HK — Audit Report / Information 2021

Nov 12, 2021

Hold-Key Electric Wire & Cable Co., Ltd.

Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Hold-Key Electric Wire & Cable Co., Ltd.

Opinion

We have audited the accompanying financial statements of Hold-Key Electric Wire & Cable Co., Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2021 and 2020, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue Recognition

The Company’s revenue, which comes from sales of wires and cables to domestic contractors for government projects, is recognized upon the customers’ acceptance of the products based on the agreed upon conditions. Since the amount of such revenue is significant to the financial statements, we considered the occurrence of such revenue as a key audit matter for the year ended December 31, 2021.

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To address this matter, we evaluated the Company’s revenue recognition policy and the design and implementation of internal controls for such revenue and conducted the relevant internal control test and substantive test. We selected samples of such recorded sales revenue and verified them against the contract, customers’ acceptance documents, sales orders, invoices, etc., and confirmed the occurrence of this type of revenue transactions.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

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

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

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

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

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

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

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

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

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 financial statements for the year ended December 31, 2021 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 audits resulting in this independent auditors’ report are Tza-Li Gung and Wen-Yuan Chuang.

Deloitte & Touche Taipei, Taiwan Republic of China

March 22, 2022

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with 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 financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

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HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - current (Notes 4 and 8) Financial assets at amortized cost - current (Notes 4, 9 and 28) Contract assets - current (Notes 4 and 21) Notes receivable (Notes 4, 10 and 21) Trade receivables (Notes 4, 10, 21 and 27) Other receivables (Note 10) Inventories (Notes 4, 5 and 12) Other current assets (Note 17) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8) Investments accounted for using the equity method (Notes 4 and 13) Property, plant and equipment (Notes 4, 14 and 28) Right-of-use assets (Notes 4 and 15) Investment properties (Notes 4, 16 and 28) Deferred tax assets (Notes 4, 5 and 23) Other non-current assets (Note 17) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Notes payable Trade payables to unrelated parties Trade payables to related parties (Note 27) Amounts due to customers for construction contracts (Note 11) Other payables (Note 18) Current tax liabilities (Notes 4 and 23) Lease liabilities - current (Notes 4 and 15) Other current liabilities (Note 18) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 23) Lease liabilities - non-current (Notes 4 and 15) Other non-current liabilities (Notes 18, 19 and 27) Total non-current liabilities Total liabilities EQUITY (Notes 4, 8 and 20) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2021 Amount % $ 167,669 4 157,113 3 93,689 2 9,408 - 267,778 6 35,795 1 303,073 7 10,937 - 904,884 20 10,169 - 1,960,515 43 905,744 20 54,683 1 1,320,472 29 8,686 - 289,931 6 24,517 1 11,755 - 2,615,788 57 $ 4,576,303 100 $ 429 - 128,443 3 15,476 - 7,005 - 81,403 2 33,319 1 4,062 - 24,115 - 294,252 6 474 - 4,676 - 36,033 1 41,183 1 335,435 7 1,926,917 42 283,083 6 332,672 7 - - 1,453,006 32 1,785,678 39 245,190 6 4,240,868 93 $ 4,576,303 100		2020
				Amount % $ 677,966 13 167,508 3 126,724 3 14,000 - 240,070 5 26,483 - 290,463 6 2,936 - 755,907 15 38,417 1 2,340,474 46 990,554 20 55,500 1 1,389,644 28 4,928 - 192,936 4 28,136 1 27,043 - 2,688,741 54 $ 5,029,215 100 $ 290 - 220,435 4 - - 2,066 - 82,575 2 42,955 1 2,809 - 23,001 - 374,131 7 2,553 - 2,261 - 34,676 1 39,490 1 413,621 8 2,408,647 48 359,377 7 307,990 6 11,237 - 1,207,765 24 1,526,992 30 320,578 7 4,615,594 92 $ 5,029,215 100

The accompanying notes are an integral part of the financial statements.

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HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 21 and 27) OPERATING COSTS (Notes 12, 19, 22 and 27) GROSS PROFIT OPERATING EXPENSES (Notes 19, 22 and 27) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income (Note 22) Other income (Note 22) Other gains and losses (Note 22) Finance costs (Note 22) Share of profit or loss of subsidiaries (Note 13) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4, 5 and 23) NET PROFIT FOR THE YEAR		2021 Amount % $ 2,800,179 100 2,453,015 88 347,164 12 47,817 2 40,499 1 4,889 - 93,205 3 253,959 9 1,366 - 41,023 1 (8,012) - (161) - 2,764 - 36,980 1 290,939 10 58,023 2 232,916 8		2020
				Amount % $ 2,818,659 100 2,474,138 88 344,521 12 56,281 2 38,492 1 4,460 - 99,233 3 245,288 9 2,551 - 37,064 1 12,488 1 (296) - (2,932) - 48,875 2 294,163 11 52,183 2 241,980 9 (Continued)

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HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instruments at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 24) Basic Diluted		2021 Amount % $ (1,237) - (48,835) (2) 454 - (49,618) (2) $ 183,298 6 $ 1.04 $ 1.04		2020
				Amount % $ 323 - 336,584 12 (257) - 336,650 12 $ 578,630 21 $ 1.00 $ 1.00
		$		$

The accompanying notes are an integral part of the financial statements.

(Concluded)

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HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Share Capital Capital Surplus BALANCE AT JANUARY 1, 2020 $ 2,408,647 $ 431,635 Appropriation of the 2019 earnings Legal reserve - - Special reserve - - Issuance of cash dividends from capital surplus - (72,258) Net profit for the year ended December 31, 2020 - - Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax - - Total comprehensive income (loss) for the year ended December 31, 2020 - - Disposals of investments in equity instruments designated as at fair value through other comprehensive income - - BALANCE AT DECEMBER 31, 2020 2,408,647 359,377 Appropriation of the 2020 earnings Legal reserve - - Special reserve - - Issuance of cash dividends from capital surplus - (72,259) Capital reduction (481,730) - Disposal of investments accounted for using the equity method - (4,035) Net profit for the year ended December 31, 2021 - - Other comprehensive income (loss) for the year ended December 31, 2021, net of income tax - - Total comprehensive income (loss) for the year ended December 31, 2021 - - Disposals of investments in equity instruments designated as at fair value through other comprehensive income - - BALANCE AT DECEMBER 31, 2021 $ 1,926,917 $ 283,083	Retained Earnings	Total $ 1,280,177 - - - 241,980 323 242,303 4,512 1,526,992 - - - - - 232,916 (1,237) 231,679 27,007 $ 1,785,678	Other Equity	Total $ (11,237) - - - - 336,327 336,327 (4,512) 320,578 - - - - - - (48,381) (48,381) (27,007) $ 245,190	Total Equity $ 4,109,222 - - (72,258) 241,980 336,650 578,630 - 4,615,594 - - (72,259) (481,730) (4,035) 232,916 (49,618) 183,298 - $ 4,240,868
			Exchange Differences on Translating Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ 6,062 $ (17,299) - - - - - - - - (257) 336,584 (257) 336,584 - (4,512) 5,805 314,773 - - - - - - - - - - - - 454 (48,835) 454 (48,835) - (27,007) $ 6,259 $ 238,931
	Legal Reserve Special Reserve Unappropriated Earnings $ 301,196 $ 221,330 $ 757,651 6,794 - (6,794) - (210,093) 210,093 - - - - - 241,980 - - 323 - - 242,303 - - 4,512 307,990 11,237 1,207,765 24,682 - (24,682) - (11,237) 11,237 - - - - - - - - - - - 232,916 - - (1,237) - - 231,679 - - 27,007 $ 332,672 $ - $ 1,453,006

The accompanying notes are an integral part of the financial statements.

