HannsTouch — Audit Report / Information 2020

Nov 5, 2020

HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2020 AND 2019

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

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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

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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:

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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.

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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 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:

1. Assessed the expected future income used in the experts’ appraisal report and compared with local market price and forecast documents for the industry.

2. 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.

3. 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.

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

Auditors’ responsibilities for the audit of the consolidated financial statements

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

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

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.

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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

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

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

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HANNSTOUCH SOLUTION INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

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

(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)

Items

Year ended December 31 Notes 2020 2019 6(21) and 7 $ 3,086,399 $ 4,403,816 6(6)(25) and 7 ( 2,375,024) ( 2,741,916) 711,375 1,661,900 6(25) and 7 ( 27,311) ( 53,680) ( 224,588) ( 303,634) ( 40,679) ( 43,498) 12(2) 45 ( 148) ( 292,533) ( 400,960) 418,842 1,260,940 6(22) 3,463 2,884 6(23) 153,745 36,931 6(24) and 7 ( 16,183) 24,825 7 ( 97,247) ( 148,536) 43,778 ( 83,896) 462,620 1,177,044 6(26) ( 102,874) ( 192,526) $ 359,746 $ 984,518 6(16) $ - $ 1,803 6(3) ( 8,071) - 6(26) 1,614 ( 361) $ 353,289 $ 985,960 $ 350,004 $ 1,018,057 $ 9,742 ($ 33,539) $ 343,547 $ 1,019,499 $ 9,742 ($ 33,539) 6(27) $ 0.43 $ 1.35 $ 0.43 $ 1.35

4000 Sales revenue 5000 Operating costs 5950 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Impairment loss (impairment gain and reversal of impairment loss) determined in accordance with IFRS 9 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year 8311 Actuarial gains on defined benefit plans 8316 Unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8500 Total comprehensive income for the year Profit (loss), attributable to: 8610 Owners of the parent 8620 Non-controlling interest Comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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)

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							Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent	Equity attributable to owners ofthe parent				Non-controlling interest		Totalequity
			Share capital - commonstock			Capital Reserves					RetainedEarnings				Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income		Total
				Total capital surplus, additional paid- incapital		Capital surplus, difference between consideration and carrying amount of subsidiaries acquired or disposed		Capital surplus, others			Legal reserve	Special reserve		Unappropriated retained earnings
	6(18) 6(20)		$ 7,369,485 - - - 700,000 $ 8,069,485 $ 8,069,485 - - - - - $ 8,069,485		$ 61,616 - - - 247,419 $ 309,035 $ 309,035 - - - - - $ 309,035		$ 919 - - - - $ 919 $ 919 - - - - - $ 919		$ - - - - 2,971 $ 2,971 $ 2,971 - - - - - $ 2,971		$ 12,398 - - - - $ 12,398 $ 12,398 - - - 96,963 - $ 109,361		$ 14,100 - - - - $ 14,100 $ 14,100 - - - - - $ 14,100	($ 48,428 ) 1,018,057 1,442 1,019,499 - $ 971,071 $ 971,071 350,004 - 350,004 ( 96,963 ) ( 282,432 ) $ 941,680	$ - - - - - $ - $ - - ( 6,457 ) ( 6,457 ) - - ($ 6,457 )	$ 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		$ 293,391 ( 33,539 ) - ( 33,539 ) - $ 259,852 $ 259,852 9,742 - 9,742 - - $ 269,594	$ 7,703,481 984,518 1,442 985,960 950,390 $ 9,639,831 $ 9,639,831 359,746 ( 6,457 ) 353,289 - ( 282,432 ) $ 9,710,688

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.

2. 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

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

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

New Standards,Interpretations 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.

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

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

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

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

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

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

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

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International

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Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

• A. Except for the 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.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

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

• (b) Inter-company transactions, balances and 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.

• (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

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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:

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

• 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.

• 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

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$259,852, respectively. The information on non-controlling interest and respective subsidiaries is as follows:

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

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 Glory Stone

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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

(4) Foreign currency translation

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

(5) Classification of current and non-current items

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

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

(6) 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.

(7) 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.

(8) 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.

(9) 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.

(10) 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.

(11) 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.

(12) 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.

－ (13) 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.

(14) 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.

(15) 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.

(16) 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 be depreciated separately.

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• 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

(17) 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. When the lease liability is remeasured, the amount of remeasurement is recognised as an

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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.

(18) 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.

(19) 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.

(20) 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.

(21) 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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(22) 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.

(23) 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.

(24) Derecognition of financial liabilities

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

(25) 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.

(26) 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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(27) 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.

