ 33,539)
Comprehensive income attributable
to:
8710 Owners of the parent $ 343,547 $ 1,019,499
8720 Non-controlling interest $ 9,742 ($ 33,539)
Earnings per share (in dollars) 6(27)
9750 Basic earnings per share $ 0.43 $ 1.35
9850 Diluted earnings per share $ 0.43 $ 1.35
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The accompanying notes are an integral part of these consolidated financial statements.

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`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

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Equity attributable to owners of the parent
Capital Reserves Retained Earnings
Capital Unrealised
surplus, gains
difference (losses) from
between financial
consideration assets
Total capital and carrying measured at
surplus, amount of fair value
Share capital additional subsidiaries Capital Unappropriate through other Non-
- common paid-in acquired or surplus, Special d retained comprehensive controlling
Notes stock capital disposed others Legal reserve reserve earnings income Total interest Total equity
Year ended December 31, 2019
Balance at January 1, 2019 $ 7,369,485 $ 61,616 $ 919 $ - $ 12,398 $ 14,100 ($ 48,428 ) $ - $ 7,410,090 $ 293,391 $ 7,703,481
Profit for the year - - - - - - 1,018,057 - 1,018,057 ( 33,539 ) 984,518
Other comprehensive income - - - - - - 1,442 - 1,442 - 1,442
Total comprehensive income - - - - - - 1,019,499 - 1,019,499 ( 33,539 ) 985,960
Proceeds from issuance of shares 6(18) 700,000 247,419 - 2,971 - - - - 950,390 - 950,390
Balance at December 31, 2019 $ 8,069,485 $ 309,035 $ 919 $ 2,971 $ 12,398 $ 14,100 $ 971,071 $ - $ 9,379,979 $ 259,852 $ 9,639,831
Year ended December 31, 2020
Balance at January 1, 2020 $ 8,069,485 $ 309,035 $ 919 $ 2,971 $ 12,398 $ 14,100 $ 971,071 $ - $ 9,379,979 $ 259,852 $ 9,639,831
Profit for the year - - - - - - 350,004 - 350,004 9,742 359,746
Other comprehensive loss - - - - - - - ( 6,457 ) ( 6,457 ) - ( 6,457 )
Total comprehensive income - - - - - - 350,004 ( 6,457 ) 343,547 9,742 353,289
Appropriations of 2019 earnings: 6(20)
Legal reserve - - - - 96,963 - ( 96,963 ) - - - -
Cash dividends - - - - - - ( 282,432 ) - ( 282,432 ) - ( 282,432 )
Balance at December 31, 2020 $ 8,069,485 $ 309,035 $ 919 $ 2,971 $ 109,361 $ 14,100 $ 941,680 ($ 6,457 ) $ 9,441,094 $ 269,594 $ 9,710,688
----- End of picture text -----

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

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`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES`

`CONSOLIDATED STATEMENTS OF CASH FLOWS`

`YEARS ENDED DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation
Expected credit (gain) loss on doubtful accounts
Amortisation
Interest expense
Interest income
Dividend income
Loss (gain) on disposals of property, plant and
equipment
Gain on financial assets at fair value through profit or
loss
Share-based payment
Gain on lease modification
Reversal of impairment loss recognised in profit or
loss, non-financial assets
Gain on disposal subsidiaries
Other income-gain on pension settlement
Other income-gain on litigation settlement
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Other receivables - related parties
Inventory
Prepaid pension
Other current assets
Changes in operating liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Cash dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities Year ended December 31
Notes
2020
2019
$
462,620
$
1,177,044
6(25)
985,385
1,015,060
12(2)
(
45 )
148
6(25)
8,029
6,692
97,247
148,599
6(22)
(
3,463 ) (
2,884 )
6(23)
-
(
4,430 )
6(24)
10,634
(
13,362 )
6(2)
(
2,195 ) (
38,585 )
6(17)
-
5,390
6(9)
(
10 )
-
6(24)
(
28,698 )
-
6(24)
(
3,741 )
-
6(23)
(
2,339 )
-
6(23)
(
39,600 )
-
4,673
86,627
131,925
(
151,879 )
(
16,443 ) (
451 )
(
30,611 )
37,144
55,507
-
(
22,574 ) (
53,478 )
-
(
813 )
9,484
(
359 )
(
1,159 )
841
(
25,632 )
73,629
2,468
(
55 )
7,314
76,575
678
(
2,202 )
9,935
3,951
30,749
16,308
1,640,138
2,379,510
3,407
3,355
-
4,430
(
87,577 ) (
132,400 )
-
(
2,765 )
1,555,968
2,252,130

(Continued)

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`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS`

`YEARS ENDED DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in current financial assets at amortised
cost
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Decrease (increase) in other non-current assets
Acquisition of subsidiaries (less cash)
Proceeds from disposal subsidiaries (less cash)
Financial assets at fair value through other comprehensive
income
Advance receipts for the sale of property, plant and
equipment
Decrease (increase) in other current financial assets
Net cash flows from (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of short-term debt
Repayment of long-term debt
Proceeds from long-term debt
Repayment of corporate bonds payable
Repayment of lease liabilities
Seasoned equity offering
Exercise of employee stock options
Cash dividends paid
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year Year ended December 31
Notes
2020
2019
($
508,769 )
$
258,937
6(29)
(
365,810 ) (
514,141 )
524
13,362
(
1,200 )
-
61,892
(
11 )
6(28)
-
18,701
6(29)
86,414
-
(
201,482 )
-
7
1,108,000
-
22,361
(
30,927 )
201,930
(
254,079 )
(
30,000 ) (
490,000 )
-
(
1,988,388 )
600,000
-
(
600,000 ) (
300,000 )
(
58,671 ) (
81,106 )
-
902,583
-
42,417
6(20)
(
282,432 )
-
(
371,103 ) (
1,914,494 )
1,386,795
83,557
6(1)
402,233
318,676
6(1)
$
1,789,028
$
402,233

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

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HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2020 AND 2019

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

1. History and Organisation

HannsTouch Solution Incorporated (the ‘Company’) was incorporated in September 1999 as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the manufacture and sale of touch products, lease of property and hotel business. The common shares of the Company have been listed on the Taiwan Stock Exchange since September 27, 2002.

The Date of Authorisation for Issuance of the Financial Statements and Procedures for Authorisation

These financial statements were authorised for issuance by the Board of Directors on March 19, 2021.

3. Application of New Standards, Amendments and Interpretations

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

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

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

Note: Earlier application from January 1, 2020 is allowed by the FSC.

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

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

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

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New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
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’	January 1, 2021 January 1, 2021

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

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

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

New Standards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

Amendments to IFRS 3, ‘Reference to the conceptual framework’
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, ‘Insurance contracts’
Amendments to IAS 1, ‘Classification of liabilities as current or non-
current’
Amendments to IAS 1, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Definition of accounting estimates’
Amendments to IAS 16, ‘Property, plant and equipment: proceeds
before intended use’
Amendments to IAS 37, ‘Onerous contracts - cost of fulfilling a
contract’
Annual improvements to IFRSs 2018-2020 cycle

January 1, 2022
To be determined by
International Accounting
Standards Board
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022

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

4. Summary of Significant Accounting Policies

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

`(一)` Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the

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“Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

`(二)` Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

(b) Financial assets at fair value through other comprehensive income.

B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group classified’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial Consolidated statements are disclosed in Note 5.

`(三)` Basis of consolidation

A. Basis for preparation of consolidated financial statements:
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b) Inter-company transactions, balances and unrealised gains or losses are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Difference of adjustment of non-controlling interest and fair value of consideration paid or received is recognised in equity.

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

Investor	Name of subsidiary	Main business activities	December 31, December 31, 2020 2019 Description Ownership (%)
HannsTouch Solution Incorporated HannsTouch Solution Incorporated HannsTouch Solution Incorporated Glory Stone Inc. Golden Apple Investment Corporation	Richest Investment Ltd. (Richest Investment) Golden Apple Investment Corporation (Golden Apple Investment) Glory Stone Inc. (Glory Stone) Mian-Lu Corp. (Mian- Lu) Chaiin Hotel Co.,Ltd (Chaiin Hotel)	Investment Investment Hotel business Food service Hotel business	100.00 100.00 - 100.00 100.00 - 42.31 42.31 Note 1 - 100.00 Note 3 19.00 100.00 Note 2

Note 1: Although HannsTouch Solution only held 42.31% equity interest in Glory Stone, the Group accounted for two thirds of the Board of Directors and had relatively major voting rights than other shareholders. Therefore, Glory Stone was included in the consolidation.
Note 2: Golden Apple Investment acquired 100% common shares in Chaiin Hotel, and had completed the related procedure in April 2019. However, Golden Apple Investment disposed of 81% equity interest of Chaiin Hotel in May 2020, and the Group has lost control over Chaiin Hotel. Hence, Chaiin Hotel. was excluded from the consolidation on December 31, 2020.
Note 3: Glory Stone had disposed of 100% equity interest in Mian-Lu Corp. on July 28, 2020.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.

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

As of December 31, 2020 and 2019 the non-controlling interest amounted to $269,594 and $259,852, respectively. The information on non-controlling interest and respective subsidiaries is as follows:

as follows:
Name of subsidiary	Principal business Taiwan		Non-controllinginterest		Ownership (%) 57.69% 31,2019	Description
		December	Ownership (%) 57.69% 31,2020	December
		Amount 269,594 $		Amount 259,852 $
Glory Stone

Summarised financial information of the subsidiaries:

Balance sheets

			Glory	Stone
		December	31,2020	December	31,2019
Current assets	$		134,852	$	216,222
Non-current assets			1,510,184		1,484,787
Current liabilities	(		108,288)	(	136,586)
Non-current liabilities	(		1,069,434)	(	1,113,996)
Total net assets	$		467,314	$	450,427

Statements of comprehensive income

Revenue Profit (loss) before income tax Income tax benefit Net profit (loss) Total comprehensive income (loss) Comprehensive income (loss) attributable to non-controlling interest	2020 2019 213,041 $ 8,244 $ 16,244 66,646) ( 644 8,509 16,888 $ 58,137) ($ 16,888 $ 58,137) ($ 9,742 $ 33,539) ($ Year ended December 31 GloryStone

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Statements of cash flows

		Glory	Stone
		Year ended December		31
		2020		2019
Net cash provided by (used in) operating	$	139,113	($	37,822)
activities
Net cash flows (used in) from investing	(	91,471)		22,114
activities
Net cash used in financing activities	(	47,290)	(	839)
Increase (decrease) in cash and cash		352	(	16,547)
equivalents
Cash and cash equivalents, beginning of		44,820		61,367
year
Cash and cash equivalents, end of year	$	45,172	$	44,820

`(四)` Foreign currency translation

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

Foreign currency transactions and balances

A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
B. Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
C. All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘other gains and losses’.

`(五)` Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realised within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are

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to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

`(六)` Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

`(七)` Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using settlement date accounting.
C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

`(八)` Financial assets at fair value through other comprehensive income

A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income:
(a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

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(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using settlement date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(九) Financial assets at amortised cost
A. Financial assets at amortised cost are those that meet all of the following criteria:
(a) The objective of the Group’s business model is achieved by collecting contractual cash flows.
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using settlement date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.
D. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.
(十) Accounts receivable
A. Accounts receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(十一) Impairment of financial assets

For financial assets at amortised cost including accounts receivable or contract assets that have a significant financing component, lease receivables, loan commitments and financial guarantee contracts, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or

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contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

`(十二)` Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.

`－ (十三)` Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

`(十四)` Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

`(十五)` Non-current assets held for sale

Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use, and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

`(十六)` Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must

~127~

be depreciated separately.

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

Buildings and structures 3~35 years Machinery equipments 3~10 years Furniture and fixtures 2~5 years Other equipments 2~10 years

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

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:
(a) Fixed payments, less any lease incentives receivable;
(b) Variable lease payments that depend on an index or a rate; and
(c) Amounts expected to be payable by the lessee under residual value guarantees.

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

C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
(a) The amount of the initial measurement of lease liability;
(b) Any lease payments made at or before the commencement date; and
(c) Any initial direct costs incurred by the lessee.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term.

~128~

When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

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

`(十八)` Intangible assets

Software

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 2 to 6 years.

`(十九)` Impairment of non-financial assets

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

`(二十)` Borrowings

A. Borrowings comprise long-term and short-term bank borrowings and other long-term and shortterm loans. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

`(二十一)` Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term accounts and notes payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

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`(二十二)` Financial liabilities at fair value through profit or loss

A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges or financial liabilities designated at fair value through profit or loss on initial recognition. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss at initial recognition:
(a) Hybrid (combined) contracts; or
(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.
B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

`(二十三)` Bonds payable

Ordinary corporate bonds issued by the Group are initially recognised at fair value, net of transaction costs incurred. Ordinary corporate bonds are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is accounted for as the premium or discount on bonds payable and presented as an addition to or deduction from bonds payable, which is amortized in profit or loss as an adjustment to the ‘financial cost’ over the period of bond circulation using the effective interest method.

`(二十四)` Derecognition of financial liabilities

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

`(二十五)` Non-hedging derivatives

Non-hedging derivatives are initially recognised at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognised in profit or loss.

`(二十六)` Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, as a deduction of sales revenue in the period when related products are sold.

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`(二十七)` Employee benefits

A. Short-term employee benefits

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

B. Pensions
(a) Defined contribution plan

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

(b) Defined benefit plan
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date).
ii. Remeasurements arising on defined benefit plan is recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

iii. Past service costs are recognised immediately in profit or loss.

C. Employees’ compensation and directors’ remuneration

Employees’ compensation and directors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

- `(二十八)` Employee share based payment

For the cash-settled share-based payment arrangements, the employee services received and the liability incurred are measured at fair value, and recognised as compensation cost and liability over the vesting period. The fair value of the liability is remeasured at each balance sheet date and settlement date, with any change in fair value recognised in profit or loss.

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`(二十九)` Income taxes

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.
(三十) Share capital

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

`(三十一)` Dividends

Dividends are recorded in the Group’s financial statements in the period in which they are approved by the Group’s shareholders. Cash dividends are recorded as liabilities.

(三十二) Revenue recognition
A. Sales of goods
- (a) The Group manufactures and sells touch panel and related products. Sales are recognised when control of the products has transferred, being when the products are delivered to the buyer, the buyer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the buyer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the buyer, and either the buyer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for

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acceptance have been satisfied.

(b) Sales revenue of products was recognised based on the contract price net of sales returns and discount. The sales returns and discounts are estimated based on the anticipated annual sales quantities. Accumulated experience is used to estimate and provide for the sales returns and discounts, using the anticipated annual sales quantities, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognised for expected sales returns and discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the control was transferred with a credit term of 60 days, which is consistent with market practice.
(c) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

B. Leases

The Group is engaged in the leasing of certain property classified as operating leases based on the lease condition. The lease payments received during the leasing period on a straight line basis are recognised as property lease income.

C. Food services, sale of hotel products, accommodation and related services
(a) Revenue from food services and sale of hotel products are recognised upon transfer of the items to customers. Payment of the transaction price is due immediately when the customer purchases products.
(b) Revenue from accommodation is recognised in the accounting period in which the services are rendered. The customer pays at the time specified in the payment schedule.
(c) As the time interval between the transfer of committed goods or services and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.

`(三十三)` Government grants

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

`(三十四)` Business combinations

A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities

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incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

B. The excess of the consideration transferred of the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date.

`(三十五)` Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Group’s chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

5. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

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

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

None.

`(二)` Critical accounting estimates and assumptions

A. Impairment assessment of tangible assets

The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of company strategy might cause material impairment on assets in the future.

B. Realisability of deferred tax assets

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, available tax credits, tax planning, etc. Any variations in global economic environment,

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industrial environment, and laws and regulations might cause material adjustments to deferred tax assets.

As of December 31, 2020, the Group recognised deferred tax assets amounting to $333,480.

6. Details of Significant Accounts

`(一)` Cash and cash equivalents

Cash on hand and revolving funds Checking accounts and demand deposits Time deposits	December 31,2020 375 $ 288,653 1,500,000 1,789,028 $	December 31,2019
		745 $ 280,488 121,000
		402,233 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. Certain cash and cash equivalents which were pledged as collaterals and restricted have been transferred to other financial assets. Please refer to Notes 6(7) and 8 for details.
C. As of December 31, 2020 and 2019, time deposits with maturity over three months amounting to $494,832 and $156,063, respectively, were reclassified as financial assets at amortised cost due to its lack of high liquidity in nature. Please re fer to Note 6(4) for details.

`(二)` Financial assets/liabilities at fair value through profit or loss

Items Current items: Financial assets mandatorily measured at fair value through profit or loss Listed stocks Unlisted stocks Non-hedging derivatives Valuation adjustment Total Financial liabilities mandatorily measured at fair value through profit or loss Non-hedging derivatives Non-current items: Financial assets mandatorily measured at fair value through profit or loss Non-hedging derivatives	December 31,2020 216 $ 50,157 234 50,607 $ 4,898 55,505 $ 1 $ - $	December 31,2019
		- $ 40,332 927
		41,259 $ 6,897
		48,156 $
		- $
		6,560 $

A. The nature of financial assets at fair value through profit or loss are as follows:

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(a) Equity instruments: including listed, unlisted and emerging stocks.
(b) Derivative instruments: including forward foreign exchange contracts, foreign exchange options and put options.
B. The Group’s non-hedging financial derivatives - put option (shown as non-current financial assets at fair value through profit or loss, mandatorily measured at fair value) pertain to a 100% equity interest in Chaiin Hotel which was acquired on April 30, 2019 and will be generated from the contract upon exercise of put options and call options of equity transaction in the future. Further, in May 2020, the put options were exercised, and accordingly, the shareholding ratio decreased from 100% to 19%, which was shown as financial assets at fair value through profit or loss.
C. Amounts recognised in profit or loss in relation to financial assets/liabilities at fair value through profit or loss are listed below:

		Year ended December	Year ended December	31
		2020		2019
Financial assets mandatorily measured at fair
value through profit or loss
Equity instruments	($	1,999)	$	36,911
Derivative instruments		4,194		1,674
	$	2,195	$	38,585

D. The Group entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below:

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Derivative financial instruments Presale forward exchange contracts -Sell USD and buy NTD -Sell USD and buy JPY	December 31,2020	December 31,2020
	(Notionalprincipal) (In thousands) USD 4,000 $ USD 200 Contract amount	Contractperiod
		2020/12/8-2021/2/5 2020/12/25-2021/1/28

Derivative financial instruments Presale forward exchange contracts -Sell USD and buy NTD Option contract -Put options	December 31,2019	December 31,2019
	(Notionalprincipal) (In thousands) USD 5,000 $ USD 2,000 $ Contract amount	Contractperiod
		2019/12/13-2020/2/3 2019/12/9-2020/1/9

The Group entered into forward foreign exchange contracts to sell to hedge exchange rate risk. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

E. The Group has no financial assets at fair value through profit or loss pledged to others as collateral.
F. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

`(三)` Financial assets at fair value through other comprehensive income

Items Non-current items: Equity instruments Listed stocks Valuation adjustment	December 31,2020 201,482 $ 8,071) ( 193,411 $	December 31,2019
		- $ -
		- $

A. The Group has elected to classify equity investments that are considered to have stable dividend as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $193,411 as at December 31, 2020.
B. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

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Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income (	Year ended December 31	Year ended December 31
	2020 8,071) $	2019
		- $

C. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.
D. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).

`(四)` Financial assets at amortised cost

Items Current items: Time deposits with maturity over three months Bills with repurchase agreement	December 31,2020 494,832 $ 170,000 664,832 $

A. The Group recognised interest income in profit or loss in relation to financial assets at amortised cost in the amount of $1,125 and $1,978 for the years ended December 31, 2020 and 2019, respectively.
B. The Group has no financial assets at amortised cost pledged to others as collateral.
C. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

`(五)` Accounts receivable

	December	31,2020	December	31,2019
Accounts receivable	$	272,960	$	426,640
Less: Allowance for sales returns and discounts	(	20,803)	(	40,362)
Loss allowance	(	89)	(	137)
	$	252,068	$	386,141

A. The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Not past due Up to 30 days	December 31,2020 Accounts receivable 272,960 $ - 272,960 $	December 31,2019
		Accounts receivable
		425,277 $ 1,363
		426,640 $

The above ageing analysis was based on past due date.

B. The Group has no accounts receivable pledged as collaterals.

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C. Information relating to credit risk of accounts receivable is provided in Note 12(2).

