HOTA — Annual Report 2021

Nov 15, 2021

These financial statements are translated from the traditional Chinese version and are unaudited by a CPA.

Hota Industrial Manufacturing Company Limited

Individual Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report (stock code 1536)

Company Address: No. 115 Rd. Ren Hua, Dali District, Taichung Tel: (04)2491-2191

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Hota Industrial Manufacturing Company Limited

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

Table of Contents

Item 1、Cover 2、Table of Contents 3、Independent Auditor’s Report 4、Individual Balance Sheet 5、Individual Statements of Comprehensive Income 6、Individual Statements of Changes in Equity 7、Individual Statement of Cash Flows 8、Individual Financial report note (1) History of the Company (2) Date and procedure to approve financial reports (3) Application of newly issued and revised standards and interpretations (4) Summary of significant accounting policies (5) Significant sources of uncertainty in major accounting judgments, assumptions and estimates (6) Explanation of important accounting subjects (7) Related party transactions (8) Assets pledged as collaterals (9) Commitments and contingencies (10) Losses due to major disasters (11) Significant subsequent events (12) Others (13) Other disclosure

Page/Index 1 2 ~ 3 4 ~ 9 10 ~ 11 12 ~ 13 14 15 ~ 16 17 ~ 90 17 17 17 ~ 18 18 ~ 27 27 28 ~ 54 55 ~ 58 58 58 58 58 58 ~ 68 68 ~ 69

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Page/Index

Item

9、	List of important accounting items
	Accounts receivable – net	List 1
	Inventories	List 2
	Movements of Investments for Using Equity Method	List 3
	Movements of Property, Plant and Equipment	List 4
	Movements of Accumulated Depreciation on Property, Plant and Equipment	List 5
	Short-term borrowings	List 6
	Statement of short-term bills payable	List 7
	Notes payable	List 8
	Accounts payable	List 9
	Long-term loans	List 10
	Operating revenue	List 11
	Operating costs	List 12
	Manufacturing costs	List 13
	Operating expenses	List 14
	Other gains and losses	List 15
	Finance costs	List 16
	Functional Summary of Employee Benefit, Depreciation, Depletion and
	Amortization Occurred in Current Period	List 17

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Independent Auditor’s Report

• (111) Ministry of Finance approved No. 21004711(111) Ministry of Finance approved No. 21004711(111) Ministry of Finance approved No. 21004711(111) Ministry of Finance

approved No. 21004711

The Board of Directors and Shareholders Hota Industrial Manufacturing Company Limited Public

Opinion

We have audited the accompanying Individual states of Hota Industrial Manufacturing Company Limited (the “Company”), which comprise the individual balance sheets as of December 31,2021 and 2020, and the individual statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the individual financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying individual financial statements present fairly, according to our audit result and audit reports from other accountants(please refer to “Others” section),the individual financial position of the Company as of December 31,2021 and 2020,and its individual financial performance and its individual cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by the Securities Issuers and the International Reporting Standards(IRFS), International Accounting Standards(IAS), IFRIC Interpretations(IFRIC), and SIC Interpretations (SIC) endorsed and issues into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Individual Financial Statement 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 December 31, 2021 and 2020,

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

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Key audit matters for the company’s individual financial statements for the year ended December 31,2021 are stated as follows:

Cut-off date for international export income

Notes

With regard to the accounting policy on income recognition, please refer to Note 4 (28) of the individual financial report.

The Company mainly focused on the manufacturing and trading of related products for vehicle transmission parts. The main source of sales income is international export sales. Sales to customers involve different types of trading conditions. However, the Company recognize the sales revenue immediately after shipment. At the end of each period, ownership of the products that has not been transferred to the buyer due to the failure of the agreed trading conditions and the control of the product has not been transferred to the buyer. Because the data collection that does not meet the sales revenue recognition conditions involves a high degree of manual judgment and operation, the accountant has included the cut-off date of the export sales revenue as a significant review item.

Corresponding verification procedures

The accountants respond to above notes and take procedures for the specific aspects and procedures are summarized as follows:

1. Understand and evaluate the operating procedures and internal controls of the Company sales transactions, and test the controls.