- (28) 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.

(29) Income taxes

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or

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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.

(30) 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.

(31) 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.

(32) 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 acceptance have been satisfied.

• (b) Sales revenue of products was recognised based on the contract price net of sales returns and

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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.

(33) 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.

(34) 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 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

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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.

(35) 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:

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

None.

(2) 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, 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.

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6. Details of Significant Accounts

(1) Cash and cash equivalents

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

(2) 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:

• (a) Equity instruments: including listed, unlisted and emerging stocks.

• (b) Derivative instruments: including forward foreign exchange contracts, foreign exchange options and put options.

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• 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 31	Year ended December 31	Year ended December 31	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
The Group entered into contracts relating to derivative financial				assets which were not accounte
for under hedge accounting.	The information is listed		below:
			December	31,2020
	Contract amount
Derivative financial	(Notionalprincipal)		(In thousands)			Contractperiod
instruments
Presale forward exchange
contracts
-Sell USD and	USD		$	4,000	2020/12/8-2021/2/5
buy NTD
-Sell USD and	USD			200	2020/12/25-2021/1/28
buy JPY
			December	31,2019
	Contract amount
Derivative financial	(Notionalprincipal)		(In thousands)			Contract period
instruments
Presale forward exchange
contracts
-Sell USD and	USD		$	5,000	2019/12/13-2020/2/3
buy NTD
Option contract
-Put options	USD		$	2,000	2019/12/9-2020/1/9

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

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.

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• 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).

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

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

• 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:

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

• 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).

(4) Financial assets at amortised cost

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 $	December 31,2019
		156,063 $ -
		156,063 $

• 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).

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(5) 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:

December 31, 2020 Accounts receivable Not past due 272,960 $ Up to 30 days - 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.

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

(6) 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:

(7)	Other current financial assets Cost of goods sold Unallocated overhead expense Loss on decline in market value Scrapped inventory Time deposits pledged Restricted bank deposits	2020 2019 2,058,586 $ 2,696,571 $ 299,522 30,471 12,657 7,308 4,259 7,566 2,375,024 $ 2,741,916 $ Year ended December 31 December31,2020 December31,2019 38,489 $ 38,741 $ 20,901 43,010 59,390 $ 81,751 $	2020 2019 2,058,586 $ 2,696,571 $ 299,522 30,471 12,657 7,308 4,259 7,566 2,375,024 $ 2,741,916 $ Year ended December 31 December31,2020 December31,2019 38,489 $ 38,741 $ 20,901 43,010 59,390 $ 81,751 $
			2,741,916 $
			December31,2019
			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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(8) 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

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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	Buildings and Leasehold Machinery and Furniture and Unfinished construction and equipment under Land structures improvements equipment fixtures Other equipment acceptance Total - $ 9,093,496 $ - $ 9,071,853 $ 9,502 $ 83,252 $ 130,269 $ 18,388,372 $ - 2,681,303) ( - 6,797,636) ( 2,148) ( 75,856) ( - 9,556,943) ( - $ 6,412,193 $ - $ 2,274,217 $ 7,354 $ 7,396 $ 130,269 $ 8,831,429 $ - $ 6,412,193 $ - $ 2,274,217 $ 7,354 $ 7,396 $ 130,269 $ 8,831,429 $ - - - - 857 - 380,752 381,609 - - 116,099 - 63 194 - 116,356 4,974,140 767,362 - 25,957 1,806 92 50,582) ( 5,718,775 - 430,915) ( 14,082) ( 467,348) ( 1,948) ( 1,739) ( - 916,032) ( 4,974,140 $ 6,748,640 $ 102,017 $ 1,832,826 $ 8,132 $ 5,943 $ 460,439 $ 14,132,137 $ 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 $	Total
		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.

－ (9) 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. Lowvalue 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:

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 $ 2020			2020
					Total

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

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

==> picture [477 x 45] intentionally omitted <==

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

Year ended December 31
2020 2019
Items affecting profit or loss
----- End of picture text -----

Items affecting profit or loss	Items affecting profit or loss	Items affecting profit or loss
Interest expense on lease liabilities				$		11,427 $		15,551
Expense on short-term lease contracts						3,163		2,548
Expense on leases of low-value assets						2,829		4,564
Gains arising from	lease modifications					10		-
. For the years ended December 31, 2020			and 2019, the Group’s			total cash outflow for leases were
$64,663 and $88,218, respectively.
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		-		-		-		-
	$	-	$	-	$	-	$	-

• 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.

(10) Investment property

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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:

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.