`(六)` Inventories

Raw materials Work in progress Finished goods Room supplies (including food and beverage) Raw materials Work in progress Finished goods		December 31,2020
	Allowance for Cost valuation loss 62,886 $ 12,264) ($ 30,204 - 133,337 16,063) ( 629 - 227,056 $ 28,327) ($ December 31,2019		Book value
			50,622 $ 30,204 117,274 629
			198,729 $

	Allowance for Cost valuation loss 56,370 $ 8,948) ($ 31,136 - 104,319 6,722) ( 191,825 $ 15,670) ($		Book value
			47,422 $ 31,136 97,597
			176,155 $

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The cost of inventories recognised as expense for the year:

Cost of goods sold Unallocated overhead expense Loss on decline in market value Scrapped inventory	Year ended December 31	Year ended December 31
	2020 2,058,586 $ 299,522 12,657 4,259 2,375,024 $	2019
		2,696,571 $ 30,471 7,308 7,566
		2,741,916 $

`(七)` Other current financial assets

Time deposits pledged Restricted bank deposits	December 31,2020 38,489 $ 20,901 59,390 $	December 31,2019
		38,741 $ 43,010
		81,751 $

Refer to Note 8 for further information on other current financial assets pledged to others as collateral. (Remainder of page intentionally left blank)

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`(八)` Property, plant and equipment

January 1, 2020 Cost Accumulated depreciation and impairment 2020 At January 1 Additions Disposals Reclassifications (Note 2) Depreciation Proceeds from disposal of subsidiaries Reversal of impairment loss (Note 3) At December 31 December 31, 2020 Cost Accumulated depreciation and impairment	Buildings and Leasehold Machinery and Furniture and Unfinished construction and equipment under Land structures improvements equipment fixtures Other equipment acceptance Total 4,974,140 $ 9,927,045 $ 268,023 $ 8,057,766 $ 12,301 $ 63,365 $ 460,439 $ 23,763,079 $ - 3,178,405) ( 166,006) ( 6,224,940) ( 4,169) ( 57,422) ( - 9,630,942) ( 4,974,140 $ 6,748,640 $ 102,017 $ 1,832,826 $ 8,132 $ 5,943 $ 460,439 $ 14,132,137 $ 4,974,140 $ 6,748,640 $ 102,017 $ 1,832,826 $ 8,132 $ 5,943 $ 460,439 $ 14,132,137 $ - 115,893 - - 9,132 9,188 186,100 320,313 - 10,454) ( - 684) ( 20) ( - - 11,158) ( - 1,984,107) ( - 19,437 26,750 2,878) ( 637,882) ( 2,578,680) ( - 473,564) ( 6,896) ( 441,940) ( 7,061) ( 1,882) ( - 931,343) ( - 1,533) ( 95,121) ( - 1,005) ( 154) ( - 97,813) ( - 28,698 - - - - - 28,698 4,974,140 $ 4,423,573 $ - $ 1,409,639 $ 35,928 $ 10,217 $ 8,657 $ 10,862,154 $ 4,974,140 $ 6,730,299 $ - $ 8,075,148 $ 46,106 $ 69,309 $ 8,657 $ 19,903,659 $ - 2,306,726) ( - 6,665,509) ( 10,178) ( 59,092) ( - 9,041,505) ( 4,974,140 $ 4,423,573 $ - $ 1,409,639 $ 35,928 $ 10,217 $ 8,657 $ 10,862,154 $	Total
		23,763,079 $ 9,630,942) ( 14,132,137 $
		10,862,154 $
		19,903,659 $ 9,041,505) ( 10,862,154 $

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January 1, 2019 Cost Accumulated depreciation and impairment 2019 At January 1 Additions Acquired from business combinations Reclassifications Depreciation At December 31 December 31, 2019 Cost Accumulated depreciation and impairment	Land - $ - - $ - $ - - 4,974,140 - 4,974,140 $ 4,974,140 $ - 4,974,140 $	Buildings and structures 9,093,496 $ 2,681,303) ( 6,412,193 $ 6,412,193 $ - - 767,362 430,915) ( 6,748,640 $ 9,927,045 $ 3,178,405) ( 6,748,640 $	Leasehold improvements - $ - - $ - $ - 116,099 - 14,082) ( 102,017 $ 268,023 $ 166,006) ( 102,017 $	Machinery and equipment 9,071,853 $ 6,797,636) ( 2,274,217 $ 2,274,217 $ - - 25,957 467,348) ( 1,832,826 $ 8,057,766 $ 6,224,940) ( 1,832,826 $	Furniture and fixtures 9,502 $ 2,148) ( 7,354 $ 7,354 $ 857 63 1,806 1,948) ( 8,132 $ 12,301 $ 4,169) ( 8,132 $	Unfinished construction and equipment under Other equipment acceptance Total 83,252 $ 130,269 $ 18,388,372 $ 75,856) ( - 9,556,943) ( 7,396 $ 130,269 $ 8,831,429 $ 7,396 $ 130,269 $ 8,831,429 $ - 380,752 381,609 194 - 116,356 92 50,582) ( 5,718,775 1,739) ( - 916,032) ( 5,943 $ 460,439 $ 14,132,137 $ 63,365 $ 460,439 $ 23,763,079 $ 57,422) ( - 9,630,942) ( 5,943 $ 460,439 $ 14,132,137 $	Total
							18,388,372 $ 9,556,943) (
							8,831,429 $
							14,132,137 $
							23,763,079 $ 9,630,942) (
							14,132,137 $

Note 1: Refer to Note 8 for further information on property, plant and equipment pledged to others as collateral.

Note 2: On November 5, 2020, the Group considered the efficiency of assets and the utilization of assets, and decided to dispose 1F to 3F of the plant located in Southern Taiwan Science Park after the resolution of the Board of Directors. Accordingly, the related assets were transferred into ‘disposal group held for sale’ in the amount of $2,575,574. Please refer to Note 6(11) for details.

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Note 3: A gain on reversal of impairment loss on certain properties amounting to $28,698 was recognised from the difference between the carrying amount and recoverable amount which was shown as other gains and losses. Please refer to Note 12(3) for related fair value information.

`－ (九)` Lease transactions lessee

A. The Group leases various assets including land, buildings, machinery and business vehicles. Rental contracts are typically made for periods of 3 to 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. Short-term leases with a lease term of 12 months or less comprise offices and parking lots. Low-value assets comprise foreign warehouse and dormitory.
C. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings and structures Transportation equipment (Business vehicles) Other equipment Land Buildings and structures Transportation equipment (Business vehicles) Other equipment	December 31,2020 December 31,2019 Book value Book value 325,143 $ 342,069 $ - 652,872 64 192 10,516 12,245 335,723 $ 1,007,378 $ Year ended December 31	December 31,2019
		Book value
		342,069 $ 652,872 192 12,245
		1,007,378 $
	2020 Depreciation expense 31,605 $ 20,580 128 1,729 54,042 $	2019
		Depreciation expense
		30,304 $ 42,146 128 1,729
		74,307 $

D. The movements of right-of-use assets of the Group during the 2020 and 2019 are as follows:

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								2020
							Transportation
								equipment		Other
				Buildings and				(Business		equipment
		Land			structures			vehicles)		(Tank)		Total
At January 1	$	342,069	$		652,872	$		192	$	12,245	$	1,007,378
Modification		14,679	(		986)			-		-		13,693
Depreciation	(	31,605)	(		20,580)	(		128)	(	1,729)	(	54,042)
Proceeds from disposal
of subsidiaries		-	(		631,306)			-		-	(	631,306)
At December 31	$	325,143	$		-	$		64	$	10,516	$	335,723

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At January 1 Additions Acquired from business combinations Depreciation At December 31			2019		Total - $ 388,639 693,046 74,307) ( 1,007,378 $
	Land - $ 372,373 - 30,304) ( 342,069 $	Buildings and structures - $ 1,972 693,046 42,146) ( 652,872 $	Transportation equipment (Business vehicles) - $ 320 - 128) ( 192 $	Other equipment (Tank) - $ 13,974 - 1,729) ( 12,245 $

E. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets Gains arising from lease modifications	Year ended December 31	Year ended December 31
	2020 11,427 $ 3,163 2,829 10	2019
		15,551 $ 2,548 4,564 -

F. For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases were $64,663 and $88,218, respectively.

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`(十)` Investment property

								Unfinished
							construction and
						Buildings and	equipment under
			Land			structures		acceptance		Total
January 1, 2019
Cost		$	4,974,140		$	539,060	$	140,224	$	5,653,424
Accumulated
depreciation			-	(		41,466)		-	(	41,466)
		$	4,974,140		$	497,594	$	140,224	$	5,611,958
2019
At January 1		$	4,974,140		$	497,594	$	140,224	$	5,611,958
Additions			-			-		141,859		141,859
Reclassifications	(		4,974,140)	(		472,873)	(	282,083)	(	5,729,096)
Depreciation			-	(		24,721)		-	(	24,721)
At December 31 December 31, 2019		$	-		$	-	$	-	$	-
Cost		$	-		$	-	$	-	$	-
Accumulated
depreciation			-			-		-		-
		$	-		$	-	$	-	$	-

The Group’s hotel property in Xinyi District is operated by the Group starting from the 4th quarter of 2019. As the owner-occupied portion of the property is significant, the investment property was reclassified to property, plant and equipment, and the balance of investment property as of December 31, 2020 and 2019 was $0 for both years.

A. Rental income from investment property and direct operating expenses arising from investment property are shown below:

Rental income from investment property Direct operating expenses arising from the investment property that did not generate rental income during the year	Year ended December 31,2019
	- $
	35,897 $

B. Amount of borrowing costs capitalised as part of investment property and the interest rate for such capitalisation are as follows:

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Amount capitalised Interest rate for capitalisation	Year ended December 31,2019
	1,689 $ 1.45%

C. Information about the investment property that was pledged to others as collateral is provided in Note 8.

`(十一)` Non-current assets held for sale

On November 5, 2020, the Group considered the efficiency and utilization of assets, and decided to dispose the 1F to 3F of the plant located in Southern Taiwan Science Park after the resolution of the Board of Directors. The disposal transaction amount was $2,770,000. As of December 31, 2020, the disposal proceeds received in advance amounted to $1,108,000 (shown as other current liabilities) and the related assets were transferred as ‘disposal group held for sale’.

Further, in February 2021, the Group collected additional proceeds from the disposal amounting to $554,000.

Assets of disposal group held for sale:

`二)`Short-term borrowings Property, plant and equipment Type of Borrowings Bank borrowings Unsecured borrowings Interest rate	December 31,2020 2,575,574 $ December 31,2020 - $ - $	December 31,2019 - $ December 31,2019 30,000 $ 1.65%	December 31,2019 - $ December 31,2019 30,000 $ 1.65%

			30,000 $
			1.65%

`(十二)` Short-term borrowings

Interest expense recognised in profit or loss amounted to $184 and $5,409 for the years ended December 31, 2020 and 2019, respectively.

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`(十三)` Other payables

Salary and bonus payable Repairs and maintenance expense payable Business tax payable (Note) Payables for machinery and equipment Utility expenses payable Import/export (customs) expense payable Others	December 31,2020 90,155 $ 66,358 61,287 53,070 19,922 2,311 79,321 372,424 $	December 31,2019
		135,157 $ 81,867 1,405 138,167 21,217 10,892 85,087
		473,792 $

Note: As of December 31, 2020, the Group has collected proceeds in advance from the disposal of 1F to 3F of the plant in Southern Taiwan Science Park and reported the related business tax. Please refer to Note 6(11) for further information.

`(十四)` Bonds payable

Bonds payable Less: Maturity within one year	December 31,2020 900,000 $ - 900,000 $	December 31,2019 1,500,000 $ 600,000) ( 900,000 $

A. In order to fulfill working capital, the Board of Directors resolved to issue the first private unsecured bonds on October 27, 2017, and completed the collection on November 28, 2017. Please refer to Note 7(2)I. The terms and conditions of the private bonds were as follows:
(a) Issuance amount: NT$1.8 billion
(b) Face value: NT$10 million
(c) Issuance price: Issued at par value and divided into A, B and C bonds. The amounts were NT$300 million, NT$600 million and NT$900 million, respectively.
(d) Issuance period: the issuance period for A bond is 2 years from November 28, 2017 to November 28, 2019. The issuance period for B bond is 3 years from November 28, 2017 to November 28, 2020. The issuance period for C bond is 5 years from November 28, 2017 to November 28, 2022.
(e) The interest rate of bond and payments of interest: The interest rate of A bond is 2.1%, the

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interest rate of B bond is 2.2% and the interest rate of C bond is 2.3%. The simple interest is calculated and paid per half year starting from the issuance date.

(f) The repayment date and method: bullet repayment.
(g) Redemption right of the Group: The Group could exercise the right of redemption on all or part of bond from the redemption date, 14[th] of each month starting from 5 months before maturity date for bond A, 6 months for bond B and 1 year for bond C. However, the exercise amount shall be NT$10 million or multiples of NT$10 million. When exercising the redemption right mentioned above, the Group must send redemption notice to each debtor for redemption amount one month before the redemption date.
(h) Put option of bondholder: The bondholders can exercise put options on the 14th of each month (redemption date) starting from 5 months before the maturity date for bond A, starting from 6 months before the maturity date for bond B and starting from 1 year before the maturity date for bond C. However, the exercise amount shall be exactly NT$10 million or multiples of NT$10 million. When the bondholder exercises the aforementioned put options, the bondholder shall give the Group the bond sales notice for sell amount within one month before the sell date.
(i) Secure method: None.
B. The Group transferred current bonds payable as long-term liabilities, current portion based on the liquidity. On December 31, 2020 and 2019, the amounts were $0 and $600,000, respectively.

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- `(十五)` Long term borrowings

Borrowingnature, period and repayment term Land and buildings on Yixian Road, Sec. 2 pledged as collateral for borrowings NTD borrowings from Land Bank: the borrowing period is 15 years and interest is payable monthly for the first 3 years, principal is payable quarterly starting from the 4th year until May 2033 (Note). Unsecured borrowings Borrowing from Taishin Bank: the borrowing period is 3 years and is payable on the maturity date. Borrowing from Taipei Fubon Bank: 12 months starting from the first drawdown date is the grace period, and principal is payable every 6 months after the grace period into 5 installments at 20% per installment. Less: Current portion (including unamortised long-term borrowing cost) Borrowingnature, period and repayment term Land and buildings on Yixian road 2nd sec. pledged as collateral for borrowing NTD borrowings from Land Bank: the borrowing period is 15 years and interest is payable monthly for the first 3 years, principal is payable quarterly starting from the 4th year until May 2033 (Note).	Coupon Rate 1.20% 1.57% 1.56% Coupon Rate 1.45%	December 31,2020 4,160,000 $ 300,000 300,000 4,760,000 233,333) ( 4,526,667 $ December 31,2019 4,160,000 $

Note: The Group has pledged certain property, plant and equipment as collateral for the above borrowing.

On May 8, 2018, the Group entered into a syndicated loan for 15 years with Land Bank, for a facility of $4.16 billion with land and buildings on Yixian Rd., Sec. 2 as collateral.

`(十六)` Pensions

A. Defined benefit plans

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(a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

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

Present value of defined benefit obligations Fair value of plan assets Net defined benefit asset	December 31,2020 December 31,2019 - $ 716) ($ - 62,427 - $ 61,711 $	December 31,2019
		61,711 $

Present value of defined benefit 0 obligations 2020 At January 1 716) ($ Clear the service years of old pension 716 ( At December 31 - $	Fair value of plan assets 62,427 $ 62,427) ( - $	Net defined benefit asset 61,711 $ 61,711) - $

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Present value of defined benefit 0 obligations 2019 At January 1 621) ($ Interest (expense) income 9) ( 630) ( Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) - Change in demographic assumptions 8) ( Change in financial assumptions 49) ( Experience adjustments 29) ( 86) ( At December 31 716) ($	Fair value of Net defined plan assets benefit asset 59,716 $ 59,095 $ 822 813 60,538 59,908 1,889 1,889 - 8) ( - 49) ( - 29) ( 1,889 1,803 62,427 $ 61,711 $

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, overthe-counter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorised by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2109 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.
(e) The principal actuarial assumptions used were as follows:

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Discount rate Future salary increases	Year ended December 31,2019
	1.000%
	2.00%

Assumptions regarding future mortality rate were estimated to be 10% in accordance with the 5th version of Taiwan Standard Ordinary Experience Mortality Table.

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

December 31, 2019 Effect on present value of defined benefit obligation	Increase 25% Decrease 25% 34) ($ 35 $ Discount rate	Increase 25% Decrease 25% 35 $ 33) ($ Future salaryincreases
	Increase 25% 34) ($	Increase 25% 35 $

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

The methods used in preparing the sensitivity analysis did not change compared to the previous period.

(f) In April 2020, employees covered under the aforementioned pension plan have reached an agreement with the Company to clear the service years under the old pension, and settled the pension fund with the Bank of Taiwan. The remaining fund balance has been returned to the Company.
B. Defined contribution plan
(a) Effective July 1, 2005, the Group has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Group contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) The pension costs under the defined contribution pension plan of the Group for the years ended December 31, 2020 and 2019 were $14,126 and $13,185, respectively.

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`(十七)` Share-based payment

A. For the year ended December 31, 2019, the Group’s share-based payment arrangements were as follows:

as follows:
Type of arrangement Cash capital increase reserved for employee preemption	Grant date 2019/8/12	Quantity granted (in thousands) 7,000	Contract period -	Vesting conditions
				Vested immediately

The abovementioned share-based payment arrangements are equity-settled.

B. Details of the share-based payment arrangements are as follows:

				2019
					Weighted-average
			No. of options		exercise price
			(in thousands)		(in dollars)
Options	outstanding at January 1			-	-
Options	granted		7,000		13.5
Options	exercised	(	3,142)		13.5
Options	expired	(	3,858)		13.5
Options	outstanding at December 31			-
Options	exercisable at December 31			-	-

C. The weighted-average stock price of stock options at exercise dates for the year ended December 31, 2019 was $14.05.
D. The fair value of stock options granted on the grant date is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Type of arrangement Cash capital increase reserved for employee preemption	Grant date 2019/8/12	Share price $ 14.05	Exercise price $ 13.50	Expected price volatility 50.49%	Expected option life 9 days	Risk-free interest rate 0.49%	Fair value per unit
							$ 0.77

Note: Expected price volatility was estimated from the standardised average of annualised daily return on stock price on the grant date.

E. Expenses incurred on share-based payment transactions are shown below:

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Cash capital increase reserved for employee preemption	Year ended December 31,2019
	5,390 $

On December 13, 2020, there was no such transaction.

`(十八)` Share capital

A. As of December 31, 2020, the Company’s authorized capital was $20,000,000, consisting of 2 billion shares, and the paid-in capital was $8,069,485 with a par value of $10 (in dollars) per share.

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

At January 1 Cash capital increase At December 31	2020 806,949 - 806,949	2019
		736,949 70,000
		806,949

B. In order to repay liabilities, fulfill working capital, improve financial structure or strategic alliance to develop related business, the shareholders on May 30, 2014, resolved to increase capital in cash through private placement or public offering and issue common shares up to a maximum of 700 million shares or increase capital through the issuance of global depository receipts (including private placement common shares not to exceed 300 million shares), with a par value of $10 per share. On July 8, 2014, the Board of Directors of the Company resolved to increase capital in cash through private placement of 281,690 thousand common shares with a discounted price of $7.10 per share, totaling $1,999,999. The effective date of private placement was July 22, 2014, and the purpose of capital increase was for additional working capital. Pursuant to the Securities and Exchange Act, the ordinary shares raised through the private placement are subject to certain transfer restrictions and cannot be listed on the stock exchange until three years after they have been issued and have been offered publicly. Other than these restrictions, the rights and obligations of the ordinary shares raised through the private placement are the same as other issued ordinary shares. On May 8, 2020, the Board of Directors of the Company resolved to apply for additional public offering and listed transaction, and submitted the related data to the authority on July 24, 2020. The effective date of the letter from the authority was August 4, 2020, and the stock has been listed in the security market.
C. In order to promote the development of strategy alliance, improve financial structure, fulfill

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working capital, and repay liabilities, the Company's shareholders, on June 16, 2020, resolved to increase capital in cash and issue common shares up to 70 million shares or increase capital through the issuance of global depository receipts. The Company will choose one or both methods, at a par value of NT$10 per share.

`(十九)` Capital surplus

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

`(二十)` Retained earnings

A. Under the Company’s Articles of Incorporation, the annual earnings, if any, shall first be used to pay all taxes and offset accumulated deficit and then 10% of the remaining amount shall be set aside as legal reserve until the legal reserve equals the paid-in capital. Except for the distribution of cash dividends and bonus which the Board of Directors are authorised to resolve and then report to shareholders, others will be proposed by the Board of Directors and approved by the shareholders.
B. According to the Articles of Incorporation, the Company shall consider to appropriate all of current undistributed earnings based on finance, business, operation and other factors. The appropriation of earnings can be in the form of cash dividend or stock dividend separately or both. The ratio of cash dividend shall not be lower than 20% of the total dividends distributed.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.
D. On March 19, 2021 and June 16, 2020, the Board of Directors and stockholders during their meeting resolved the following, respectively: besides, no earnings were appropriated in 2018 due to accumulated deficit.

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Dividends per share Dividends per share Amount (in dollars) Amount (in dollars) Legal reserve 35,000 $ 96,963 $ Reversal of special reserve 7,643) ( - Cash dividends 314,710 - $ 282,432 0.35 $ 342,067 $ 379,395 $ Year ended December 31 2020 2019	Year ended December 31	Year ended December 31	Year ended December 31
		2019
		Amount 96,963 $ - 282,432 379,395 $	Dividends per share (in dollars)
			0.35 $

`(二十一)` Operating revenue

Revenue from contracts with customers Touch sensors and related products Rental revenue from property Others	Year ended December 31	Year ended December 31
	2020 2,774,175 $ 69,292 242,932 3,086,399 $	2019
		4,199,530 $ 20,138 184,148
		4,403,816 $

Disaggregation of revenue from contracts with customers

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

Revenue from external customer contracts South Korea China Taiwan	Year ended December 31	Year ended December 31
	2020 2,096,081 $ 630,552 359,766 3,086,399 $	2019
		3,120,698 $ 1,069,182 213,936
		4,403,816 $

For the year ended December 31, 2020, the Group was affected by COVID-19, thus orders from customers were delayed and the operating revenue and capacity utilization were jointly affected. However, the Group has communicated with customers and continually produced its products for delivery subsequently. There was no significant effect on the range of service contract and price.