2. Perform a cut-off test for sales transactions within a certain period before and after the end of the financial report, and confirm that revenue is recognized in the appropriate period.

Inventory allowance falling price and sluggish loss evaluation

Notes

With regard to inventory accounting policies, please refer to Note 4 (13) of the individual financial report. For important accounting estimates and assumptions for inventory evaluation, please refer to Note 5 (2) of the individual financial report. Please refer to Note 6 (6) of the individual financial report for the description of the inventory allowance loss. The Company’s inventory and inventory allowance losses as of December 31, 2021 were NT$2,767,618 thousand and NT$85,702 thousand, respectively.

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The Company is mainly engaged in the manufacturing and trading of automotive transmission parts related products. Due to the fierce competition in the automotive transmission parts market, there is a high risk of inventory falling-price loss or outdated price loss. The inventories of the Company are measured by cost and net realizable value. For inventories that are older than a certain period of age and those that are respectively identified as obsolete, provision is made for depreciation losses based on the degree of inventory depletion. The net realizable value used to evaluate obsoleteness often involves subjective judgments and therefore a high degree of uncertainty in estimation exists. Considering the Company's inventory and its allowance for depreciation losses have a significant impact on the financial statements. The accountant believes that the Company's inventory depreciation loss evaluation is one of the most important items in this year's audit.

Corresponding verification procedures

The accountants respond to above notes and take procedures for the specific aspects and procedures are summarized as follows:

1. Understand and evaluate the inventory allowance for depreciation losses, the operating procedures and internal controls mentioned. And then test the controls.

2. Review the annual inventory-check plan and participate in the annual inventory check to evaluate the management’s control of outdated inventory.

3. The policy for the provision of allowances for inventory evaluation losses is consistently adopted and the rationality of the provision policy is evaluated during the period of comparing the financial statements.

4. Obtain the inventory age reports to check the inventory items to test the accuracy of the inventory age calculation logic and information.

5. Regarding the estimated net realizable value of the inventory items, discuss with the management and obtain supporting documents, and then evaluate the rationality of the inventory allowance evaluation loss.

Other matters-adopting other accountant’s audit reports

The company’s individual financial statements adopt equity method for investee companies whose financial statements have not been checked by this accountant, but by other accountants. Therefore, in the opinions expressed by this accountant on the above individual financial statements, the amounts listed in the financial statements of these companies are based on the audit reports of other accountants. The amount of investment using the equity method on December 31, 2021 and December 31, 2020 were NT$59,394 thousand and 45,707 thousand, respectively, accounting for 0.30% and 0.27% of the total assets respectively. From January 1st to December 31st 2021 and from January 1st to December 31st 2020, the comprehensive profits recognized by the equity method were NT$2,843 thousand in benefits and NT$258 thousand in losses, respectively, each accounting for 0.87% and 0.08% of comprehensive profit and loss.

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

Management is responsible for the preparation and fair presentation of the individual financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IRFS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China ,and for such internal control as management determines is necessary to enable the

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preparation of individual financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including members of the audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Individual Financial Statements

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

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

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

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

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

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

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

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

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We communicate with those charged with governance departments, 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 the audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of significance in the audit of the individual 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 communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

PricewaterhouseCoopers Taiwan

Wu, Song-yuan

CPA

Xu, Jian-ye

Financial Supervisory Commission

Approved-certified No.: Financial-Supervisory-Securities-Auditing-1090350620 Approved-certified No.: Financial-Supervisory-Securities-Auditing-1050035683

March 16, 2022

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Hota Industrial Manufacturing Company Limited