• (11) 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:

Property, plant and equipment	December31,2020 2,575,574 $	December31,2019
		- $

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(12) Short-term borrowings

Type of Borrowings Bank borrowings Unsecured borrowings Interest rate	December 31,2020 December 31,2019 - $ 30,000 $ - $ 1.65%

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

(13) 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.

(14) Bonds payable

Bonds payable Less: Maturity within one year	December31,2020 December31,2019 900,000 $ 1,500,000 $ - 600,000) ( 900,000 $ 900,000 $	December31,2019
		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

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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: 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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- (15) 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 December 31,2020 1.20% 4,160,000 $ 1.57% 300,000 1.56% 300,000 4,760,000 233,333) ( 4,526,667 $ Coupon Rate December 31,2019 1.45% 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.

(16) Pensions

A. Defined benefit plans

• (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

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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:

The amounts recognised in the balance sheet	are as follows:
	December31,2020	December	31,2019
Present value of defined benefit obligations	- $	($	716)
Fair value of plan assets	-		62,427
Net defined benefit asset	- $	$	61,711

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

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

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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, 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 2109 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

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

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

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obligation is affected. The analysis was as follows:

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

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.

• (17) Share-based payment

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

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:

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		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 Exercise price price $ 14.05 $ 13.50	Expected price volatility 50.49%	Expected option life 9 days	Risk-free interest Fair value rate per unit 0.49% $ 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:

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

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

(18) 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

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• 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 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.

(19) 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.

(20) 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

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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.

			Year ended	Year ended	December 31	December 31
		2020				2019
			Dividends					Dividends
			per share					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

(21) 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 $

~48~

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.

(22) Interest income

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

(23) 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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(24) 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.

(25) 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
	Operatingcosts 176,699 $ 17,896 8,234 21,878 973,795 3,575	Operatingexpenses Total 132,309 $ 309,008 $ 10,277 28,173 5,892 14,126 15,274 37,152 11,590 985,385 4,454 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	Operatingcosts Operatingexpenses Total 194,228 $ 160,721 $ 354,949 $ 15,441 10,898 26,339 7,297 5,075 12,372 27,566 20,427 47,993 988,701 26,359 1,015,060 4,301 2,391 6,692 Year ended December 31,2019

• 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.

(26) Income taxes

• A. Income tax expense

• (a) Components of income tax expense:

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		Year ended December	Year ended December	31
		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
(b) The income tax (charge)/credit relating to components follows:		of other comprehensive income is as

follows:
		Year ended December 31
		2020	2019
Remeasurement of defined benefit	$	-	361 $
obligations
Changes in fair value of financial assets at
fair value through other comprehensive
income	(	1,614)	-
	($	1,614)	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

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

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2020

									2020
												Recognised in
												other
						Disposals by	Recognised in					comprehensive
			At January1			the business			profit or loss			income			At December 31
－Deferred tax assets:
Temporary differences:
Provisions		$	8,072		$	-	($		3,911)		$	-		$	4,161
Impairment loss			37,763			-	(		24,450)			-			13,313
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)			-			-
Book-tax difference from			1,759	(		1,759)			-			-			-
lease
Deferred revenue			4,175	(		4,175)			-			-			-
Loss carryforward			381,245			-	(		72,519)			-			308,726
			436,419	(		5,934)	(		98,619)			1,614			333,480
－Deferred tax liabilities:
Temporary differences:
Defined benefit plan	(		8,025)			-			8,025			-			-
Unrealised exchange gain			-			-	(		6)			-	(		6)
Unrealised gain on valuation
of financial instruments	(		9,883)			-			9,110			-	(		773)
	(		17,908)			-			17,129			-	(		779)
Total		$	418,511	($		5,934)	($		81,490)		$	1,614		$	332,701
									2019
												Recognised in
												other
						Disposals by	Recognised in					comprehensive
			At January1			the business			profit or loss			income			At December 31
－Deferred tax assets:
Temporary differences:
Provisions		$	3,636		$	-		$	4,436		$	-		$	8,072
Impairment loss			195,213			-	(		157,450)			-			37,763
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
Book-tax difference from
lease			-			605			1,154			-			1,759
Deferred revenue			-			4,639	(		464)			-			4,175
Loss carryforward			397,612			460	(		16,827)			-			381,245
			610,601			5,704	(		179,886)			-			436,419
－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		$	5,704	($		189,769)	($		361)		$	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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(27) Earnings per share

Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ bonus Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ bonus Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	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 $
	Weighted average number of ordinary shares outstanding Amount after tax (shares in thousands) 1,018,057 $ 753,916 1,018,057 $ 753,916 - 1,259 1,018,057 $ 755,175	Earnings per share (in dollars)
		1.35 $
		1.35 $

(28) Business combinations

A. On April 30, 2019, the Group acquired a 100% equity interest in Chaiin Hotel for a consideration

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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.