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`(二十二)` Interest income

Interest income from bank deposits Interest income from financial assets measured at amortised cost Other interest income	Year ended December 31	Year ended December 31
	2020 2,244 $ 1,125 94 3,463 $	2019
		902 $ 1,978 4
		2,884 $

`(二十三)` Other income

Revenue from purchasing masks on behalf of others Government grant revenues (Note 1) Rent income Income from settlement of old pension fund Dividend income Other income (Note 2)	Year ended December 31	Year ended December 31
	2020 9,741 $ 70,304 23,121 2,339 - 48,240 153,745 $	2019
		11,605 $ 14,137 2,227 - 4,430 4,532
		36,931 $

Note 1: The Company obtained the plan of AOI intelligent detection feedback system to enhance the output value of touch sensor and A+ Industrial innovative R&D program to support big size Micro LED Display technique. The development time of this plan was 17~24 months. For the years ended December 31, 2020 and 2019, the grant revenue recognised based on execution stage were $16,480 and $14,137, respectively. Further, as the Group was affected by COVID-19, the Group applied for economic relief package and recognised grant revenue in the amount of $53,824 for the year ended December 31, 2020.
Note 2: The dispute between the Company and PAI CHUNG ENGINEERING CO., LTD. (PAI CHUNG ENGINEERING) has been concluded by the Taiwan Taipei District Court in September 2020. Accordingly, the Company transferred other payable to PAI CHUNG ENGINEERING amounting to $39,600 as other income based on the judgement.

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`(二十四)` Other gains and losses

		Year ended December	Year ended December	31
		2020		2019
Foreign exchange losses	($	33,128)	($	14,592)
Gains on financial instruments at fair value
through profit or loss		2,195		38,585
Gains on disposal of subsidiaries		3,741		-
(Losses) gains on disposals of property, plant
and equipment	(	10,634)		13,362
Reversal of impairment loss on non-financial
assets (Note)		28,698		-
Other losses	(	7,055)	(	12,530)
	($	16,183)	$	24,825

Note: Please refer to Note 6(8) for the related information.

`(二十五)` Employee benefit expense and expenses by nature

Employee benefit expense Salary expenses Labour and health insurance fees Pension costs Other personnel expenses Depreciation expense Amortisation charge	Year ended December 31,2020	Year ended December 31,2020	Year ended December 31,2020
	Operatingcosts 176,699 $ 17,896 8,234 21,878 973,795 3,575	Operatingexpenses 132,309 $ 10,277 5,892 15,274 11,590 4,454	Total
			309,008 $ 28,173 14,126 37,152 985,385 8,029

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Employee benefit expense Salary expenses Labour and health insurance fees Pension costs Other personnel expenses Depreciation expense Amortisation charge	Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
	Operatingcosts 194,228 $ 15,441 7,297 27,566 988,701 4,301	Operatingexpenses 160,721 $ 10,898 5,075 20,427 26,359 2,391	Total
			354,949 $ 26,339 12,372 47,993 1,015,060 6,692

A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall be between 0.001% and 15% for employees’ compensation and shall not be higher than 2% for directors’ remuneration.
B. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at $25,020 and $59,364, respectively; while directors’ remuneration was accrued at $6,000 and $17,128, respectively. The aforementioned amounts were recognised in salary expenses.

For the year ended December 31, 2020, the employees’ compensation and directors’ remuneration were estimated and accrued based on profit of current year distributable as of the end of reporting period as prescribed by the Company’s Articles of Incorporation. The employees’ compensation and directors’ and supervisors’ remuneration resolved by the Board of Directors were the same, and the employees’ compensation will be distributed in the form of cash.

Employees’ compensation and directors’ remuneration for 2019 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2019 financial statements.

C. Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.
(二十六) Income taxes
A. Income tax expense
- (a) Components of income tax expense:

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(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows: 2020 2019 Current tax: Current tax on profits for the year 4,511) ($ 1,948 $ Tax on undistributed earnings 25,895 - Prior year income tax underestimation - 809 Total current tax 21,384 2,757 Deferred tax: Origination and reversal of temporary differences 81,490 189,769 Total deferred tax 81,490 189,769 Income tax expenses 102,874 $ 192,526 $ Year ended December 31 2020 2019 Remeasurement of defined benefit obligations - $ 361 $ Changes in fair value of financial assets at fair value through other comprehensive income 1,614) ( - 1,614) ($ 361 $ Year ended December 31	Year ended December 31	Year ended December 31
		2019
		1,948 $ - 809
		2,757
		189,769
		189,769
		192,526 $
	2020 - $ 1,614) 1,614) $	2019
		361 $ -
		361 $

B. Reconciliation between income tax expense and accounting profit

		Year ended December	Year ended December	31
		2020		2019
Income tax calculated by applying statutory	$	81,143	$	164,256
rate to the profit before tax
Expenses disallowed by tax regulation		3,626		4,254
Tax exempt income by tax regulation	(	7,898)	(	4,721)
Temporary differences not recognised as
deferred tax assets		-		26,692
Tax losses not recognised as deferred tax
assets		108		1,236
Tax on undistributed earnings		25,895		-
Prior year income tax under estimation		-		809
Income tax expenses	$	102,874	$	192,526

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

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	Recognised in other comprehensive income At December 31 - $ 4,161 $ - 13,313 - 5,666 1,614 1,614 - - - - - - - 308,726 1,614 333,480 - - - 6) ( - 773) ( - 779) ( 1,614 $ 332,701 $	At December 31
		4,161 $ 13,313 5,666 1,614 - - - 308,726
		333,480
		779) (
		332,701 $

Disposals by Recognised in Recognised in other comprehensive the business profit or loss income At December 31 - $ 4,436 $ - $ 8,072 $ - 157,450) ( - 37,763 - 1,462 - 3,134 - 12,052) ( - - - 145) ( - 271 605 1,154 - 1,759 4,639 464) ( - 4,175 460 16,827) ( - 381,245 5,704 179,886) ( - 436,419 - - 361) ( 8,025) ( - 9,883) ( - 9,883) ( - 9,883) ( 361) ( 17,908) ( 5,704 $ 189,769) ($ 361) ($ 418,511 $		At December 31
		8,072 $ 37,763 3,134 - 271 1,759 4,175 381,245
		436,419
		17,908) (
		418,511 $

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D. The amounts of deductible temporary differences that were not recognised as deferred tax assets are as follows:

December 31, 2020 December 31, 2019 - Deductible temporary differences $ $ 133,460

E. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

		December 31,2020	December 31,2020
Year incurred 2012 2014 2016 2017 2018 2019 2020	Amount filed/ assessed 2,380,945 $ 994,010 278,110 36 10,972 67,310 3,756	Unrecognised Unused amount deferred tax assets 317,047 $ 91,254 $ 994,010 - 278,110 48 36 36 10,972 10,972 67,310 24,768 3,756 536 December 31,2019		Expiry year
				2022 2024 2026 2027 2028 2029 2030
Year incurred 2012 2014 2016 2017 2018 2019	Amount filed/ assessed 2,380,945 $ 994,010 278,110 36 11,402 48,720	Unused amount 682,869 $ 994,010 278,110 36 11,402 48,720	Unrecognised deferred tax assets - $ - 48 36 11,402 6,178	Expiry year
				2022 2024 2026 2027 2028 2029

F. The status of the Company’s and its subsidiaries’ income tax returns which were assessed by the tax authority are as follows:

The Company Glory Stone Golden Apple Investment	Assessment
	2018 2019 2019

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`(二十七)` Earnings per share

Year ended December 31,2020	Year ended December 31,2020	Year ended December 31,2020
Weighted average number of ordinary shares outstanding Earnings per share Amount after tax (shares in thousands) (in dollars) 350,004 $ 806,949 0.43 $ 350,004 $ 806,949 - 3,724 350,004 $ 810,673 0.43 $ Year ended December 31,2020		Earnings per share (in dollars)
		0.43 $
		0.43 $
Amount after tax ( 1,018,057 $ 1,018,057 $ - 1,018,057 $	Weighted average number of ordinary shares outstanding shares in thousands) 753,916 753,916 1,259 755,175	Earnings per share (in dollars)
		1.35 $
		1.35 $

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`(二十八)` Business combinations

A. On April 30, 2019, the Group acquired a 100% equity interest in Chaiin Hotel for a consideration of $30,012, and obtained control over Chaiin Hotel which was engaged in hotel business. As a result of the acquisition, the Group is expected to increase its presence in this market.
B. The following table summarises the consideration paid for Chaiin Hotel and the fair values of the assets acquired and liabilities assumed at the acquisition date:

			April 30,2019
Purchase consideration
Cash		$	30,012
Fair value of the identifiable assets acquired and liabilities assumed
Cash			48,713
Accounts receivable			2,024
Other current assets			10,973
Property, plant and equipment			116,356
Right-of-use assets			693,046
Deferred income tax assets			5,704
Other non-current assets			19,620
Accounts payable	(		6,589)
Other payables	(		13,474)
Current tax liabilities	(		3,260)
Lease liability - current	(		53,230)
Other current liabilities	(		1,503)
Long-term borrowings	(		199,930)
Lease liability - non-current	(		642,841)
Other non-current liabilities	(		276)
Total identifiable net assets	(		24,667)
Financial assets at fair value through profit or loss - put option			6,560
Goodwill		$	48,119

C. From April 2019, the date of acquisition of Chaiin Hotel, the acquisition resulted to an increase in operating income and net loss before tax in the amounts of $176,313 and $6,009, respectively. Had Chaiin Hotel been consolidated from January 1, 2019, the consolidated statement of comprehensive income would show operating revenue of $4,480,947 and profit before income tax of $1,182,658.

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`(二十九)` Supplemental cash flow information

A. Investing activities with partial cash payments

			Year ended December 31	Year ended December 31	Year ended December 31	Year ended December 31
			2020			2019
Purchase of property, plant and equipment		$	320,313		$	381,609
Reclassifications	(		17,225)			152,313
Add: Opening balance of payable on			115,792			96,011
equipment
Less: Ending balance of payable on equipment	(		53,070)	(		115,792)
Cash paid during the year		$	365,810		$	514,141

			Year ended December			31
			2020			2019
Purchase of investment property	$		-	$		141,859
Reclassifications	(		22,375)	(		152,313)
Add: Opening balance of payable on			22,375			32,829
equipment
Less: Ending balance of payable on equipment			-	(		22,375)
Cash paid during the year	$		-	$		-

B. On May 25, 2020, the Group disposed its 81% equity interest in Chaiin Hotel, and therefore the Group lost control over the subsidiary (please refer to Note 4(3)B). The details of the consideration received from the transaction (including cash and cash equivalents) and assets and liabilities relating to the subsidiary are as follows:

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		May25,2020
Consideration received
Cash	$	100,135
Equity instruments		9,826
Total consideration		109,961
Carrying amount of the assets and liabilities of Chaiin Hotel
Cash		13,754
Accounts receivable		2,193
Other receivables		1,158
Other current assets		3,440
Property, plant and equipment		95,294
Right-of-use assets		631,306
Deferred income tax assets		10,446
Other non-current assets		19,605
Notes payable	(	527)
Accounts payable	(	982)
Other payables	(	20,635)
Other payables - related parties	(	55,507)
Lease liability - current	(	54,355)
Current tax liabilities	(	3,528)
Other current liabilities	(	1,394)
Lease liability - non-current	(	588,486)
Other non-current liabilities	(	206)
Total net assets		51,576
Financial assets at fair value through profit or loss - put option		6,560
Goodwill		48,119
		106,255
Gain on disposal of subsidiaries	$	3,706

`(三十)` Changes in liabilities from financing activities

For the years ended December 31, 2020 and 2019, the Group’s liabilities from financing activities included short-term borrowings, short-term notes and bills payable, dividends payable, bonds payable, long-term borrowings and lease liabilities. The changes all pertain to changes in the financing cash flow and other non-cash changes, the aggregate amounts were as follows. Please refer to statements of cash flows for other information.

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Short-term Bonds Long-term borrowings (including Liabilities from financing borrowings payable currentportion) Lease liability activities-gross At January 1 30,000 $ 1,500,000 $ 4,160,000 $ 1,019,156 $ 6,709,156 $ Changes in cash flow from financing activities 30,000) ( 600,000) ( 600,000 58,671) ( 88,671) ( Changes from disposal of subsidiaries - - - 642,841) ( 642,841) ( Changes in other non-cash items - - - 25,121 25,121 At December 31 - $ 900,000 $ 4,760,000 $ 342,765 $ 6,002,765 $ Short-term Bonds Long-term borrowings (including Liabilities from financing borrowings payable currentportion) Lease liability activities-gross At January 1 520,000 $ 1,800,000 $ 5,948,458 $ - $ 8,268,458 $ Adjustments under new standards - - - 388,640 388,640 Changes in cash flow from financing activities 490,000) ( 300,000) ( 1,988,388) ( 81,106) ( 2,859,494) ( Changes in acquisition of subsidiaries - - 199,930 696,071 896,001 Changes in other non-cash items - - - 15,551 15,551 At December 31 30,000 $ 1,500,000 $ 4,160,000 $ 1,019,156 $ 6,709,156 $ 2019 2020			2020
			Long-term borrowings (including Liabilities from financing currentportion) Lease liability activities-gross 4,160,000 $ 1,019,156 $ 6,709,156 $ 600,000 58,671) ( 88,671) ( - 642,841) ( 642,841) ( - 25,121 25,121 4,760,000 $ 342,765 $ 6,002,765 $ 2019		Liabilities from financing activities-gross
					6,002,765 $

					Liabilities from financing activities-gross
					6,709,156 $

7. Related Party Transactions

`(一)` Names of related parties and relationship with the Company

Names of related parties Relationship with the Company Hannstar Display Corp. (Hannstar) Entities with significant influence to the Group Hannstar Display (Nanjing) Corp. (Hannstar Other related parties (Nanjing))

`(二)` Significant related party transactions

A. Operating revenue:

~169~

Revenue from sales and rooms Entities with significant influence to the Group	Year ended December 31	Year ended December 31
	2020 23,156 $	2019
		1,115 $

There were no similar transactions that can be compared with. The transaction conditions were based on the mutual agreement.

B. Purchases

Purchases of goods: Entities with significant influence to the Group Other related parties	Year ended December 31	Year ended December 31
	2020 9,335 $ - 9,335 $	2019
		5,446 $ 643
		6,089 $

There were no similar transactions that can be compared with. The transaction conditions were based on the mutual agreement.

C. Rent expense

Entities with significant influence to the Group	2020 2019 2,575 $ 2,548 $ Year ended December 31	2020 2019 2,575 $ 2,548 $ Year ended December 31
		2019 2,548 $

There were no similar transactions that can be compared with. The transaction conditions were based on the mutual agreement.

D. Interest expenses

Hannstar	2020 2019 29,390 $ 38,751 $ Year ended December 31	2020 2019 29,390 $ 38,751 $ Year ended December 31
		2019 38,751 $

E. Receivables from related parties

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Payables to related parties Receipts in advance (shown as other current liabilities) December31,2020 Accounts receivable: Entities with significant influence to the Group 16,894 $ December 31,2020 Accounts payable: Entities with significant influence to the Group 2,486 $ Other payables: Entities with significant influence to the Group 1,964 $ December 31,2020 Hannstar 1,108,000 $	December31,2019
	451 $
	December 31,2019
	18 $
	4,015 $
	December 31,2019
	- $

F. Payables to related parties
G. Receipts in advance (shown as other current liabilities)

Advance receipts arose from disposal of 1F to 3F of the plant in Tainan Science Park.

H. Property transactions:

Disposal of property, plant and equipment

Year ended December 31	Year ended December 31	Year ended December 31
Disposal proceeds Gain/(loss) 14 $ 14 $ 2020	2019
Disposal proceeds 14 $	Disposal proceeds - $	Gain/(loss)
		- $

I. Issuance of bonds payable

On November 28, 2017, the Group issued domestic first private unsecured bonds, the issuance amount was NT$1.8 billion. As of December 31, 2020, the Company's bonds payable was $900,000 (including current portion).

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`(三)` Key management compensation

Salaries and other short-term employee benefits Share-based payment	Year ended December 31	Year ended December 31
	2020 31,202 $ - 31,202 $	2019
		38,249 $ 1,176
		39,425 $

8. Pledged Assets

The Group’s assets pledged for the purpose of long-term borrowings, notes, customs duty on raw material imports and performance bond are as follows:

Pledged asset Pledged time deposits (shown as other financial assets) Demand deposits (shown as other financial assets) Property, plant and equipment and investment property	Book value	Book value
	December 31,2020 38,489 $ 20,901 5,214,919 5,274,309 $	December 31,2019
		38,741 $ 43,010 5,610,105
		5,691,856 $

9. Significant Contingent Liabilities and Unrecognised Contract Commitments

As of December 31, 2020, significant commitments and contingencies are outlined as follows:

`(一)` Contingencies

In November 2013, the Tainan District Prosecutors Office initiated the prosecution proceedings against the Company and the Company’s former Directors and financial managers suspected of false reporting, increasing the contract prices of construction projects, purchasing scrapped equipment, misappropriating deposits, receiving kickbacks, hollowing out the Company's assets and breach of trust under the Securities and Exchange Act, Criminal Code, Business Entity Accounting Act and Tax Collection Act and other crimes. In December 2016, the Criminal court of Tainan District Court has rendered its decision that the Company is innocent. In March 2019, the second instance court has found the other defendants guilty. The above criminal case has been initiated for third instance with the Supreme Court. Further, the Company filed additional civil lawsuits against 14 people suspected of the criminal case. In January 2019, the first instance court has rendered its judgment whereby the Company partly won in some of the cases. Consequently,

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the Company filed appeals with the Taiwan High Court Tainan Branch Court which are still pending as of the report date. As the construction and equipment had been derecognised from past financial statements through depreciation, impairment and loss from disposal, the above cases have no significant effect on the Company’s financial situation.

`(二)` Commitments

Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

Property, plant and equipment	December 31,2020 40,635 $	December 31,2019
		168,452 $

10. Significant Disaster Loss

None.

11. Significant Events after the Balance Sheet Date

(一) Refer to Notes 6(11), 6(20) and 6(25) for details.
(二) On March 19, 2021, the Company’s board of directors resolved not to proceed with the capital increase by cash through the issuance of up to 70 million shares of stock either through private placement or public offering, as resolved by the shareholders during their meeting last June 16, 2020 for the purpose of developing strategic alliances, increasing working capital, etc. However, in order for the Company to have the flexibility to respond to changes in the industry and the economy, and in line with the practice of the competent authority to review the plans of companies to raise capital, the Company’s board of directors proposed another resolution for the capital increase.
(三) For the purpose of developing strategic alliances and increasing working capital, the Company’s board of directors during its meeting on March 19, 2021 resolved to increase capital through the issuance of up to 80 million shares of stock or depository receipts with a proposed denomination of NT$10 per share through private placement or public offering.

12. Others

`(一)` Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital

~173~

structure to reduce the cost of capital. To maintain or adjust the capital structure, the Company adjusted the capital structure through the issuance of new shares to borrow or repay loans.

`(二)` Financial instruments

A. Financial instruments by category

Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Accounts receivable (including related parties) Other receivables Other financial assets Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Financial liabilities at amortised cost Short-term borrowings Notes payable Accounts payable (including related parties) Other payables (including related parties) Bonds payable (including current portion) Long-term borrowings (including current portion) Lease liability	December 31,2020 55,505 $ 193,411 $ 1,789,028 $ 664,832 268,962 32,560 59,390 2,814,772 $ 1 $ - $ 217 139,146 374,388 900,000 4,760,000 6,173,751 $ 342,765 $	December 31,2019
		54,716 $
		- $
		402,233 $ 156,063 386,592 3,051 81,751
		1,029,690 $
		- $
		30,000 $ 1,903 163,292 477,807 1,500,000 4,160,000
		6,333,002 $
		1,019,156 $

~174~

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To minimise any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign exchange forward contracts and foreign currency option contracts are used to hedge certain exchange rate risk.
(b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Exchange rate risk

i. The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and JPY. Foreign exchange rate risk arises from future commercial transactions and recognised assets and liabilities.
ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. Exchange rate risk is measured through a forecast of highly probable USD and JPY expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of the exchange rate affecting cost of forecast inventory purchases.
iii. The Group’s businesses involve some non-functional currency operations (the Group’s functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~175~

December 31, 2020

Book value (NTD) 279,061 $ 18,724 46,056 34,848 December	Sensitivityanalysis	Sensitivityanalysis	Sensitivityanalysis
	Degree of variation 1% 1% 1% 1% 31,2019	Effect on profit or loss 2,791 $ 187 461 348	Effect on other comprehensive income
			- $ - - -
Book value (NTD) 406,197 $ 33,139 60,047 28,089	Sensitivityanalysis
	Degree of variation 1% 1% 1% 1%	Effect on profit or loss 4,062 $ 331 600 281	Effect on other comprehensive income
			- $ - - -

iv. Total exchange gain (loss), including realised and unrealised, arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2020 and 2019, amounted to ($33,128) and ($14,592), respectively.