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HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expense Reversal of expected credit loss on trade receivables Net loss (gain) on fair value changes of financial assets designated as at fair value through profit or loss Finance costs Interest income Dividend income Share of (profit) loss of subsidiaries Loss on disposal of property, plant and equipment Write-downs of inventories Reversal of write-downs of inventories Net loss on foreign currency exchange Other non-cash items Changes in operating assets and liabilities Contract assets Notes receivable Trade receivables Amounts due from customers for construction contracts Other receivables Inventories Other current assets Notes payable Trade payables Amounts due to customers for construction contracts Other payables Other current liabilities Other non-current liabilities Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through other comprehensive income Proceeds from sale of financial assets at fair value through other comprehensive income Proceeds from capital reduction by return of shares - financial assets at FVTOCI Purchase of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost	2021 $ 290,939 61,387 (158) 10,395 161 (1,366) (32,901) (2,764) 86 15,595 (20,113) 288 (12) (27,708) (9,023) (13,152) - (2,615) (144,459) 28,248 139 (76,372) 4,939 (1,764) 1,114 (235) 80,649 (161) (65,810) 14,678 (9,690) 73,196 - (23,408) 28,000	2020 $ 294,163 74,364 (2,089) (23,067) 296 (2,551) (28,766) 2,932 8,674 1,850 (9,500) 421 (8) (84,599) 12,020 213,189 3,203 6,098 69,223 9,838 119 (126,045) (8,736) 2,198 7,347 (59) 420,515 (296) (4,511) 415,708 (94,554) 4,694 9,253 (28,000) 30,986 (Continued)

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HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Payments for property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for investment properties Increase in prepayments for equipment Interest received Other dividends received Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from guarantee deposits received Refunds of guarantee deposits received Repayment of the principal portion of lease liabilities Cash dividends from capital surplus Payment for reduction of capital Net cash used in financing activities NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2021 $ (48,062) (11,221) 11,708 (21,609) (626) 1,463 32,901 32,652 3,496 (3,450) (3,684) (72,259) (481,730) (557,627) (510,297) 677,966 $ 167,669	2020 $ (258,078) (14,189) 12,557 (529) (15,427) 2,801 28,766 (321,720) 45 (45) (6,052) (72,258) - (78,310) 15,678 662,288 $ 677,966

The accompanying notes are an integral part of the financial statements.

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

1. GENERAL INFORMATION

Hold-Key Electric Wire & Cable Co., Ltd. (the “Company”) was established in Taipei, Taiwan in March 1989 and its factories are located in Taoyuan, Taiwan. The Company mainly manufactures and sells XLPE power cables, electric cables, aluminum cables, rubber cables, communication cables, fiber optic cables, LAN cables, cable accessories, etc. and is also engaged in the import and export of the aforementioned products and lease of properties.

The Company’s shares are listed and have been traded on the Taiwan Stock Exchange since September 2000.

The financial statements of the Company are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors and authorized for issue on March 22, 2022.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

• a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies.

• b. The IFRSs endorsed by the FSC for application starting from 2022

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by IASB
	January 1, 2022 (Note 1) January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4)

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• Note 1: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

• Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

• Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

• Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

The initial application of the aforementioned amendments did not have material impact on the Company’s assets, liabilities and equity as of January 1, 2022

• c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

Effective Date Announced by IASB (Note 1)

To be determined by IASB January 1, 2023 January 1, 2023 (Note 2) January 1, 2023 (Note 3) January 1, 2023 (Note 4)

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

• Note 2: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

• Note 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

Except for the above impact, as of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value, and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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

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

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing these parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries, associates and joint ventures. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries, associates and joint ventures, the share of other comprehensive income of subsidiaries, associates and joint ventures and the related equity items, as appropriate, in these parent company only financial statements.

• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 months after the reporting period; even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

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• 3) Liabilities for which the Company does not have an unconditional right to defer settlement 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.

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

The Company is engaged in the construction business, which has an operating cycle of over 1 year. The normal operating cycle applies when considering the classification of the Company’s construction-related assets and liabilities.

• d. Foreign currencies

In preparing the financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

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

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated using the exchange rate at the date of the transaction.

For the purposes of presenting the financial statements, the functional currencies of the entities (including operations of the subsidiaries and associates in other countries which used different currencies from the functional currency of the Company) are translated into the presentation currency, the New Taiwan dollar as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

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

In relation to a partial disposal of a subsidiary that does not result in the Company losing of control over the subsidiary, the proportionate share of accumulated exchange differences is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

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e. Inventories

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

f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

Subsidiaries are the entities controlled by the Company.

Under the equity method, investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries attributable to the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are accounted for as equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

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

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits and losses resulting from downstream transactions is eliminated in full only in the parent company only financial statements. Profits and loss resulting from upstream and transactions between subsidiaries is recognized only in the parent company only financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

• 14 -

g. Property, plant and equipment

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

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

• h. Investment properties

Investment properties are properties held to earn rentals or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Freehold investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

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

• i. Impairment of property, plant and equipment, right-of-use asset, investment properties and assets related to contract costs

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use asset and investment properties to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

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

Before the Company recognizes an impairment loss from assets related to contract costs, any impairment loss on inventories and property, plant and equipment related to the contract shall be recognized in accordance with applicable standards. Then, impairment loss from the assets related to the contract costs is recognized to the extent that the carrying amount of the assets exceeds the remaining amount of consideration that the Company expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services and which have not been recognized as expenses. The assets related to the contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating impairment of that cash-generating unit.

• 15 -

When an impairment loss is subsequently reversed, the corresponding carrying amount of the asset, cash-generating unit or assets related to contract costs is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset, cash-generating unit or assets related to contract costs in prior years. A reversal of an impairment loss is recognized in profit or loss.

j. Financial instruments

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

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

Financial assets

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

• 1) Measurement categories

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

a) Financial assets at FVTPL

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

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 26.

• b) Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, trade receivables at amortized cost, notes receivable, construction contracts, other receivables and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for:

• i. Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of the financial asset; and

• ii. Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset.

Cash equivalents include time deposits, commercial papers and repurchase agreements collateralized by bonds with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

• c) Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

• 2) Impairment of financial assets and contract assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), as well as contract assets.

The Company always recognizes lifetime Expected Credit Losses (ECLs) for trade receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Company recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

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• 3) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

Equity instruments

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

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Company’s own equity instruments.

Financial liabilities

• 1) Subsequent measurement

All the financial liabilities are measured at amortized cost using the effective interest method.

• 2) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

• k. Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

• 1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of electric wires and cables. Sales of goods are recognized as revenue when the goods are delivered to the customer’s specific location and examined by the customer because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Revenue and contract assets are recognized concurrently. Any amounts previously recognized as contract assets are subsequently reclassified to trade receivables when invoices are issued. The transaction price received is recognized as a contract liability until the goods have been delivered to the customer or examined by the customer.

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2) Revenue from the rendering of services

Revenue from the rendering of services comes from cable and wire installation services. Revenue from the installation of electric wires and cables and contract assets are recognized concurrently when the installation has been completed and examined by the customer. Contract assets are subsequently reclassified to trade receivables when invoices are issued.

l. Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

1) The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

When a lease includes both land and building elements, the Company assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the lessee. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

2) The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

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Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the balance sheets.

m. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost, and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, effects of changes to asset ceiling and returns on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

3) Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plans except that remeasurement is recognized in profit or loss.

• n. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of tax jurisdiction.

According to the Income Tax Law in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

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2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carryforwards and unused tax credits for purchases of machinery, equipment and technology, to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint arrangements, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profit against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimations, and assumptions on about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

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Key Sources of Estimation Uncertainty

a. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience for the sale of product of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

b. Income taxes

As of December 31, 2021 and 2020, the carrying amount of deferred tax assets in relation to deductible temporary differences was $24,517 thousand and $28,136 thousand, respectively. As of December 31, 2021 and 2020, no deferred tax asset was recognized on tax losses of $69,898 thousand and $71,188 thousand, respectively, due to the unpredictability of future profit streams. A key source of estimation uncertainty is the determination of the realizability of the deferred tax asset mainly depends on whether sufficient future profit or taxable temporary differences will be available. In cases where the actual future profit generated is less than expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the period in which such a reversal takes place.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents Time deposits with original maturities of 3 months or less		December 31	December 31
		2021 $ 37 151,832 15,800 $ 167,669	2020 $ 37 226,729 451,200 $ 677,966

The rate intervals of cash in banks at the end of the reporting period were as follows:

Bank balance	December 31
	2021 2020 0%-0.41% 0%-0.41%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Gold investment account		**December 31 **	**December 31 **
		2021 $ 157,113	2020 $ 167,508

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8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in Equity Instruments at FVTOCI

Current Domestic investments Listed shares Ordinary shares - G-Shank Enterprise Co., Ltd. Ordinary shares - Nishoku Technology Inc. Ordinary shares - Taiwan Cooperative Financial Holding Co., Ltd. Ordinary shares - Global Mixed-Mode Technology Inc. Ordinary shares - Sinher Technology Inc. Ordinary shares - DrayTek Company Ordinary shares - Taiwan Fu Hsing Industrial Co., Ltd. Ordinary shares - Mega Financial Holding Company Ltd. Non-current Domestic investments Listed shares Ordinary shares - Young Fast Optoelectronics Co., Ltd. Ordinary shares - Fuzetec Technology Co., Ltd. Unlisted shares Ordinary shares - Sol Young Enterprises Co., Ltd. Ordinary shares - Bond-Galv Industrial Co., Ltd. Ordinary shares - Mosart Semiconductor Corp. Ordinary shares - Luminous Optical Technology Co., Ltd. Ordinary shares - Taiwan Submarine Cable Co., Ltd. (Note) Preference shares - MagiCap Venture Capital Co., Ltd.		**December 31 **	**December 31 **
		2021 $ - - 81,323 - - 7,033 - 5,333 $ 93,689 $ 587,947 87,410 130,086 50,782 30,333 12,549 300 6,337 $ 905,744	2020 $ 11,696 17,876 63,751 11,165 8,676 6,578 2,512 4,470 $ 126,724 $ 698,187 51,532 135,622 64,199 9,976 21,563 300 9,175 $ 990,554

Note: One-Seven Trading Co., Ltd. was renamed as Taiwan Submarine Cable Co., Ltd. on December 31, 2020.