(29) Supplemental cash flow information

• A. Investing activities with partial cash payments

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		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

(30) 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 borrowings payable At January 1 30,000 $ 1,500,000 $ Changes in cash flow from financing activities 30,000) ( 600,000) ( Changes from disposal of subsidiaries - - Changes in other non-cash items - - At December 31 - $ 900,000 $	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 $ 2020	Liabilities from financing activities-gross
		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			2019

7. Related Party Transactions

(1) 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))

(2) Significant related party transactions

A. Operating revenue:

nificant related party transactions Operating revenue:
Revenue from sales and rooms Entities with significant influence to the Group	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.

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B. Purchases

		Year ended	December	31
		2020		2019
Purchases of goods:
Entities with significant influence to the	$	9,335	$	5,446
Group
Other related parties		-		643
	$	9,335	$	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
		2,548 $

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

D. Interest expenses

E. Receivables from related parties Hannstar Accounts receivable: Entities with significant influence to the Group	Year ended December 31	Year ended December 31
	2020 29,390 $ December 31,2020 16,894 $	2019
		38,751 $
		December 31,2019
		451 $

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F. Payables to related parties

December 31, 2020 December 31, 2019

Accounts payable: Entities with significant influence to the Group Other payables: Entities with significant influence to the Group	2,486 $ 18 $ 1,964 $ 4,015 $

• G. Receipts in advance (shown as other current liabilities)

December31,2020 Hannstar 1,108,000 $	December31,2019 - $

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

Entities with significant influence to the Group	Disposal Disposal proceeds Gain/(loss) proceeds Gain/(loss) 14 $ 14 $ - $ - $ Year ended December 31 2020 2019	Disposal Disposal proceeds Gain/(loss) proceeds Gain/(loss) 14 $ 14 $ - $ - $ Year ended December 31 2020 2019	Disposal Disposal proceeds Gain/(loss) proceeds Gain/(loss) 14 $ 14 $ - $ - $ Year ended December 31 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).

(3) 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:

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

9. Significant Contingent Liabilities and Unrecognised Contract Commitments

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

(1) 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, 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.

(2) Commitments

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

Property, plant and equipment	December31,2020 40,635 $	December31,2019
		168,452 $

10. Significant Disaster Loss

None.

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11. Significant Events after the Balance Sheet Date

• (1) Refer to Notes 6(11), 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.

12. Others

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. To maintain or adjust the capital structure, the Company adjusted the capital structure through the issuance of new shares to borrow or repay loans.

(2) Financial instruments

• A. Financial instruments by category

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December 31, 2020 December 31, 2019

	December 31,2020	December 31,2019
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	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 $	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 $

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

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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:

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==> picture [439 x 385] intentionally omitted <==

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

December 31, 2020
Sensitivity analysis
Foreign
currency Effect on Effect on other
amount Exchange Book value Degree of profit comprehensive
(In thousands) rate (NTD) variation or loss income
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD $ 9,931 28.100 $ 279,061 1% $ 2,791 $ -
JPY:NTD 68,713 0.2725 18,724 1% 187 -
Financial liabilities
Monetary items
USD:NTD 1,639 28.100 46,056 1% 461 -
JPY:NTD 127,884 0.2725 34,848 1% 348 -
December 31, 2019
Sensitivity analysis
Foreign
currency Effect on Effect on other
amount Exchange Book value Degree of profit comprehensive
(In thousands) rate (NTD) variation or loss income
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD $ 13,549 29.980 $ 406,197 1% $ 4,062 $ -
JPY:NTD 120,067 0.2760 33,139 1% 331 -
Financial liabilities
Monetary items
USD:NTD 2,003 29.980 60,047 1% 600 -
JPY:NTD 101,771 0.2760 28,089 1% 281 -
----- End of picture text -----

• 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.

• 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.

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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;

• (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;

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• (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	Group 1 0.03%~100% - $ Group1 0.03%~100% - $	Group2 0.03% 272,960 $ Group 2 0.03% 426,640 $	Total
			272,960 $
			Total
			426,640 $

• 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 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

(c) Liquidity risk

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• 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 nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities were as follows:

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

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Non-derivative financial liabilities:

Less than December 31, 2019 1year Short-term borrowings 30,000 $ Notes payable 1,903 Accounts payable (including related parties) 163,292 Other payables (including related parties) 477,807 Current tax liabilities 3,528 Lease liability 83,033 Other current liabilities, others 11,926 Bonds payable (including put option on corporate bonds matured or exercised within 1 year) 600,000 Long-term borrowings (including current portion) -

Between Between Over 2 and 3years 3 and 4years 5years - $ - $ - $ - - - - - - - - - - - - 170,430 160,050 605,643 - - - 900,000 - - 695,603 789,232 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.

