Stock Code:1608

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2020 and 2019

Address: No. 170, Chung Cheng 4th Road, Kaohsiung, Taiwan, R.O.C. Telephone: 886-7-281-4161

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

Contents
1. Cover Page
2. Table of Contents
3. Representation Letter
4. Independent Auditors’ Report
5. Consolidated Balance Sheets
6. Consolidated Statements of Comprehensive Income
7. Consolidated Statements of Changes in Equity
8. Consolidated Statements of Cash Flows
9. Notes to the Consolidated Financial Statements
(1)
Company history
(2)
Approval date and procedures of the consolidated financial statements
(3)
New standards, amendments and interpretations adopted
(4)
Summary of significant accounting policies
(5)
Significant accounting assumptions and judgments, and major sources
of estimation uncertainty
(6)
Explanation of significant accounts
(7)
Related-party transactions
(8)
Pledged assets
(9)
Commitments and contingencies
(10) Losses due to major disasters
(11) Subsequent Events
(12) Other
(13) Other disclosures
(a) Information on significant transactions
(b) Information on investees
(c) Information on investment in Mainland China
(d) Major shareholders
(14) Segment information Page

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Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’ Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses due to major disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in Mainland China (d) Major shareholders (14) Segment information	Page
	1 2 3 4 5 6 7 8 9 9 9`～`11 11`～`29 29`～`30 30`～`67 67`～`68 69 69 69 69 69 70`～`71 72 72`～`73 73 73`～`75

Representation Letter

The entities that are required to be included in the combined financial statements of HUA ENG WIRE & CABLE CO., LTD. as of and for the year ended December 31, 2020 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 endorsed by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, HUA ENG WIRE & CABLE CO., LTD. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: HUA ENG WIRE & CABLE CO., LTD. Chairman: Zong-Ren Liu Date: March 22, 2021

Independent Auditors’ Report

To the Board of Directors HUA ENG WIRE & CABLE CO., LTD.

Opinion

We have audited the consolidated financial statements of HUA ENG WIRE & CABLE CO., LTD. (“ the Company”) and subsidiaries (“the Group”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 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 with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“ the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matters we judged shall be presented in the financial report as follows:

Valuation of inventory

Please refer to Note 4(h) for significant accounting policies on inventories and Note 5 for significant accounting assumptions and judgment, and major sources of estimation uncertainty, information regarding the inventory is shown in Note 6(f) of the consolidated financial statements.

4-1

Description of key audit matter:

The Group's inventories are wire, cable and copper products which are measured at the lower of cost and net realizable value. Since the selling price is affected by copper price which fluctuates wildly in recent years, the valuation of inventory is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures include assessing the reasonableness of inventory valuation and obsolescence, and evaluating the assumptions made by the management; corroborating, on a sample basis, by testing the accuracy of inventory aging, examining their net realizable value to the recent sales records and making an analysis on the trend of international copper price fluctuations.

Other Matter

The Company has prepared its parent-company-only financial statements as of and for the years ended December 31, 2020 and 2019, on which we have issued an unmodified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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.

4-2

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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on 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.
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.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method 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.

The engagement partners on the audit resulting in this independent auditors’ report are Cheng Lung, Hsu and Po Jen, Yang.

KPMG

Taipei, Taiwan (Republic of China) March 22, 2021

Notes to Readers

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

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

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2020 Amount % $ 394,201 3 1,171,537 9 75,947 1 11,767 - 904,275 7 11,155 - 2,811,269 23 81,126 1 5,461,277 44 2,133,288 17 59,922 - 11,617 - 3,125,844 26 323,009 3 1,119,678 9 82,300 1 12,789 - 406 - 4,471 - 8,874 - 6,882,198 56 $ 12,343,475 100	December 31, 2019 Amount % 639,066 5 939,131 8 117,698 1 25,637 - 888,477 7 12,962 - 2,715,124 22 41,016 - 5,379,111 43 2,223,185 18 74,895 1 12,676 - 2,983,585 24 346,081 3 1,066,497 9 138,999 1 69,006 1 418 - - - 8,874 - 6,924,216 57 12,303,327 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(n)) 2110 Short-term notes and bills payable (notes 6(n) and (o)) 2130 Current contract liabilities (note 6(w)) 2150 Notes payable (note 6(s)) 2170 Accounts payable 2180 Accounts payable to related parties (note 7) 2200 Other payables (notes 6(s)) 2280 Current lease liabilities (note 6(q)) 2300 Other current liabilities (notes 6(p) and (w)) Total current liabilities Non-Current liabilities: 2570 Deferred tax liabilities (note 6(t)) 2580 Non-current lease liabilities (note 6(q)) 2640 Non-current net defined benefit liability (note 6(s)) 2645 Guarantee deposits received Total non-current liabilities Total liabilities Equity attributable to owners of parent (notes 6(h) and (u)): 3110 Ordinary share 3200 Capital surplus 3300 Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity 3500 Treasury shares Total equity attributable to owners of parent: 36XX Non-controlling interests (notes 6(h) and (i)) Total equity Total liabilities and equity	December 31,	2020	December 31, 2019 Amount % 1,045,043 9 1,705,938 14 35,175 - 11,264 - 342,301 3 105 - 158,861 1 15,796 - 14,262 - 3,328,745 27 786,866 7 247,052 2 27,171 - 3,606 - 1,064,695 9 4,393,440 36 6,327,735 51 3,463 - - - 873,871 7 649,975 5 1,523,846 12 (44,801) - (968,671) (8) 6,841,572 55 1,068,315 9 7,909,887 64 12,303,327 100
Amount $ 394,201 1,171,537 75,947 11,767 904,275 11,155 2,811,269 81,126 5,461,277 2,133,288 59,922 11,617 3,125,844 323,009 1,119,678 82,300 12,789 406 4,471 8,874 6,882,198 $ 12,343,475	Amount 639,066 939,131 117,698 25,637 888,477 12,962 2,715,124 41,016 5,379,111 2,223,185 74,895 12,676 2,983,585 346,081 1,066,497 138,999 69,006 418 - 8,874 6,924,216 12,303,327	Amount	%	Amount 1,045,043 1,705,938 35,175 11,264 342,301 105 158,861 15,796 14,262 3,328,745 786,866 247,052 27,171 3,606 1,064,695 4,393,440 6,327,735 3,463 - 873,871 649,975 1,523,846 (44,801) (968,671) 6,841,572 1,068,315 7,909,887 12,303,327
			8 15 - - 3 - 1 - -
			27
			7 2 - -
			9
			36
			51
			-
			1 8 3
			12
			-

See accompanying notes to financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

4100
Operating revenues (note 6(w))
5000
Operating costs (notes 6(f), (s), (x), 7 and 12)
5900
Gross profit
6000
Operating expenses (notes 6(s), (x), 7 and 12)
6900
Net operating income (loss)
7000
Non-operating income and expenses (notes 6(f), (j), (p), (q), (r), (y) and 7):
7100
Interest income
7010
Other income
7020
Other gains and losses, net
7050
Finance costs
7060
Share of profit (loss) of associates and joint ventures accounted for using equity method, net
7900
Profit before income tax
7950
Less: Income tax expenses (benefit) (note 6(t))
8200
Profit
8300
Other comprehensive income (loss):
8310
Items that may not be reclassified subsequently to profit or loss:
8311
Remeasurements of defined benefit plans
8316
Unrealized 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 (note 6(t))
8300
Other comprehensive income (after tax)
8500
Comprehensive income
Profit attributable to:
8610
Owners of parent
8620
Non-controlling interests (note 6(i))
Comprehensive income (loss) attributable to:
8710
Owners of parent
8720
Non-controlling interests (note 6(i))
Earnings per share (note 6(v)):
9750
Basic earnings per share (in New Taiwan Dollars)
9850
Diluted earnings per share (in New Taiwan Dollars)

2020

See accompanying notes to financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

		Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent				Non-controlling interests
Ordinary shares	Capital surplus		Retained earnings				Other equity		Treasury shares		Total equity attributable to owners of parent
							Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income
		Legal reserve		Special reserve	Unappropriated retained earnings (deficit yet to compensated)
	254,959	93,079		873,871		(483,968) 792,653 (6,748) 785,905 93,079 254,959 - 649,975 323,664 (5,181) 318,483 (64,997) (165,826) (417,631) - 320,004		(27,279) - (17,522) (17,522) - - - (44,801) - 4,019 4,019 - - - - (40,782)		(912,919) - - - - - (55,752) (968,671) - - - - - - - (968,671)	6,125,478	1,161,837 (60,234) (3,314) (63,548) - - (29,974) 1,068,315 48,033 6,002 54,035 - - - - 1,122,350
	- -	- -		- -
	-	-		-
				- - -
				873,871
				- -
				-
				- 165,826 - -
				1,039,697

See accompanying notes to financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the 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 expense Net gain on financial assets at fair value through profit or loss Interest expense Interest income Dividend income Share of loss of subsidiaries, associates and joint ventures accounted for using equity method Loss (gain) on disposal of property, plant and equipment Provision reversal Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Net changes in operating assets: Decrease (Increase) in contract assets Decrease in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivables Increase in inventories Increase in other current assets Total net changes in operating assets Net changes in operating liabilities: Decrease in contract liabilities Decrease in notes payable Increase (decrease) in accounts payable Decrease in accounts payable to related parties Increase in other payables Increase in other current liabilities Decrease in net defined benefit liabilities Total net changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes refund (paid) Net cash flows from operating activities Cash flows used in investing activities: Acquisition of financial assets at fair value through profit or loss Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Acquisition of investment property Increase in prepayments for equipment Net cash flows used in investing activities Cash flows from (use in) financing activities: Increase (decrease) in short-term borrowings Increase in short-term notes and bills payable Increase in guarantee deposits received Payment of lease liabilities Cash dividends paid Acquisition of ownership interests of subsidiaries Net cash flows from (used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 $ 427,271 167,334 (49,916) 22,472 (75) (180,225) 1,059 (935) (1,221) (41,507) 41,751 13,870 (15,798) 2,596 (96,145) (40,110) (93,836) (13,230) (2,949) 5,536 (103) 12,369 4,149 (10,919) (5,147) (98,983) (140,490) 286,781 71 180,225 (10,756) 1 456,322 (92,593) 20,721 (222,160) 1,130 (774) (61,519) - (355,195) (56,251) 81,770 550 (15,796) (356,265) - (345,992) (244,865) 639,066 $ 394,201	2019 663,824 162,376 (650,799) 21,827 (149) (81,133) 1,152 730 (4,110) (550,106) (26,351) 5,633 151,790 (1,423) (13,348) (1,503) 114,798 (48,459) (5,688) (79,958) (390) 14,871 2,493 (85,323) (202,454) (87,656) (637,762) 26,062 149 81,181 (9,517) (18,281) 79,594 (59,875) - (155,002) 236 68,580 (150) (65,357) (211,568) 110,136 94,078 1,621 (15,568) - (87,248) 103,019 (28,955) 668,021 639,066

See accompanying notes to financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, unless otherwise specified)

(1) Company history:

Hua Eng Wire & Cable Co., Ltd. (“the Company”) was incorporated on December 8, 1956, as a company limited by shares and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company's registered office is No. 170, Chung Cheng 4th Road, Kaohsiung, Taiwan R.O.C. The Company and subsidiaries (together referred to as the "Group") is engaged in the processing, manufacture, sale and construction of wire, cable and copper products.

(2) Approval date and procedures of the consolidated financial statements:

The consolidated financial statements were authorized for issue by the Board of Directors on March 22, 2021.