These investments in equity instruments are held for medium to long-term strategic purposes, and the Company expects to profit from the shares through long-term investment. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes.

In 2021 and 2020, the Company acquired investments in equity instruments for medium to long-term strategic purposes of $9,690 thousand and $94,554 thousand, respectively; the management designated these investments as at FVTOCI.

In 2021 and 2020, the Company sold its shares in order to manage credit concentration risk. The sold shares had a fair value of $73,196 thousand and $4,694 thousand, respectively, and the related unrealized valuation (loss) gain of $27,007 thousand and $4,512 thousand, respectively, was transferred from other equity to retained earnings.

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9. FINANCIAL ASSETS AT AMORTIZED COST

Current Domestic investments Time deposits with original maturities of more than 3 months Restricted assets - demand deposit		December	31
		2021 $ - 9,408 $ 9,408	2020 $ 14,000 - $ 14,000

• a. As of December 31, 2020, the interest rates for time deposits with original maturity of more than 3 months were 0.55%, as at the end of the reporting period.

• b. Refer to Note 28 for information relating to investments in financial assets at amortized cost pledged as security.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables Tax refund receivable Earned revenue receivable and others		**December 31 **	**December 31 **
		2021 $ 36,234 (439) $ 35,795 $ 306,138 (3,065) $ 303,073 $ 1,001 9,936 $ 10,937	2020 $ 27,211 (728) $ 26,483 $ 293,397 (2,934) $ 290,463 $ - 2,936 $ 2,936

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Trade receivables at amortized cost

In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk was significantly reduced.

Other than government agencies, the Company transacted with customers from diverse industries that are unrelated to each other; thus, no concentration of credit risk was observed.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix approach considering the past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company’s different customer base.

The following table details the loss allowance of trade receivables based on the Company’s provision matrix.

December 31, 2021

	Not Past Due
Expected credit loss rate	1%
Gross carrying amount	$ 342,372
Loss allowance (Lifetime ECLs)	(3,504)
Amortized cost	$ 338,868
December 31, 2020
	Not Past Due
Expected credit loss rate	1%
Gross carrying amount	$ 320,608
Loss allowance (Lifetime ECLs)	(3,662)
Amortized cost	$ 316,946

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Less: Amounts recovered Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 3,662 (158) $ 3,504	2020 $ 5,751 (2,089) $ 3,662

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11. AMOUNTS DUE TO CUSTOMERS FOR CONSTRUCTION CONTRACTS

Amounts due to customers for construction contracts Progress billings Less: Construction costs incurred plus recognized profits less recognized losses to date		December	31
		2021 $ 9,616 (2,611) $ 7,005	2020 $ 4,426 (2,360) $ 2,066

12. INVENTORIES

Finished goods Work in progress Raw materials		December 31	December 31
		2021 $ 251,598 333,913 319,373 $ 904,884	2020 $ 271,368 279,152 205,387 $ 755,907

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2021 and 2020 was $2,383,120 thousand and $2,386,983 thousand, respectively.

The cost of goods sold included reversal of write-downs of inventories of $20,113 thousand and inventory write-downs of $15,595 thousand for the year ended December 31, 2021. The cost of goods sold included reversal of write-downs of inventories of $9,500 thousand and inventory write-downs of $1,850 thousand for the year ended December 31, 2020. Previous write-downs were reversed as a result of increased selling price and the sale of obsolete and slow-moving inventories which were previously written down.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Subsidiaries

Name of Subsidiaries Holdkey (Belize) Investments Limited Muchonfarm Inc. (Note) Name of Subsidiaries Holdkey (Belize) Investments Limited Muchonfarm Inc. (Note)		December	31
	2021 2020 $ 5,641 $ 4,967 49,042 50,533 $ 54,683 $ 55,500 Proportion of Ownership and Voting Rights
	**December 31 **
	2021 2020 100% 100% 100% 100%

Note: Muchorganic Incorporated Limited was renamed as Muchonfarm Inc. on May 8, 2020.

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The share of profits and losses of subsidiaries accounted for using the equity method and other comprehensive income and losses for the years ended December 31, 2021 and 2020 were recognized based on the financial statements of subsidiaries that have been audited by accountants during the same periods.

14. PROPERTY, PLANT AND EQUIPMENT

Assets Used by the Company

Freehold Land Cost Balance at January 1, 2021 $ 499,204 Additions - Disposals - Transferred from prepaid equipment - Transferred from investment properties 20,230 Transferred to investment properties - Balance at December 31, 2021 $ 519,434 Accumulated depreciation and impairment Balance at January 1, 2021 $ - Disposals - Depreciation expense - Transferred to investment properties - Balance at December 31, 2021 $ - Balance at December 31, 2021, net $ 519,434 Cost Balance at January 1, 2020 $ 302,373 Additions 196,831 Disposals - Transferred from prepaid equipment - Balance at December 31, 2020 $ 499,204 Accumulated depreciation and impairment Balance at January 1, 2020 $ - Disposals - Depreciation expense - Balance at December 31, 2020 $ - Balance at December 31, 2020, net $ 499,204	Buildings Machinery and Equipment $ 1,376,724 $ 236,144 43,553 879 (24,322 ) (40,060 ) 11,377 - - - (214,885) - $ 1,192,447 $ 196,963 $ (589,159 ) $ (187,561 ) 24,322 40,060 (34,919 ) (7,723 ) 117,362 - $ (482,394) $ (155,224) $ 710,053 $ 41,739 $ 1,414,117 $ 488,239 31,328 8,274 (71,354 ) (276,754 ) 2,633 16,385 $ 1,376,724 $ 236,144 $ (616,137 ) $ (444,269 ) 65,278 276,608 (38,300) (19,900) $ (589.159) $ (187,561) $ 787,565 $ 48,583	Other Equipment $ 79,435 4,222 (8,895 ) - - - $ 74,762 $ (25,143 ) 8,809 (9,182 ) - $ (25,516) $ 49,246 $ 54,661 21,346 (7,955 ) 11,383 $ 79,435 $ (23,263 ) 5,503 (7,383) $ (25,143) $ 54,292	Total $ 2,191,507 48,654 (73,277 ) 11,377 20,230 (214,885) $ 1,983,606 $ (801,863 ) 73,191 (51,824 ) 117,362 $ (663,134) $ 1,320,472 $ 2,259,390 257,779 (356,063 ) 30,401 $ 2,191,507 $ (1,083,669 ) 347,389 (65,583) $ (801,863) $ 1,389,644

The above items of property, plant and equipment used by the Company are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings 6-55 years Machinery and equipment 4-20 years Other equipment 3-16 years

The major parts of the buildings held by the Company include plants and fire extinguishing equipment, which are depreciated over their estimated useful lives of 50 years and 10 years, respectively.

Refer to Note 28 for the carrying amount of property, plant and equipment pledged for general banking facilities granted to the Company.

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15. LEASE ARRANGEMENTS

a. Right-of-use assets

b. c.	Carrying amounts Buildings Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Buildings Transportation equipment Lease liabilities Carrying amounts Current Non-current Range of discount rate for lease liabilities was as follows: Buildings Transportation equipment Other lease information Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases		December	31
		2021 2020 $ 6,263 $ 1,670 2,423 3,258 $ 8,686 $ 4,928 **For the Year Ended December 31 **
			2021 $ 7,977 $ 1,852 1,754 $ 3,606 December	2020 $ - $ 4,275 1,757 $ 6,032 31
			2021 $ 4,062 $ 4,676 December	2020 $ 2,809 $ 2,261 31
		2021 2020 1.195%-1.465% 1.195%-1.465% 1.165%-1.465% 1.465% **For the Year Ended December 31 **
			2021 $ 3,627 $ 102 $ (3,770)	2020 $ 2,973 $ 101 $ (6,307)

• 28 -

The Company’s leases of certain buildings and transportation equipment qualify as short-term leases and leases of certain buildings and transportation equipment qualify as low-value asset leases. The Company has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

Lease arrangements under operating leases for the leasing out of investment properties are set out in Note 16.