Price risk

i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

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ii. The Group’s investments in equity securities comprise shares issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $553 and $472, respectively.

Cash flow and fair value interest rate risk

The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. Group policy is to maintain at least 1~3% of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. During 2020 and 2019, the Group’s borrowings at variable rate were mainly denominated in New Taiwan dollars.

(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortised cost, at fair value through profit or loss.
ii. The Group adopts the assumption that the default occurs when the contract payments are past due over 120 days.
iii. The Group adopts the following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

iv. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i) It becomes probable that the issuer will enter bankruptcy or other financial reorganisation due to their financial difficulties;

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(ii) The disappearance of an active market for that financial asset because of financial difficulties;
(iii) Default or delinquency in interest or principal repayments.
v. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights. On December 31, 2020 and 2019, the Group had no written-off financial assets that are still under recourse procedures.
vi. The methods used by the Group in assessing the expected credit risk of accounts receivable were as follows:
(i) Individually estimated expected credit loss according to individual significant accounts receivable which are considered on default;
(ii) Other customers’ accounts receivable were classified based on the Group's credit rating standards. The Group applies different loss rate methodology and provision matrix to estimate the expected credit loss of different groups.
(iii) Loss rates are calculated based on past and current information, taking into account forward-looking information provided by the Basel Committee on Banking Supervision.
(iv) On December 31, 2020 and 2019, the provision loss for accounts receivable which were individually estimated by loss rate methodology and provision matrix were as follows:

December 31,2020 Expected loss rate Total book value December 31,2019 Expected loss rate Total book value	Group1 0.03%~100% - $ Group1 0.03%~100% - $	Group2 0.03% 272,960 $ Group2 0.03% 426,640 $	Total
			272,960 $
			Total
			426,640 $

Group 1: For customers with impairment indications, individual expected credit

~178~

loss is determined through considering the claim order of insurance and debts.

Group 2: Long-term customers with good credit history.

vii. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable are as follows:

			2020
		Accounts receivable
At January 1	$		137
Provision and reversal of impairment loss	(		45)
Write-offs	(		3)
At December 31	$		89
			2019
		Accounts receivable
At January 1	$		16,495
Provision for impairment			148
Write-offs	(		16,506)
At December 31	$		137

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements.
ii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities were as follows:

~179~

Non-derivative financial liabilities : Less than December 31, 2020 1year Financial liabilities at fair value through profit or loss 1 $ Notes payable 217 Accounts payable (including related parties) 139,146 Other payables (including related parties) 374,388 Current tax liabilities 25,895 Lease liability 30,794 Other current liabilities, others 1,128,467 Bonds payable (including put option on corporate bonds matured or exercised within 1 year) - Long-term borrowings (including current portion) 291,907	Between 2 and 3years - $ - - - - 63,532 - 900,000 1,332,294	Between 3 and 4years - $ - - - - 66,401 - - 764,378	Over 5years
December 31, 2020 Financial liabilities at fair value through profit or loss Notes payable Accounts payable (including related parties) Other payables (including related parties) Current tax liabilities Lease liability Other current liabilities, others Bonds payable (including put option on corporate bonds matured or exercised within 1 year) Long-term borrowings (including current portion)
			- $ - - - - 182,038 - - 2,718,215

~180~

Non-derivative financial liabilities:

December 31, 2019 Short-term borrowings Notes payable Accounts payable (including related parties) Other payables (including related parties) Current tax liabilities Lease liability Other current liabilities, others Bonds payable (including put option on corporate bonds matured or exercised within 1 year) Long-term borrowings (including current portion)	Less than 1year 30,000 $ 1,903 163,292 477,807 3,528 83,033 11,926 600,000 -	Between 2and 3 years - $ - - - - 170,430 - 900,000 695,603	Between 3 and4years - $ - - - - 160,050 - - 789,232	Over 5 years
				- $ - - - - 605,643 - - 3,131,656

iii. In order to repay the borrowings, the Group planned to issue share of stocks through public offering or private placement. Please refer to Note 6(18)C for details.

`(三)` Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. An active market refers to a market in which transactions for an asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in forward foreign exchange contracts is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The Group’s put option which were generated from investment is included in Level 3.
B. Fair value information of investment property at cost is provided in Note 6(10).
C. Financial instruments not measured at fair value

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The carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, financial assets at amortised cost, accounts receivable (including related parties), other receivables, other financial assets - current, short-term borrowing, short-term notes and bills payable, notes payable, accounts payable (including related parties), other payables (including related parties)) and lease liability approximate to their fair values. As of December 31, 2020 and 2019, the fair value of long-term borrowings (including current portion) which were included in Level 3 were $3,973,461 and $3,278,828, respectively.

D. Financial and non-financial instruments measured at fair value
(a) The related information on financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2020 and 2019 are as follows:

~182~

December 31, 2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Listed stocks Unlisted stocks Non-hedging derivatives Financial assets at fair value through other comprehensive income Listed and emerging stocks Non-recurring fair value measurements Non-current assets held for sale Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Non-hedging derivatives	Level 1 200 $ - - 193,411 193,611 $ - $ 1 $	Level 2 - $ - 234 - 234 $ - $ - $	Level 3 - $ 55,071 - - 55,071 $ 2,575,574 $ - $	Total
				200 $ 55,071 234 193,411
				248,916 $
				2,575,574 $
				1 $

~183~

December 31, 2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Unlisted stocks Non-hedging derivatives	Level 1 - $ - - $	Level 2 - $ 927 927 $	Level 3 47,229 $ 6,560 53,789 $	Total
				47,229 $ 7,487
				54,716 $

(b) The methods and assumptions the Group used to measure fair value are as follows:
- i. For the instruments the Group used market quoted prices as their fair values (that is, Level 1), the Group uses the closing price of the listed shares as fair value.
- ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.
- iii. When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
E. On December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.
F. For the years ended December 31, 2020 and 2019, there was no transfer into or out from Level 3.
G. Finance and accounting segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions,

~184~

confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value. The Group’s finance and accounting department use valuation methods and assumptions announced by the Financial Supervisory Commission, Securities and Futures Bureau or through outsourced appraisal performed by the external valuer.

H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

					Significant
	December		31, 2020	Valuation	unobservable	Range (weighted	Relationship of
		Fairvalue		technique	input	average)	inputstofairvalue
Non-derivative equity	instrument:
Unlisted shares	$		55,071	Market	Price book ratio	Not applicable	The higher the multiple
				comparable	multiplier, discount		and control premium, the
				companies	for lack of		higher the fair value;
					marketability		the higher the discount for
							lack of marketability, the
							lower the fair value
					Significant
	December		31, 2019	Valuation	unobservable	Range (weighted	Relationship of
		Fairvalue		technique	input	average)	inputstofairvalue
Non-derivative equity	instrument:
Unlisted shares	$		47,229	Market	Price book ratio	Not applicable	The higher the multiple
				comparable	multiplier, discount		and control premium, the
				companies	for lack of		higher the fair value; the
					marketability		higher the discount for
							lack of marketability, the
							lower the fair value

13. Supplementary Disclosures

`(一)` Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.
D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company's paid-in capital: None.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

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F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: Please refer to table 3.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: None.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting period: Please refer to Notes 6(2).
J. Significant inter-company transactions during the reporting periods: None.

`(二)` Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 4.

`(三)` Information on investments in Mainland China

A. Basic information: Please refer to table 5.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

`(四)` Major shareholders information

Major shareholders information: Please refer to Table 6.

14. Segment Information

`(一)` General information

Management has determined the reportable operating segments based on the reports reviewed by the Board of Directors that are used to make strategic decisions.

(二) Measurement of segment information

The Group measures operating segment revenue and net operating profit or loss, and the Company has eliminated the impact of inter-segment transactions.

`(三)` Measurement of segment information

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

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	Year ended December 31,2020	Year ended December 31,2020
Manufacturing of touch production 2,774,175 $ - 2,774,175 $ 347,684 $ 898,775 $	Others 312,224 $ 99,109 411,333 $ 67,310 $ 168,274 $	Adjustment and write-offs - $ 99,109) ( 99,109) ($ 3,848 $ 73,635) ($	Total
			3,086,399 $ -
			3,086,399 $
			418,842 $
			993,414 $

~187~

	Year ended December 31,2019	Year ended December 31,2019
Manufacturing of touch production 4,199,530 $ - 4,199,530 $ 1,314,664 $ 939,037 $	Others 204,286 $ 29,701 233,987 $ 51,530) ($ 108,654 $	Adjustment and write-offs - $ 29,701) ( 29,701) ($ 2,194) ($ 25,939) ($	Total
			4,403,816 $ -
			4,403,816 $
			1,260,940 $
			1,021,752 $

`(四)` Reconciliation for segment income (loss)

Sales between segments are carried out at arm’s length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.

A reconciliation of reportable segment income or loss to the income/(loss) before tax from continuing operations for the years ended December 31, 2020 and 2019 is provided as follows:

Reportable segments income/(loss) Other segments income/(loss) Total segments Non-operating income and expenses Income/(loss) before tax from continuing operations	2020 2019 347,684 $ 1,314,664 $ 71,158 53,724) ( 418,842 1,260,940 43,778 83,896) ( 462,620 $ 1,177,044 $ Year ended December 31
	2020 347,684 $ 71,158 418,842 43,778 462,620 $

~188~

`(五)` Geographical information

Year ended December 31

Non-current Revenue assets 2,096,081 $ - $ 630,552 - 359,766 11,218,652 3,086,399 $ 11,218,652 $ 2020	2019	2019
Revenue 2,096,081 $ 630,552 359,766 3,086,399 $	Revenue 3,120,698 $ 1,069,182 213,936 4,403,816 $	Non-current assets
		- $ - 15,230,825
		15,230,825 $

`(六)` Major customer information

Year ended December 31	Year ended December 31	Year ended December 31
Revenue Location 2,096,050 $ South Korea 411,899 China 2020	2019
Revenue 2,096,050 $ 411,899	Revenue 3,120,698 $ 548,141	Location
		South Korea China

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HannsTouch Solution Incorporated and subsidiaries

Loans to others

Year ended December 31, 2020

Table 1

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

Maximum outstanding balance during the year ended December 31, Balance at December 31, 2020(Note 3) Actual amount drawn down No. (Note 1) Creditor Borrower General ledger account (Note 2) Is a related party Interest rate range Nature of loan Amount of transactions with the borrower Reason for short-term financing Allowance for doubtful accounts	Collateral	Limit on loans granted to a single party	Ceiling on total loans granted	Note
	Item Value
0 HannsTouch Solution Incorporated Glory Stone Co., Ltd. Other receivables due from related parties Yes 130,000 $ 130,000 $ - $ Undetermined Necessary for short- term financing - $ Operating - $	None - $	186,926 $	1,888,219 $	Note 4, 5, 6

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1)The Company is ‘0’.
(2)The subsidiaries are numbered in order starting from ‘1’.
Note 2: Fill in the name of account in which the loans are recognised, such as receivables–related parties, current account with stockholders, prepayments, temporary payments, etc.

Note 3: The upper limit of capital loan and balance of capital loans in the end of the year are the amount approved by the Board of Directors, not actual drawn amount.

Note 4: The limit of HannsTouch Solution Incorporated loans to individual who has the needs of short-term financing shall not exceed 20% of the net asset value of latest financial statements.

Note 5: The total loans amount of HannsTouch Solution Incorporated shall not exceed 30% of net asset value.

Note 6: The limits of the company loan to Glory Stone Co. Ltd. with amount of $1.3 million and to individual were resolved by the Board of Directors on March 20, 2020.

HannsTouch Solution Incorporated and subsidiaries

Holding of marketable securities at the end of the year (not including subsidiaries, associates and joint ventures)

December 31, 2020

Table 2


Securities held by Marketable securities Relationship with the securities issuer General ledger account Table 2		Book value Ownership (%) Fair value(Note) Note EndingBalance EXCEPT AS OTHERWISE INDICATED) (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,
	Number of shares (in thousands)	Book value	Ownership (%) Fair value(Note)
HannsTouch Solution Incorporated Stock KHAM INC. None Financial assets at fair value through profit or loss YH Bio Co., Ltd. None 〞 VITA GENOMICS, INC. None 〞 Touch Cloud Inc. None 〞 Hannstar Display Corp. Other related parties Financial assets at fair value through other comprehensive income Golden Apple Investment Corporation Stock Chaiin Hotel Co., Ltd. None Financial assets at fair value through profit or loss	4 6,973 156 250 15,744 2,100	$ 200 44,229 1,432 386 193,411	0.01% $ 200 3.40% 44,229 0.26% 1,432 3.42% 386 0.57% 193,411 19.00% 9,024 $
		$239,658
		$9,024

Note: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; Fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

HannsTouch Solution Incorporated and subsidiaries

Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more

Year ended December 31, 2020

Table 3

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

Real estate disposed by	Real estate	Transaction date or date of the event(Note 3)	Date of acquisition	Book value	Disposal amount	Status of collection ofproceeds	Gains (losses) on disposal	Counterparty	Relationshipwith the seller	Reason for disposal	Basis or reference used in settingtheprice	Other commitments
The Company	1F to 3F of the plant in Tainan Science Park	November 2020	May 1, 2012~October 31, 2018	2,575,574 $	2,770,000 $	Perform the agreement by both parties	Note 4	Hannstar Display Corp.	Relationship with the counterparty	Considering the efficiency of assets usage and activating assets	Negotiated based on appraisal report and approved by the Board of Directors

Note 1: The appraisal result should be presented in the ‘Basis or reference used in setting the price’ column if the real estate disposed of should be appraised pursuant to the regulations.

Note 2: Paid-in capital referred to herein is the paid-in capital of parent company.

In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation. Note 3: Date of the event referred to herein is the date of contract signing date, date of payment, date of execution of a trading order, date of title transfer, date of board resolution, or other date that can confirm the counterparty and the monetary amount of the transaction, whichever is earlier.

Note 4: The amount of expected income from disposal is about $194,426. Actual income from disposal will be net of related expenses and will not be recorded until the transaction is completed.

HannsTouch Solution Incorporated and subsidiaries

Table 4

Information on investees

Year ended December 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

Investor	Investee	Location	Main business activities	Initial inv	estment amount	Shares held	as at Decemb	er 31,2020	Net income of investee for the year ended December 31, 2020	EXCEPT AS OTHERWI Investment income (loss) recognised by the Company for the year ended December 31, 2020	SE INDICATED) Note
				Balance as at December 31,2020	Balance as at December 31, 2019	No. of shares (in thousands)	Ownership (%)	Book value
HannsTouch Solution Incorporated	Richest Investment Ltd. Golden Apple Investment Corporation Glory Stone Co., Ltd.	Cayman Islands Taiwan Taiwan	Investment Investment Hotel business	148,434 $ 150,000 220,000	148,434 $ 150,000 220,000	4,500 15,000 22,000	100.00 100.00 42.31	- $ 134,684 214,450	- $ 15,679) ( 16,888	- $ 15,679) ( 20,885	Note 1 〞〞

Note 1: The Company’s subsidiary.

HannsTouch Solution Incorporated and subsidiaries

Information on investments in Mainland China

Year ended December 31, 2020

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Table 5
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Table 5 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED) Accumulated Amount remitted from Taiwan to Investment income amount of Mainland China/Amount remitted Net income of (loss) recognised Book value of investment income Accumulated amount of back to Taiwan for the year ended Accumulated amount of investee for the Ownership held by the Company investments in remitted back to remittance from Taiwan December 31, 2020 remittance from Taiwan year ended by the Company for the year ended Mainland China as Taiwan as of Main business Paid-in capital Investment to Mainland China as of Remitted to Remitted back to to Mainland China as of December 31, (direct or December 31, of December 31, December 31, Investee in Mainland China activities (Note 1) method January 1, 2020 Mainland China Taiwan December 31, 2020 2020 indirect) 2020 (Note 3) 2020 (Note 3) 2020 Note NanJin GuanXin Co. Ltd. Development and $ 469,950 Note 2 $ 148,434 $ - $ - $ 148,434 $ - 31.12 $ - $ - $ - production of PMMA, light guide plate and related components

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2020(Note 4)	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
HannsTouch Solution Incorporated	1,789,949 $	1,721,665 $	5,826,413 $

Note 1: Translated from historical exchange rate. Note 2: Reinvested through Richest Investment Ltd. Note 3: In 2013, the Company’s investment in NanJin GuanXin Co. Ltd. has been reduced to $0. Note 4: NTD amount was translated from historical exchange rate of actual remittance.

HannsTouch Solution Incorporated and subsidiaries

Table 6

Major shareholders information December 31, 2020

Name of major shareholders	Shares	Shares
	Name of shares held(in thousands)	Ownership (%)
Hannstar Display Corp. Huali Investment Corp.	214,639 59,440	26.60% 7.36%

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of HannsTouch Solution Incorporated

Opinion

We have audited the accompanying parent company only balance sheets of HannsTouch Solution Incorporated as at December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

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

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the parent company only financial statements section of our report. We are independent of the 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.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of HannsTouch Solution Incorporated’s 2020 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for HannsTouch Solution Incorporated’s 2020 parent company only financial statements are stated as follows:

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Key Audit Matter – Recognition of overseas warehouse operating revenue

Description

Refer to Note 4(33) for a description of accounting policy on revenue recognition in the financial statements.

The Company stores inventories in the warehouses under the custody of foreign third parties. Such inventories are checked and accepted by the custodians in order to meet the requirements of overseas sales customers. The custodians regularly send inventory reports to the Company to verify the quantity, and the Company recognizses operating revenue based on actual used inventories at the customer side which are shown in the inventory report provided by the custodians.

As the process of revenue recognition of the Company’s foreign warehouse involves numerous manual procedures, we identified the recognition of overseas warehouse operating revenue as a key audit matter.

How our audit addressed the matter:

We performed the following audit procedures on the above key audit matter:

4. Obtained an understanding and evaluated the Company’s procedures on overseas warehouse operating revenue, and selected samples to check the accuracy of operating revenue recognition.

5. Performed cutoff procedures on sales revenue from distribution warehouse recognised during a specific period before and after the period-end, including verifying delivery schedule of distribution warehouse and ensuring the movements of inventories contained in the statements and cost of goods sold had been recognised in the appropriate period; and

6. Performed confirmation for significant warehouses.

Key audit matter- Impairment assessment on investment property

Description

Refer to Notes 4(20), 5(2) and 6(11) for accounting policy applied on impairment of property, plant and equipment, accounting estimates and assumptions applied on the impairment assessment of tangible assets and details of impairment.

The Company has appointed appraisers to appraise the investment property in Taipei and to value the recoverable amount as the basis for assessing the impairment of investment property.

The recoverable amount is calculated through income approach and comparison method. The determination of the recoverable amount is subject to management judgement and uncertainty, which

~191~

could have a significant impact in assessing whether there is any impairment loss on property, plant and equipment. Thus, we considered the impairment assessment of property, plant and equipment as a key audit matter.

How our audit addressed the matter:

We understood the basis and process of management’s assessment and performed the following audit procedures in respect of the above key audit matter:

Assessed the expected future income used in the experts’ appraisal report and compared with local market price and forecast documents for the industry.
Assessed the discount rate used in the experts’ appraisal report and inspected the assumptions of cost of capital with return on similar assets in the market.
Examined the parameters of valuation model in the experts’ appraisal report and setting of formulas.

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

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

In preparing the parent company only financial statements, management is responsible for assessing HannsTouch Solution Incorporated’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 HannsTouch Solution Incorporated or to cease operations, or has no realistic alternative but to do so.