(3) New standards, amendments and interpretations adopted:

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2020:

●Amendments to IFRS 3 “Definition of a Business”
●Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”
●Amendments to IAS 1 and IAS 8 “Definition of Material”
●Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its consolidated financial statements:

●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
－
●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform Phase 2”

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have not yet to be endorsed by the FSC:

Standards or
Interpretations
Amendments to IAS 1
“Classification of Liabilities as
Current or Non-current”
Amendments to IAS 16
“Property, Plant and
Equipment－Proceeds before
Intended Use”
Amendments to IAS 37
“Onerous Contracts－Cost of
Fulfilling a Contract”
Amendments to IAS 1
“Disclosure of Accounting
Policies” Content of amendment
Effective date per
IASB
The amendments aim to promote consistency
in applying the requirements by helping
companies
determine
whether,
in
the
statement of balance sheet, debt and other
liabilities with an uncertain settlement date
should be classified as current (due or
potentially due to be settled within one year)
or non-current. The amendments include
clarifying the classification requirements for
debt a company might settle by converting it
into equity.
January 1, 2023
The amendments prohibit a company from
deducting from the cost of property, plant
and equipment amounts received from
selling items produced while the company is
preparing the asset for its intended use.
Instead, a company will recognize such sales
proceeds and related cost in profit or loss.
January 1, 2022
The amendments clarify that the ‘ costs of
fulfilling a contract’ comprises the costs that
relate directly to the contract as follows:
●the incremental costs – e.g. direct labor
and materials; and
●an allocation of other direct costs – e.g. an
allocation of the depreciation charge for
an item of property, plant and equipment
used in fulfilling the contract.
January 1, 2022
The key amendments to IAS 1 include:
●requiring companies to disclose their
material accounting policies rather than
their significant accounting policies;
●clarifying that accounting policies related
to immaterial transactions, other events or
conditions are themselves immaterial and
as such need not be disclosed; and
●clarifying that not all accounting policies
that relate to material transactions, other
events or conditions are themselves
material to a company’ s financial
statements.
January 1, 2023

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Standards or
Interpretations
Amendments to IAS 8
“Definition of Accounting
Estimates”

Content of amendment
Effective date per
IASB
The amendments introduce a new definition
for accounting estimates: clarifying that they
are monetary amounts in the financial
statements that are subject to measurement
uncertainty.
The amendments also clarify the relationship
between accounting policies and accounting
estimates by specifying that a company
develops an accounting estimate to achieve
the objective set out by an accounting policy.
January 1, 2023

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

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

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Annual Improvements to IFRS Standards 2018-2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(4) Summary of significant accounting policies:

The significant accounting policies presented in the consolidated financial statements are summarized as follows. Except for those specifically indicated, the following accounting policies were applied consistently throughout the presented periods in the consolidated financial statements.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations” ) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, ROC.

(b) Basis of preparation

(i) Basis of measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on the historical cost basis:

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Financial assets at fair value through other comprehensive income are measured at fair value;
3) The defined benefit liability (assets) are recognized as the present value of the defined benefit obligation less the fair value of pension fund assets and the re-measurement of the effect of the asset ceiling as stated in note 4(p).
(ii) Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates.

The Group consolidated financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Basis of consolidation
(i) Principle of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, 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.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

(ii) List of subsidiaries in the consolidated financial statements

Name of Investor The Company	Name of Subsidiary First Copper Technology Co., Ltd.	Business Activity Processing, manufacture and sale of copper wire and copper plate	Shareholding December 31, 2020 December 31, 2019 Description % 39.44 % 39.44 The Company accounted for 4 of the 7 directors of First copper Technology Co., Ltd, who can, directly or indirectly, control its personnel, finance or business activities. (Note1)
			December 31, 2020 % 39.44

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

==> picture [427 x 131] intentionally omitted <==

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

Shareholding
Name of Name of Business December 31, December 31,
Investor Subsidiary Activity 2020 2019 Description
The Company Hua Ho Engineering Co., Design, bidding and 49.31 % 49.31 % The Company
Ltd. construction of general accounted for 2 of the 4
electrical engineering and directors of Hua Ho
communication engineering Engineering Co., Ltd,
who can, directly or
indirectly, control its
personnel, finance or
business activities.
(Note2)
First Copper Hua Ho Engineering Co., Design, bidding and 0.29 % 0.29 % (Note 2)
Technology Co., Ltd. Ltd. construction of general
electrical engineering and
communication engineering
----- End of picture text -----

Note 1: Significant subsidiary.

Note 2: Non-significant subsidiary.

(iii) Subsidiaries excluded from the consolidated financial statements: None.
(d) Foreign currencies

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

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

(i) an investment in equity securities designated as at fair value through other comprehensive income;
(ii) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
(iii) qualifying cash flow hedges to the extent that the hedges are effective.
(e) Classification of current and non-current assets and liabilities

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

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or

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HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

(i) It is expected to be settled in its normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(f) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. The time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes are reclassified as cash equivalents.

(g) Financial instruments

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

(i) Financial assets

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

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Financial assets measured at amortized cost

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

‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

2) Fair value through other comprehensive income (FVOCI )

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

‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Some accounts receivables are held within a business model whose objective is achieved by both collecting contractual cash flows and selling by the Group, therefore, those receivables are measured at FVOCI and presented as accounts receivable.

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

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

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

Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment is established.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4) Business model assessment

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

‧ the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether the management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
‧ how the performance of the portfolio is evaluated and reported to the Group’ s management;
‧ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
‧ how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
‧ the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

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

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

5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

‧ contingent events that would change the amount or timing of cash flows ；
‧ terms that may adjust the contractual coupon rate, including variable rate features ；
‧ prepayment and extension features ； and
‧ terms that limit the Group’ s claim to cash flows from specified assets (e.g. nonrecourse features).
6) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables and guarantee deposit paid), debt investments measured at FVOCI and contract assets.

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

‧ debt securities that are determined to have low credit risk at the reporting date ； and
‧ other debt securities and bank deposit for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

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

The Group considers its financial instrument to have low credit risk when it is in low default risk, and the debtor has strong ability to perform contractual obligations to the current cash flow if adverse change in economic and business conditions may (not necessarily) reduce the debtor's ability to perform its obligations to the cash flow over a longer period of time.

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

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group considers a financial asset to be in default when the financial asset is more than 180 days past due or the debtor is unlikely to pay its credit obligations to the Group in full.

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

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

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

ECL are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECL are discounted at the effective interest rate of the financial asset.

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

‧ significant financial difficulty of the borrower or issuer ；
‧ a breach of contract such as a default or being more than 180 days past due ；
‧ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider ；
‧ it is probable that the borrower will enter bankruptcy or other financial reorganization ； or
‧ the disappearance of an active market for a security because of financial difficulties.

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

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) Derecognition of financial assets

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

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

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

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

2) Equity instrument

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

3) Treasury shares

The consolidated subsidiary holds the shares of the Company when preparing the consolidated financial report, it is treated as treasury stock processing.

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

4) Financial liabilities

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

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

5) Derecognition of financial liabilities

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

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

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on weighted average costing principle and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(i) Investment in associates

Associates are those entities in which the Group has significant influence, but not control or joint control, over their consolidated financial and operating policies. Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Group’ s share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Group from the date on which significant influence commences until the date on which significant influence ceases. The Group recognizes any changes, of its proportionate share in the investee within capital surplus, when an associate's equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual significant in influence.

Unrealized gains and losses resulting from the transactions between the Group and an associate are recognized only to the extent of unrelated Group's interests in the associate.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

When the Group’s share of losses of an associate equals or exceeds its interest in associates, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

(j) Investment property

Investment property is the property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, for use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at cost less accumulated depreciation and accumulated impairment losses.Depreciation expense is calculated based on the depreciation method, useful lives, and residual value which are the same as those adopted for property, plant and equipment.

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

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

(k) Property, plant and equipment
(i) Recognition and measurement

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

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

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

(ii) Subsequent expenditure

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

(iii) Depreciation

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

Land is not depreciated.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The estimated useful lives for the current and comparative years are as follows:

1)	Buildings	1 to 55 years
2)	Machinery and equipment	1 to 25 years
3)	Other equipment	1 to 20 years

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

(iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property.

(l) Lease

(i) Identifying a lease

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

－ the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
－ the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
－ the customer has the right to direct the use of the asset throughout the period of use only if either:
(1) the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or
(2) the relevant decisions about how and for what purpose the asset is used are predetermined and:
the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

On the date of lease establishment or reassessment of whether the contract includes a lease, the Group allocates the consideration in the contract to each lease components on the basis of their relative stand-alone price.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) As a lessee

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

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

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

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

－ fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－ amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

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

－ there is a change in future lease payments arising from the change in an index or rate; or
－ there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－ there is a change of its assessment on whether it will exercise an extension or termination option; or
－ there is any lease modifications

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

The Group has elected not recognize right-of-use assets and lease liabilities for short-term leases of office spaces and equipments that have a lease term of 12 months or less. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(iii) As a lessor

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

The Group recognizes lease payments received under operating leases as income on a straightline basis over the lease term as part of ‘rental income’.

(m) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’ s recoverable amount is estimated.

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

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

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

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(n) Provisions

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

Provision for onerous contracts

The provision for onerous contracts is recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract or the expects net cost of continuing with the contract. Before a provision is established. the Group recognizes any impairment loss on the assets associated with that contract.

(o) Revenue

(i) Revenue from contracts with customers

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

1) Sale of goods

The Group recognizes revenue when control of the products has been transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

The Group grants its customers the right to return the product within a period. Therefore, the Group reduces revenue by the amount of expected returns and recognizes a refund liability and a right to the returned goods. Accumulated experience is used to estimate such returns at the time of sale in past. Because the number of products returned has been steady for years, it is highly probable that a significant reversal in the cumulative revenue recognized will not occur. At each reporting date, the Group reassesses the estimated amount of expected returns.

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Construction contracts

The Group enters into contracts to constructions. Because its customer controls the asset as it is constructed, the Group recognizes revenue over time on the basis of the construction costs incurred to date as a proportion of the total estimated costs of the contract. The consideration promised in the contract includes fixed and variable amounts. The customer pays the fixed amount based on a payment schedule, for some variable considerations, accumulated experience is used to estimate the amount of variable consideration, using the expected value method; for other variable considerations, the Group estimates the amount of variable consideration using the most likely amount. The Group recognizes revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. If the Group has recognized revenue, but not issued a bill, then the entitlement to consideration is recognized as a contract asset. The contract asset is transferred to receivables when the entitlement to payment becomes unconditional.

If the Group cannot reasonably measure its progress towards complete satisfaction of the performance obligation of a construction contract, the Group shall recognize revenue only to the extent of the costs expected to be recovered.

A provision for onerous contracts is recognized when the Group expects the unavoidable costs of performing the obligations under a construction contract exceed the economic benefits expected to be received under the contract.

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

3) Financing components

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

(ii) Contract costs

1) Incremental costs of obtaining a contract

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

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Costs to fulfil a contract

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

‧ the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify;
‧ the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and
‧ the costs are expected to be recovered.

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

(p) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

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

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

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

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(q) Income taxes

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

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

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

(i) Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) Taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) The Group has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) different taxable entities which intends to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(r)

Earnings per share

The Group discloses the basic and diluted earnings per share attributable to common shares holders of the Company. The basic earnings per share are calculated as the profit attributable to the common shareholders of the Company divided by the weighted-average number of common shares outstanding. The diluted earnings per share are calculated as the profit attributable to common shareholders of the Company divided by the weighted-average number of common shares outstanding after adjustment for the effects of all dilutive potential common shares, such as employee bonus not yet resolved by the shareholders.

(s)

Operating segments

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

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

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

The management continues to monitor the accounting estimates and assumptions. It recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

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

Valuation of inventories

Because the Group's selling price is affected by international copper price, there is an uncertainty risk on the estimation of inventories' net realizable value resulting from the copper price fluctuations. Please refer

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

to note 6(f) for further description of the valuation of inventories.