16. INVESTMENT PROPERTIES

Freehold Land Cost Balance at January 1, 2021 $ 130,168 Additions - Disposals - Transferred from prepaid equipment - Transferred from property, plant and equipment - Transferred to property, plant and equipment (20,230) Balance at December 31, 2021 $ 109,938 Accumulated depreciation and impairment Balance at January 1, 2021 $ - Disposals - Depreciation expense - Transferred from property, plant and equipment - Balance at December 31, 2021 $ - Balance at December 31, 2021, net $ 109,938 Cost Balance at January 1, 2020 $ 130,168 Additions - Disposals - Balance at December 31, 2020 $ 130,168 Accumulated depreciation and impairment Balance at January 1, 2020 $ - Disposals - Depreciation expense - Balance at December 31, 2020 $ - Balance at December 31, 2020, net $ 130,168

Buildings Total $ 91,666 $ 221,834 21,609 21,609 (114) (114) 4,050 4,050 214,885 214,885 - (20,230) $ 332,096 $ 442,034 $ (28,898) $ (28,898) 114 114 (5,957) (5,957) (117,362) (117,362) $ (152,103) $ (152,103) $ 179,993 $ 289,931 $ 91,730 $ 221,898 529 529 (593) (593) $ 91,666 $ 221,834 $ (26,742) $ (26,742) 593 593 (2,749) (2,749) $ (28,898) $ (28,898) $ 62,768 $ 192,936

Investment properties are depreciated on a straight-line basis over their estimated useful lives of 6 to 50 years.

• 29 -

The fair value of investment properties was $440,725 thousand and $322,019 thousand as of December 31, 2021 and 2020, respectively. The fair value was not evaluated by an independent appraiser; the Company evaluated it with reference to the market evidence of similar real estate transaction prices.

The investment properties were leased out for 1 to 3 years. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

As of December 31, 2021 and 2020, guarantee deposits received by the Company for operating lease contracts were amounted to $3,978 thousand and $3,932 thousand, respectively.

The maturity analysis of lease payments receivable under operating leases of investment properties was as follows:

Year 1 Year 2 Year 3		**December **	**31 **
		2021 $ 13,522 1,947 - $ 15,469	2020 $ 15,318 1,855 714 $ 17,887

The Company has freehold interest in all of its investment property. Refer to Note 28 for the carrying amount of investment properties pledged to secure general banking facilities granted to the Company.

17. OTHER ASSETS

Current Prepayments Temporary payments and payments on behalf of others Others Non-current Refundable deposits Prepayments for equipment		December	31
		2021 $ 5,591 960 3,618 $ 10,169 $ 11,129 626 $ 11,755	2020 $ 31,200 969 6,248 $ 38,417 $ 11,616 15,427 $ 27,043

• 30 -

18. OTHER LIABILITIES

Current Other payables Payable for purchase of equipment Salaries or bonuses Payable for commissions Payable for retirement and others Other liabilities Contract liabilities (Note) Temporary receipts Others Non-current Other liabilities Net defined benefit liabilities (Note 19) Guarantee deposits received (Note 16)		December	31
		2021 $ 1,277 41,331 3,210 35,585 $ 81,403 $ 21,706 1,665 744 $ 24,115 $ 32,055 3,978 $ 36,033	2020 $ 685 39,918 3,831 38,141 $ 82,575 $ 17,507 4,770 724 $ 23,001 $ 30,744 3,932 $ 34,676

Note: Contract liabilities under other liabilities are collections in advance for the sale of goods.

19. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Company make monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Act is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

• 31 -

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of the defined benefit obligation Fair value of the plan assets Deficit Net defined benefit liabilities		December	31
		2021 $ 75,774 (43,719) 32,055 $ 32,055	2020 $ 84,492 (53,748) 30,744 $ 30,744

Movements in net defined benefit liabilities (assets) were as follows:

	Present Value		Net Defined
	of the Defined		Benefit
	Benefit	Fair Value of	Liabilities
	Obligation	the Plan Assets	(Assets)
Balance at January 1, 2020	$ 88,411	$ (57,204)	$ 31,207
Service cost
Current service cost	810	-	810
Net interest expense (income)	663	(433)	230
Recognized in profit or loss	1,473	(433)	1,040
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(1,880)	(1,880)
Actuarial (gain) loss - changes in
demographic assumptions	229	-	229
Actuarial (gain) loss - changes in financial
assumptions	2,016	-	2,016
Actuarial (gain) loss - experience
adjustments	(769)	-	(769)
Recognized in other comprehensive income	1,476	(1,880)	(404)
Contributions from the employer	-	(1,099)	(1,099)
Benefits paid	(6,868)	6,868	-
Balance at December 31, 2020	$ 84,492	$ (53,748)	$ 30,744
Balance at January 1, 2021	$ 84,492	$ (53,748)	$ 30,744
Service cost
Current service cost	653	-	653
Net interest expense (income)	422	(271)	151
Recognized in profit or loss	1,075	(271)	804
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(695)	(695)
Actuarial (gain) loss - changes in
demographic assumptions	1,996	-	1,996
Actuarial (gain) loss - changes in financial
assumptions	(883)	-	(883)
Actuarial (gain) loss - experience
adjustments	1,128	-	1,128
Recognized in other comprehensive income	2,241	(695)	1,546
			(Continued)

• 32 -

	Present Value		Net Defined
	of the Defined		Benefit
	Benefit	Fair Value of	Liabilities
	Obligation	the Plan Assets	(Assets)
Contributions from the employer	$ -	$ (1,039)	$ (1,039)
Benefits paid	(12,034)	12,034	-
Balance at December 31, 2021	$ 75,774	$ (43,719)	$ 32,055
			(Concluded)

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 756 134 (116) 30 $ 804	2020 $ 781 167 62 30 $ 1,040

Through the defined benefit plans under the Labor Standards Act, the Company is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the government or corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rate(s) of salary increase	**December 31 **
	2021 2020 0.63% 0.50% 2.00% 2.00%

• 33 -

If possible reasonable change in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		**December **	**31 **
		2021 $ (1,762) $ 1,823 $ 1,767 $ (1,717)	2020 $ (2,017) $ 2,090 $ 2,023 $ (1,963)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		**December **	**31 **
		2021 $ 1,038 9.4 years	2020 $ 1,104 9.6 years

20. EQUITY

• a. Share capital

Ordinary shares

Number of authorized shares (in thousands) Amount of authorized shares Number of issued and fully paid shares (in thousands) Amount of issued and fully paid shares		**December 31 **	**December 31 **
		2021 320,000 $ 3,200,000 192,692 $ 1,926,917	2020 320,000 $ 3,200,000 240,865 $ 2,408,647

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and a right to receive dividends.

The Company’s shareholders in their meetings on July 20, 2021 resolved to reduce its capital of $481,730 thousand, which eliminated 48,173 thousand ordinary shares, and the reduction rate is about 20%. The paid ordinary shares after reduction were 192,692 thousand shares. On August 24, 2021, the above transaction was approved by the FSC and the subscription base date was determined by the board of the directors to be August 26, 2021.

• 34 -

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Arising from issuance of ordinary shares May be used to offset a deficit only Arising from changes in percentage of ownership interest in subsidiaries (2) Arising from share of changes in capital surplus of associates		December 31	December 31
		2021 $ 282,924 159 - $ 283,083	2020 $ 355,183 159 4,035 $ 359,377

• 1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).

• 2) Such capital surplus arises from the effect of changes in ownership interest in a subsidiary resulted from equity transactions other than actual disposal or acquisition, or from changes in capital surplus of subsidiaries accounted for using equity method.

c. Retained earnings and dividends policy

The Company considers the needs of the environment and the characteristics of the industry and long-term financial planning, dividend policy, measure of investment funds, financial structure, and surplus situation before it decides on the amount and type of surplus distribution.

Under the dividends policy as set forth in the Articles, when the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes and offsetting losses of previous years. The Company shall, after its losses have been covered and all taxes and dues have been paid and at the time of allocating surplus profit, first set aside 10% of such profit as a legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply. In addition to the aforesaid legal reserve, the Company appropriates another sum as a special reserve. Finally, any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. Distribution of cash dividends shall not be less than 10% of total dividends.

The Company’s shareholders resolved the amendments to the Company’s Articles of Incorporation on July 20, 2021. The amendment explicitly stipulates that the board of directors is authorized to adopt a special resolution to distribute dividends, bonuses, capital surplus or all or part of legal reserve in cash and a report of such distribution should be submitted in the shareholders’ meeting.