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

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

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

~192~

be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 HannsTouch Solution Incorporated’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 HannsTouch Solution Incorporated’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within HannsTouch Solution Incorporated to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

~193~

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

[Signature] [Signature] Chen, Ching Chang Lin, Chun-Yao

For and on behalf of PricewaterhouseCoopers, Taiwan March 19, 2021

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

~194~

`HANNSTOUCH SOLUTION INCORPORATED PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

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Assets Notes December 31, 2020 December 31, 2019
Current assets
1100 Cash and cash equivalents 6(1) $ 1,618,587 $ 320,390
1110 Financial assets at fair value through 6(2)
profit or loss - current 46,481 48,156
1136 Current financial assets at amortised 6(4)
cost 600,000 789
1170 Accounts receivable, net 6(5) 245,518 381,677
1180 Accounts receivable due from related 7
parties, net 73,620 29,697
1200 Other receivables 21,652 1,628
1210 Other receivables - related parties 7 485 100
130X Inventory 6(6) 198,100 176,155
1460 Non-current assets or disposal groups 6(12)
classified as held for sale, net 2,575,574 -
1476 Other current financial assets 6(7) and 8 59,390 81,751
1479 Other current assets 38,557 35,452
11XX Total current assets 5,477,964 1,075,795
Non-current assets
1517 Non-current financial assets at fair 6(3)
value through other comprehensive
income 193,411 -
1550 Investments accounted for under 6(8)
equity method 349,134 347,193
1600 Property, plant and equipment 6(9), 7 and 8 4,615,811 7,986,314
1755 Right-of-use assets 6(10) 335,723 354,506
1760 Investment property - net 6(11) and 8 5,810,132 5,729,096
1780 Intangible assets 17,128 22,985
1840 Deferred income tax assets 6(26) 324,327 421,977
1900 Other non-current assets 6(16) 598 62,327
15XX Total non-current assets 11,646,264 14,924,398
1XXX Total assets $ 17,124,228 $ 16,000,193
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(Continued)

~195~

`HANNSTOUCH SOLUTION INCORPORATED PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes December 31, 2020 6(2) `$` `1` `217` `134,500` 7 `2,486` 6(13) `342,864` 7 `2,615` `25,895` 6(10) `30,794` 6(15) `233,333` 7 `1,123,886` `1,896,591` 6(14) and 7 `900,000` 6(15) and 8 `4,526,667` 6(26) `779` 6(10) `311,971` `47,126` `5,786,543` `7,683,134` 6(18) `8,069,485` 6(19) `312,925` 6(20) `109,361` `14,100` `941,680` `(` `6,457)` `9,441,094` 9 11 `$` `17,124,228`	December 31, 2019
Current liabilities 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2280 Current lease liabilities 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity		`$` `-` `1,341` `161,727` `18` `389,981` `3,700` `-` `29,028` `600,000` `10,939`
		`1,196,734`
		`900,000` `4,160,000` `17,908` `329,244` `16,328`
		`5,423,480`
		`6,620,214`
		`8,069,485` `312,925` `12,398` `14,100` `971,071` `-`
		`9,379,979`
		`$` `16,000,193`

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

~196~

`HANNSTOUCH SOLUTION INCORPORATED`

`PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019`

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

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Year ended December 31
Items Notes 2020 2019
4000 Sales revenue 6(21) and 7 $ 2,929,250 $ 4,248,959
5000 Operating costs 6(6)(25) and 7 ( 2,294,305) ( 2,681,508)
5950 Net operating margin 634,945 1,567,451
Operating expenses 6(25) and 7
6100 Selling expenses ( 27,264) ( 52,691)
6200 General and administrative expenses ( 144,547) ( 160,164)
6300 Research and development expenses ( 40,678) ( 43,498)
6450 Reversal of impairment loss 12(2)
(impairment loss) determined in
accordance with IFRS 9 48 ( 136)
6000 Total operating expenses ( 212,441) ( 256,489)
6900 Operating profit 422,504 1,310,962
Non-operating income and expenses
7100 Interest income 6(22) 2,630 492
7010 Other income 6(23) 139,272 37,795
7020 Other gains and losses 6(24) and 7 ( 18,002) 25,121
7050 Finance costs 7 ( 93,575) ( 139,071)
7070 Share of profit (loss) of associates 6(8)
and joint ventures accounted for
using equity method, net 5,205 ( 17,926)
7000 Total non-operating income and
expenses 35,530 ( 93,589)
7900 Profit before income tax 458,034 1,217,373
7950 Income tax expense 6(26) ( 108,030) ( 199,316)
8200 Profit for the year $ 350,004 $ 1,018,057
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
8311 Actuarial gains on defined benefit 6(16)
plans $ - $ 1,803
8316 Unrealised losses from investments 6(3)
in equity instruments measured at
fair value through other
-
comprehensive income ( 8,071)
8349 Income tax related to components of 6(26)
other comprehensive income that
will not be reclassified to profit or
loss 1,614 ( 361)
8300 Other comprehensive (loss) income
for the year ($ 6,457) $ 1,442
8500 Total comprehensive income for the
year $ 343,547 $ 1,019,499
Earnings per share (in dollars) 6(27)
9750 Basic earnings per share $ 0.43 $ 1.35
9850 Diluted earnings per share $ 0.43 $ 1.35
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The accompanying notes are an integral part of these parent company only financial statements.

~197~

`HANNSTOUCH SOLUTION INCORPORATED PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

Year ended December 31, 2019 Balance at January 1, 2019 Profit for the year Other comprehensive income Total comprehensive income Proceeds from issuance of shares Balance at December 31, 2019 Year ended December 31, 2020 Balance at January 1, 2020 Profit for the year Other comprehensive loss Total comprehensive income Appropriations of 2019 earnings: Legal reserve Cash dividends Balance at December 31, 2020	`Notes` 6(18) 6(20)	`Share capital` `- common` `stock` `$ 7,369,485` `-` `-` `-` `700,000` `$ 8,069,485` `$ 8,069,485` `-` `-` `-` `-` `-` `$ 8,069,485`	`Capital Reserves`	`Capital Reserves`	`Capital Reserves`	`Capital Reserves`		`Retained Earnings` `Legal reserve` `Special` `reserve` `Unappropriate` `d retained` `earnings` `$` `12,398` `$` `14,100` `($` `48,428 )` `-` `-` `1,018,057` `-` `-` `1,442` `-` `-` `1,019,499` `-` `-` `-` `$` `12,398` `$` `14,100` `$ 971,071` `$` `12,398` `$` `14,100` `$ 971,071` `-` `-` `350,004` `-` `-` `-` `-` `-` `350,004` `96,963` `-` `(` `96,963 )` `-` `-` `(` `282,432 )` `$ 109,361` `$` `14,100` `$ 941,680`	`Retained Earnings` `Legal reserve` `Special` `reserve` `Unappropriate` `d retained` `earnings` `$` `12,398` `$` `14,100` `($` `48,428 )` `-` `-` `1,018,057` `-` `-` `1,442` `-` `-` `1,019,499` `-` `-` `-` `$` `12,398` `$` `14,100` `$ 971,071` `$` `12,398` `$` `14,100` `$ 971,071` `-` `-` `350,004` `-` `-` `-` `-` `-` `350,004` `96,963` `-` `(` `96,963 )` `-` `-` `(` `282,432 )` `$ 109,361` `$` `14,100` `$ 941,680`	`Retained Earnings` `Legal reserve` `Special` `reserve` `Unappropriate` `d retained` `earnings` `$` `12,398` `$` `14,100` `($` `48,428 )` `-` `-` `1,018,057` `-` `-` `1,442` `-` `-` `1,019,499` `-` `-` `-` `$` `12,398` `$` `14,100` `$ 971,071` `$` `12,398` `$` `14,100` `$ 971,071` `-` `-` `350,004` `-` `-` `-` `-` `-` `350,004` `96,963` `-` `(` `96,963 )` `-` `-` `(` `282,432 )` `$ 109,361` `$` `14,100` `$ 941,680`	`Unrealised` `gains` `(losses) from` `financial` `assets` `measured at` `fair value` `through other` `comprehensive` `income` `$` `-` `-` `-` `-` `-` `$` `-` `$` `-` `-` `(` `6,457 )` `(` `6,457 )` `-` `-` `($` `6,457 )`	`Total equity` `$ 7,410,090` `1,018,057` `1,442` `1,019,499` `950,390` `$ 9,379,979` `$ 9,379,979` `350,004` `(` `6,457 )` `343,547` `-` `(` `282,432 )` `$ 9,441,094`
			`Total capital` `surplus,` `additional` `paid-in` `capital` `$` `61,616` `-` `-` `-` `247,419` `$ 309,035` `$ 309,035` `-` `-` `-` `-` `-` `$ 309,035`		`Difference` `between the` `price for` `acquisition` `or disposal` `of` `subsidiaries` `and carrying` `amount` `$` `919` `-` `-` `-` `-` `$` `919` `$` `919` `-` `-` `-` `-` `-` `$` `919`		`Capital` `surplus,` `others` `$` `-` `-` `-` `-` `2,971` `$` `2,971` `$` `2,971` `-` `-` `-` `-` `-` `$` `2,971`	`Legal reserve` `$` `12,398` `-` `-` `-` `-` `$` `12,398` `$` `12,398` `-` `-` `-` `96,963` `-` `$ 109,361`		`Special` `reserve` `$` `14,100` `-` `-` `-` `-` `$` `14,100` `$` `14,100` `-` `-` `-` `-` `-` `$` `14,100`

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

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`HANNSTOUCH SOLUTION INCORPORATED`

`PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation
Expected credit (gain) loss on doubtful accounts
Amortisation
Interest expense
Interest income
Dividend income
Share-based payment
Gain on financial assets at fair value through profit or
loss
Share of profit or loss of associates and joint ventures
accounted for under equity method
Loss (gain) on disposals of property, plant and
equipment
Reversal of impairment loss recognised in profit or
loss, non-financial assets
Other income-gain on pension settlement
Other income-gain on litigation settlement
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss
Accounts receivable
Accounts receivable - related parties
Other receivables
Other receivables - related parties
Inventory
Prepaid pension
Other current assets
Changes in operating liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Cash dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities Year ended December 31
Notes
2020
2019
$
458,034
$
1,217,373
6(25)
931,517
957,066
12(2)
(
48 )
136
6(25)
6,735
6,692
93,575
139,072
6(22)
(
2,630 ) (
492 )
6(23)
-
(
4,430 )
6(17)
-
5,390
6(2)(24)
(
2,996 ) (
38,585 )
6(8)
(
5,205 )
17,926
6(24)
10,614
(
13,362 )
6(24)
(
28,698 )
-
6(23)
(
2,339 )
-
6(23)
(
39,600 )
-
4,672
86,627
136,207
(
149,525 )
(
43,923 ) (
29,697 )
(
19,756 )
37,996
(
385 )
-
(
21,945 ) (
53,478 )
-
(
813 )
(
3,105 )
3,737
(
1,124 )
279
(
27,227 )
78,671
2,468
(
55 )
8,606
56,561
125
(
1,984 )
4,944
4,529
30,798
16,328
1,489,314
2,335,962
2,362
496
-
4,430
(
87,025 ) (
132,352 )
-
(
809 )
1,404,651
2,207,727

(Continued)

~199~

`HANNSTOUCH SOLUTION INCORPORATED`

`PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in current financial assets at amortised cost
Acquisition of investments accounted for under equity
method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and
equipment
Acquisition of investment property
Decrease (increase) in other non-current assets
Decrease (increase) in other current financial assets
Financial assets at fair value through other
comprehensive incom
Dividends reveived
Advance receipts for the sale of property, plant and
equipment
Net cash flows from (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of short-term debt
Repayment of corporate bonds payable
Proceeds from long-term debt
Repayment of long-term debt
Repayment of lease liabilities
Seasoned equity offering
Exercise of employee stock options
Cash dividends paid
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year Year ended December 31
Notes
2020
2019
($
599,211 ) ($
789 )
6(8)
-
(
149,900 )
6(28)
(
73,470 ) (
124,216 )
524
13,362
6(28)
(
110,107 ) (
152,313 )
64,067
(
41 )
22,361
(
30,927 )
(
201,482 )
-
6(8)
3,264
-
7
1,108,000
-
213,946
(
444,824 )
-
(
520,000 )
(
600,000 ) (
300,000 )
600,000
-
-
(
1,788,458 )
(
37,968 ) (
36,319 )
-
902,583
-
42,417
6(20)
(
282,432 )
-
(
320,400 ) (
1,699,777 )
1,298,197
63,126
6(1)
320,390
257,264
6(1)
$
1,618,587
$
320,390

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

~200~

HANNSTOUCH SOLUTION INCORPORATED

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

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

15. History and Organisation

HannsTouch Solution Incorporated (the “Company”) was incorporated in September 1999 as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.). The Company is primarily engaged in the manufacture and sale of touch products and lease of property. The common shares of the Company have been listed on the Taiwan Stock Exchange since September 27, 2002.

The Date of Authorisation for Issuance of the Financial Statements and Procedures for Authorisation

These financial statements were authorised for issuance by the Board of Directors on March 19, 2021.

17. Application of New Standards, Amendments and Interpretations

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

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

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

Note: Earlier application from January 1, 2020 is allowed by the FSC.

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

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

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

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
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’	January 1, 2021 January 1, 2021

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

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

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

New Standards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

Amendments to IFRS 3, ‘Reference to the conceptual framework’
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, ‘Insurance contracts’
Amendments to IAS 1, ‘Classification of liabilities as current or non-
current’
Amendments to IAS 1, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Defintion of accounting estimates’
Amendments to IAS 16, ‘Property, plant and equipment: proceeds
before intended use’
Amendments to IAS 37, ‘Onerous contracts - cost of fulfilling a
contract’
Annual improvements to IFRSs 2018-2020 cycle

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

18. Summary of Significant Accounting Policies

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

`(六)` Compliance statement

The parent company only financial statements of the Company have been prepared in accordance

with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(七) Basis of preparation
A. Except for the following items, the parent company only financial statements have been prepared under the historical cost convention:
- (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (b) Financial assets at fair value through other comprehensive income.
B. The preparation of financial statements in conformity with with the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group classified’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial parent company only statements are disclosed in Note 5.
(八) Foreign currency translation

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

Foreign currency transactions and balances

A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
B. Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
C. All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘other gains and losses’.

`(九)` Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realised, or are intended to be

sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realised within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

`(十)` Cash equivalents

`(十一)` Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using settlement date accounting.
C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(十二) Financial assets at fair value through other comprehensive income
A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income:
- (a) The objective of the Company’s business model is achieved both by collecting contractual cash flows and selling financial assets; and
- (b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using settlement date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value:

The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(十三) Financial assets at amortised cost
A. Financial assets at amortised cost are those that meet all of the following criteria:
(a) The objective of the Company’s business model is achieved by collecting contractual cash flows.
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using settlement date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.
D. The Company’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.
(十四) Accounts receivable
A. Accounts receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

B. The short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(十五) Impairment of financial assets

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

`(十六)` Derecognition of financial assets

The Company derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.

`－ (十七)` Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

`(十八)` Inventories

`(十九)` Non-current assets held for sale (or disposal groups)

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use, and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

`(二十)` Investments accounted for using equity method

A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
B. Unrealised gains on transactions between the Company and its subsidiaries are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company recognise loss continuously in proportion to its ownership.
D. Pursuant to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation.
(二十一) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and

Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures 3~35 years Machinery equipments 3~10 years Furniture and fixtures 2~5 years Other equipments 2~10 years

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

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:
(a) Fixed payments, less any lease incentives receivable;
(b) Variable lease payments that depend on an index or a rate; and
(c) Amounts expected to be payable by the lessee under residual value guarantees.

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

C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
(a) The amount of the initial measurement of lease liability;
(b) Any lease payments made at or before the commencement date; and
(c) Any initial direct costs incurred by the lessee.

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

`(二十三)` Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 25 years.

`(二十四)` Intangible assets

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 2 to 6 years.

`(二十五)` Impairment of non-financial assets

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

`(二十六)` Borrowings

A. Borrowings comprise long-term and short-term bank borrowings and other long-term and shortterm loans. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

`(二十七)` Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term accounts and notes payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

`(二十八)` Financial liabilities at fair value through profit or loss

A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges.
B. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.
C. If the credit risk results in fair value changes in financial liabilities designated as at fair value through profit or loss, they are recognised in other comprehensive income in the circumstances other than avoiding accounting mismatch or recognising in profit or loss for loan commitments or financial guarantee contracts.

`(二十九)` Bonds payable

Ordinary corporate bonds issued by the Company are initially recognised at fair value less transaction costs. Any difference between the proceeds (net of transaction costs) and the redemption value is presented as an addition to or deduction from bonds payable, which is amortised to profit or loss over the period of bond circulation using the effective interest method as an adjustment to ‘finance costs’.

`(三十)` Derecognition of financial liabilities

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

`(三十一)` Non-hedging derivatives

`(三十二)` Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, as a deduction of sales revenue in the period when related products are sold.

`(三十三)` Employee benefits

A. Short-term employee benefits

B. Pensions
(a) Defined contribution plan

(b) Defined benefit plan

i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date).
ii. Remeasurements arising on defined benefit plan is recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

iii. Past service costs are recognised immediately in profit or loss.

C. Employees’ compensation and directors’ remuneration

- `(三十四)` Employee share based payment

`(三十五)` Income taxes

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. Deferred tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.
(三十六) Share capital

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

`(三十七)` Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Group’s shareholders. Cash dividends are recorded as liabilities.

`(三十八)` Revenue recognition

A. Sales of goods

(a) The Company manufactures and sells touch panel and related products. Sales are recognised when control of the products has transferred, being when the products are delivered to the buyer, the buyer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the buyer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the buyer, and either the buyer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

(b) Sales revenue of products was recognised based on the contract price net of sales returns and discount. The sales returns and discounts are estimated based on the anticipated annual sales quantities. Accumulated experience is used to estimate and provide for the sales returns and discounts, using the anticipated annual sales quantities, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognised for expected sales returns and discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the control was transferred with a credit term of 60 days, which is consistent with market practice.
(c) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

B. Leases

The Company is engaged in the leasing of certain property classified as operating leases based on the lease condition. The lease payments received during the leasing period on a straight line basis are recognised as property lease income.

`(三十九)` Government grants

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

19. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

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

`(四十)` Critical judgements in applying the Company’s accounting policies

Investment property

The Company uses a portion of the property for its own use and another portion to earn rentals or for capital appreciation. When these portions cannot be sold separately and cannot be leased out separately under a finance lease, the property is classified as investment property only if the own-use portion accounts for the immaterial property.

`(四十一)` Critical accounting estimates and assumptions

A. Impairment assessment of tangible assets

The Company assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of company strategy might cause material impairment on assets in the future.

B. Realisability of deferred tax assets

As of December 31, 2020, the Company recognised deferred tax assets amounting to $324,327.

20. Details of Significant Accounts

(四十二) Cash and cash equivalents

`十二)`Cash and cash equivalents
Checking accounts and demand deposits Time deposits	December 31,2020 218,587 $ 1,400,000 1,618,587 $	December 31,2019
		200,390 $ 120,000
		320,390 $

A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. Certain cash and cash equivalents which were pledged as collaterals and restricted have been transferred to other financial assets. Please refer to Notes 6(7) and 8 for details.

(四十三) Financial assets/liabilities at fair value through profit or loss

Items Current items: Financial assets mandatorily measured at fair value through profit or loss Listed stocks Unlisted stocks Non-hedging derivatives Revaluation – gross Total Financial liabilities mandatorily measured at fair value through profit or loss Non-hedging derivatives	December 31,2020 216 $ 40,332 234 40,782 $ 5,699 46,481 $ 1 $	December 31,2019
		- $ 40,332 927
		41,259 $ 6,897
		48,156 $
		- $

A. The nature of financial assets and liabilities at fair value through profit or loss are as follows:
(a) Equity instruments: including listed, unlisted and emerging stocks.
(b) Derivative instruments: including forward foreign exchange contracts and foreign exchange options.
B. Amounts recognised in profit or loss in relation to financial assets/liabilities at fair value through profit or loss are listed below:

		Year ended December	Year ended December	31
		2020		2019
Financial assets mandatorily measured at fair
value through profit or loss
Equity instruments	($	1,198)	$		36,911
Derivative instruments		4,194			1,674
	$	2,996	$		38,585

C. The Company entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below:

Derivative financial instruments Presale forward exchange contracts -Sell USD and buy NTD -Sell USD and buy JPY	December 31,2020	December 31,2020
	(Notionalprincipal) (In thousands) USD 4,000 $ USD 200 Contract amount	Contractperiod
		2020/12/8-2021/2/5 2020/12/25-2021/1/28

Derivative financial instruments Presale forward exchange contracts -Sell USD and buy NTD Option contract -Put options	December 31,2019	December 31,2019
	(Notionalprincipal) (In thousands) USD 5,000 $ USD 2,000 $ Contract amount	Contractperiod
		2019/12/13-2020/2/3 2019/12/9-2020/1/9

The Company entered into forward foreign exchange contracts to sell to hedge exchange rate risk. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

D. The Company has no financial assets at fair value through profit or loss pledged to others as collateral.
E. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

(四十四) Financial assets at fair value through other comprehensive income

Items Non-current items: Equity instruments Listed stocks Revaluation – gross	December 31,2020 201,482 $ 8,071) ( 193,411 $	December 31,2019
		- $ -
		- $

A. The Company has selected to classify the stock investments that are considered to be steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $193,411 as of December 31, 2020.
B. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income	Year ended December 31	Year ended December 31
	2020 8,071) ($	2019
		- $

C. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).

`(四十五)` Financial assets at amortised cost

Items Current items: Time deposits with maturity over three months Bills with repurchase agreement	December 31,2020 430,000 $ 170,000 600,000 $

A. For the years ended December 31, 2020 and 2019, interest income arising from time deposits with maturity over three months held by the Company amounted to $424 and $1, respectively.
B. The Company has no financial assets at amortised cost pledged to others as collateral.
C. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

`(四十六)` Accounts receivable

	December	31,2020	December	31,2019
Accounts receivable	$	266,410	$	422,176
Less: Allowance for sales returns and discounts	(	20,803)	(	40,362)
Loss allowance	(	89)	(	137)
	$	245,518	$	381,677

A. The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Not past due Up to 30 days	December 31,2020 266,410 $ - 266,410 $	December 31,2019
		420,813 $ 1,363
		422,176 $

The above ageing analysis was based on past due date.

B. As of December 31, 2020 and 2019, accounts receivable was all from contracts with customers.
C. The Company has no accounts receivable pledged as collaterals.
D. Information relating to credit risk of accounts receivable is provided in Note 12(2).