The Group’s accounting policies and disclosing include measuring financial and non-financial assets at fair value.

The Group's financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back-testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value.

When measuring the fair value of an asset, the Group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

(a) Level 1: quoted prices (unadjusted) in active markets for identified assets or liabilities.
(b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
(c) Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs).

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date.

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

December 31, 2020 Cash and cash on hand $ 405 Checking deposits and demand deposits 393,796 Cash and cash equivalents in the consolidated statement of cash flows $ 394,201	December 31, 2019
	599 638,467
	639,066

Please refer to note 6(z) for the exchange rate risk, sensitivity analysis and credit risk of the financial assets of the Group.

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

December 31, 2020 Mandatorily measured at fair value through profit or loss`：` Non-derivative financial assets Publicly traded stocks $ 2,821,993 Non-publicly traded stocks 482,832 $ 3,304,825	December 31, 2019
	2,869,663 292,653
	3,162,316

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2020 Classified as`：` Current $ 1,171,537 Non-current 2,133,288 $ 3,304,825	December 31, 2019
	939,131 2,223,185
	3,162,316

For the net gain or loss on financial assets at FVTPL, please refer to note 6(y).

The Group did not provide above financial assets at fair value through profit or loss as collateral or restricted.

December 31,
2020
Equity investments at fair value through other
comprehensive income：
Non-publicly traded stocks - International United
Technology Co., Ltd.
$ 7,820
Non-publicly traded stocks - Pack & Proper Co.,
Ltd.
8,040
Non-publicly traded stocks - Global Corporation
-
Non-publicly traded stocks - United Electronics
Industrial Co., Ltd.
13,290
Non-publicly traded stocks - Taiwan Sugar
Corporation
26,766
Non-publicly traded stocks - Taiwan Submarine
Cable Co., Ltd. (Original name is Illchi United
Trading Corporation)
220
Liquidation receivables of Global Corporation
3,786
$
59,922 December 31,
2019

6,368
19,040
13,092
9,403
26,692
300
-

74,895

December 31, 2020 Equity investments at fair value through other comprehensive income`：` Non-publicly traded stocks - International United Technology Co., Ltd. $ 7,820 Non-publicly traded stocks - Pack & Proper Co., Ltd. 8,040 Non-publicly traded stocks - Global Corporation - Non-publicly traded stocks - United Electronics Industrial Co., Ltd. 13,290 Non-publicly traded stocks - Taiwan Sugar Corporation 26,766 Non-publicly traded stocks - Taiwan Submarine Cable Co., Ltd. (Original name is Illchi United Trading Corporation) 220 Liquidation receivables of Global Corporation 3,786 $ 59,922	December 31, 2019
	6,368 19,040 13,092 9,403 26,692 300 -
	74,895

The Group designated its equity investments shown above as at fair value through other comprehensive income because these equity investments that the Group intends to hold for long-term strategic purposes.

During the years ended December 31, 2020 and 2019, the dividends of $7,726 and $2,534, respectively, related to equity investments as fair value through other comprehensive income held on the years then ended, were recognized.

The amount of cash refuned from capital redction of Global Corporation in 2020 was $20,721.

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments in 2020.

For market risk information, please refer to note 6(z).

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group did not provide above financial assets at fair value through other comprehensive income as collateral or restricted.

(d) Notes and accounts receivable

December 31, 2020 Notes receivable from operating activities $ 11,767 Accounts receivable-measured at amortized cost 891,464 Accounts receivable-measured at fair value through other comprehensive income 12,811 Less: Loss allowance - $ 916,042	December 31, 2019
	25,637 883,958 4,519 -
	914,114

The Group has assessed a portion of its accounts receivable that was held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; therefore, such accounts receivable was measured at fair value through other comprehensive income.

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, notes and accounts receivable have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision was determined as follows:

December 31, 2020 Gross carrying amounts of notes and accounts receivable Weighted- average loss rate $ 916,042 - - - $ 916,042 December 31, 2019	December 31, 2020 Gross carrying amounts of notes and accounts receivable Weighted- average loss rate $ 916,042 - - - $ 916,042 December 31, 2019
		Loss allowance provision
		- -
		-

Gross carrying amounts of notes and accounts receivable $ 914,114 - $ 914,114	Weighted- average loss rate - -	Loss allowance provision
		- -
		-

The movement in the allowance for notes and accounts receivable were as follow:

Balance at January 1 (Balance at December 31)	2020 $ -	2019
		-

The Group did not provide notes and accounts receivable as collateral or restricted.

For further credit risk information, please refer to note 6(z).

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group entered into separate factoring agreements with different financial institutions to sell its accounts receivable. Under the agreements, the financial institution is required to bear the credit risk of un-collection of accounts receivable due to any non-business dispute or financial difficulty. The Group derecognized the above accounts receivable because it has transferred substantially all of the risks and rewards of their ownership, and it does not have any continuing involvement in them. The amounts receivable from the financial institutions were recognized as other receivable upon the derecognition of those accounts receivable. The Group sold its accounts receivable without recourse as follows:

as follows:
	December 31, 2020
Purchaser Amount derecognized Taishin Bank $ 10,624 CTBC Bank 22,664 CTBC Bank 2,162 $ 35,450	Amount advanced Unpaid paid 9,561 7,027 20,398 20,398 1,946 - 27,425	Amount recognized in other receivables 3,597 2,266 2,162 8,025	Range of interest rate Significant transferring terms 0.86%~0.93% None 0.93% None - None
	Unpaid 9,561 20,398 1,946

		December 31, 2019	December 31, 2019
Purchaser Amount derecognized Taishin Bank $ 16,337 CTBC Bank 26,270 CTBC Bank 2,980 $ 45,587		Amount advanced Unpaid paid 14,704 14,704 23,643 21,728 2,682 - 36,432	Amount recognized in other receivables 1,633 4,542 2,980 9,155	Range of interest rate Significant transferring terms 2.75%~2.88% None 2.80% None - None
		Unpaid 14,704 23,643 2,682

(e) Other receivables (including refundable deposits)

December 31, 2020 Other receivables-the difference of purchasing price materials $ - Other receivables-factoring accounts receivable 8,025 Refundable deposits 1,413 Others 2,123 Less: Loss allowance - $ 11,561 December 31, 2020 Classified as: Other receivables $ 11,155 Refundable deposits 406 $ 11,561	December 31, 2019
	2,368 9,155 639 1,218 -
	13,380
	December 31, 2019
	12,962 418
	13,380

For further credit risk information, please refer to note 6(z).

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(f) Inventories

December 31,
2020
Finished goods
$ 828,538
Work in progress
960,910
Raw materials and supplies
597,508
Merchandise
33,946
Inventory in transit
390,367
$
2,811,269
The details of the cost sales were as follows:
2020
Inventory that has been sold
$ 6,922,657
Write-down of inventories (reversal of write-downs)
(28,167)
Unallocated production overheads
139,180
Construction cost
73,738
Others
(14,436)
$
7,092,972

December 31,
2019
796,077
965,428
613,690
56,669
283,260
2,715,124
2019
7,216,366
(3,144)
117,986
408,937
(5,587)
7,734,558

The Group did not provide any inventories as collateral or restricted.

(g) Investments accounted for using equity method
(i) A summary of the Group's financial information for investments accounted for using the equity method at the reporting date is as follows:

December 31, 2020 Associates $ 11,617	December 31, 2019
	12,676

(ii) The Group's financial information for investments accounted for using the equity method that are individually insignificant was as follows:

December 31, 2020 Carrying amount of individually insignificant associates’ equity $ 11,617 2020 Attributable to the Group: Loss from continuing operations $ (1,059) Other comprehensive income - Total comprehensive income $ (1,059)	December 31, 2019 12,676 2019 (1,152) - (1,152)

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Collateral

The Group did not provide any investments accounted for using the equity method as collateral for its loans.

(h) Changes in a parent's ownership interest in a subsidiary

In 2019, the Group acquired an additional interest in First Copper Technology Co., Ltd. for $82,263 in cash increasing its ownership from 37.17% to 39.44%.

The effects of the changes in shareholdings were as follows:

The effects of the changes in shareholdings were as follows:
		2019
Carrying amount of non-controlling interest on
acquisition	$	85,726
Consideration paid to non-controlling interests		(82,263)
Capital surplus differences between consideration and
carrying amounts subsidiaries acquired	$	3,463

(i) Material non-controlling interests of subsidiaries

The material non-controlling interests of subsidiaries were as follows:

Subsidiaries First Copper Technology Co., Ltd. Hua Ho Engineering Co., Ltd.	Main operation place Taiwan Taiwan	Percentage of non-controlling interests December 31, 2020 December 31, 2019 % 60.56 % 60.56 % 50.58 % 50.58

The following information of the aforementioned subsidiaries have been prepared in accordance with the regulations governing the preparation of financial reports by securities issuers. Included in this information are the fair value adjustment made during the acquisition and relevant difference in accounting principles between the Group as at the acquisition date. Intragroup transactions were not eliminated in this information.

(i) First Copper Technology Co., Ltd.'s collective financial information:

December 31, 2020 Current assets $ 1,854,780 Non-current assets 4,183,631 Current liabilities (1,223,804) Non-current liabilities (265,888) Net assets $ 4,548,719 Non-controlling interests $ 1,105,368	December 31, 2019 1,990,131 3,305,521 (1,345,106) (272,975) 3,677,571 1,051,448

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2020
Operating revenues
$
2,260,596
Profit (loss)
$ 79,210
Other comprehensive income
791,938
Comprehensive income
$
871,148
Profit (loss), attributable to non-controlling
interests
$
47,970
Comprehensive income, attributable to non-
controlling interests
$
53,920
Net cash flows from operating activities
$ 14,635
Net cash flows from investing activities
(155,923)
Net cash flows from financing activities
(156,256)
Net increase (decrease) in cash and cash
equivalents
$
(297,544)
Paid cash dividends of non-controlling interest
$
-

2019
2,544,943
(99,342)
150,856
51,514
(60,887)
(64,263)
66,692
(132,219)
146,802
81,275
-

(ii) Hua Ho Engineering Co., Ltd.'s collective financial information:

December 31,
2020
Current assets
$ 37,577
Non-current assets
3,699
Current liabilities
(6,307)
Non-current liabilities
(1,274)
Net assets
$
33,695
Non-controlling interests
$
16,982
2020
Operating revenues
$
35,049
Profit
$ 127
Other comprehensive income
103
Comprehensive income
$
230
Profit, attributable to non-controlling interests
$
63
Comprehensive income, attributable to non-
controlling interests
$
115
Net cash flows from operating activities
$ 17,295
Net cash flows from investing activities
(1,164)
Net cash flows from financing activities
(6,528)
Net increase in cash and cash equivalents
$
9,603
Paid cash dividends of non-controlling interest
$
-

December 31,
2019
56,895
3,043
(25,027)
(1,446)
33,465
16,867
2019
45,520
1,295
123
1,418
653
715
(2,429)
(2,001)
6,456
2,026
-

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Property, plant and equipment

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

Land Cost or deemed cost: Balance at January 1, 2020 $ 2,056,148 Additions - Reclassifications - Disposals - Balance at December 31, 2020 $ 2,056,148 Balance at January 1, 2019 $ 2,056,148 Additions - Reclassifications - Disposals - Balance at December 31, 2019 $ 2,056,148 Depreciation and impairment loss: Balance at January 1, 2020 $ - Depreciation - Disposals - Balance at December 31, 2020 $ - Balance at January 1, 2019 $ - Depreciation - Disposals - Balance at December 31, 2019 $ - Carrying amounts: Balance at December 31, 2020 $ 2,056,148 Balance at January 1, 2019 $ 2,056,148 Balance at December 31, 2019 $ 2,056,148	Buildings 1,415,744 15,696 14,823 (120) 1,446,143 1,396,473 18,612 3,804 (3,145) 1,415,744 1,144,077 36,286 (120) 1,180,243 1,111,886 34,394 (2,203) 1,144,077 265,900 284,587 271,667	Machinery and equipment 6,043,777 54,373 24,287 (118,152) 6,004,285 5,968,829 82,952 14,292 (22,296) 6,043,777 5,628,536 95,639 (117,957) 5,606,218 5,557,901 92,907 (22,272) 5,628,536 398,067 410,928 415,241	Other equipment 131,193 3,434 - (4,516) 130,111 127,130 8,100 92 (4,129) 131,193 117,496 3,999 (4,516) 116,979 118,143 3,482 (4,129) 117,496 13,132 8,987 13,697	Construction in progress and testing equipment 226,832 204,875 (39,110) - 392,597 199,483 45,537 (18,188) - 226,832 - - - - - - - - 392,597 199,483 226,832	Total 9,873,694 278,378 - (122,788) 10,029,284 9,748,063 155,201 - (29,570) 9,873,694 6,890,109 135,924 (122,593) 6,903,440 6,787,930 130,783 (28,604) 6,890,109 3,125,844 2,960,133 2,983,585

The property, plant and equipment of the Group has not been pledged as collateral or restricted.