For the policies on distribution of compensation of employees and remuneration of directors, refer to compensation of employees and remuneration of directors in Note 22-h.

Legal reserve shall be appropriated until it has reached the Company’s paid-in capital. This reserve may be used to offset a deficit. If the Company has no deficit, and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

• 35 -

The appropriation of earnings for 2020 and 2019 were approved in the shareholder’s meetings on July 20, 2021 and June 29, 2020, respectively, were as follows:

Legal reserve Special reserve		Appropriation of	Earnings
		For Year 2020 $ 24,682 $ (11,237)	For Year 2019 $ 6,794 $(210,093)

The Company’s shareholders in their meetings on July 20, 2021 and June 29, 2020 also resolved to issue cash dividends from the capital surplus of $72,259 thousand and $72,258 thousand, respectively.

The appropriations of earnings for 2021 are proposed by the Company’s board of directors and subject to the resolution of the shareholders’ meeting to be held on June 27, 2022.

21. REVENUE

Wires and cables revenue Rental revenue Contract Balances December 31, 2021 Notes and trade receivables (Note 10) $ 338,868 Contract assets - current Sale of wires and cables $ 267,778	For the Year Ended December 31	For the Year Ended December 31
	2021 $ 2,779,747 20,432 $ 2,800,179 December 31, 2020 $ 316,946 $ 240,070	2020 $ 2,802,428 16,231 $ 2,818,659 January 1, 2020 $ 540,134 $ 155,721

22. NET PROFIT

• a. Interest income

Interest income Bank deposits Interest on deposits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 1,344 22 $ 1,366	2020 $ 2,525 26 $ 2,551

• 36 -

b. Other income

Dividends Others c. Other gains and losses Financial assets mandatorily classified as at FVTPL Net foreign exchange gains Loss on disposal of property, plant and equipment Others d. Finance costs Interest on bank loan Interest on lease liabilities Interest on deposits e. Depreciation An analysis of depreciation by function Operating costs Operating expenses f. Operating expenses directly related to investment properties Direct operating expenses of investment properties generating rental income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2021 2020 $ 32,901 $ 28,766 8,122 8,298 $ 41,023 $ 37,064 For the Year Ended December 31
	2021 2020 $ (10,395) $ 23,067 2,568 1,770 (86) (8,674) (99) (3,675) $ (8,012) $ 12,488 For the Year Ended December 31
	2021 2020 $ 44 $ - 86 255 31 41 $ 161 $ 296 For the Year Ended December 31
	2021 2020 $ 58,509 $ 69,368 2,878 4,996 $ 61,387 $ 74,364 For the Year Ended December 31
		2021 $ 7,167	2020 $ 4,698

• 37 -

g. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans (Note 19) Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2021 $ 5,832 804 6,636 185,064 $ 191,700 $ 141,897 49,803 $ 191,700	2020 $ 5,780 1,040 6,820 188,513 $ 195,333 $ 141,357 53,976 $ 195,333

h. Compensation of employees and remuneration of directors

According to the Company’s Articles, where the Company made a profit in a fiscal year, it distributes compensation of employees at the rate of no less than 1% and no higher than 5% and remuneration of directors at the rate of no higher than 2.5% of net profit before income tax. The compensation of employees is calculated based on the remaining balance of the current year’s profit (i.e., profit before income tax prior to the distribution of compensation of employees and remuneration of directors) minus accumulated deficits.

The compensation of employees and remuneration of directors for the year ended December 31, 2021 are subject to the approval by the Company’s board of directors. The compensation of employees and remuneration of directors for the year ended December 31, 2020 were approved by the Company’s board of directors on May 11, 2021 as follows:

Accrual rate

Compensation of employees Remuneration of directors Amount Compensation of employees Remuneration of directors	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2021 2020 2.94% 2.93% 1.96% 1.17% For the Year Ended December 31
	2021 Cash $ 9,000 6,000	2020
		Cash $ 9,000 3,600

If there is a change in the amounts after the annual financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There was no difference between the actual amounts of compensation of employees and remuneration of directors and supervisors paid and the amounts recognized in 2020 and 2019 in the financial statements for the years ended December 31, 2020 and 2019.

• 38 -

Information on the compensation of employees and remuneration of directors resolved by the Company’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• i. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 5,031 (2,463) $ 2,568	2020 $ 6,807 (5,037) $ 1,770

23. INCOME TAXES

• a. Income tax recognized in profit or loss

Major components of tax expense were as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior year Deferred tax In respect of the current year Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 48,480 7,623 71 1,849 $ 58,023	2020 $ 45,496 - - 6,687 $ 52,183

A reconciliation of accounting profit and current income tax expense is as follows:

Profit before tax Income tax expense calculated at the statutory rate Non-deductible expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Unrecognized deductible temporary differences Adjustments for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2021 $ 290,939 $ 58,188 12 (6,580) 7,623 (1,291) 71 $ 58,023	2020 $ 294,163 $ 58,833 - (5,753) - (897) - $ 52,183

• 39 -

• b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current year: Remeasurement of defined benefit plans Total income tax (benefit) expense recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ (309) $ (309)	2020 $ 81 $ 81

c. Current tax liabilities

Current tax liabilities Income tax payable		**December **	**31 **
		2021 $ 33,319	2020 $ 42,955

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2021

Deferred Tax Assets Temporary differences Unrealized investment losses Inventory write-downs Defined benefit plans Others Deferred Tax Liabilities Temporary differences Unrealized valuation gains	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ 3,941 $ 150 $ - $ 4,091 16,100 (4,023) - 12,077 7,680 (47) 309 7,942 415 (8) - 407 $ 28,136 $ (3,928) $ 309 $ 24,517 Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ 2,553 $ (2,079) $ - $ 474

• 40 -

For the year ended December 31, 2020

Deferred Tax Assets Temporary differences Unrealized investment losses Inventory write-downs Unrealized valuation losses Defined benefit plans Others Deferred Tax Liabilities Temporary differences Unrealized valuation gains	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ 3,630 $ 311 $ - $ 3,941 18,000 (1,900) - 16,100 2,061 (2,061) - - 7,773 (12) (81) 7,680 887 (472) - 415 $ 32,351 $ (4,134) $ (81) $ 28,136 Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Closing Balance $ - $ 2,553 $ - $ 2,553

• e. Deductible temporary differences for which no deferred tax assets have been recognized in the balance sheets

Deductible temporary differences Unrealized investment losses Impairment of assets		December 31	December 31
		2021 $ 323,134 26,357 $ 349,491	2020 $ 326,643 29,299 $ 355,942

• f. Income tax assessments

The income tax returns of the Company through 2019 have been assessed and cleared by the tax authorities.

• 41 -

24. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share were as follows:

Net Profit for the Year

Profit for the year attributable to owners of the Company Weighted Average Number of Ordinary Shares Outstanding Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation issued Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
	2021 2020 $ 232,916 $ 241,980 (In Thousands of Shares) For the Year Ended December 31
		2021 223,971 789 224,760	2020 240,865 849 241,714

The Company may settle the compensation of employees in cash or shares; therefore, the Company assumes that the entire amount of the compensation will be settled in shares and the resulting potential shares will be included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

25. CAPITAL MANAGEMENT

In consideration of the industry dynamics, the Company manages its capital in a manner to ensure that it has sufficient and necessary financial resources to find its working capital needs, capital assets purchases, research and development activities, and dividend payments associated with its existing operations over the next 12 months.

26. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

Management believes the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values or their fair values cannot be reliably measured.

• 42 -

• b. Fair value of financial instruments that are measured at fair value on a recurring basis

• 1) Fair value hierarchy

December 31, 2021 Financial assets at FVTPL Gold investment account Financial assets at FVTOCI Listed securities in the ROC Equity securities Unlisted securities in the ROC Equity securities Preference shares December 31, 2020 Financial assets at FVTPL Gold investment account Financial assets at FVTOCI Listed securities in the ROC Equity securities Unlisted securities in the ROC Equity securities Preference shares	Level 1 $ 157,113 769,046 - - $ 926,159 Level 1 $ 167,508 876,443 - - $ 1,043,951	Level 2 $ - - - - $ - Level 2 $ - - - - $ -	Level 3 $ - - 224,050 6,337 $ 230,387 Level 3 $ - - 231,660 9,175 $ 240,835	Total $ 157,113 769,046 224,050 6,337 $ 1,156,546 Total $ 167,508 876,443 231,660 9,175 $ 1,284,786

There were no transfers between Levels 1 and 2 in the current and prior periods.