`(四十七)` Inventories

Raw materials Work in progress Finished goods Raw materials Work in progress Finished goods		December 31,2020
	Allowance for Cost valuation loss 62,886 $ 12,264) ($ 30,204 133,337 16,063) ( 226,427 $ 28,327) ($ December 31,2019		Book value
			50,622 $ 30,204 117,274
			198,100 $

	Allowance for Cost valuation loss 56,370 $ 8,948) ($ 31,136 - 104,319 6,722) ( 191,825 $ 15,670) ($		Book value
			47,422 $ 31,136 97,597
			176,155 $

The cost of inventories recognised as expense for the year:

Cost of goods sold Unallocated overhead expense Loss on decline in market value Scrapped inventory	Year ended December 31	Year ended December 31
	2020 1,977,867 $ 299,522 12,657 4,259 2,294,305 $	2019
		2,636,163 $ 30,471 7,308 7,566
		2,681,508 $

`(四十八)` Other current financial assets

Time deposits pledged Restricted bank deposits	December 31,2020 38,489 $ 20,901 59,390 $	December 31,2019
		38,741 $ 43,010
		81,751 $

Refer to Note 8 for further information on other current financial assets pledged to others as collateral.

`(四十九)` Investments accounted for using equity method

At January 1 Addition of investments accounted for using equity method Share of profit or loss of investments accounted for using equity method Earnings distribution of investments accounted for using equity method At December 31 Subsidiaries Glory Stone Co., Ltd. Golden Apple Investment Corporation	2020 2019 347,193 $ 215,219 $ - 149,900 5,205 17,926) ( 3,264) ( - 349,134 $ 347,193 $ December 31,2020 December 31,2019 214,450 $ 193,566 $ 134,684 153,627 349,134 $ 347,193 $

Please refer to Note 4(3) in the consolidated financial statements for the year ended December 31, 2020 for the information regarding the Company’s subsidiaries.

`(五十)` Property, plant and equipment

												Unfinished
											construction and
		Buildings and		Machinery and		Furniture and					equipment under
		structures		equipment		fixtures		Other	equipment			acceptance		Total
January 1, 2020
Cost	$	9,102,693	$	8,057,766	$	10,247	$		63,169	$		148,433	$	17,382,308
Accumulated depreciation
and impairment	(	3,110,519)	(	6,224,940)	(	3,142)	(		57,393)			-	(	9,395,994)
	$	5,992,174	$	1,832,826	$	7,105	$		5,776	$		148,433	$	7,986,314
2020
At January 1	$	5,992,174	$	1,832,826	$	7,105	$		5,776	$		148,433	$	7,986,314
Additions		-		-		-			-			47,001		47,001
Disposals	(	10,454)	(	684)		-			-			-	(	11,138)
Reclassifications (Note 2)	(	2,412,551)		19,437		1,316			2,126	(		186,778)	(	2,576,450)
Depreciation	(	413,398)	(	441,941)	(	1,626)	(		1,649)			-	(	858,614)
Reversal of impairment loss
(Note 3)		28,698		-		-			-			-		28,698
At December 31 December 31, 2020	$	3,184,469	$	1,409,638	$	6,795	$		6,253	$		8,656	$	4,615,811
Cost	$	5,364,819	$	8,075,148	$	11,563	$		65,123	$		8,656	$	13,525,309
Accumulated depreciation
and impairment	(	2,180,350)	(	6,665,510)	(	4,768)	(		58,870)			-	(	8,909,498)
	$	3,184,469	$	1,409,638	$	6,795	$		6,253	$		8,656	$	4,615,811

January 1, 2019 Cost Accumulated depreciation and impairment 2019 At January 1 Additions Reclassifications Depreciation At December 31 December 31, 2019 Cost Accumulated depreciation and impairment	Buildings and structures 9,090,287 $ 2,680,673) ( 6,409,614 $ 6,409,614 $ - 12,406 429,846) ( 5,992,174 $ 9,102,693 $ 3,110,519) ( 5,992,174 $	Machinery and equipment 9,071,853 $ 6,797,636) ( 2,274,217 $ 2,274,217 $ - 25,957 467,348) ( 1,832,826 $ 8,057,766 $ 6,224,940) ( 1,832,826 $	Furniture and fixtures 7,584 $ 1,865) ( 5,719 $ 5,719 $ 857 1,806 1,277) ( 7,105 $ 10,247 $ 3,142) ( 7,105 $	Unfinished construction and equipment under Other equipment acceptance Total 83,252 $ 101,003 $ 18,353,979 $ 75,855) ( - 9,556,029) ( 7,397 $ 101,003 $ 8,797,950 $ 7,397 $ 101,003 $ 8,797,950 $ - 98,012 98,869 92 50,582) ( 10,321) ( 1,713) ( 900,184) ( 5,776 $ 148,433 $ 7,986,314 $ 63,169 $ 148,433 $ 17,382,308 $ 57,393) ( - 9,395,994) ( 5,776 $ 148,433 $ 7,986,314 $

Note 1: Refer to Note 8 for further information on property, plant and equipment pledged to others as collateral.
Note 2: On November 5, 2020, the Company considered the efficiency of assets and the utilization of assets, and decided to dispose 1F to 3F of the plant located in Southern Taiwan Science Park after the resolution of the Board of Directors. Accordingly, the related assets were transferred into ‘disposal group held for sale’ in the amount of $2,575,574. Please refer to Note 6(12) for details.

Note 3: A gain on reversal of impairment loss on certain properties amounting to $28,698 was recognised from the difference between the carrying amount and recoverable amount which was shown as other gains and losse s. Please refer to Note 12(3) for related fair value information.

`－ (五十一)` Lease transactions lessee

A. The Company leases various assets including land, machinery and business vehicles. Rental contracts are typically made for periods of 3 to 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. Short-term leases with a lease term of 12 months or less comprise office and parking lot. Lowvalue assets comprise foreign warehouse and dormitory.
C. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Transportation equipment (Business vehicles) Other equipment Land Transportation equipment (Business vehicles) Other equipment	December 31,2020 December 31,2019 Book value Book value 325,143 $ 342,069 $ 64 192 10,516 12,245 335,723 $ 354,506 $ Year ended December 31	December 31,2019
		Book value
		342,069 $ 192 12,245
		354,506 $
	2020 Depreciation expense 31,605 $ 128 1,729 33,462 $	2019
		Depreciation expense
		30,304 $ 128 1,729
		32,161 $

D. The movements of right-of-use assets of the Company during the 2020 and 2019 are as follows:

					2020	2020
				Transportation
					equipment		Other
					(Business		equipment
		Land			vehicles)		(Tank)		Total
At January 1	$	342,069	$		192	$	12,245	$	354,506
Depreciation	(	31,605)	(		128)	(	1,729)	(	33,462)
Contracts changed		14,679			-		-		14,679
At December 31	$	325,143	$		64	$	10,516	$	335,723

At January 1 Additions Depreciation At December 31		2019	2019	Total - $ 386,667 32,161) ( 354,506 $
	Land - $ 372,373 30,304) ( 342,069 $	Transportation equipment (Business vehicles) - $ 320 128) ( 192 $	Other equipment (Tank) - $ 13,974 1,729) ( 12,245 $

E. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets	2020 2019 7,939 $ 8,261 $ 2,458 2,548 2,551 3,865 Year ended December 31
	2020 7,939 $ 2,458 2,551

F. For the years ended December 31, 2020 and 2019, the Company’s total cash outflow for leases were $42,977 and $42,732, respectively.

`(五十二)` Investment property

January 1, 2020 Cost Accumulated depreciation 2020 At January 1 Additions Reclassifications Depreciation At December 31 December 31, 2020 Cost Accumulated depreciation	Land 4,974,140 $ - 4,974,140 $ 4,974,140 $ - - - 4,974,140 $ 4,974,140 $ - 4,974,140 $	Buildings and Unfinished construction and equipment under structures acceptance 821,143 $ - $ 66,187) ( - ( 754,956 $ - $ 754,956 $ - $ - 120,477 120,477 120,477) ( 39,441) ( - ( 835,992 $ - $ 941,620 $ - $ 105,628) ( - ( 835,992 $ - $	Total
			5,795,283 $ 66,187)
			5,729,096 $
			5,729,096 $ 120,477 - 39,441)
			5,810,132 $
			5,915,760 $ 105,628)
			5,810,132 $

January 1, 2019 Cost Accumulated depreciation 2019 At January 1 Additions Reclassifications Depreciation At December 31 December 31, 2019 Cost Accumulated depreciation	Land 4,974,140 $ - 4,974,140 $ 4,974,140 $ - - - 4,974,140 $ 4,974,140 $ - 4,974,140 $	Buildings and Unfinished construction and equipment under structures acceptance 539,060 $ 140,224 $ 41,466) ( - 497,594 $ 140,224 $ 497,594 $ 140,224 $ - 141,859 282,083 282,083) ( 24,721) ( - 754,956 $ - $ 821,143 $ - $ 66,187) ( - 754,956 $ - $	Total 5,653,424 $ 41,466) ( 5,611,958 $ 5,611,958 $ 141,859 - 24,721) ( 5,729,096 $ 5,795,283 $ 66,187) ( 5,729,096 $

A. Rental income from investment property and direct operating expenses arising from investment property are shown below:

Rental income from investment property Direct operating expenses arising from the investment property that generate rental income during the year Direct operating expenses arising from the investment property that did not generate rental income during the year	Year ended December 31	Year ended December 31
	2020 155,075 $ 80,258 $ - $	2019
		49,429 $
		17,235 $
		35,897 $

B. The fair value of the investment property held by the Company as at December 31, 2020 and 2019 was $6,483,563 and $6,570,652, respectively, which was valued using the actual price registration. In addition, there was no significance difference between the fair value on December 31, 2020 and the assessment result of the fair value on March 19, 2021 under management’s assessment.

C. Amount of borrowing costs capitalised as part of investment property and the interest rate for such capitalisation are as follows:

Amount capitalised Interest rate for capitalisation	Year ended December 31	Year ended December 31
	2020 - $ -	2019
		1,689 $ 1.45%

D. Information about the investment property that was pledged to others as collateral is provided in Note 8.

(五十三) Non-current assets held for sale and discontinued operations

On November 5, 2020, the Company considered the efficiency and utilization of assets, and decided to dispose the 1F to 3F of the plant in Southern Taiwan Science Park after the resolution of the Board of Directors. The disposal transaction amount was $2,770,000. As of December 31, 2020, the disposal proceeds received in advance amounted to $1,108,000 (shown as other current liabilities, other) and the related assets were transferred as ‘disposal group held for sale’.

Further, in February 2021, the Company collected additional proceeds from the disposal amounting to $554,000.

Assets of disposal group held for sale:

Property, plant and equipment

December 31,2020 2,575,574 $	December 31,2019
	- $

`(五十四)` Other payables

Salary and bonus payable Repairs and maintenance expense payable Business tax payable (Note) Payables for machinery and equipment Utility expenses payable Import/export (customs) expense payable Others	December 31,2020 84,682 $ 66,358 61,287 36,583 19,922 2,311 71,721 342,864 $	December 31,2019
		122,010 $ 81,867 1,405 92,282 20,354 10,892 61,171
		389,981 $

Note: As of December 31, 2020, the Company has collected proceeds in advance from the disposal of 1F to 3F of the plant in Southern Taiwan Science Park and reported the related business tax. Please refer to Note 6(12) for further information.

`(五十五)` Bonds payable

Bonds payable Less: Maturity within one year	December 31,2020 900,000 $ - 900,000 $	December 31,2019 1,500,000 $ 600,000) ( 900,000 $

A. In order to fulfill working capital, the Board of Directors resolved to issue the first private unsecured bonds on October 27, 2017, and completed the collection on November 10, 2017. Please refer to Note 7(2)J. The terms and conditions of the private bonds were as follows:
(a) Issuance amount: NT$1.8 billion
(b) Face value: NT$10 million
(c) Issuance price: Issued at full amount of face value and divided into A, B and C bonds. The amounts were NT$300 million, NT$600 million and NT$900 million, respectively.
(d) The time limit of issuance: the issuance period for A bond is 2 years from November 28, 2017 to November 28, 2019. The issuance period for B bond is 3 years from November 28, 2017 to November 28, 2020. The issuance period for C bond is 5 years from November 28, 2017 to November 28, 2022.
(e) The interest rate of bond and payments of interest: The interest rate of A bond is 2.1%, the interest rate of B bond is 2.2% and the interest rate of C bond is 2.3%. The simple interest is calculated and paid per half year starting from the issuance date.
(f) The repayment date and method: repayable at once on the maturity date.
(g) Redemption Right of the Company: The Company could exercise the right of redemption on all or part of bond from the redemption date, 14[th] of each month starting from 5 months before maturity date for bond A, 6 months for bond B and 1 year for bond C. However, the exercise amount shall be NT$10 million or multiples of NT$10 million. When exercising the redemption right mentioned above, the Group must send redemption notice to each debtor for redemption amount one month before the redemption date.
(h) Put option of bondholder: The bondholders can exercise put options on the 14th of each month (redemption date) starting from 5 months before the maturity date for bond A, starting from 6 months before the maturity date for bond B and starting from 1 year before the maturity date for bond C. However, the exercise amount shall be exactly NT$10 million or multiples of NT$10 million. When the bondholder exercises the aforementioned put options, the bondholder shall give the Company the bond sales notice for sell amount within one month before the sell date.
(i) Secure method: None.
B. The Company transferred current bonds payable as long-term liabilities, current portion based on the liquidity. On December 31, 2020 and 2019, the amounts were $0 and $600,000, respectively.

- `(五十六)` Long term borrowings

Borrowing period and repayment term Land and buildings on Yixian Road, Sec. 2 pledged as collateral for borrowings NTD borrowings from Land Bank: the borrowing period is 15 years and interest is payable monthly for the first 3 years, principal is payable quarterly starting from the 4th year until May 2033 (Note). Unsecured borrowings Borrowing from Taishin Bank: the borrowing period is 3 years and is payable on the maturity date. Borrowing from Taipei Fubon Bank (Anhe Branch): 12 months starting from the first drawdown date is the grace period, and principal is payable every 6 months after the grace period into 5 installments at 20% per installment. Less: Current portion (including unamortised long-term borrowing cost) Borrowing, period and repayment term Land and buildings on Yixian road 2nd sec. pledged as collateral for borrowing NTD borrowings from Land Bank: the borrowing period is 15 years and interest is payable monthly for the first 3 years, principal is payable quarterly starting from the 4th year until May 2033 (Note).	Coupon Rate 1.20% 1.57% 1.56% ( Coupon Rate 1.45%	December 31,2020 4,160,000 $ 300,000 300,000 4,760,000 233,333) 4,526,667 $ December 31,2019 4,160,000 $

Note: The Company has pledged certain property, plant and equipment as collateral for the above borrowing.

On May 8, 2018, the Company entered into a syndicated loan for 15 years with Land Bank, for a facility of $4.16 billion with land and buildings on Yixian Rd., Sec. 2 as collateral.

`(五十七)` Pensions

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

the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

(b) In April 2020, employees covered under the aforementioned pension plan have reached an agreement with the Company to clear the service years under the old pension, and settled the pension fund with the Bank of Taiwan. The remaining fund balance has been returned to the Company.
(c) The amounts recognised in the balance sheet are as follows:

	December	31,2019
Present value of defined benefit obligations	($	716)
Fair value of plan assets		62,427
Net defined benefit asset	$	61,711

(d) Movements in net defined benefit assets are as follows:

Present value of defined benefit 0 obligations 2020 At January 1 716) ($ Clear the service years of old pension 716 At December 31 - $	Fair value of planassets 62,427 $ 62,427) ( - $	Net defined benefit asset 61,711 $ 61,711) ( - $

Present value of defined benefit 0 obligations 2019 At January 1 621) ($ Interest (expense) income 9) ( 630) ( Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) - Change in demographic assumptions 8) ( Change in financial assumptions 49) ( Experience adjustments 29) ( 86) ( At December 31 716) ($	Fair value of Net defined plan assets benefit asset 59,716 $ 59,095 $ 822 813 60,538 59,908 1,889 1,889 - 8) ( - 49) ( - 29) ( 1,889 1,803 62,427 $ 61,711 $

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

Discount rate Future salary increases	Year ended December 31,2019
	1.000%
	2.00%

Assumptions regarding future mortality rate were estimated to be 10% in accordance with

the 5th version of Taiwan Standard Ordinary Experience Mortality Table.

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

December 31, 2019 Effect on present value of defined benefit obligation	Increase 0.25% Decrease 0.25% 34) ($ 35 $ Discount rate	Increase 0.25% Decrease 0.25% 35 $ 33) ($ Future salaryincreases
	Increase 0.25% 34) ($	Increase 0.25% 35 $

The methods used in preparing the sensitivity analysis did not change compared to the previous period.

B. Defined contribution plan

(a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
- (b) The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2020 and 2019 were $11,331 and $10,036, respectively.
(五十八) Share-based payment
A. For the years ended December 31, 2020 and 2019, the Company’s share-based payment arrangements were as follows:

Type of arrangement Cash capital increase reserved for employee preemption	Grant date 2019/8/12	Quantity granted (in thousands) 7,000	Contract period -	Vesting conditions
				Vested immediately

The abovementioned share-based payment arrangements are equity-settled.

B. Details of the share-based payment arrangements are as follows:

			2019	2019
					Weighted-average
			No. of options		exercise price
			(in thousands)		(in dollars)
Options	outstanding at January 1		-	$	-
Options	granted		7,000		13.5
Options	exercised	(	3,142)		13.5
Options	expired	(	3,858)		13.5
Options	outstanding at December 31		-
Options	exercisable at December 31		-		-

C. The weighted-average stock price of stock options at exercise dates for the year ended December 31, 2019 was $14.05.
D. The fair value of stock options granted on grant date is measured using the Black-Scholes optionpricing model. Relevant information is as follows:

Type of arrangement Cash capital increase reserved for employee preemption	Grant date 2019/8/12	Share price $ 14.05	Exercise price 13.50 $	Expected price volatility 50.49%	Expected option life 9 days	Risk-free interest rate 0.49%	Fair value per unit
							0.77 $

Note: Expected price volatility rate was estimated using the stock prices of the most recent period with length of this period approximate to the length of the stock options’ expected life, and the standard deviation of return on the stock during this period.

E. Expenses incurred on share-based payment transactions are shown below:

Cash capital increase reserved for employee preemption	Year ended December 31,2019
	5,390 $

`(五十九)` Share capital

A. As of December 31, 2020, the Company’s authorized capital was $20,000,000, consisting of 2 billion shares, and the paid-in capital was $8,069,485 with a par value of $10 (in dollars) per share.

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

At January 1 Cash capital increase At December 31	2020 806,949 - 806,949	2019
		736,949 70,000
		806,949

B. In order to repay liabilities, fulfill working capital, improve financial structure or strategic alliance to develop related business, the shareholders on May 30, 2014, resolved to increase capital in cash through private placement or public offering and issue common shares up to a maximum of 700 million shares or increase capital through the issuance of global depository receipts (including private placement of common shares not to exceed 300 million shares), with a par value of $10 per share. On July 8, 2014, the Board of Directors of the Company resolved to increase capital in cash through private placement of 281,690 thousand common shares with a discounted price of $7.10 per share, totaling $1,999,999. The effective date of private placement was July 22, 2014, and the purpose of capital increase was for additional working capital. Pursuant to the Securities and Exchange Act, the ordinary shares raised through the private placement are subject to certain transfer restrictions and cannot be listed on the stock exchange until three years after they have been issued and have been offered publicly. Other than these restrictions, the rights and obligations of the ordinary shares raised through the private placement are the same as other issued ordinary shares. On May 8, 2020, the Board of Directors of the Company resolved to apply for additional public offering and listed transaction, and submitted the related data to the authority on July 24, 2020. The effective date of the letter from the authority was August 4, 2020, and the stock has been listed in the security market.
C. In order to promote the development of strategy alliance, improve financial structure, fulfill working capital, and repay liabilities, the Company's shareholders, on June 16, 2020, resolved to increase capital in cash and issue common shares up to 70 million shares or increase capital through the issuance of global depository receipts. The Company will choose one or both methods, at a par value of NT$10 per share.

`(六十)` Capital surplus

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

`(六十一)` Retained earnings

A. Under the Company’s Articles of Incorporation, the annual earnings, if any, shall first be used to pay all taxes and offset accumulated deficit and then 10% of the remaining amount shall be set

aside as legal reserve until the legal reserve equals the paid-in capital. Except for the distribution of cash dividends and bonus which the Board of Directors are authorised to resolve and then report to shareholders, others will be proposed by the Board of Directors and approved by the shareholders.

B. According to the Articles of Incorporation, the Company shall consider to appropriate all of current undistributed earnings based on finance, business, operation and other factors. The appropriation of earnings can be in the form of cash dividend or stock dividend separately or both. The ratio of cash dividend shall not be lower than 20% of the total dividends distributed.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 20% of the Company’s paid-in capital.
D. On March 19, 2021, the Board of Directors during its meeting resolved the following:

		Year ended December 31,2020	Year ended December 31,2020
			Dividends
			per share
		Amount	(in dollars)
Legal reserve	$	35,000
Reversal of special reserve	(	7,643)
Cash dividends		314,710	$	-
	$	342,067

E. On June 16, 2020, the appropriation of 2019 earnings resolved by the shareholders is as follows. In addition, as the Company had accumulated deficit as of December 31, 2018, no available earnings can be distributed.