For the gains or losses on disposal of the property, plant and equipment, please refer to note 6(y).

(k) Right- of- use assets

Information about leases land for which the Group as a lessee was presented below:

		Land
Cost:
Balance at January 1, 2020	$	369,153
Balance at December 31, 2020	$	369,153
Balance at January 1, 2019	$	369,153
Balance at December 31, 2019	$	369,153

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

		Land
Accumulated depreciation:
Balance at January 1, 2020	$	23,072
Depreciation for the year		23,072
Balance at December 31, 2020	$	46,144
Balance at January 1, 2019	$	-
Depreciation for the year		23,072
Balance at December 31, 2019	$	23,072
Carrying amount:
Balance at December 31, 2020	$	323,009
Balance at December 31, 2019	$	346,081

(l) Investment property

The details of investment property were as follows:

Owned property
Land and
improvements
Buildings
and others
Cost or deemed cost:
Balance at January 1, 2020
$ 935,375
261,717
Additions
61,252
267
Disposals
-
(8,001)
Balance at December 31, 2020
$
996,627
253,983
Balance at January 1, 2019
$ 935,375
261,567
Additions
-
150
Balance at December 31, 2019
$
935,375
261,717
Depreciation and impairment loss:
Balance at January 1, 2020
$ -
130,595
Depreciation
-
8,338
Disposals
-
(8,001)
Balance at December 31, 2020
$
-
130,932
Balance at January 1, 2019
$ -
122,074
Depreciation
-
8,521
Balance at December 31, 2019
$
-
130,595
Carrying amount:
Balance at December 31, 2020
$
996,627
123,051
Balance at January 1, 2019
$
935,375
139,493
Balance at December 31, 2019
$
935,375
131,122

Total
1,197,092
61,519
(8,001)
1,250,610
1,196,942
150
1,197,092
130,595
8,338
(8,001)
130,932
122,074
8,521
130,595
1,119,678
1,074,868
1,066,497

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Fair value:
Balance at December 31, 2020	$	1,782,457
Balance at December 31, 2019	$	1,719,703

The Group did not have any non-cancellable lease or contingent rental. For information about investment property leases, please refer to note 6(r).

As of December 31, 2020 and 2019, the fair value of the investment property was determined based on comparative method and cost method by the Group. The recurring fair value measurement for the investment property based on the inputs of levels of fair value hierarchy in determining the fair value is classified to Level 3.

Investment property of the Group has not been pledged as collateral or restricted.

(m) Other current assets and other non-current assets

The other current assets and other non-current assets of the Group were as follows:

December 31, 2020 Prepaid expenses $ 3,946 Prepaid raw materials and construction 39,763 Excess business tax paid and refundable tax 28,323 Right to the returned goods 8,445 Others 9,523 $ 90,000 December 31, 2020 Current $ 81,126 Non-current 8,874 $ 90,000	December 31, 2019
	4,558 12,388 18,386 5,030 9,528
	49,890
	December 31, 2019
	41,016 8,874
	49,890

(n) Short-term borrowings

Details of short-term borrowings of the Group were as follows:

December 31, 2020 Letters of credit $ 178,792 Unsecured loans 810,000 Total $ 988,792 Unused credit lines $ 4,603,618 Range of interest rates 0.80%~1.05%	December 31, 2019
	232,043 813,000
	1,045,043
	4,341,399
	0.55%~2.69%

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group did not provide any assets as collateral for short-term borrowings.

Please refer to note 6(z) for exchange rate risk, interest rate risk, sensitive analysis and liquid risk of the financial liabilities of the Group.

(o) Short-term notes and bills payable

Details of short-term notes and bills payable of the Group were as follows:

December 31, 2020 Commercial paper payable $ 1,799,484 Range of interest rates 0.948%~0.950%	December 31, 2019
	1,705,938
	0.988%~1.238%

The Group did not provide any assets as collateral for short-term notes and bills payable.

Unused credit lines for short-term notes and bills payable are combined in short-term borrowings, please refer to note 6(n).

(p) Other current liabilities

Details of other current liabilities of the Group were as follows:

December 31, 2020 Advance receipts $ 4,455 Provision of onerous contracts 559 Refund liabilities 9,698 Temporary credits 2,177 Others 301 $ 17,190	December 31, 2019
	3,470 1,780 6,693 2,066 253
	14,262

The movement of provisions were as follows:

		Onerous
		contracts
Balance at January 1, 2020	$	1,780
Provisions used and reversed during the year		(3,618)
Provisions made during the year		2,397
Balance at December 31, 2020	$	559
Balance at January 1, 2019	$	5,890
Provisions used and reversed during the year		(5,879)
Provisions made during the year		1,769
Balance at December 31, 2019	$	1,780

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The movement of provisions of onerous contracts were included in other gains or losses of nonoperating income and expense in the consolidated statements of comprehensive income, please refer to note 6(y).

(q) Lease liabilities

The carrying amounts of lease liabilities of the Group was as follows:

December 31, 2020 Current $ 16,027 Non-current $ 231,025	December 31, 2019
	15,796
	274,052

For the maturity analysis, please refer to note 6(z) financial instruments.

The amounts recognized in profit or loss was as follows:

Interest on lease liabilities Expenses relating to short-term leases		2020 2019 3,567 3,795 1,611 2,143
	$ $

The amounts recognized in the statement of cash flows for the Group was as follows:

Total cash outflow for leases	2020 $ 20,524	2019
		21,519

(i) Real estate leases

The Group leases land from Taiwan Sugar Corporation for its plant. The leases of plant typically run for a period of 40 years.

Leases provide for additional rent payments that are based on changes in declared land price.

(ii) Other leases

The Group also leases some office space and equipment. These leases are short-term with a lease term of less than one year. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases.

(r) Operating lease

Leases as lessor

The Group leases out its investment property. The Group has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(l) sets out information about the operating leases of investment property.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

December 31, 2020 Less than one year $ 35,226 One to two years 11,417 Two to three years 5,253 Three to four years 1,680 Four to five years 1,260 Total undiscounted lease payments $ 54,836	December 31, 2019
	36,702 23,422 6,670 1,401 -
	68,195

In 2020 and 2019, the rental income for investment property amounting to $43,237 and $36,899, respectively, is included in other income in the consolidated statements of comprehensive income.

The direct expenses including repairs and maintenance arising from income-generating investment property amounting to $6,093 and $5,399 in 2020 and 2019, respectively, are included in other gains and losses in the consolidated statements of comprehensive income.

(s) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value were as follows:

December 31, 2020 Present value of the defined benefit obligations $ 417,305 Fair value of plan assets (432,722) Net defined benefit liabilities $ (15,417) Classified as: December 31, 2020 Net defined benefit assets $ 4,471 Net defined benefit liabilities (19,888) $ (15,417)	December 31, 2019 439,723 (466,894) (27,171) December 31, 2019 - (27,171) (27,171)

The Group makes defined benefit plan contributions to the labor pension fund account and manager pension fund account, respectively, with Bank of Taiwan. Such accounts provide pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle retired employees to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Composition of plan assets

The Group allocates its labor pension funds in accordance with the Labor Standards Law, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. According to the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, the minimum earnings of the funds will be no less than the earnings attainable from two-year time deposits, with interest rates offered by local banks.

The balance of the Group's pension reserve accounts for labor and managers in Bank of Taiwan amounted to $417,305 at the end of the reporting period. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor. The pension funds for mangers deposited with time deposits and demand deposits.

2) Movements in present value of the defined benefit obligations

The movements in present value of the defined benefit obligations for the Group were as follows:

2020
Defined benefit obligations at January 1
$ 466,894
Current service costs and interest
6,457
Remeasurement of the net defined benefit
liabilities :
–Actuarial loss (gain) arising from change in
financial assumptions
15,072
–Actuarial loss (gain) arising from change in
demographic assumptions
-
–Actuarial loss (gain) arising from experience
adjustments
(2,786)
Benefits paid by the plan
(52,915)
Defined benefit obligations at December 31
$
432,722

2019
459,171
7,672
6,725
(214)
15,484
(21,944)
466,894

3) Movements in the fair value of plan assets

The movements in the fair value of the plan assets for the Group were as follows:

2020 Fair value of plan assets at January 1 $ 439,723 Interest income 4,008 Remeasurements of the net defined benefit liabilities: -Return on plan assets (excluding interest income) 13,121 Contributions made 13,368 Benefits paid by the plan (52,915) Fair value of plan assets at December 31 $ 417,305	2019 356,339 3,894 12,333 89,101 (21,944) 439,723

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group were as follows:

2020 Current service costs $ 2,253 Net interest of net defined benefit liabilities 196 $ 2,449 Operating costs $ 2,153 Operating expenses 296 $ 2,449	2019
	2,690 1,088
	3,778
	3,335 443
	3,778

5) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increase rate	December 31, 2020 December 31, 2019 0.500% 0.750 %`～`1.000 % % 1.000 % 1.000

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date is $10,441.

The weighted-average lifetime of the defined benefits plans is 8.13 years to 9.92 years.

6) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

		Influences of defined benefit	Influences of defined benefit
		obligations
		Increased	Decreased
As of December 31, 2020
Discount rate (Decreasing or increasing in
0.25%)	$	(8,522)	8,788
Future salary increasing rate (Decreasing or
increasing in 0.25%)		8,506	(8,291)
As of December 31, 2019
Discount rate (Decreasing or increasing in
0.25%)	$	(9,841)	9,504
Future salary increasing rate (Decreasing or
increasing in 0.25%)		9,243	(9,003)

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2020 and 2019.

(ii) Defined contribution plans

The Group allocates 6% of each employee’ s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Group allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The Group recognized the pension costs under the defined contribution method amounting to $17,843 and $17,436 for 2020 and 2019, respectively. The payment was made to the Bureau of Labor Insurance. As of December 31, 2020 and 2019, the payables which had not been contributed to the Bureau of Labor Insurance were $3,293 and $3,280, respectively, and they were recognized as notes payable and other payables in the consolidated balance sheets.

(iii) Short-term benefit obligation

As of December 31, 2020 and 2019, the Group’s short-term benefit liabilities for vacation were $20,009 and $20,134, respectively, and were recognized as other payables in the consolidated balance sheets.