• 43 -

• 2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2021

Financial assets Balance at January 1, 2021 Disposals/settlements Return of shares after capital reduction Recognized in other comprehensive income (included in unrealized valuation gain (loss) on financial assets at FVTOCI) Balance at December 31, 2021 For the year ended December 31, 2020	Financial Assets at FVTOCI
	Equity Instruments $ 240,835 (1,627) (5,504) (3,317) $ 230,387

Financial assets Balance at January 1, 2020 Disposals/settlements Return of shares after capital reduction Recognized in other comprehensive income (included in unrealized valuation gain (loss) on financial assets at FVTOCI) Balance at December 31, 2020	Financial Assets at FVTOCI
	Equity Instruments $ 201,381 (4,694) (9,253) 53,401 $ 240,835

• 3) Valuation techniques and inputs applied for Level 3 fair value measurement

Domestic unlisted shares were valued using the market approach. The estimates and assumptions used by the Company under the market approach are consistent with those used by market participants in the pricing of financial instruments.

• c. Categories of financial instruments

Financial assets FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost (Note 1) Financial assets at FVTOCI Financial liabilities Amortized cost (Note 2)	December 31
	2021 2020 $ 157,113 $ 167,508 538,011 1,023,464 999,433 1,117,278 236,734 309,298

• 44 -

• Note 1: The balances include financial assets at amortized cost, which comprise cash and cash equivalents, debt investments, notes receivable, trade receivables, other receivables and refundable deposits.

• Note 2: The balances include financial liabilities at amortized cost, which comprise notes payable, trade payables, amounts due to customers for constructions contracts, other payables and guarantee deposits.

• d. Financial risk management objectives and policies

The Company sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Company’s policies approved by the board of directors.

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

• a) Foreign currency risk

With regard to the carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation), refer to Note 32.

Sensitivity analysis

The Company is mainly exposed to the USD and JPY.

The following table details the Company’s sensitivity to a 2% increase in New Taiwan dollars (the functional currency) against the relevant foreign currencies. The sensitivity rate of 2% is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items at the end of the reporting period under the assumption of a 2% change in foreign currency rates. A positive number below indicates an increase/decrease in pre-tax profit/loss when New Taiwan dollars strengthened by 2% against the relevant currency. For a 2% weakening of New Taiwan dollars against the relevant currency, there would be an equal and opposite impact on pre-tax profit/loss and the balances below would be negative.

Profit or loss	USD Impact For the Year Ended December 31 2021 2020 $ 348 $ (457)	JPY Impact
		For the Year Ended December 31
		2021 2020 $ 130 $ 152

The amounts were mainly attributable to the outstanding receivables and payables, which were not hedged at the end of the reporting period.

The Company’s sensitivity to foreign currency risk in 2021 and 2020 has not changed significantly from the prior year.

• 45 -

b) Interest rate risk

The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Cash flow interest rate risk Financial assets Sensitivity analysis	December 31
	2021 2020 $ 15,800 $ 465,200 160,502 225,925

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. A sensitivity rate of 0.25% increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 0.25% higher/lower and all other variables were held constant, the Company’s pre-tax profit/loss for the years ended December 31, 2021 and 2020 would have increased/decreased by $401 thousand and $565 thousand, respectively, which was mainly a result of variable-rate bank deposits.

The Company’s sensitivity to interest rate risk in 2021 and 2020 has not changed significantly from the prior year.

c) Other price risk

The Company was exposed to equity price risk through its investments in equity securities. The Company has appointed a special team to monitor the price risk and make plans to manage the price risk.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to the price risks of the aforementioned investments at the end of the reporting period.

If equity prices had been 1% higher/lower, pre-tax profit for the years ended December 31, 2021 and 2020 would have increased/decreased by $1,571 thousand and $1,675 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2021 and 2020 would have increased/decreased by $7,690 thousand and $8,764 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

The Company’s sensitivity to investments in equity securities in 2021 has not changed significantly from the prior year.

• 46 -

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation and financial guarantees provided by the Company could arise from:

• a) The carrying amount of the respective recognized financial assets as stated in the balance sheets; and

• b) The amount of contingent liabilities in relation to financial guarantee issued by the Company.

The Company adopted a policy of only dealing with government agencies and creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above.

Refer to Note 10 for impairment assessment of individual customer receivables.

• 3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Company relies on bank borrowings as a significant source of liquidity. As of December 31, 2021 and 2020, the Company had available unutilized short-term bank loan facilities of $1,072,995 thousand and $1,143,507 thousand, respectively.

27. TRANSACTIONS WITH RELATED PARTIES

Besides disclosures mentioned in other notes, the details of transactions between the Company and other related parties were disclosed below.

• a. Related party name and category

Related Party Name Related Party Category Muchonfarm Inc. (Muchonfarm) Subsidiary Young Fast Optoelectronics Co., Ltd. (Young Fast) Other related party (the Company is the corporate director) Taiwan SRU Corp. Ltd. (SRU) Other related party (related party in substance) Bond-Galv Industrial Co., Ltd. (Bond-Galv) Other related party (corporate director of the Company)

• 47 -

b. Operating revenue

Line Item Related Party Category/Name Sales Other related parties Rental revenue Subsidiary Other related parties Young Fast SRU	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 2,408 $ 136 13,467 2,603 $ 16,206	2020 $ 253 $ 240 10,081 1,719 $ 12,040

Sales were made at discounted market price to reflect the quantity of goods sold and the relationships between the parties.

Terms of sales from related parties were similar to those from third parties.

The Company rented houses to related parties. The amount of rent was agreed by both parties.

Terms of rent collection from related parties were similar to those from third parties.

As of December 31, 2021 and 2020, guarantee deposits received from the renting of houses to related parties were as follows:

Line Item Related Party Category/Name Guarantee deposits received Other related parties Young Fast SRU		December	31
		2021 $ 3,000 450 $ 3,450	2020 $ 3,000 450 $ 3,450

• c. Purchases of goods

Related Party Category Other related parties	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2021 $ 90,014	2020 $ 131,933

Purchases were made at discounted market prices to reflect the quantity of goods purchased and the relationships between the parties.

Terms of purchases from related parties were similar to those from third parties.

• d. Receivable to related parties

Line Item Related Party Category Trade receivables Other related parties		**December 31 **	**December 31 **
		2021 $ 130	2020 $ -

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2021 and 2020, no impairment losses were recognized for trade receivables from related parties.

• 48 -

e. Payables to related parties

Line Item Related Party Category/Name Trade payables to related parties Other related parties Young Fast		December	31
		2021 $ 15,476	2020 $ -

The outstanding payables to related parties were unsecured.

• f. Remuneration of key management personnel

Short-term employee benefits	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2021 $ 22,637	2020 $ 23,579

The remuneration of directors and key executives, as determined by the remuneration committee, was based on the performance of individuals and market trends.

28. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets have been mortgaged as collateral for long- and short-term bank credit lines, performance guaranty, and a deposit for management and maintenance of public open space:

Financial assets at amortized cost - current Restricted assets - demand deposit Property, plant and equipment Freehold land Buildings, net Investment properties Freehold land Buildings, net		**December 31 **	**December 31 **
		2021 $ 9,408 190,967 512,785 31,462 153,066 $ 897,688	2020 $ - 170,737 589,740 51,692 33,157 $ 845,326

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Company as of December 31, 2021 and 2020 were as follows:

• a. As of December 31, 2021 and 2020, unused letters of credit for purchases of raw materials and machinery and equipment amounted to the following:

USD JPY		December 31	December 31
		2021 $ 3,486 $ 124,650	2020 $ 3,423 $ 36,600

• 49 -

• b. Unrecognized commitments for purchase of property, plant and equipment amounted to the following:

NTD		December	31
		2021 $ 8,623	2020 $ 54,123

c. Unrecognized contractual commitments of contracts entered into subcontractors are as follows: NTD	c. Unrecognized contractual commitments of contracts entered into subcontractors are as follows: NTD	between the Company and the December 31	between the Company and the December 31
		2021 $ 132,145	2020 $ 190,624

• d. In accordance with the customs import tariff of the post-release duty payment for imported goods, the bank issued a letter of guarantee on behalf of the Company to the customs. The endorsement/guarantee amount was as follows:

NTD		December	31
		2021 $ 8,000	2020 $ 5,000

30. SIGNIFICANT LOSSES FROM DISASTERS: NONE

31. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD: NONE

32. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Company and the exchange rates between foreign currencies and respective functional currency were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