Legal reserve Cash dividends	Year ended December 31,2019	Year ended December 31,2019
	Amount 96,963 $ 282,432 379,395 $	Dividends per share (in dollars)
		0.35 $

`(六十二)` Operating revenue

Revenue from contracts with customers Touch sensors and related products Rental revenue from property	Year ended December 31	Year ended December 31
	2020 2,774,175 $ 155,075 2,929,250 $	2019
		4,199,530 $ 49,429
		4,248,959 $

Disaggregation of revenue from contracts with customers

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

Revenue from external customer contracts South Korea China Taiwan	Year ended December 31	Year ended December 31
	2020 2,096,081 $ 630,552 202,617 2,929,250 $	2019
		3,120,698 $ 1,069,182 59,079
		4,248,959 $

`(六十三)` Interest income

Interest income from bank deposits Interest income from financial assets measured at amortised cost Other interest income Interest income	Year ended December 31	Year ended December 31
	2020 2,201 $ 424 5 2,630 $	2019
		487 $ 1 4
		492 $

`(六十四)` Other income

Revenue from purchasing masks on behalf of others Rent income Dividend income Income from settlement of old pension fund Government grant revenues (Note 1) Other income (Note 2)	Year ended December 31	Year ended December 31
	2020 9,741 $ 22,971 - 2,339 51,005 53,216 139,272 $	2019
		11,605 $ 2,017 4,430 - 14,137 5,606
		37,795 $

Note 1: The Company obtained the plan of AOI intelligent detection feedback system to enhance the output value of touch sensor and A+ Industrial innovative R&D program to support big size Micro LED Display technique. The development time of this plan was 17~24 months. For the years ended December 31, 2020 and 2019, the grant revenue recognised based on execution stage were $16,480 and $14,137, respectively. Further, as the Company was affected by COVID-19, the Company applied for economic relief package and recognised grant revenue in the amount of $34,525 for the year ended December 31, 2020.
Note 2: The dispute between the Company and PAI CHUNG ENGINEERING CO., LTD. (PAI CHUNG ENGINEERING) has been concluded by the Taiwan Taipei District Court in September 2020. Accordingly, the Company transferred other payable to PAI CHUNG ENGINEERING amounting to $39,600 as other income based on the judgement.

`(六十五)` Other gains and losses

		Year ended December	Year ended December	31
		2020		2019
(Losses) gains on disposals of property, plant	($	10,614)	$		13,362
and equipment
Reversal of impairment loss on non-financial
assets (Note)		28,698			-
Gains on financial instruments at fair value
through profit or loss		2,996			38,585
Net foreign exchange losses	(	33,112)	(		14,588)
Other losses	(	5,970)	(		12,238)
	($	18,002)	$		25,121

Note: Please refer to Note 6(9) for the related information.

`(六十六)` Employee benefit expense and expenses by nature

Employee benefit expense Salary expenses Labour and health insurance fees Pension costs Directors' remuneration Other personnel expenses Depreciation expense Amortisation charge	Year ended December 31,2020	Year ended December 31,2020	Year ended December 31,2020
	Operatingcosts 161,969 $ 16,471 7,470 - 20,949 926,852 3,575	Operatingexpenses 91,935 $ 6,596 3,861 8,400 12,216 4,665 3,160	Total
			253,904 $ 23,067 11,331 8,400 33,165 931,517 6,735

Employee benefit expense Salary expenses Labour and health insurance fees Pension costs Directors' remuneration Other personnel expenses Depreciation expense Amortisation charge	Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
	Operatingcosts 190,335 $ 14,883 6,979 - 27,101 953,520 4,301	Operatingexpenses 93,519 $ 5,299 2,244 23,742 15,316 3,546 2,391	Total
			283,854 $ 20,182 9,223 23,742 42,417 957,066 6,692

As of December 31, 2020 and 2019, the Company had 341 and 324 employees, respectively. There were 6 non-employee directors for both years.

For the years ended December 31, 2020 and 2019, the average employee benefits were $960 and $1,118, respectively, the average salary expenses were $758 and $893, respectively, and the average change in adjustments on salary expenses was (15.12%). In addition, the Company had established the audit committee to replace supervisors, thus no remuneration was paid to supervisors.

The Company’s salary and remuneration policy for directors, managers and employees is as follows:

a. Employees’ salary standard is determined based on job responsibility, education and experience, professional knowledge and skill and their professional seniority. Salary and remuneration shall not be based on the employees’ age, gender, race, religion, political affiliation and civil status.
b. Bonus will be distributed based on the Company’s operating performance and employees’ individual performance.
c. Employees’ compensation is determined based on the job grade, performance and years of service.
d. Salary increase is determined based on the Company’s operating condition, taking into

consideration domestic economic growth rate, price index and salary increases within the same industry and the individual performance.

e. Directors’ and managers’ remuneration and employees’ compensation are discussed by the remuneration committee and proposed to the Board of Directors for approval.
A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall be between 0.001% and 15% for employees’ compensation and shall not be higher than 2% for directors’ remuneration.
B. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at $25,020 and $59,364, respectively; while directors’ remuneration was accrued at $6,000 and $17,128, respectively. The aforementioned amounts were recognised in salary expenses.

Employees’ compensation and directors’ remuneration for 2019 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2019 financial statements.

C. Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.
(六十七) Income taxes
A. Income tax expense
- (a) Components of income tax expense:

Current tax: Current tax on profits for the year Tax on undistributed earnings Prior year income tax underestimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expenses	Year ended December 31	Year ended December 31
	2020 - $ 25,895 - 25,895 82,135 108,030 $	2019
		- $ - 809
		809
		198,507
		199,316 $

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

Remeasurement of defined benefit obligations Changes in fair value of financial assets at fair value through other comprehensive income ( (	Year ended December 31	Year ended December 31
	2020 - $ 1,614) 1,614) $	2019
		361 $ -
		361 $

B. Reconciliation between income tax expense and accounting profit

		Year ended December	Year ended December	31
		2020		2019
Income tax calculated by applying statutory	$	85,382	$	176,910
rate to the profit before tax
Expenses disallowed by tax regulation		17		3,589
Tax exempt income by tax regulation	(	3,264)	(	3,850)
Temporary differences not recognised as
deferred tax assets		-		21,858
Tax on undistributed earnings		25,895		-
Prior year income tax under estimation		-		809
Income tax expenses	$	108,030	$	199,316

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

Recognised in Recognised in other comprehensive AtJanuary1 profit or loss income At December 31 Temporary differences: Provisions 8,072 $ 3,911) ($ - $ 4,161 $ Impairment loss 37,763 24,450) ( - 13,313 Loss on obsolete inventories / Inventory valuation loss 3,134 2,532 - 5,666 Unrealised loss on valuation of financial instruments - - 1,614 1,614 Unrealised exchange loss 271 271) ( - - Loss carryforward 372,737 73,164) ( - 299,573 421,977 99,264) ( 1,614 324,327 `－`Deferred tax liabilities: Temporary differences: Defined benefit plan 8,025) ( 8,025 - Unrealised gain on valuation of financial instruments 9,883) ( 9,110 - 773) ( Unrealised exchange gain - 6) ( - 6) ( 17,908) ( 17,129 - 779) ( Total 404,069 $ 82,135) ($ 1,614 $ 323,548 $ Recognised in Recognised in other comprehensive At January1 profit or loss income At December 31 Temporary differences: Provisions 3,636 $ 4,436 $ - $ 8,072 $ Impairment loss 195,213 157,450) ( - 37,763 Loss on obsolete inventories / Inventory valuation loss 1,672 1,462 - 3,134 Unrealised loss on valuation of financial instruments 12,052 12,052) ( - - Unrealised exchange loss 416 145) ( - 271 Loss carryforward 397,612 24,875) ( - 372,737 610,601 188,624) ( - 421,977 `－`Deferred tax liabilities: Temporary differences: Defined benefit plan 7,664) ( - 361) ( 8,025) ( Unrealised gain on valuation of financial instruments - 9,883) ( - 9,883) ( 7,664) ( 9,883) ( 361) ( 17,908) ( Total 602,937 $ 198,507) ($ 361) ($ 404,069 $ 2020 `－`Deferred tax assets: 2019 `－`Deferred tax assets:		2020
			At December 31
			4,161 $ 13,313 5,666 1,614 - 299,573
			324,327
			17,908) (
			404,069 $

D. The amounts of deductible temporary differences that were not recognised as deferred tax assets are as follows:

Deductible temporary differences	December 31,2020 - $	December 31,2019
		109,290 $

E. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

		December 31,2020	December 31,2020
Year incurred 2012 2014 2016	Amount filed/ assessed 2,380,945 $ 994,010 278,062	Unrecognised Unused amount deferred tax assets 317,047 $ 91,254 $ 994,010 - 278,062 - December 31,2019		Expiry year
				2022 2024 2026
Year incurred 2012 2014 2016	Amount filed/ assessed 2,380,945 $ 994,010 278,062	Unused amount 682,869 $ 994,010 278,062	Unrecognised deferred tax assets - $ - -	Expiry year
				2022 2024 2026

F. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

`(六十八)` Earnings per share

Year	ended December 31,2020	ended December 31,2020
Weighted average number of ordinary shares outstanding Earnings per share Amount after tax (shares in thousands) (in dollars) 350,004 $ 806,949 0.43 $ 350,004 $ 806,949 - 3,724 350,004 $ 810,673 0.43 $ Year ended December 31,2019		Earnings per share (in dollars)
		0.43 $
		0.43 $
Amount after tax ( 1,018,057 $ 1,018,057 $ - 1,018,057 $	Weighted average number of ordinary shares outstanding shares in thousands) 753,916 753,916 1,259 755,175	Earnings per share (in dollars)
		1.35 $
		1.35 $

(六十九) Supplemental cash flow information

Investing activities with partial cash payments

		Year ended December	Year ended December	31
		2020		2019
Purchase of property, plant and equipment	$	47,001	$	98,869
Reclassifications to investment property		-		-
Add: Opening balance of payable on		69,907		95,254
equipment
Less: Ending balance of payable on equipment	(	3,838)	(	69,907)
Less: Others	(	39,600)		-
Cash paid during the year	$	73,470	$	124,216

		Year ended December		31
		2020		2019
Purchase of investment property	$	120,477	$	141,859
Reclassified from property, plant and equipment		-		-
Add: Opening balance of payable on		22,375		32,829
equipment
Less: Ending balance of payable on equipment	(	32,745)	(	22,375)
Cash paid during the year	$	110,107	$	152,313

`(七十)` Changes in liabilities from financing activities

For the years ended December 31, 2020 and 2019, the Company’s liabilities from financing activities included bonds payable, long-term borrowings and lease liabilities. The changes all pertain to changes in the financing cash flow and other non-cash changes, the aggregate amounts were as follows. Please refer to statements of cash flows for other information.

2020

At January 1 Changes in cash flow from financing activities Changes in other non-cash items At December 31	Short-term Bonds borrowings payable - $ 1,500,000 $ - 600,000) ( - - - $ 900,000 $	Long-term Liabilities from financing borrowings Lease liability activities-gross 4,160,000 $ 358,272 $ 6,018,272 $ 600,000 37,968) ( 37,968) ( - 22,461 22,461 4,760,000 $ 342,765 $ 6,002,765 $

2019

						2019
											Liabilities from
		Short-term		Bonds		Long-term						financing
		borrowings		payable		borrowings		Lease	liability		activities-gross
At January 1	$	520,000	$	1,800,000	$	5,948,458	$		-	$		8,268,458
Adjustments under new		-		-		-			386,667			386,667
standards
Changes in cash flow from	(	520,000)	(	300,000)	(	1,788,458)	(		36,319)	(		2,644,777)
financing activities
Changes in other non-cash
items		-		-		-			7,924			7,924
At December 31	$	-	$	1,500,000	$	4,160,000	$		358,272	$		6,018,272

21. Related Party Transactions

`(七十一)` Names of related parties and relationship with the Company

Names of related parties Hannstar Display Corp. (Hannstar) Hannstar Display (Nanjing) Corp. (Hannstar (Nanjing)) Glory Stone Co., Ltd. (White Stone) Mian-Lu Corp. (Mian-Lu)	Relationship withthe Company
	Entities with significant influence to the Company Other related party Subsidiary Subsidiary

`(七十二)` Significant related party transactions

A. Operating revenue

Entities with significant influence to the Company Subsidiaries	YearendedDecember31	YearendedDecember31
	2020 17,647 $ 85,784 103,431 $	2019
		- $ 29,291
		29,291 $

There were no similar transactions that can be compared with. The transaction conditions were based on the mutual agreement.

B. Purchases

Purchases of goods: Entities with significant influence to the Company Other related parties	Year ended December 31	Year ended December 31
	2020 9,335 $ - 9,335 $	2019
		5,446 $ 643
		6,089 $

There were no similar transactions that can be compared with. The transaction conditions were based on the mutual agreement.

C. Rent expense

Entities with significant influence to the Company	Year ended December 31	Year ended December 31
	2020 2,575 $	2019
		2,548 $

There were no similar transactions that can be compared with. The transaction conditions were based on the mutual agreement.

D. Interest expenses

Hannstar	Year ended December 31	Year ended December 31
	2020 29,390 $	2019
		38,751 $

E. Administrative expenses

Accounts receivable Subsidiaries Accounts receivable: Entities with significant influence to the Company Subsidiaries Other receivables: Subsidiaries	YearendedDecember31	YearendedDecember31
	2020 18,351 $ December 31,2020 16,460 $ 57,160 73,620 $ 485 $	2019
		- $
		December 31,2019
		- $ 29,697
		29,697 $
		100 $

F. Accounts receivable

It pertains to rent receivable and office expenses.

G. Accounts payable

Accounts payable: Entities with significant influence to the Company Other payables: Entities with significant influence to the Company Subsidiaries	December 31,2020 2,486 $ 1,964 $ 651 2,615 $	December 31,2019
		18 $
		3,638 $ 62
		3,700 $

H. Receipts in advance (shown as other current liabilities)

Hannstar	December 31,2020 1,108,000 $	December 31,2019
		- $

Advance receipts from disposal of 1F to 3F of Tainan Science Park.

I. Property transactions

Disposal of property, plant and equipment

Year ended December 31	Year ended December 31	Year ended December 31
Disposal proceeds Gain/(loss) 14 $ 14 $ 2020	2019
Disposal proceeds 14 $	Disposal proceeds - $	Gain/(loss)
		- $

J. Issuance of bonds payable

On November 28, 2017, the Group issued domestic first private unsecured bonds, the issuance amount was NT$1.8 billion which was used to repay the corporate bonds issued in 2016. The bonds were fully subscribed by Hannstar. As of December 31, 2020, the Company's bonds payable was $900,000 (including current portion).

`(七十三)` Key management compensation

Salaries and other short-term employee benefits Share-based payment	Year ended December 31	Year ended December 31
	2020 31,202 $ - 31,202 $	2019
		38,249 $ 1,176
		39,425 $

22. Pledged Assets

The Company’s assets pledged for the purpose of long-term borrowings, customs duty on raw material imports and performance bond are as follows:

Pledged asset Pledged time deposits (shown as other financial assets) Demand deposits (shown as other financial assets) Property, plant and equipment and investment property	Book value	Book value
	December 31,2020 38,489 $ 20,901 5,215,919 5,275,309 $	December 31,2019
		38,741 $ 43,010 5,610,105
		5,691,856 $

23. Significant Contingent Liabilities and Unrecognised Contract Commitments

As of December 31, 2020, significant commitments and contingencies are outlined as follows:

`(七十四)` Contingencies

`(七十五)` Commitments

Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

Property, plant and equipment Investment property	December 31,2020 32,366 $ 7,697 40,063 $	December 31,2019
		37,430 $ 88,257
		125,687 $

24. Significant Disaster Loss

None.

25. Significant Events after the Balance Sheet Date

(1) Refer to Notes 6(12), 6(20) and 6(25) for details.
(2) On March 19, 2021, the Company’s board of directors resolved not to proceed with the capital increase by cash through the issuance of up to 70 million shares of stock either through private placement or public offering, as resolved by the shareholders during their meeting last June 16, 2020 for the purpose of developing strategic alliances, increasing working capital, etc. However, in order for the Company to have the flexibility to respond to changes in the industry and the economy, and in line with the practice of the competent authority to review the plans of companies to raise capital, the Company’s board of directors proposed another resolution for the capital increase.
(3) For the purpose of developing strategic alliances and increasing working capital, the Company’s board of directors during its meeting on March 19, 2021 resolved to increase capital through the issuance of up to 80 million shares of stock or depository receipts with a proposed denomination of NT$10 per share through private placement or public offering.
(4) Loans to Glory Stone were resolved by the Board of Directors on March 19, 2021 in the amount of $300,000.

26. Others

`(七)` Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. To maintain or adjust the capital structure, the Company adjusted the capital structure through the issuance of new shares to borrow or repay loans.

`(八)` Financial instruments

A. Financial instruments by category

Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Accounts receivable (including related parties) Other receivables (including related parties) Other financial assets Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities designated as at fair value through profit or loss Loss from financial liabilities at amortised cost Notes payable Accounts payable (including related parties) Other payables (including related parties) Bonds payable (including current portion) Long-term borrowings (including current portion) Lease liability	December 31,2020 46,481 $ 193,411 $ 1,618,587 $ 600,000 319,138 22,137 59,390 2,619,252 $ 1 $ 217 $ 136,986 345,479 900,000 4,760,000 6,142,682 $ 342,765 $	December 31,2019
		48,156 $
		- $
		320,390 $ 789 411,374 1,728 81,751
		816,032 $
		- $
		1,341 $ 161,745 393,681 1,500,000 4,160,000
		6,216,767 $
		358,272 $

B. Financial risk management policies
(a) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts and foreign currency option contracts are used to hedge certain exchange rate risk.
(b) Risk management is carried out by a central treasury department (Company treasury) under

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

C. Significant financial risks and degrees of financial risks
(a) Market risk

Exchange rate risk

i. The Company operates internationally and is exposed to exchange rate risk arising from the transactions of the Company used in various functional currency, primarily with respect to the USD and JPY. Foreign exchange rate risk arises from future commercial transactions and recognised assets and liabilities.
ii. Management has set up a policy to require the Company to manage its foreign exchange risk against the functional currency. The Company is required to hedge the entire foreign exchange risk exposure with the Company treasury. Exchange rate risk is measured through a forecast of highly probable USD and JPY expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of the exchange rate affecting cost of forecast inventory purchases.
iii. The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

December 31, 2020

Book value (NTD) 279,061 $ 18,724 46,056 34,848 December	Sensitivityanalysis	Sensitivityanalysis	Sensitivityanalysis
	Degree of variation 1% 1% 1% 1% 31,2019	Effect on profit or loss 2,791 $ 187 461 348	Effect on other comprehensive income
			- $ - - -
Book value (NTD) 406,157 $ 33,139 60,047 28,089	Sensitivity analysis
	Degree of variation 1% 1% 1% 1%	Effect on profit or loss 4,062 $ 331 600 281	Effect on other comprehensive income
			- $ - - -

iv. Total exchange loss, including realised and unrealised, arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2020 and 2019, amounted to ($33,112) and ($14,588), respectively.

Price risk

i. The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.
ii. The Company’s investments in equity securities comprise shares issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $462 and $472, respectively.

Cash flow and fair value interest rate risk

The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. Company policy is to maintain at least 1~3% of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. During 2020 and 2019, the Company’s borrowings at variable rate were mainly denominated in New Taiwan dollars.

(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Company adopts the assumption that the default occurs when the contract payments are past due over 120 days.
iii. The Company adopts the following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

iv. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i) It becomes probable that the issuer will enter bankruptcy or other financial reorganisation due to their financial difficulties;
(ii) The disappearance of an active market for that financial asset because of financial difficulties;

(iii) Default or delinquency in interest or principal repayments.

v. The Company wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Company will continue executing the recourse procedures to secure their rights. On December 31, 2020 and 2019, the Company had no written-off financial assets that are still under recourse procedures.
vi. The methods used by the Company in assessing the expected credit risk of accounts receivable were as follows:
(i) Individually estimated expected credit loss according to individual significant accounts receivable which are considered on default;
(ii) Other customers’ accounts receivable were classified based on the Company's credit

rating standards. The Company applies different loss rate methodology and provision matrix to estimate the expected credit loss of different groups.

(iii) Loss rates are calculated based on past and current information, taking into account forward-looking information provided by the Basel Committee on Banking Supervision.
(iv) On December 31, 2020 and 2019, the provision loss for accounts receivable which were individually estimated by loss rate methodology and provision matrix were as follows:

December 31, 2020 Expected loss rate Total book value December 31, 2019 Expected loss rate Total book value	Group1 0.03%~100% - $ Group1 0.03%~100% - $	Group2 0.03% 266,410 $ Group2 0.03% 422,176 $	Total
			266,410 $
			Total
			422,176 $

Group 1: For customers with impairment indications, individual expected credit loss is determined through considering the claim order of insurance and debts.