(t) Income taxes

(i) The amount of income tax expense (benefit) was as follows:

2020 Current tax benefit Current period $ - Adjustment for prior years - - Deferred tax expense (benefit) Origination and reversal of temporary differences and tax losses 58,559 Change in unrecognized deferred tax assets of deductible temporary differences and tax losses (2,985) 55,574 Income tax expense (benefit) $ 55,574	2019 - (110) (110) (93,885) 25,400 (68,485) (68,595)

No income tax was recognized directly in equity for 2020 and 2019.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amount of income tax recognized in other comprehensive income for 2020 and 2019 was as follows:

2020 Items not reclassified to profit or loss`：` Remeasurements of the net defined benefit liability $ 1,742	2019
	-

Reconciliation of income tax expense (benefit) and profit before tax for 2020 and 2019 were as follows:

2020
Profit before income tax
$
427,271
Income tax using the Company’s domestic tax rate $ 85,454
Unrealized gains on valuation of financial assets
(9,983)
Dividends income
(34,844)
Dividends income which does not count in tax loss
carryforward
17,552
Non-deductible expenses
-
Effect of investment losses (gains) under equity
method
213
Compensate for loss reduction of investees
-
Changes in unrecognized temporary differences
and tax losses
(2,985)
Adjustments for prior periods
-
Others
167
$
55,574

2019
663,824
132,765
(130,160)
(16,226)
16,678
108
230
(97,274)
25,400
(110)
(6)
(68,595)

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

Deferred tax assets of the Group have not been recognized in respect of the following items:

December 31, 2020 Defined benefits plan $ 18,019 The carryforward of unused tax loss 567,787 $ 585,806	December 31, 2019
	24,962 567,792
	592,754

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The R.O.C Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes. As of December 31, 2020, the information of the Group's unused tax losses for which no deferred tax assets were recognized are as follows:

	Year of loss		Unused tax loss	Year of expiry
2015	(approved)	$	59,012	2025
2016	(approved)		301,624	2026
2019	(not yet approved)		207,151	2029
		$	567,787

2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2020 and 2019 were as follows:

Adjustment of difference of useful life of PPE between financial and tax method Deferred tax liabilities: Balance at January 1, 2020 $ 188 Debit (credit) profit or loss (179) Debit (credit) other comprehensive income - Balance at December 31, 2020 $ 9 Balance at January 1, 2019 $ 402 Debit (credit) profit or loss (214) Balance at December 31, 2019 $ 188		Unrealized foreign exchange gains		Land value increment tax provision 786,248 - - 786,248 786,248 - 786,248	Defined benefits plan 161 (810) 1,742 1,093 142 19 161	Others 269 (161) - 108 580 (311) 269	Total 786,866 (1,124) 1,742
		- 26 - 26 29 (29) -
							787,484
							787,401 (535)
							786,866

Allowance for inventories losses Deferred tax assets: Balance at January 1, 2020 $ 108,535 Credit (debit) profit or loss (53,702) Balance at December 31, 2020 $ 54,833 Balance at January 1, 2019 $ 41,400 Credit (debit) profit or loss 67,135 Balance at December 31, 2019 $ 108,535	Tax loss carry- forward 9,144 (5,632) 3,512 9,773 (629) 9,144	Others 21,320 2,635 23,955 19,876 1,444 21,320	Total 138,999 (56,699) 82,300 71,049 67,950 138,999

(iii) Assessment of tax

The Company's income tax returns for the years through 2018 were assessed by the tax authorities.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(u) Capital and other equity

(i) Capital stock

As of December 31, 2020 and 2019, the authorized shares capital of the Company were both $6,327,735, comprising 632,774 thousand shares, with a par value $10. All issued shares were paid up upon issuance.

(ii) Capital surplus

The balances of capital surplus were as follows:

December 31, 2020 Treasury share transactions $ 54,290 Difference arising from subsidiary's share price and its carrying value 3,463 $ 57,753	December 31, 2019
	- 3,463
	3,463

According to the R.O.C Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(iii) Retained earnings

According to the Company's articles of incorporation, current-period earnings should first be used to settle all outstanding tax payables and accumulated deficit, and then 10% should be retained as legal reserve until the accumulated legal reserve equals the issued capital stock, and special reserve should be retained or reversed according to the Company's operating environment and statutory requirements. Thereafter, any remaining profit, together with any undistributed prior-period retained earnings, shall be distributed at the discretion of the board of directors and with the resolution to be approved during the stockholders' meeting.

The industry of operation of the Company still has good prospects. The Company will grasp the economic environment for sustainable operation and long-term development. When preparing the proposal for appropriation of net profit, the board of directors will follow a stable dividend policy, which will be based on the Company's expected profit in the future, and plan for operating capital, thereafter, a portion of net profit should be retained. Cash dividends should not be less than 10% of total dividends.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Legal reserve

When the Company incurs no loss, it may, pursuant to a resolution approved during the shareholder's meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

According to Securities and Futures Bureau (SFB, former SFC) regulations, the investment income resulting from the sale of long-term equity investment in First Copper Technology Co., Ltd. in 1988 should be treated as unrealized gain, and such gain cannot be distributed until such long-term equity investment is resold. As of December 31, 2020 and 2019, the amount of the unrealized gain was $95,408.

By choosing to apply exemptions granted under IFRS 1 First-time Adoption of International Financial Reporting Standards during the Company's first-time adoption of the IFRSs approved by the FSC, unrealized revaluation gains shall be reclassified as unappropriated retained earnings at the adoption date. According to regulations, the increase in retained earnings amounted to $888,766. It exceeded the increase in retained earnings occurring before the date of first-time adoption of IFRSs amounting to $776,576. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, an increase in retained earnings due to the first-time adoption of IFRSs shall be retained as a special reserve, and when the relevant assets are used, disposed of, or reclassified, this special reserve shall be reversed as distributable earnings proportionately.

In accordance with the guidelines of the above Ruling, a portion of current-period earnings and undistributed prior-period earnings shall be retained as a special reserve. The amount to be retained should be equal to the current-period total reduction of other shareholders' equity. Similarly, a portion of undistributed prior-period earnings shall be reclassified as a special reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders' equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions. As of the carrying amount of special reserve amounted to $794,098 and $776,576 on December 31, 2020 and 2019.

In accordance with Rule No. 1010047490 issued by the Financial Supervisory Commission (“ FSC” ) on November 21, 2012, if the market value of the Company's shares is lower than the carrying value of the Company's shares held by subsidiaries at year-end, the Company should retain a special reserve amounting to the difference between the market value and the carrying value, based upon the Company's ownership percentage in the subsidiaries. When market value rebounds, the Company could reverse the special reserve. As of December 31, 2020 and 2019, the balance of special reserve amounted to $150,191 and $1,887, respectively.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Earnings distribution

Earnings distribution for 2019 was decided by the general meeting of shareholders held on June 17, 2020. The relevant dividend distributions to shareholders was as follows:

		2019
	Amount per share
		(in dollars)	Total Amount
Dividends distributed to ordinary
shareholders:
Cash	$	0.66	417,631

In 2018, the Company incurred loss, the legal reserve and capital surplus amounting to $348,038 was used to offset accumulated deficit, with the approval of the general meeting of shareholders held on June 12, 2019.

Earnings distribution for 2020 was proposed by the resolution adopted, at the general meeting of shareholders held on March 22, 2021. The relevant dividend distributions to shareholders was as follows:

		2020
	Amount per share
		(in dollars)	Total Amount
Dividends distributed to ordinary
shareholders:
Cash	$	0.7	442,941

Related Information would be available at the Market Observation Post System website after the approval from the shareholders.

(iv) Treasury stock

First Copper Technology Co., Ltd, controlled by the Company, held the Company's common stocks for finance management. Such shares are treated as treasury stock in preparation of financial statements. As of December 31, 2020 and 2019, the investee, First Copper Technology Co., Ltd., held 208,564 thousand shares of the Company's common stock, and their market values amounted to $2,857,324 and $2,075,210, respectively. The total amount which the Company recognized as treasury stock were both $968,671.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Other equity (net of tax)

		Financial assets
		measured at fair
		value through
		other
		comprehensive
		income
Balance at January 1, 2020	$	(44,801)
Unrealized gains (losses) from financial assets measured at fair value
through other comprehensive income		512
Unrealized gains (losses) from receivables		2,382
Unrealized gains (losses) from financial assets measured at fair value
through other comprehensive income of subsidiaries accounted for
using equity method		1,125
Balance at December 31, 2020	$	(40,782)
Balance at January 1, 2019	$	(27,279)
Unrealized gains (losses) from financial assets measured at fair value
through other comprehensive income		(17,270)
Unrealized gains (losses) from financial assets measured at fair value
through other comprehensive income of subsidiaries accounted for
using equity method		(252)
Balance at December 31, 2019	$	(44,801)

(v) Earnings per share

The calculation of basic earnings per share and diluted earnings per share for the years ended December 31, 2020 and 2019, were as follows (excluding 208,564 thousand shares, of common stock outstanding held by the Company's subsidiaries as treasury stock):

2020 sic earnings per share Profit attributable to ordinary shareholders of the Company $ 323,664 Weighted-average number of common shares outstanding (shares in thousands) 424,210 Basic earnings per share (in dollars) $ 0.76	2019
	792,653
	424,210
	1.87

Basic earnings per share

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2020
Diluted earnings per share
Profit attributable to ordinary shareholders of the
Company(After adjusting to dilutive potential
ordinary share effect)
$
323,664
Weighted-average number of common shares
outstanding (shares in thousands)
424,210
Effect of dilutive potential ordinary shares
Effect of employee share bonus
(shares in thousands)
1,469
Weighted-average number of common shares
outstanding (shares in thousands)
(After adjusting to dilutive potential ordinary share
effect)
425,679
Diluted earnings per share (in dollars)
$
0.76

2019
792,653
424,210
1,838

426,048
1.86

(w) Revenue from contracts with customers (i) Disaggregation of revenue

		2020
Wire $ 1,497,677 312,448 18,576 $ 1,828,701 $ 1,686,066 - - 4,521 - 138,114 $ 1,828,701	Cable 3,239,904 2,306 - 3,242,210 - 2,876,732 - 1,908 - 363,570 3,242,210	Copper 1,267,374 571,617 416,501 2,255,492 - - 1,986,207 122,468 - 146,817 2,255,492	Other 113,272 - 388 113,660 - - - - 95,137 18,523 113,660	Total
				6,118,227 886,371 435,465
				7,440,063
				1,686,066 2,876,732 1,986,207 128,897 95,137 667,024
				7,440,063

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

		2020
Wire $ 1,828,701 - $ 1,828,701 Wire $ 1,663,610 233,520 92,133 $ 1,989,263 $ 1,804,959 - - 20,227 - 164,077 $ 1,989,263 $ 1,989,263 - $ 1,989,263	Cable 3,242,210 - 3,242,210	Copper 2,255,492 - 2,255,492 2019	Other 18,523 95,137 113,660	Total
				7,344,926 95,137
				7,440,063

	Cable 2,882,877 8,484 162 2,891,523 - 2,687,326 - 912 - 203,285 2,891,523 2,891,523 - 2,891,523	Copper 1,358,715 598,822 576,596 2,534,133 - - 2,245,891 101,696 - 186,546 2,534,133 2,534,133 - 2,534,133	Other 417,698 - - 417,698 - - - - 375,099 42,599 417,698 42,599 375,099 417,698	total
				6,322,900 840,826 668,891
				7,832,617
				1,804,959 2,687,326 2,245,891 122,835 375,099 596,507
				7,832,617
				7,457,518 375,099
				7,832,617

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As of December 31, 2020 and 2019, the estimated amount of refund liabilities were $9,698 and $6,693, respectively, recognized as deduction of current-period revenue. The refund liabilities were included in other current liabilities in the consolidated balance sheets.