December 31, 2021

December 31, 2021
	Foreign			Carrying
	Currency			Amount (In
	(In Thousands)		Exchange Rate	Thousands)
Financial assets
Monetary items
USD	$	1,624	27.63	$ 44,879
JPY		55,378	0.24	13,208
				$ 58,087
Financial liabilities
Monetary items
USD		990	27.73	$ 27,455
JPY		27,600	0.24	6,693
				$ 34,148

• 50 -

December 31, 2020

December 31, 2020
		Foreign		Carrying
	Currency			Amount (In
	(In Thousands)		Exchange Rate	Thousands)
Financial assets
Monetary items
USD	$	792	28.43	$	22,521
JPY		64,846	0.27		17,787
				$	40,308
Non-monetary items
Investments accounted for using the equity
method
USD		174	28.48	$	4,967
Financial liabilities
Monetary items
USD		1,590	28.53	$	45,349
JPY		36,650	0.28		10,200
				$	55,549

The Company is mainly exposed to the USD and JPY. The following information was aggregated by the functional currencies of the Company, and the exchange rate between the respective functional currency and the presentation currency was disclosed. The significant realized and unrealized foreign exchange gains (losses) were as follows:

Functional Currency NTD	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2021 Exchange Rate Net Foreign Exchange Gain (Loss) 1 (NTD:NTD) $ 2,568	2020
		Exchange Rate Net Foreign Exchange Gain (Loss) 1 (NTD:NTD) $ 1,770

33. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions:

• 1) Financing provided to others: None.

• 2) Endorsements/guarantees provided: None.

• 3) Marketable securities held (excluding investments in subsidiaries, associates and joint controlled entities). (Table 1)

• 4) Marketable securities acquired and disposed of at costs or prices at least NT$300 million or 20% of the paid-in capital: None.

• 5) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.

• 51 -

• 6) Disposals of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.

• 9) Trading in derivative instruments: None.

• b. Information on investees. (Table 2)

• c. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: None.

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: None.

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.

  • c) The amount of property transactions and the amount of the resultant gains or losses.

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.

  • e) The highest period balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.

  • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services.

• d. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 3)

• 52 -

TABLE 1

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

MARKETABLE SECURITIES HELD DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars/Shares, Unless Stated Otherwise)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account			December 31, 2021	December 31, 2021		Note
				Number of Shares		Carrying Amount	% of Ownership	Fair Value
Hold-Key Electric Wire & Cable Co., Ltd.	Taiwan Cooperative Financial Holding Co., Ltd. DrayTek Company Mega Financial Holding Company Ltd. Young Fast Optoelectronics Co., Ltd. MagiCap Venture Capital Co., Ltd. Sol Young Enterprises Co., Ltd. Bond-Galv Industrial Co., Ltd. Fuzetec Technology Co., Ltd. Mosart Semiconductor Corp. Luminous Optical Technology Co., Ltd. Taiwan Submarine Cable Co., Ltd.	- - - The Company is the corporate director - Corporate director Corporate director - - - -	Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current	3,195 253 150 20,415 63 3,652 1,797 1,247 743 275 30		$ 81,323 7,033 5,333 587,947 6,337 130,086 50,782 87,410 30,333 12,549 300 $ 999,433	0.02 0.29 0.00 13.49 1.78 5.60 11.46 3.33 3.32 5.50 6.67	$ 81,323 7,033 5,333 587,947 6,337 130,086 50,782 87,410 30,333 12,549 300

• 53 -

TABLE 2

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, U.S. Dollars and Hong Kong Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	As of December 31, 2021	As of December 31, 2021	As of December 31, 2021	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2021	December 31, 2020	Number of Shares	% of Ownership	Carrying Amount
Hold-Key Electric Wire & Cable Co., Ltd. Holdkey (Belize) Investments Limited	Holdkey (Belize) Investments Limited Muchonfarm Inc. Midori Mark (H.K.) Limited	Belize City 3F., No. 36-10, Sec. 1, Fuxing S. Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.) Unit 2911, Tower 2 Metroplaza, 223 Hing Fong Rd., Kwai Fong, N.T., Hong Kong	Investment Agriculture Trading of various panels	$ 346,448 (US$ 10,237) (HK$ 1,000) 87,250 US$ -	$ 346,448 (US$ 10,237) (HK$ 1,000) 87,250 US$ 539	9,971 13,000 -	100.00 100.00 -	$ 5,641 49,042 -	$ 4,255 (1,491) -	$ 4,255 (1,491) -	Subsidiary Subsidiary

• 54 -

TABLE 3

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2021

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
Sol Young Enterprises Co., Ltd.	62,045,531	32.19

Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preference shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

• 55 -

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

THE CONTENTS OF STATEMENTS FOR MAJOR ACCOUNTING ITEMS

Item Major Accounting Items in Assets, Liabilities and Equity Statement of cash and cash equivalents Statement of financial assets at fair value through profit or loss - current Statement of investments in equity instruments at fair value through other comprehensive income - current Statement of notes receivable Statement of trade receivables Statement of contract assets - current Statement of inventories Statement of other current assets Statement of changes in financial assets at fair value through other comprehensive income - non-current Statement of changes in investments accounted for using the equity method Statement of changes in property, plant and equipment Statement of changes in accumulated depreciation of property, plant and equipment Statement of changes in accumulated impairment of property, plant and equipment Statement of changes in right-of-use assets Statement of changes in accumulated depreciation of right-of-use assets Statement of changes in investment properties Statement of changes in accumulated depreciation of investment properties Statement of changes in accumulated impairment of investment properties Statement of other non-current assets Statement of trade payables Statement of other payables Statement of other current liabilities Statement of lease liabilities Statement of other non-current liabilities Major Accounting Items in Profit or Loss Statement of operating revenue Statement of operating costs Statement of selling and marketing expenses Statement of general and administrative expenses Statement of research and development expenses Statement of finance costs Statement of labor, depreciation, depreciation and amortization by function

**Statement Index **

1 2 3 4 5 Note 21 6 Note 17 7 8 Note 14 Note 14 Note 14 9 10 Note 16 Note 16 Note 16 Note 17 11 Note 18 Note 18 12 Note 18 13 14 15 16 17 Note 22 18

• 56 -

STATEMENT 1

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Cash on hand Checking accounts Demand deposits Including foreign currency deposits of US$1,207 thousand and JPY27,600 thousand @27.63 and $0.24 Time deposits Time deposits with original maturities of 3 months or less	Amount $ 37 738 151,094 15,800 $ 167,669

• 57 -

STATEMENT 2

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT DECEMBER 31, 2021

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

Carrying Name Description Kg Amount Amount Rate Gold investment account 99 $ - $ -	Accumulated Cost Impairment $ 154,745 $ -	FairValue Unit Price Total Amount Note 1,587 $ 157,113 None

• 58 -

STATEMENT 3

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF INVESTMENTS IN EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - CURRENT DECEMBER 31, 2021

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

Carrying Name Description Shares Amount Amount Rate Taiwan Cooperative Financial Holding Co., Ltd. 3,195 $ - $ - DrayTek Corporation 253 - - Mega Financial Holding Company Ltd. 150 - -	Accumulated Cost Impairment $ 46,795 $ - 7,886 - 3,572 - $ 58,253	FairValue Unit Price Total Amount Note 25.45 $ 81,323 None 27.80 7,033 〃 35.55 5,333 〃 $ 93,689

• 59 -

STATEMENT 4

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Client Name Description Non-related party Client A Payments Client B 〃 Client C 〃 Client D 〃 Others (Note) 〃 Less: Allowance for impairment loss	Amount $ 14,493 2,461 2,435 2,231 14,614 36,234 439 $ 35,795

Note: The amount of individual client included in others does not exceed 5% of the account balance.

• 60 -

STATEMENT 5

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF TRADE RECEIVABLES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Client Name Description Non-related party Client A Payments Client B 〃 Client C 〃 Client D 〃 Others (Note) 〃 Related party Client E Less: Allowance for impairment loss	Amount $ 100,918 51,009 48,587 31,872 73,622 306,008 130 306,138 3,065 $ 303,073

Note: The amount of individual client included in others does not exceed 5% of the account balance.

• 61 -

STATEMENT 6

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Raw materials Materials Work in progress Finished goods Less: Allowance for write-downs of inventories		Amount
		Cost Net Realizable Value $ 330,019 $ 314,802 9,669 4,571 351,041 333,913 274,542 251,598 965,271 $ 904,884 60,387 $ 904,884

Note: Inventories are evaluated at the lower of cost or net realizable value.