Group 2: Long-term customers with good credit history.

vii. Movements in relation to the Company applying the modified approach to provide loss allowance for accounts receivable are as follows:

At January 1 Reversal of impairment loss At December 31 At January 1 Provision for impairment loss Write-offs At December 31	2020 Accounts receivable 137 $ 48) ( 89 $ 2019 Accounts receivable 16,495 $ 136 16,494) ( 137 $

(c) Liquidity risk

i. Cash flow forecasting is performed by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Company’s financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements.
ii. The table below analyses the Company’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities were as follows:

Non-derivative financial liabilities:

Non-derivative financial liabilities :
December 31, 2020 Financial liabilities at fair value through profit or loss Notes payable Accounts payable (including related parties) Other payables (including related parties) Current tax liabilities Lease liability Other current liabilities, others Bonds payable (including put option on corporate bonds matured or exercised within 1 year) Long-term borrowings (including current portion)	Less than 1year 1 $ 217 136,986 345,479 25,895 30,794 1,123,886 - 291,907	Between 2 and 3years - $ - - - - 63,532 - 900,000 1,332,294	Between 3 and 4years - $ - - - - 66,401 - - 764,378	Over 5years
				- $ - - - - 182,038 - - 2,718,215

Non-derivative financial liabilities:

Non-derivative financial liabilities :
December 31, 2019 Notes payable Accounts payable (including related parties) Other payables (including related parties) Lease liability Other current liabilities, others Bonds payable (including put option on corporate bonds matured or exercised within 1 year) Long-term borrowings (including current portion)	Less than 1year 1,341 $ 161,745 393,681 29,028 10,939 600,000 -	Between 2 and 3years - $ - - 59,816 - 900,000 695,603	Between 3 and 4years - $ - - 62,449 - - 789,232	Over 5years
				- $ - - 206,979 - - 3,131,656

iii. In order to repay the borrowings, the Company planned to issue shares of stock through public offering or private placement. Please refer to Note 6(18)C for details.

`(九)` Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. An active market refers to a market in which transactions for an asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in forward foreign exchange contracts is included in Level 2.
Level 3: Unobservable inputs for the asset or liability.
B. Fair value information of investment property at cost is provided in Note 6(11).
C. Financial instruments not measured at fair value

The carrying amounts of the Company’s financial instruments not measured at fair value (including cash and cash equivalents, accounts receivable (including related parties), other receivables (including related parties), other financial assets - current, notes payable, accounts payable (including related parties), other payables (including related parties) and lease liabilities) approximate to their fair values. On December 31, 2020 and 2019, the fair value of long-term borrowings (including current portion) which were included in Level 3 were $3,973,461 and $3,278,828, respectively.

D. Financial and non-financial instruments measured at fair value

(a) The related information on financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2020 and 2019 are as follows:

December 31, 2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Listed stocks Unlisted stocks Non-hedging derivatives Financial assets at fair value through other comprehensive income Listed and emerging stocks Non-recurring fair value measurements Non-current assets held for sale Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Non-hedging derivatives December 31, 2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Listed stocks Unlisted stocks	Level 1 200 $ - - 193,411 193,611 $ - $ - $ Level 1 - $ - - $	Level 2 - $ - 234 - 234 $ - $ 1 $ Level 2 - $ 927 927 $	Level 3 - $ 46,047 - - 46,047 $ 2,575,574 $ - $ Level 3 47,229 $ - 47,229 $	Total
				200 $ 46,047 234 193,411
				239,892 $
				2,575,574 $
				1 $
				Total
				47,229 $ 927
				48,156 $

(b) The methods and assumptions the Company used to measure fair value are as follows:
- i. For the instruments the Company used market quoted prices as their fair values (that is, Level 1), the Company uses the closing price of the listed shares as fair value.
- ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the parent company only balance sheet date.
- iii. When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.
E. On December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.
F. On December 31, 2020 and 2019, there was no transfer into or out from Level 3.
G. Finance and accounting segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value. The Company’s finance and accounting department use the valuation methods and assumptions announced by the Financial Supervisory Commission, Securities and Futures Bureau or through outsourced appraisal performed by the external valuer.
H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

					Significant
	December		31, 2020	Valuation	unobservable	Range (weighted	Relationship of
		Fairvalue		technique	input	average)	inputs tofairvalue
Non-derivative equity	instrument:
Unlisted shares	$		46,047	Market	Price book ratio	Not applicable	The higher the multiple
				comparable	multiplier, discount		and control premium, the
				companies	for lack of		higher the fair value;
					marketability		the higher the discount for
							lack of marketability, the
							lower the fair value

Significant December 31, 2019 Valuation unobservable Range (weighted Relationship of Fair value technique input average) inputs to fair value Non-derivative equity instrument: Unlisted shares $ 47,229 Market Price book ratio Not applicable The higher the multiple comparable multiplier, discount and control premium, the companies for lack of higher the fair value; the marketability higher the discount for lack of marketability, the lower the fair value

27. Supplementary Disclosures

`(十)` Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.
D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company's paid-in capital: None.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: Please refer to table 3.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: None.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting period: Please refer to Notes 6(2).
J. Significant inter-company transactions during the reporting periods: None.
(十一) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 4.

`(十二)` Information on investments in Mainland China

A. Basic information: Please refer to table 5.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

`(十三)` Major shareholders information

Major shareholders information: Please refer to Table 6.

28. Segment Information

Not applicable

HANNSTOUCH SOLUTION INCORPORATED CASH AND CASH EQUIVALENTS DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 1 Items Summary Bank deposit Checking account deposits NTD Demand deposits NTD JPY 68,713 thousand, exchange rate: $0.2725 USD 997 thousand, exchange rate: $28.100 Cash equivalents Time deposits	Amount
	432 $ 171,412 18,724 28,019 1,400,000
	1,618,587 $

HANNSTOUCH SOLUTION INCORPORATED DETAILS OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS DECEMBER 31, 2020

`(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)`

Statement 2

Statement 2
Investee	Summary	No. of shares (in thousands)		Acquisition cost		Fair value	Collateral or endorsement provided
KHAM INC. YH Bio Co., Ltd. VITA GENOMICS, INC. Touch Cloud Inc.	Stocks Stocks Stocks Stocks	4 6,973 156 250		216 64,923 1,278 5,000 71,417 $		200 44,229 1,432 386 46,247 $	None `〝` `〝` `〝`

HANNSTOUCH SOLUTION INCORPORATED

DETAILS OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 3 Name of financial instrument Hannstar Display Corp.	Summary Stock	No. of shares (in thousands) 15,744	Acquisition cost 201,482 $	Fair value Total amount 193,411 $	Note
					None

HANNSTOUCH SOLUTION INCORPORATED MOVEMENT SUMMARY OF INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD YEAR ENDED DECEMBER 31, 2020 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 4

Statement 4
Number of shares (per thousand Name share) Richest Investment Ltd. 4,500 Golden Apple Investment Corporation 15,000 Glory Stone Co., Ltd. 22,000 Opening	Opening	Cash dividends paid during Investment Number of shares theyear income(loss) (per thousand Shareholding Amount Amount Amount share) ratio - $ - - 4,500 100% 153,627 3,264) ( 15,679) ( 15,000 100% 193,566 - 20,884 22,000 42.31% 347,193 $ 3,264) ($ 5,205 $ Endingbalance balance	Endingbalance		Amount - $ 134,684 214,450 349,134 $	Market price or net equity
				Shareholding ratio 100% 100% 42.31%
						Total amount
						- $ - -
						- $

HANNSTOUCH SOLUTION INCORPORATED DETAILS OF ACCOUNTS RECEIVABLE DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 5

Statement 5
Customer Name		Amount	Note
`Ａ`customer	$	132,020
`Ｂ`customer		62,940
`Ｃ`customer		44,269
`Ｄ`customer		19,487
			The balance of individual client account is less
Others		7,694	than 5% of the accounts receivable balance
		266,410
Less: Sales returns and discounts and allowances	(	20,803)
Allowance for doubtful accounts	(	89)
	$	245,518

HANNSTOUCH SOLUTION INCORPORATED DETAILS OF INVENTORIES DECEMBER 31, 2020 `(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)`

Statement 6

Statement 6
Items Materials and supplies Work in progress Finished goods Less: Allowance for inventory valuation losses and loss for obsolete and slow- moving inventories	Net realisable Cost value 62,886 $ 51,305 $ 30,204 30,204 133,337 190,360 226,427 28,327) ( 198,100 $ 271,869 $ Amount	Note
	Cost 62,886 $ 30,204 133,337 226,427 28,327) ( 198,100 $
		Inventories calculated based on lower of cost and the net realisable value

HANNSTOUCH SOLUTION INCORPORATED DETAILS OF ACCOUNTS PAYABLE DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 7 Vendor name A Vendor B Vendor C Vendor D Vendor E Vendor Others	Amount Note 30,148 $ 17,773 15,156 12,640 7,704 51,079 The balance of individual vendor account is less than 5% of the accounts payable balance 134,500 $	Note

265

HANNSTOUCH SOLUTION INCORPORATED DETAILS OF LONG-TERM BORROWINGS DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 8 Creditor	Summary Secured borrowings for land and buildings located in Yixian Rd., Sec. 2, with a contract period of 15 years. Interest is payable monthly for the first 3 years, and the principal is payable quartely starting from the fourth year until May 2033. Contract period is 3 years, the borrowing is payable on the maturity date. The borrowing has a grace period of 12 months starting from the first drawdown date, and the principal is payable every 6 months after the grace period in 5 installments at 20% per installment. Current portion (including unamortized cost of long-term borrowings)	Amount 4,160,000 $ 300,000 300,000 4,760,000 233,333) ( 4,526,667 $	Contractperiod 2018/5~2033/5 2020/8~2023/8 2020/8~2023/8	Interest 1.20% 1.57% 1.56%	Pledged orguarantee
Land Bank Taishin International Bank Taipei Fubon Bank Less:					Investment property Unsecured Unsecured

HANNSTOUCH SOLUTION INCORPORATED DETAILS OF OPERATING REVENUE YEAR ENDED DECEMBER 31, 2020 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 9

Items Sales revenue Touch products Rental revenue from property Total operating revenue Less: Sales returns and discounts and allowances Operating revenue, net	Numbers (in thousandpcs) 1,540	Amount 2,823,948 $ 155,075 2,979,023 49,773) ( 2,929,250 $

267

HANNSTOUCH SOLUTION INCORPORATED DETAILS OF OPERATING COST YEAR ENDED DECEMBER 31, 2020 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 10
Items		Amount
Direct materials
Add: Raw materials at beginning	$	56,370
Material purchased during the year		792,942
Less: Raw materials at the end	(	62,886)
Others	(	147,316)
Cost of material		639,110
Direct labor		63,852
Overhead		1,686,121
Unallocated overhead expense	(	299,522)
Manufacturing cost		2,089,561
Add: Beginning work in Progress		31,136
Less: Ending work in Progress	(	30,204)
Cost of finished goods		2,090,493
Add: Beginning finished goods		104,319
Purchases during the year		7,202
Less: Ending finished goods	(	133,337)
Expenses order settlement	(	1,650)
Others	(	88,800)
Cost of finished goods sold		1,978,227
Test goods transferred to cost of sales	(	360)
Unallocated overhead expense		299,522
Inventory valuation loss		12,657
Scrapped inventories		4,259
Total operating cost	$	2,294,305

268

HANNSTOUCH SOLUTION INCORPORATED DETAILS OF MANUFACTURING EXPENSE YEAR ENDED DECEMBER 31, 2020 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 11 Items Depreciation Repairs and maintenance expense Utilities expense Salary expenses Amortisation charge Others	Amount
	926,852 $ 233,355 200,257 115,157 3,575 206,925
	1,686,121 $

269

Employee benefit expense Salary expenses Labour and health insurance fees Pension costs Directors' remuneration Other personnel expenses Depreciation Amortisation charge Cost of services Others	Selling expenses 11,785 $ 924 591 - 913 204 - 277 12,570 27,264 $	General and administrative expenses 65,100 $ 4,535 2,545 8,400 10,257 3,731 1,118 15,908 32,953 144,547 $	Research and development expenses 15,050 $ 1,137 725 - 1,046 730 2,042 - 19,948 40,678 $	Total
				91,935 $ 6,596 3,861 8,400 12,216 4,665 3,160 16,185 65,471
				212,489 $

HannsTouch Solution Incorporated

Loans to others

Year ended December 31, 2020

Table 1

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

Maximum General outstanding Amount of ledger Is a balance during the Balance at transactions Reason for Limit on loans Collateral No. account related year ended December 31, Actual amount Interest rate Nature of with the short-term Allowance for granted to a single Ceiling on total loans (Note 1) Creditor Borrower (Note 2) party December 31, 2020 (Note 3) drawn down range loan borrower financing doubtful accounts Item Value party granted Note 0 HannsTouch Glory Stone Co., Other Yes $ 130,000 $ 130,000 $ - Undetermined Necessary $ - Operating $ - None $ - $ 186,926 $ 1,888,219 Note 4, 5, 6 Solution Ltd. receivables for shortIncorporated due from term related financing parties

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1)The Company is ‘0’.
(2)The subsidiaries are numbered in order starting from ‘1’.
Note 2: Fill in the name of account in which the loans are recognised, such as receivables–related parties, current account with stockholders, prepayments, temporary payments, etc.
Note 3: The upper limit of capital loan and balance of capital loans in the end of the year are the amount approved by the Board of Directors, not actual drawn amount.
Note 4: The limit of HannsTouch Solution Incorporated loans to individual who has the needs of short-term financing shall not exceed 20% of the net asset value of latest financial statements. Note 5: The total loans amount of HannsTouch Solution Incorporated shall not exceed 30% of net asset value.

Note 6: The limits of the company loan to Glory Stone Co. Ltd. with amount of $1.3 million and to individual were resolved by the Board of Directors on March 20, 2020.

HannsTouch Solution Incorporated

Holding of marketable securities at the end of the year (not including subsidiaries, associates and joint ventures)

December 31, 2020

Table 2


Securities held by Marketable securities Relationship with the securities issuer General ledger account Table 2		Ending Balance EXCEPT AS OTHERWISE ESSED IN THOUSANDS OF NEW TAIWA		Note INDICATED) N DOLLARS,
	Number of shares (in thousands)	Book value	Ownership (%) Fair value(Note)
HannsTouch Solution Incorporated Stock KHAM INC. None Financial assets at fair value through profit or loss YH Bio Co., Ltd. None 〞 VITA GENOMICS, INC. None 〞 Touch Cloud Inc. None 〞 Hannstar Display Corp. Other related parties Financial assets at fair value through other comprehensive income Golden Apple Investment Corporation Stock Chaiin Hotel Co., Ltd. None Financial assets at fair value through profit or loss	4 6,973 156 250 15,744 2,100	$ 200 44,229 1,432 386 193,411	0.01% $ 200 3.40% 44,229 0.26% 1,432 3.42% 386 0.57% 193,411 19.00% 9,024 $
		$239,658
		$9,024

Table 3

HannsTouch Solution Incorporated

Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more

Year ended December 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

Transaction date Real estate or date of the Status of collection Gains (losses) Basis or reference used in Other disposed by Real estate event (Note 3) Date of acquisition Book value Disposal amount of proceeds on disposal Counterparty Relationship with the seller Reason for disposal setting the price commitments The Company 1F to 3F of the plant November 2020 May 1, $ 2,575,574 $ 2,770,000 Perform the Note 4 Hannstar Relationship with the Considering the efficiency Negotiated based on in Tainan Science 2012~October 31, agreement by both Display Corp. counterparty of assets usage and appraisal report and Park 2018 parties activating assets approved by the Board of Directors

Note 1: The appraisal result should be presented in the ‘Basis or reference used in setting the price’ column if the real estate disposed of should be appraised pursuant to the regulations.

Note 2: Paid-in capital referred to herein is the paid-in capital of parent company.

Note 4: The amount of expected income from disposal is about $194,426. Actual income from disposal will be net of related expenses and will not be recorded until the transaction is completed.

HannsTouch Solution Incorporated

Table 4

Information on investees

Year ended December 31, 2020


Table 4 Investor	Investee	Location	Main business activities	Initial inv	estment amount	Shares held as	at December	31,2020	(EXPRESSED IN TH Net income of investee for the year ended December 31, 2020	OUSANDS OF NEW TAIW EXCEPT AS OTHERWIS Investment income (loss) recognised by the Company for the year ended December 31, 2020	AN DOLLARS, E INDICATED) Note
				Balance as at December 31,2020	Balance as at December 31, 2019	No. of shares (in thousands)	Ownership (%)	Book value
HannsTouch Solution Incorporated	Richest Investment Ltd. Golden Apple Investment Corporation Glory Stone Co., Ltd.	Cayman Islands Taiwan Taiwan	Investment Investment Hotel business	148,434 $ 150,000 220,000	148,434 $ 150,000 220,000	4,500 15,000 22,000	100.00 100.00 42.31	- $ 134,684 214,450	- $ 15,679) ( 16,888	- $ 15,679) ( 20,885	Note 1 〞〞

Note 1: The Company’s subsidiary.

HannsTouch Solution Incorporated

Information on investments in Mainland China

Year ended December 31, 2020

Table 5

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

Investee in Mainland China	Main business activities	Paid-in capital (Note 1)	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January1, 2020	Amount remitte Mainland China back to Taiwan Decembe	d from Taiwan to /Amount remitted for the year ended r 31, 2020	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020	Net income of investee for the year ended December 31, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2020(Note 3)	EXCEPT AS O Book value of investments in Mainland China as of December 31, 2020(Note 3)	THERWISE INDICATED) Note Accumulated amount of investment income remitted back to Taiwan as of December 31, 2020	THERWISE INDICATED) Note Accumulated amount of investment income remitted back to Taiwan as of December 31, 2020
					Remitted to Mainland China	Remitted back to Taiwan
NanJin GuanXin Co. Ltd.	Development and production of PMMA, light guide plate and related components	469,950 $	Note 2	$ 148,434	- $	- $	$ 148,434	$ -	31.12	- $	- $	- $

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020(Note 4)	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
HannsTouch Solution Incorporated	1,789,949 $	1,721,665 $	5,826,413 $

Note 1: Translated from historical exchange rate.

Note 2: Reinvested through Richest Investment Ltd. Note 3: In 2013, the Company’s investment in NanJin GuanXin Co. Ltd. has been reduced to $0. Note 4: NTD amount was translated from historical exchange rate of actual remittance.

HannsTouch Solution Incorporated

Major shareholders information December 31, 2020

Table 6

Name of major shareholders	Sh	ares
	Name of shares held(in thousands)	Ownership (%)
Hannstar Display Corp. Huali Investment Corp.	214,639 59,440	26.60% 7.36%

HannsTouch Solution Incorporated Person-in-charge: WeiHsin Ma

AI assistant

HannsTouch — Annual Report 2020

52281_rns_2021-07-29_f728b6aa-a9e7-4dba-8e65-8a34fa1ecceb.pdf

HannsTouch Solution Inc. 2020 Annual Report

Publication date: April 19, 2021

------Disclaimer----

1. Name, title, contact number, and e-mail of spokesperson and acting spokesperson:

2. Address and contact number of the headquarter, branches and plant sites:

3. Name, address, website, and contact number of stock transfer agency:

4. Name of CPA and the name, address, website and contact number of the accounting firm for the latest financial

report:

HannsTouch Solution Inc.

Table of Content

One. Report to Shareholders

I. 2020 business report

(I) Outcome of the business plan:

(II) Revenues, expenses, and profitability analysis:

(III) Research and development:

II. Summary of 2021 business plan

(I) Operational guidelines:

(II) Key production/sales policies:

III. Future strategies, impacts of the competitive environment, regulatory environment, and the overall business environment

4. High-efficiency operation management

1. Operating model

2, Technology development

3. Service model

Two. Company Profile

2. Company history:

Three. Corporate Governance Report

1. Organization

(2) Responsibilities of main departments:

2. Background information of directors, supervisors, the President, vice presidents, assistant vice presidents, and heads of various departments and branches

(1) Major shareholders of corporate shareholders

(3) Directors' expertise and independence

(2) Profiles of the President, vice presidents, assistant vice presidents, and managers:

3. Compensation to directors, supervisors, the President, and vice presidents in the latest year

Compensation range

(3) Compensation to the President and vice presidents:

Compensation range

4. Corporate governance

(1) Functionality of board of directors:

(1) Functionality of the Audit Committee:

 Board diversity policy:

 Diversity of the current (8th) board of directors:

(1) Information of Remuneration Committee members:

HannsTouch Solution Inc.

Declaration of Internal Control System

Major board of directors resolutions and execution:

5. Disclosure of audit fees

6. Change of CPA: The Company’s CPAs were not replaced in 2020. As part of the internal

8. Details of shares transferred or pledged by directors, supervisors, managers, and shareholders with more than 10% ownership interest in the last year, up till the publication date of this annual report:

9. Relationships characterized as spouse or second-degree relatives or closer among top-ten shareholders:

10. Investments jointly held by the Company, the Company's directors, supervisors, managers, and enterprises directly or indirectly controlled by the Company; disclose shareholding in aggregate of the above parties:

Four. Capital Overview

1. Capital and outstanding shares

(3) Diversity of ownership:

1. Common shares:

2. Preferred shares: none

(4) List of major shareholders:

2. Corporate bonds (including offshore corporate bonds):

3. Preferred shares: None

4. Depository receipts: None

5. Employee warrants: None

6. Issuance of new shares for business acquisition or share exchange: None

7. Progress on planned uses of capital: None

Five. Operational Overview

1. Business activities

(1) Business activities:

1. Principal business activities:

2. 2020 product weight:

3. The Company's current products (services):

(II) Industry overview:

1. Current and future industry prospects:

(2) TFT back panels:

2-3 Structure of the TFT display:

EPD Module Structure

2-2 Association among upstream, mid-stream, and downstream of the electronic paper:

3. Product trends:

4. Market competition:

1. Short-term business plans:

HannsTouch Annual Report 2020

`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019`

`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019`

`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES`

`CONSOLIDATED STATEMENTS OF CASH FLOWS`

`YEARS ENDED DECEMBER 31, 2020 AND 2019`

`HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS`

`YEARS ENDED DECEMBER 31, 2020 AND 2019`