(ii) Contract balances

December 31, 2020 Notes and accounts receivable $ 916,042 Less: allowance for impairment - Total $ 916,042 December 31, 2020 Contract assets`－`construction $ 75,947 Contract liabilities`－`construction $ 2,292 Contract liabilities`－`advance sales receipts 19,653 Total $ 21,945	December 31, 2019 914,114 - 914,114 December 31, 2019 117,698 8,499 26,676 35,175	January 1, 2019
		1,071,537 -
		1,071,537
		January 1, 2019
		91,347
		62,743 20,891
		83,634

For additional information on accounts receivable and allowance for impairment, please refer to note 6(d).

For details on onerous contracts as of December 31, 2020 and 2019, please refer to note 6(p).

The amount of revenue which was recognized in 2020 and 2019, and included in the contract liability balance at January 1, 2020 and 2019 were $35,175 and $77,103, respectively.

The major change in the balance of contract assets and contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

(x) Remuneration to employees and directors

In accordance with the Articles of incorporation, the Company should contribute a minimum of 3% of its profit as employee remuneration and a maximum of 2% as directors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should first be used to offset against its deficits.

For the years ended December 31, 2020 and 2019, the Company estimated its employee remuneration amounting to $11,730 and $18,288, and directors' remuneration amounting to $1,955 and $3,048. The estimated amounts mentioned above were calculated based on the net profit before tax, excluding the remuneration to employees and directors of each period, multiplied by the percentage of remuneration to employees and directors as specified in the Company's articles. These remunerations were expensed under operating cost or operating expenses during 2020 and 2019. If there are any subsequent adjustments to the actual remuneration amounts, the adjustment will be accounted for as changes in accounting estimates and will be reflected in profit or loss in the following year. If employee remuneration is distributed by shares, the numbers of shares should be

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

calculated based on the closing price one day before the date of the board meeting. The related information would be available at the Market Observation Post System website.

The amounts, as stated in the financial statements, are identical to those of the actual distributions for 2020. For the years ended 2019, the Company estimated its employee remuneration amounting to $18,288, and directors' remuneration amounting to $3,048. There was difference of $102 between the actual distribution of employee remuneration of $18,201 as well as directors' remuneration of $3,033, and the estimated amounts decided during the board meeting. The above difference was recognized as changes in accounting estimates and reflected in profit or loss in 2020.

(y) Non-operating income and expenses
(i) Interest income

Details of interest income of the Group was as follows:

2020 Interest income $ 75 (ii) Other income Details of other income of the Group were as follows: 2020 Dividend income $ 180,225 Rental income 43,382 Revenue from sale of scrap 3,540 Directors' and supervisors' remuneration 2,856 Others 995 $ 230,998	2019
	149
	2019
	81,133 37,164 2,096 2,506 2,483
	125,382

(iii) Other gains and losses

The details of other gains and losses of the Group were as follows:

2020 Foreign exchange gains (loss), net $ 11,872 Net gains of financial assets at fair value through profit or loss 49,916 Net gains (losses) on disposal of property, plant and equipment 935 Depreciation of investment property (8,338) Others (6,519) $ 47,866	2019 (244) 650,799 (1,055) (8,521) (3,129) 637,850

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Finance costs

The details of finance costs of the Group were as follows:

2020
Interest expenses
Bank loans and short-term notes payable
$ (18,866)
Lease liabilities
(3,567)
Others
(39)
$
(22,472)
Financial instruments
(i)
Categories of financial instruments
1)
Financial assets
December 31,
2020
Financial assets at fair value through profit
or loss:
Mandatorily measured at fair value
through profit or loss
$ 3,304,825
Financial assets at fair value through other
comprehensive income：
Equity instrument investments
56,136
Accounts receivable
12,811
Liquidation receivables
3,786
Subtotal
72,733
Financial assets measured at amortized
cost:
Cash and cash equivalents
394,201
Notes receivable, accounts receivable,
and other receivables
914,386
Refundable deposits
406
Subtotal
1,308,993
Total
$
4,686,551 2019
(17,996)
(3,795)
(36)
(21,827)
December 31,
2019
3,162,316
74,895
4,519
-
79,414
639,066
922,557
418
1,562,041
4,803,771

(z) Financial instruments

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Financial liabilities

December 31, 2020 Financial liabilities at amortized cost: Short-term borrowings $ 988,792 Short-term notes and bills payable 1,799,484 Payables (including related parties) 528,888 Lease liabilities (including current portion) 247,052 Guarantee deposits received 4,266 Total $ 3,568,482	December 31, 2019
	1,045,043 1,705,938 415,281 262,848 3,606
	3,432,716

(ii) Credit risk
1) Exposure to credit risk

The carrying amount of financial assets and contract assets represents the maximum amount exposed to credit risk.

2) Concentration to credit risk

The cash is deposited in different financial institutions. The Group manages the credit risk exposure with each of these financial institutions and believes that cash do not have a significant credit risk concentration.

The major customers of the Group are centralized in industries within similar areas and dealers. As of December 31, 2020 and 2019, one customer accounted for 41.77% and 39.54% of the notes and accounts receivable, respectively, resulting in a concentration of credit risk.

3) Credit risk of receivables

For credit risk exposure of notes and accounts receivable, please refer to note 6(d). Other financial assets at amortized cost includes other receivables and other financial assets (Refundable deposits).

All of these other financial assets at amortized cost are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. (Regarding how the financial instruments are considered to have low credit risk, please refer to note 4(g)). No impairment losses allowance were recognized or reversed for the years ended December 31, 2020 and 2019.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Liquidity Risk

Details of financial liabilities categorized by due dates were as follows. The amounts include estimated interest payments but exclude the impacts of netting agreements.

Carrying amount December 31, 2020 Non-derivative financial liabilities Short-term borrowings $ 988,792 Short-term notes and bills payable 1,799,484 Notes payable 8,315 Accounts payable (including related parties) 347,839 Other payables 172,734 Lease liabilities (including current portion) 247,052 Guarantee deposits received 4,266 $ 3,568,482 December 31, 2019 Non-derivative financial liabilities Short-term borrowings $ 1,045,043 Short-term notes and bills payable 1,705,938 Notes payable 11,264 Accounts payable 342,406 Other payables 61,611 Lease liabilities (including current portion) 262,848 Guarantee deposits received 3,606 $ 3,432,716	Contractual cash flows 989,519 1,800,000 8,315 347,839 172,734 271,082 4,266 3,593,755 1,047,056 1,706,500 11,264 342,406 61,611 290,445 3,606 3,462,888	Within 6 months 989,519 1,800,000 8,315 347,839 171,589 9,681 826 3,327,769 1,047,056 1,706,500 11,264 342,406 61,611 9,681 226 3,178,744	6-12 months - - - - 255 9,682 200 10,137 - - - - - 9,682 880 10,562	1-2 years - - - - - 19,363 1,820 21,183 - - - - - 19,363 200 19,563	2-5 years - - - - 890 58,089 1,420 60,399 - - - - - 58,089 2,300 60,389	Over 5 years
						- - - - - 174,267 -
						174,267
						- - - - - 193,630 -
						193,630

The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(iv) Foreign currency risk

1) Exposure to foreign currency risk

The Group's significant financial assets and liabilities exposed to foreign currency risk were as follows:

December 31, 2020 Foreign currency Exchange rate TWD Financial assets Monetary items USD $ 1,891 28.48 53,848 HKD 92 3.673 338 Financial liabilities Monetary items USD 2,920 28.48 83,105 JPY 91,709 0.2763 25,339 EUR 6 35.02 200	December 31, 2019	December 31, 2019
	Foreign currency 1,461 29 1,635 14,803 15	Exchange rate TWD 29.98 43,822 3.849 112 29.98 49,137 0.276 4,090 33.59 488

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Sensitivity analysis

The foreign currency risk was mainly incurred from the translation of cash and cash equivalents, accounts receivable, other receivables, short-term borrowings, accounts payable, and other payables. As of December 31, 2020 and 2019, if the exchange rate of the NTD versus the USD, HKD, JPY and EUR had increased or decreased by 1%, given no changes in other factors, the impact were as follows:

==> picture [399 x 62] intentionally omitted <==

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

2020 2019
Depreciate 1% Appreciate 1% Depreciate 1% Appreciate 1%
Decrease in net Increase in net Decrease in net Increase in net
profit after tax profit after tax profit after tax profit after tax
$ 436 436 78 78
----- End of picture text -----

The analysis is performed in the same basis for 2020 and 2019.

3) Exchange gains and losses from monetary items

The exchange gains (losses) (including realized and unrealized) that resulted from monetary were as follows:

2020 Exchange gains (losses) USD $ 11,868 Others 4 Total $ 11,872	2019 Exchange gains (losses) (93) (151) (244)

(v) Interest rate analysis

Please refer to the notes on liquidity risk management and the interest rate exposure of the Group's financial liabilities.

The sensitivity analysis of interest was determined based on the interest rate of derivative and non-derivative instruments at the reporting date. The analysis of liabilities bearing floating interest rates was prepared based on the assumption that the outstanding amounts at the reporting date had existed for the whole year. Management adopted 0.25% as a reasonable change in interest rates, and therefore evaluated the impacts of 0.25% changes in interest rates.

If interest rates on borrowings had increased or decreased 0.25%, with all other variables held constant, the information was as follows:

2020 Increase 0.25% Decrease 0.25% Decrease in net profit after tax Increase in net profit after tax $ 1,977 1,977	2019	2019
Increase 0.25% Decrease in net profit after tax $ 1,977	Increase 0.25% Decrease in net profit after tax 2,090	Decrease 0.25%
		Increase in net profit after tax
		2,090

The impact was due to the floating interest rates of bank loans.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vi) Equity securities prices risk

If the prices of equity securities change at reporting date, with all other variables held constant, the influences on other comprehensive income, were as follows:

	2020	2020						2019
	Other						Other
	Prices at comprehensive			Net			comprehensive		Net
reporting date income after tax			income				income after tax		income
Increase by 1% $		561		33,048				749	31,623
Decrease by 1% $		(561) (33,048)						(749)	(31,623)
Fair	value of financial instruments
1)	Fair value of financial instruments
	The fair value of financial assets		at fair value through profit or loss and at						fair value
	through other comprehensive	income is		measured on recurring				basis. The carrying
	amount and fair value of the	Group's financial assets and liabilities, including the
	information on fair value hierarchy were			as	follow;		however, except as described in
	following paragraphs, for financial		instruments		not measured at fair			value whose carrying
	amount is reasonably close to the fair value, and					lease	liabilities, disclosure of		fair value
	information is not required:
						December 31, 2020
		Carrying					Fair Value
		amount		Level 1			Level 2	Level 3	Total
	Financial assets at fair value through
	profit or loss
	Publicly traded stocks	$ 2,821,993		2,821,993			-	-	2,821,993
	Non-publicly traded stocks		482,832		445,212		-	37,620	482,832
	Total	$ 3,304,825
	Financial assets at fair value through
	other comprehensive income
	Non-publicly traded stocks	$	56,136			-	-	56,136	56,136
	Receivables-the distribution of
	remaining on liquidation		3,786			-	3,786	-	3,786
	Accounts receivable		12,811			-	12,811	-	12,811
	Total	$	72,733

(vii) Fair value of financial instruments

Financial assets at fair value through profit or loss Publicly traded stocks Non-publicly traded stocks Total		December 31, 2019 Fair Value Level 1 Level 2 Level 3 Total 2,869,663 - - 2,869,663 260,793 - 31,860 292,653	December 31, 2019 Fair Value Level 1 Level 2 Level 3 Total 2,869,663 - - 2,869,663 260,793 - 31,860 292,653
	Carrying amount $ 2,869,663 292,653 $ 3,162,316
		Level 1 2,869,663 260,793	Level 2 - -

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets at fair value through other comprehensive income Non-publicly traded stocks Accounts receivable Total		December 31, 2019	December 31, 2019	December 31, 2019
	Carrying amount $ 74,895 4,519 $ 79,414		Fair Value
		Level 1 - -	Level 2 - 4,519	Level 3 Total 74,895 74,895 - 4,519

2) Valuation techniques and assumptions used in fair value

Non-derivative instruments

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. Quoted prices of major stock exchange and quoted prices of government bonds are the basis for measuring the fair value of stocks listed on an exchange, stocks listed on the OTC, and debt instruments with quoted prices in an active market.