• 62 -

STATEMENT 7

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars/Shares)

Name Young Fast Optoelectronics Co., Ltd. MagiCap Venture Capital Co., Ltd. Sol Young Enterprises Co., Ltd. Bond-Galv Industrial Co., Ltd. Fuzetec Technology Co., Ltd. Mosart Semiconductor Corp. Luminous Optical Technology Co., Ltd. Taiwan Submarine Cable Co., Ltd. (Note 3)	Balance, January 1, 2021 Shares Amount 20,415 $ 698,187 73 9,175 3,652 135,622 1,797 64,199 1,091 51,532 743 9,976 826 21,563 30 300 $ 990,554	Additions (Note 1) Shares Amount - $ - - - - - - - 156 35,878 - 20,357 - - - - $ 56,235	Decrease (Note 2) Shares Amount - $ 110,240 10 2,838 - 5,536 - 13,417 - - - - 551 9,014 - - $ 141,045	Balance, December 31, 2021 Percentage of Shares Ownership (%) Amount Collateral 20,415 13.49 $ 587,947 None 63 1.78 6,337 〃 3,652 5.60 130,086 〃 1,797 11.46 50,782 〃 1,247 3.33 87,410 〃 743 3.32 30,333 〃 275 5.50 12,549 〃 30 6.67 300 〃 $ 905,744
				Percentage of Shares Ownership (%) 20,415 13.49 63 1.78 3,652 5.60 1,797 11.46 1,247 3.33 743 3.32 275 5.50 30 6.67
	Shares 20,415 73 3,652 1,797 1,091 743 826 30	Shares - - - - 156 - - -	Shares - 10 - - - - 551 -

Note 1: Increase in amount resulted from adjustment and purchase.

Note 2: Decrease in amount resulted from capital reduction by adjustments for change in value return of shares and sale.

Note 3: One-Seven Trading Co., Ltd. was renamed as Taiwan Submarine Cable Co., Ltd. on December 31, 2020.

• 63 -

STATEMENT 8

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2021

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

Investees Holdkey (Belize) Investments Limited Muchonfarm Inc.	Balance, January 1, 2021 Shares Amount 9,971 $ 4,967 13,000 50,533 $ 55,500	Additions in Investment Acquired Shares Amount - $ 454 - - $ 454	Investment Decrease in Investment Gain or Shares Amount Loss - $ 4,035 $ 4,255 - - (1,491) $ 4,035 $ 2,764	Balance, December 31, 2021 Percentage of Ownership Shares (%) Amount 9,971 100 $ 5,641 13,000 100 49,042 $ 54,683	Market Value or Net Assets Value Total Unit Price Amount Collateral 0.57 $ 5,641 None 3.77 49,042 〃 $ 54,683
				Percentage of Ownership Shares (%) 9,971 100 13,000 100
		Acquired Shares - -			Unit Price 0.57 3.77
	Shares 9,971 13,000		Shares - -

• 64 -

STATEMENT 9

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Balance, January 1, 2021 Buildings $ 9,804 Transportation equipment 6,089 $ 15,893	Additions $ 7,058 919 $ 7,977	Decrease Balance, December 31, 2021 $ (8,852) $ 8,010 (757) 6,251 $ (9,609) $ 14,261

• 65 -

STATEMENT 10

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Balance, January 1, 2021 Buildings $ 8,134 Transportation equipment 2,831 $ 10,965	Additions $ 1,852 1,754 $ 3,606	Decrease Balance, December 31, 2021 $ (8,239) $ 1,747 (757) 3,828 $ (8,996) $ 5,575

• 66 -

STATEMENT 11

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF TRADE PAYABLES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Client Name Description Non-related party Client A Payments Client B 〃 Client C 〃 Client D 〃 Client E 〃 Client F 〃 Client G 〃 Others (Note) Related party Young Fast Optoelectronics Co., Ltd. 〃	Amount $ 27,455 21,821 9,999 8,444 8,342 7,377 6,693 38,312 128,443 15,476 $ 143,919

Note: The amount of individual client included in other does not exceed 5% of the account balance.

• 67 -

STATEMENT 12

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Contract Period Discount Rates (%) Buildings Dormitory 2019.08.01-2024.08.31 1.195-1.465 Transportation equipment Car 2019.02.01-2024.10.31 1.165-1.465 Less: Portion due within one year	Amount $ 6,281 2,457 8,738 4,062 $ 4,676

• 68 -

STATEMENT 13

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Quantities Unit Price Wires and cables 16,810 KM 23.67 Aluminum wire 677 MT 114.80 XLPE power cables 1,920 KM 712.48 Communication wires and cables 17,334 KM 13.72 Optical fiber cables 1,511 KM 63.89 Rental revenue Service revenue Others - ancillary equipment	Amount $ 397,927 77,720 1,367,964 237,753 96,544 20,432 72,820 529,019 $ 2,800,179

• 69 -

STATEMENT 14

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Direct raw materials Add: Raw materials, beginning of year Purchases in the period Transferred from expenses and revenue Less: Raw materials, end of year Others Materials used Materials, beginning of year Add: Purchases in the period Less: Materials, end of year Others Direct labor Manufacturing expenses Manufacturing costs Add: Work in process, beginning of year Purchases in the period Others Less: Work in process, end of year Others Cost of finished goods Add: Finished goods, beginning of year Finished goods purchased Others Less: Finished goods, end of year Others Cost of finished goods Reversal of write-downs of inventories Loss on inventory scrap Rental cost Add: Offsetting of construction in progress and advance construction receipts, beginning of year Construction in progress in the period Less: Offsetting of construction in progress and advance construction receipts, end of year Services cost

Amount $ 225,159 1,564,072 84 (330,019) (3,985) 1,455,311 10,728 18,048 (9,669) (136) 18,971 77,686 250,740 1,802,708 301,652 47 2,872 (351,041) (4,233) 1,752,005 298,868 619,883 17 (274,542) (8,593) 2,387,638 (20,113) 15,595 7,167 2,360 251 (2,611) 62,728 $ 2,453,015

• 70 -

STATEMENT 15

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF SELLING AND MARKETING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Payroll expenses Shipping expenses Commission expenses Export expenses Other (Note)	Amount $ 13,939 11,344 8,461 5,372 8,701 $ 47,817

Note: The amount of individual client included in other does not exceed 5% of the account balance.

• 71 -

STATEMENT 16

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Payroll expenses Professional service fees Others (Note)	Amount $ 29,343 3,904 7,252 $ 40,499

Note: The amount of individual client included in other does not exceed 5% of the account balance.

• 72 -

STATEMENT 17

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Payroll expenses Consumables expenses Other (Note)	Amount $ 2,366 501 2,022 $ 4,889

Note: The amount of individual client included in other does not exceed 5% of the account balance.

• 73 -

STATEMENT 18

HOLD-KEY ELECTRIC WIRE & CABLE CO., LTD.

STATEMENT OF LABOR, DEPRECIATION, DEPLETION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Employee benefits Salaries Labor and health insurance Post-employment benefits Remuneration of directors Others Depreciation	2021	Total $ 152,282 14,878 6,636 9,936 7,968 $ 191,700 $ 61,387	2020
	Classified as Operating Costs Classified as Operating Expenses $ 117,806 $ 34,476 11,890 2,988 5,400 1,236 - 9,936 6,801 1,167 $ 141,897 $ 49,803 $ 58,509 $ 2,878		Classified as Operating Costs Classified as Operating Expenses $ 117,710 $ 40,722 11,067 2,986 5,245 1,575 - 7,470 7,335 1,223 $ 141,357 $ 53,976 $ 69,368 $ 4,996	Total $ 158,432 14,053 6,820 7,470 8,558 $ 195,333 $ 74,364

Note 1: As of December 31, 2021 and 2020, the Company had 225 and 235 employees, including 5 and 5 non-employee directors, respectively.

• Note 2: The Company’s shares have been listed on the stock exchange, and the following information has been disclosed:

• 1) Average labor costs for the years ended December 31, 2021 and 2020 were $826 thousand and $817 thousand, respectively.

• 2) Average salary and bonus for the years ended December 31, 2021 and 2020 were $692 thousand and $689 thousand, respectively.

• 3) The average salary and bonus decreased by 0.44% year over year.

• 4) The Company has no supervisor.

• 5) The Company’s salary and remuneration policy, including directors, managers and employees, are as follows:

  • a) Salary is paid by remittance every month.

  • b) Depending on the operating conditions of the year, the year-end bonus will be paid before the Chinese New Year.

  • c) Depending on the operating conditions of the year, the performance bonus will be paid in the third quarter based on the employees’ job title and annual performance appraisal results.

  • d) Depending on the operating conditions of the year, 1%-5% of the current year's profit shall be allocated as compensation of employees and no more than 2.5% of the current year's profit as remuneration of directors. Remuneration will be paid in the third quarter of the year.

• 74 -