• (3) 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

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, shortterm 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.

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• 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:

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

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

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

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

• (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, 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.

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• 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:

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

Significant
December 31, 2020 Valuation unobservable Range (weighted Relationship of
Fair value technique input average) inputs to fair value
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
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
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13. Supplementary Disclosures

(1) 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.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland

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China): Please refer to table 4.

(3) 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.

(4) Major shareholders information

Major shareholders information: Please refer to Table 6.

14. Segment Information

(1) 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.

(2) 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.

(3) Measurement of segment information

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

is as follows:
Revenue from external customers Inter-segment revenue Total segment revenue Segment operating income (loss) Segment operating income (loss), including: Depreciation and amortisation		Year ended December 31, 2020
	Manufacturing of touch production 2,774,175 $ - 2,774,175 $ 347,684 $ 898,775 $	Adjustment and Others write-offs 312,224 $ - $ 99,109 99,109) ( 411,333 $ 99,109) ($ 67,310 $ 3,848 $ 168,274 $ 73,635) ($	Total
			3,086,399 $ -
			3,086,399 $
			418,842 $
			993,414 $

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Revenue from external customers Inter-segment revenue Total segment revenue Segment operating income (loss) Segment operating income (loss), including: Depreciation and amortisation	Manufacturing of touch Adjustment and production Others write-offs 4,199,530 $ 204,286 $ - $ - 29,701 29,701) ( 4,199,530 $ 233,987 $ 29,701) ($ 1,314,664 $ 51,530) ($ 2,194) ($ 939,037 $ 108,654 $ 25,939) ($ Year ended December 31,2019	Total 4,403,816 $ -
		4,403,816 $
		1,260,940 $
		1,021,752 $

(4) 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	Year ended December 31	Year ended December 31
	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 $
		1,177,044 $

(5) Geographical information

South Korea China Taiwan	Year ended December 31	Year ended December 31	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
	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 $

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(6) Major customer information

			Year ended	December 31	December 31
		2020			2019
		Revenue	Location		Revenue	Location
A	$	2,096,050	South Korea	$	3,120,698	South Korea
B		411,899	China		548,141	China

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HannsTouch Solution Incorporated and subsidiaries

Loans to others

Year ended December 31, 2020

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

Table 1
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(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 $ - $ 1,888,219 $ 2,832,328 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.

Table 1

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 Table 2	Marketable securities	Relationship with the securities issuer	General ledger account		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 Golden Apple Investment Corporation	Stock KHAM INC. YH Bio Co., Ltd. VITA GENOMICS, INC. Touch Cloud Inc. Hannstar Display Corp. Stock Chaiin Hotel Co., Ltd.	None None None None Other related parties None	Financial assets at fair value through profit or loss 〞 〞 〞 Financial assets at fair value through other comprehensive income 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% 3.40% 0.26% 3.42% 0.57% 19.00%	$ 200 44,229 1,432 386 193,411 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.

Table 2

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)

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 Display Relationship with the Considering the efficiency Negotiated based on in Tainan Science 2012~October 31, agreement by both 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.

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.

Table 3

HannsTouch Solution Incorporated and subsidiaries

Table 4

Information on investees

Year ended December 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

Investor	Investee	Location	Main business activities	Initial investment amount	Shares held as at December 31,2020	Net income of investee for the year ended December 31,2020	Investment income (loss) recognised by the Company for the year ended December 31, 2020 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 $ 148,434 $ 150,000 150,000 220,000 220,000	4,500 100.00 - $ 15,000 100.00 134,684 22,000 42.31 214,450	- $ 15,679) ( 16,888	- $ Note 1 15,679) ( 〞 20,885 〞

Note 1: The Company’s subsidiary.

Table 4

Table 5

HannsTouch Solution Incorporated and subsidiaries

Information on investments in Mainland China

Year ended December 31, 2020

(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

Accumulated amount of remittance from Taiwan to Investment amount approved by the Ceiling on investments in Mainland China Mainland China as of December Investment Commission of the Ministry of imposed by the Investment Commission of Company name 31, 2020 (Note 4) Economic Affairs (MOEA) 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.

Table 5

HannsTouch Solution Incorporated and subsidiaries

Major shareholders information

December 31, 2020

Table 6

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%

Table 6