The fair values of the Group's listed securities, and open-end funds with standard terms and conditions, and traded in active markets, were determined by the quoted market prices.

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date.

The equity instruments of the Group do not have any quoted market price. The fair value of the equity instruments is determined based on the ratio of the quoted market price of the comparative listed company and its book value per share. Also, the fair value is discounted for its lack of liquidity in the market.

3) Transfer between level 2 to level 3

The Group’ s investment in equity shares of Global Corporation, with a fair value of $13,092, was classified as fair value through other comprehensive income as of December 31, 2019.

The fair value of the investment was previously categorized as Level 3 as of December 31, 2019. This was because the shares were not listed on an exchange and there were no recent observable arm's length transactions in the shares. The equity shares now has been dissolved and in the process of liquidation in 2020. The estimated receivables of the distribution of residual assets were recognized as financial assets at fair value through other comprehensive income – receivables, resulting in the fair value measurement to be transferred from Level 3 to Level 2 of the fair value hierarchy as of December 31, 2020.

There was no transfer between the fair value hierarchy levels for the year ended December 31, 2019.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Movements of financial assets in level 3

				Fair value	Fair value	Fair value
			Fair value	through		other
		through profit or		comprehensive
			loss		income
	Equity investment			Equity investment
		without an active		without an active
			market		market
Balance at January 1, 2020	$		31,860			74,895
Total gains or losses
Recognized in profit (loss)			5,760		-
Recognized in other comprehensive
income (loss)			-			2,572
Capital reduction			-			(20,721)
Transferred to receivables			-			(610)
Balance at December 31, 2020	$		37,620			56,136
Balance at January 1, 2019	$		37,260			92,817
Total gains or losses
Recognized in profit (loss)			(5,400)		-
Recognized in other comprehensive
income (loss)			-			(17,922)
Balance at December 31, 2019	$		31,860			74,895
For the years ended December 31, 2020 and			2019, total gains and losses that were
included in “ other gains and losses” and “	unrealized gains and losses				from	financial
assets at fair value through other comprehensive			income” were as follows:
			2020		2019
Total gains and losses recognized:
In profit or loss, and presented in "other gains
and losses"			$ 5,760			(5,400)
In other comprehensive income, and
presented in “unrealized gains and losses
from financial assets at fair value through
other comprehensive income”			(5,667)			(17,922)

5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement.

The Group's financial instruments that use Level 3 inputs to measure fair value include － “financial assets measured at fair value through profit or loss equity investments” and

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

－ “financial assets measured at fair value through other comprehensive income equity investments”.

The Group's financial instrument that use Level 3 inputs to measure fair value was significant unobservable.

As of December 31, 2020 and 2019, quantified information of significant unobservable inputs were as follows:

		Significant
	Valuation	unobservable
Items	techniques	inputs
Financial assets measured at fair value through profit or loss- equity investments without an active	Comparable listed company approach	Lack of marketability discount rate (30% on December 31, 2020 and 2019,)
market
Financial assets measured at fair value through other comprehensive income -equity investments	Comparable listed company approach	Lack of marketability discount rate (30% on December 31, 2020 and 2019,)
without an active
market

Inter-relationship between significant unobservable inputs and fair value measurement

The higher the lack-ofmarketability discount is, the lower the fair value will be.

6) Fair value measurements in Level 3 – sensitivity analysis reasonably possible alternative assumptions

The fair value measurements of the Group's financial instruments are reasonable. However, change in the use of valuation models or variables may affect the estimations. For fair value measurements in Level 3, the information of changes in the use of valuation variable was as follows:

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Fair value change in profit or Fair value change in other
Increase loss comprehensive income
Inputs (decrease) Favorable Unfavorable Favorable Unfavorable
December 31, 2020
Financial assets at fair value through
profit or loss
Equity investment without an Marketability 10% $ 5,374 (5,374) - -
active market discount yield to
30%
Financial assets at fair value through
other comprehensive income
Equity investment without an Marketability 10% - - 8,019 (8,019)
active market discount yield to
30%
December 31, 2019
Financial assets at fair value through
profit or loss
Equity investment without an Marketability 10% $ 4,551 (4,551) - -
active market discount yield to
30%
Financial assets at fair value through
other comprehensive income
Equity investment without an Marketability 10% - - 10,699 (10,699)
active market discount yield to
30%
----- End of picture text -----

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique.

(aa) Financial risk management
(i) Overview

The Group have exposures to the following risks from its financial instruments:

1) Credit risk
2) Liquidity risk
3) Market risk

The Group's risk management objective, policies, and procedures, and the exposure risk arising from the aforementioned risks, are disclosed below. For more quantitative information, please refer to other notes of the financial statements.

(ii) Risk management framework

The board of directors has the overall responsibility for the establishment and oversight of the risk management framework.

The Group's risk management policies are established to identity and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The board of directors oversees how the management complies in monitoring the Group's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. Internal auditors undertake both regular and ad hoc reviews of risk management controls and procedures and exception management, the results of which are reported to the board of directors.

(iii) Credit risk

The Group's credit risk is the risk of financial loss when a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from accounts receivable and bank deposit.

1) Accounts receivable and other receivables

The Group's exposure credit risk is influenced by the individual characteristics of each customer. The Group continuously monitors the information concerning client credit risk factors, such as the default risk of the industries and countries in which the customers operate.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

According to the credit policy, the Group has to evaluate the credit of each new customer before setting the payment and delivery terms. The evaluations include external credit ratings, if available, and bank references. The Group reviews credit limits periodically and required customers to pay in advance when the customers' credit ratings did not meet the benchmark.

If necessary, the Group also factors parts of accounts receivable to financial institutions without recourse to reduce the credit risk.

2) Deposits and other financial assets

The exposure to credit risk for the bank deposits and other financial instruments is measured and monitored by the Group's finance department. The Group only deals with banks with good credit rating. The Group does not expect any counterparty above fails to meet its obligations. Hence, there is no significant credit risk arising from these counterparties.

(iv) Liquidity risk

Liquidity risk is the risk that the Group is unable to meet the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as much as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

As of December 31, 2020 and 2019, unused credit lines approximated to $4,603,618 and $4,341,399, respectively.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Group is exposed to currency risk on sales, purchases, and borrowings that are denominated in another currency. Functional currency is TWD. The currencies used in these transactions are the TWD, USD, HKD, JPY and EUR.

Generally, borrowings and purchasing are denominated in currencies that match the cash flows generated by the underlying operations of the Group as same as USD, HKD, JPY and EUR. This provides an economic hedge without derivatives being entered into, and therefore, hedge accounting is not applied in these circumstances.

2) Interest risk

To reduce the exposure to interest rate risk, the choice of a floating interest rate or a fixed interest rate was based on the Group's evaluation of the global economic environment and the trend in market interest rates.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Market price risk of equity instruments

Part of the Group's equity securities are classified as financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income. These assets are measured at fair value. Therefore, the Group will be exposed to the risk of changes in the value of the equity securities market.

(ab) Capital management

The Group sets its objectives for managing capital to ensure its capacity to continue to operate, to continue to provide returns to its shareholders and other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the dividend payment and reduce the capital for redistribution to its shareholders. The Group also issues new shares or sell assets to settle any liabilities.

The Group and other entities in the similar industry use the debt-to-equity ratio in calculating. The total net debt and divided by the total capital. The net debt from the consolidated balance sheet are derived from the total liabilities, less, cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, other equity and non-controlling interests, plus, net debt.

In 2020, the Group's capital management strategy is consistent with the prior year. The Group's debtto-equity ratio at the end of the reporting period as of December 31, 2020 and 2019, were as follows:

December 31, 2020 Total liabilities $ 4,420,392 Less: cash and cash equivalents 394,201 Net debt 4,026,191 Total equity 7,923,083 Capital after adjustment $ 11,949,274 Debt-to-equity ratio 33.69%	December 31, 2019
	4,393,440 639,066
	3,754,374 7,909,887
	11,664,261
	32.19%

(ac) Investing and financing activities not affecting current cash flow

Reconciliation of liabilities arising from financing activities of the Group were as follows:

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

January 1, 2020 Short-term borrowings $ 1,045,043 Short-term notes and bills payable 1,705,938 Lease liabilities (including current portion) 262,848 Guarantee deposit received (including other payables $1,374 ) 5,090 Total liabilities from financing activities $ 3,018,919 January 1, 2019 Short-term borrowings $ 934,907 Short-term notes and bills payable 1,599,565 Lease liabilities (including current portion) 278,416 Guarantee deposit received (including other payables $1,484 ) 3,469 Total liabilities from financing activities $ 2,816,357	Cash flows (56,251) 81,770 (15,796) 550 10,273 Cash flows 110,136 94,078 (15,568) 1,621 190,267	Non-cash changes Amortized interest - 11,776 - - 11,776 Non-cash changes Amortized interest - 12,295 - - 12,295	December 31, 2020
			988,792 1,799,484 247,052 5,640
			3,040,968
			December 31, 2019
			1,045,043 1,705,938 262,848 5,090
			3,018,919

(7) Related-party transactions:

(a) Names and relationship with related parties

The followings are related parties that have had transactions with the Group during the periods covered in the consolidated financial statements:

Name of related party National Ship Demolition Co., Ltd. Taiwan Times Co., Ltd. Mei Da Co., Ltd.	Relationship with the Group
	Controlled by key management personnel of the Group (Note) Controlled by key management personnel of the Group (Note) Controlled by key management personnel of the Group (Note)

(Note) Summarized as other related parties.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Significant transactions with related parties
(i) Purchases and cost of construction

The amounts of significant purchases and costs of construction by the Group from related parties were as follows:

2020 Other related parties $ 13	2019 9

The prices for purchases and costs of construction from related parties have not comparison with whose purchase from third-party vendors. Payment terms with related parties were 1 to 3 months.

(ii) Payables to related parties

The payables to related parties are as follows:

Account	Relationship	December 31, 2020 $ 2	December 31, 2019
Accounts payable	Other related parties		105

(iii) Others

Rental income is from office premises leased to other related parties. The above rental income was collected monthly or in advance. The price is decided by using the nearby office rental rates and negotiated each other. Rental incomes in 2020 and 2019 were both $168, and were included in other income of non-operating income and expenses in the consolidated statements of comprehensive income.

As of December 31, 2020 and 2019, the receivables from above transaction were settled in full.

The amounts of advertising expense incurred by other related parties amounted to $100 and $104 in 2020 and 2019, respectively, which were included in operating expenses in consolidated statements of comprehensive income.

Key management personnel compensation comprised:

2020 Short-term employee benefits $ 21,877 Post-employment benefits 535 Termination benefits - Other long-term benefits - Share-based payments - $ 22,412	2019
	21,226 487 - - -
	21,713

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(8) Pledged assets: None.

(9) Commitments and contingencies:

Major commitments and contingencies were as follows:

(i) Unrecognized contingencies of contracts:

December 31, 2020 Acquisition of property, plant and equipment $ 101,591 (ii) Unused standby letters of credit: December 31, 2020 Purchase of material $ 686,838	December 31, 2019
	205,883
	December 31, 2019
	511,437

(10) Losses due to major disasters: None.

(11) Subsequent Events: None.

(12) Other:

The employee benefits, depreciation, and amortization expenses, categorized by function, were as follows:

By function By item	2020	2020	2020	2019	2019	2019
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits Salary and wages Labor and health insurance Pension Remuneration of directors Other personnel costs Depreciation Amortization	332,217 36,018 16,085 - 18,247 155,835 -	67,652 7,981 4,207 5,100 9,621 3,161 -	399,869 43,999 20,292 5,100 27,868 158,996 -	321,392 35,608 16,902 - 18,239 150,725 -	64,315 7,867 4,312 5,578 9,925 3,130 -	385,707 43,475 21,214 5,578 28,164 153,855 -

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(13) Other disclosures

(a) Information on significant transactions:

The following is the information on significant transactions required by the “the Regulations” for the Group for the years ended December 31, 2020.

(i) Loans to other parties: None.
(ii) Guarantees and endorsements for other parties: None.
(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

Name of holder	Category and name of security	Relationship with the Company	Account title		Ending balance	Ending balance		Highest percentage of ownership during the year	Highest percentage of ownership during the year	Note
				Units (shares)	Carrying value	Percentage of ownership (%)	Fair value	Units (shares)	Percentage of ownership (%)
The Company The Company The Company First Copper Technology Co., Ltd. First Copper Technology Co., Ltd. The Company The Company The Company The Company The Company The Company The Company The Company The Company First Copper Technology Co., Ltd. The Company The Company	China Ecotek Corporation stock Wafer Works Corporation stock Raydium Semi-conductor Corporation stock Asia Pacific Telecom Co., Ltd. stock Co-Tech Development Corp. stock Asia Pacific Telecom Co., Ltd. stock Savior Lifetec Corporation stock Bionime Corporation stock Co-Tech Development Corp. stock Pixon Technologies Corporation stock Liyu Technology Co., Ltd. stock International United Technology Co., Ltd. stock Pack & Proper Co., Ltd. stock United Electronics Industrial Co., Ltd. stock Hua Eng Wire & Cable Co., Ltd. stock Taiwan Sugar Corporation stock Taiwan Submarine Cable Corporation stock	The Company is a director of the investee The Company is a director of the investee - The Company is a director of the investee The Company is a director of the investee The Company is a director of the investee The Company is a director of the investee The Company is a director of the investee The Company is a director of the investee The Company is a director of the investee - The Company is a director of the investee The Company is a director of the investee - The Company - -	Current financial assets at fair value through profit or loss Current financial assets at fair value through profit or loss Current financial assets at fair value through profit or loss Current financial assets at fair value through profit or loss Current financial assets at fair value through profit or loss Non-current financial assets at fair value through profit or loss Non-current financial assets at fair value through profit or loss Non-current financial assets at fair value through profit or loss Non-current financial assets at fair value through profit or loss Non-current financial assets at fair value through profit or loss Non-current financial assets at fair value through profit or loss Non-current financial assets at fair value through comprehensive income Non-current financial assets at fair value through comprehensive income Non-current financial assets at fair value through comprehensive income Non-current financial assets at fair value through comprehensive income Non-current financial assets at fair value through comprehensive income Non-current financial assets at fair value through comprehensive income	11,843,730 4,493,217 2,470,000 10,105,441 2,230,375 89,087,877 4,335,750 7,807,900 7,812,375 3,811,200 4,500,000 987,354 2,466,288 1,712,676 208,563,824 457,087 30,000	412,162 192,310 346,121 102,065 118,879 899,787 150,234 530,156 416,400 99,091 37,620 7,820 8,040 13,290 2,857,324 26,766 220	% 9.57 % 0.88 % 3.69 % 0.26 % 0.88 % 2.33 % 1.45 % 12.64 % 3.09 % 19.96 % 7.73 % 6.04 % 4.78 % 2.77 % 32.96 % 0.01 % 6.67	412,162 192,310 346,121 102,065 118,879 899,787 150,234 530,156 416,400 99,091 37,620 7,820 8,040 13,290 2,857,324 26,766 220	11,843,730 4,493,217 2,470,000 10,105,441 2,230,375 89,087,877 4,335,750 7,807,900 7,812,375 3,811,200 4,500,000 987,354 2,466,288 1,712,676 208,563,824 457,087 30,000	% 9.57 % 0.88 % 3.69 % 0.26 % 0.88 % 2.33 % 1.45 % 12.64 % 3.09 % 19.96 % 7.73 % 6.04 % 4.78 % 2.77 % 32.96 % 0.01 % 6.67	(Note)

Note: It was eliminated in the consolidation financial report.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.

(ix) Trading in derivative instruments: None.

(x) Business relationships and significant intercompany transactions:

No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions	Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0	TheCompany	First Copper Technology Co., Ltd.	1	Operating revenue Accounts receivable	35,026 10,921	(Note)	% 0.47 % 0.09
0	TheCompany	First Copper Technology Co., Ltd.	1	Purchases Accountspayable	5,104 471	No transactions with third parties for comparison	% 0.07 -
0	TheCompany	First Copper Technology Co., Ltd.	1	Reduction of operating expense- management service	19,200	No other trading terms for comparison	% 0.26
0	TheCompany	First Copper Technology Co., Ltd.	1	Rental income	240	No other trading terms for comparison	-
0	The Company	First Copper Technology Co., Ltd.	1	Gains on disposals of property, plant and equipment	77	No other trading terms for comparison	- -
0	The Company	Hua Ho Engineering Co., Ltd.	1	Construction costs Accountspayable	27,182 16,846	No transactions with third parties for comparison	% 0.37 % 0.14
0	TheCompany	Hua Ho Engineering Co., Ltd.	1	Reduction of operating expense- management service	1,440	No other trading terms for comparison	% 0.02
0	TheCompany	Hua Ho Engineering Co., Ltd.	1	Rental income	1,052	No other trading terms for comparison	% 0.01
2	Hua Ho Engineering Co., Ltd.	TheCompany	2	Gains on disposals of property, plant and equipment	50	No other trading terms for comparison	-

Note: The prices of those sales could not be compared to those of the third-parties customers. The prices of other sales were not significantly different from third-parties customers. The credit terms with other customers are from one to three months.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees:

The following is the information on investees for the year 2020 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main business and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Share of profits /losses of investee	Note
				December 31, 2020	December 31, 2019	Shares	Percentage of ownership	Carrying value
The Company	First Copper Technology Co., Ltd.	Kaohsiung	Manufacturing of copper plate	1,401,129	1,401,129	141,818,196	% 39.44	575,143	79,210	(23,050)	Subsidiary Company (Note)
The Company	Hua Ho Engineering Co., Ltd.	Kaohsiung	Cable engineering	17,195	17,195	1,726,000	% 49.31	16,615	127	63	Subsidiary Company (Note)
The Company	Chung-Tai Technology Development Engineering Corporation	New Taipei City	Telecommunication engineering	92,000	92,000	2,300,000	% 23.00	11,617	(4,450)	(1,059)	The Company exercises significant influence
First Copper Technology Co., Ltd.	Hua Ho Engineering Co., Ltd.	Kaohsiung	Cable engineering	165	165	10,000	% 0.29	98	127	1	Subsidiary Company (Note)

Note: It was eliminated in the consolidation financial report.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
First Copper Technology Co., Ltd.	208,569,277	% 32.96
Hua Hong Investment Co., Ltd.	36,944,000	% 5.83

Note: (1) The information on major shareholders, which is provided by the Taiwan Depository & Clearing Corporation, summarized the shareholders who held over 5% of the total nonphysical common stocks and preferred stocks (including treasury stocks) on the last business date of each quarter. The registered nonphysical stocks may be different from the capital stocks disclosed in the financial statement due to different calculations basis.
Note: (2) If the aforementioned data contained shares which were kept in trust by the shareholders, the data disclosed will be deemed as the settlor’s separate account for the fund set by the trustee. As for the shareholder who reports its share equity as an insider and whose shareholding ratio is greater than 10% in accordance with Securities and Exchange Act and include its self-owned shares and trusted shares, as well as the shares of the individuals who have power to decide how to allocate the trust assets. For the information on reported share equity of the insider, please refer to the Market Observation Post System.

(14) Segment information:

(a) General Information

The Group has three reportable segments: Wire segment, Cable segment and Copper segment. Wire segment produces products such as oxygen free copper wire. Cable segment produces power cable, communication cable and optical fiber cable ﹔ Copper Segment produces copper plate. The reportable segments are the Group's strategic divisions. They offer different products and services, and are managed separately because they require different technology and marketing strategies. Most of the strategic divisions were acquired separately.

The Group's other reportable segments are mainly engaged in project contracting and material trading. The above segments did not meet the quantitative thresholds; therefore, were classified as other segments.

The operating segment accounting policies are similar to those described in note 4 significant accounting policies. The Group’s operating segment measured by the operating profit before income tax and make a performance evaluation.

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information about reportable segments and their measurement and reconciliation

The Group's operating segment information and reconciliation are as follows:

	2020	2020
Cable segment 3,242,210 28,045 3,270,255 381,127 -	Copper segment 2,255,492 5,104 2,260,596 (21,161) -	other segment 113,660 27,182 140,842 12,684 -	Reconciliation and eliminations - (67,312) (67,312) 3,862 12,343,475	Total
				7,440,063 -
				7,440,063
				427,271
				12,343,475

	2019	2019
Cable segment 2,891,523 46,526 2,938,049 239,071 -	Copper segment 2,534,133 10,810 2,544,943 (91,607) -	other segment 417,698 44,750 462,448 12,904 -	Reconciliation and eliminations - (102,086) (102,086) 481,257 12,303,327	Total
				7,832,617 -
				7,832,617
				663,824
				12,303,327

Revenue from the external customers of the Group were as follows:

Product and services 2020 Copper wire $ 1,686,066 Cable 2,876,732 Copper plate 1,986,207 Processing revenue 128,897 Construction revenue 95,137 Others 667,024 Total $ 7,440,063	2019
	1,804,959 2,687,326 2,245,891 122,835 375,099 596,507
	7,832,617

(Continued)

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Geographic information

In presenting information on the basis of geography, revenue is based on the geographical location of customers and non-current assets are based on the geographical location of the assets.

Geographic information 2020 Revenue from the external customers: Taiwan $ 6,118,227 Mainland China 886,371 Japan 204,962 Other countries 230,503 Total $ 7,440,063 Non-current assets: Taiwan $ 4,590,194	2019
	6,322,900 840,826 381,580 287,311
	7,832,617
	4,474,043

Non-current assets included property, plant and equipment, investment property, intangible assets, prepayments for equipment, long-term prepaid rents, right-of-use asset and other assets not including financial instruments, net defined benefit assets deferred tax assets.

(e) Information on major customers

The sales to individual customers that constituted 10% or more of the Group’s net consolidated sales were as follows:

2020 Customer Amount % of net consolidated sales A $ 1,287,799 % 17.31	2019 Amount % of net consolidated sales 1,241,787 % 15.85
	Amount 1,241,787

AI assistant

HE — Annual Report 2020

51878_rns_2020-11-10_e47d59e6-bfbe-4088-a54b-6d29556bdbc5.pdf

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

Table of contents

Representation Letter

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Valuation of inventory

Other Matter

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

KPMG

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, unless otherwise specified)

(1) Company history:

(2) Approval date and procedures of the consolidated financial statements:

(3) New standards, amendments and interpretations adopted:

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies:

(a) Statement of compliance

(b) Basis of preparation

(i) Basis of measurement

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(g) Financial instruments

(i) Financial assets

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) Derecognition of financial assets

4) Financial liabilities

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

5) Derecognition of financial liabilities

6) Offsetting of financial assets and liabilities

(h) Inventories

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Investment property

(ii) Subsequent expenditure

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Reclassification to investment property

(l) Lease

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) As a lessor

(m) Impairment of non-financial assets

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Provisions

Provision for onerous contracts

(o) Revenue

(i) Revenue from contracts with customers

1) Sale of goods

HUA ENG WIRE & CABLE CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Construction contracts

3) Financing components

(ii) Contract costs

HE Annual Report 2020