Individual Balance Sheet

2021 and 2020 December 31

ASSETS	Note 6(1) 6(2) 6(3), 8 6(4) 6(4) 7(2) 6(5), 7(2) 6(6) 6(2) 6(7) 6(8), 8 6(9) 6(11) 6(31) 6(12)	(In Thousands of New Taiwan Dollars) December 31, 2021 December 31, 2020 Amount % Amount % $ 776,622 4 $ 687,561 4 78,221 1 76,039 1 2,121 - 57,355 - 25,442 - 9,842 - 2,472,606 13 2,041,334 12 37,761 - 18,665 - 67,702 - 40,778 - 2,681,916 14 1,676,038 10 224,690 1 129,732 1 6,367,081 33 4,737,344 28 54,313 - 57,650 - 913,788 5 860,624 5 11,569,887 60 10,476,818 62 250,524 1 257,098 2 30,387 - - - 6,142 - 7,034 - 58,738 - 60,604 - 243,429 1 545,418 3 13,127,208 67 12,265,246 72 $ 19,494,289 100 $ 17,002,590 100
		Amount $ 776,622 78,221 2,121 25,442 2,472,606 37,761 67,702 2,681,916 224,690 6,367,081 54,313 913,788 11,569,887 250,524 30,387 6,142 58,738 243,429 13,127,208 $ 19,494,289
CURRENT ASSETS 1100 Cash and cash equivalents 1120 Financial assets at fair value through profit or loss 1136 Hedging financial assets 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Other receivables from related parties, net 1200 Other receivable 130X Inventories 1470 Other current assets 11XX Total current assets NONCURRENT ASSETS 1517 Financial assets at fair value through profit or loss 1550 Investments accounted for using equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other noncurrent assets 15XX Total noncurrent assets 1XXX TOTAL

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Hota Industrial Manufacturing Company Limited

Individual Balance Sheet

2021 and 2020 December 31

LIABILITIESAND EQUITY

(In Thousands of New Taiwan Dollars) December 31, 2021 December 31, 2020 Note Amount % Amount % 6(13), 8 $ 947,263 5 $ 1,850,370 11 6(14) 1,260,000 7 600,000 4 921,500 5 425,000 2 7(2) 958,995 5 438,171 3 6(15), 7(2) 795,731 4 435,034 3 6(31) 65,160 - 42,911 - 14,868 - 13,874 - 6(16), 8 860,341 4 1,997,512 12 15,779 - 69,321 - 5,839,637 30 5,872,193 35 6(16), 8 4,614,720 24 4,344,727 26 6(31) 46,666 - 54,357 - 6(9) 240,836 1 246,790 1 6(18) 129,325 1 131,965 1 5,031,547 26 4,777,839 28 10,871,184 56 10,650,032 63 6(20) 2,795,175 14 2,545,175 15 6(21) 3,833,804 19 1,906,479 11 6(22) 689,651 4 660,162 4 48,236 - 48,236 - 1,316,593 7 1,227,622 7 6(23) ( 60,354) - ( 35,116 ) - 8,623,105 44 6,352,558 37 9 $ 19,494,289 100 $ 17,002,590 100

CURRENT LIABILITIES 2100 Short-term loans 2110 Short-term bills payable 2150 Notes payable 2170 Accounts payable 2200 Other payable 2230 Income tax payable 2280 Lease liability－Current 2320 Long-term liabilities due within one year or business cycle 2399 Other current liabilities 21XX Total current liabilities NONCURRENT LIABILITIES 2540 Long-term loan 2570 Deferred income tax liabilities 2580 Lease liability－noncurrent 2600 Other noncurrent liabilities 25XX Total noncurrent liabilities 2XXX Total liabilities EQUITY Capital 3110 Common shares Capital reserve 3200 Capital surplus Capital reserve 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings Other equity 3400 Other equity 3XXX Total equity Commitments and contingencies 3X2X Total liabilities and equities

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

Chairman ： Shen, Guo-rong Manager ： Chen, Jun-zhi

Chief accountant ： Chen, Chang-yuan

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Hota Industrial Manufacturing Company Limited Individual Statements of Comprehensive Income 2021 and 2020 January 1 to December 31

Item

(In Thousands of New Taiwan Dollars) (Except for earnings per share of New Taiwan dollars) 2021 2020 Note Amount % Amount % 6(24), 7(2) $ 6,230,770 100 $ 4,787,240 100 6(6)(29)(30), 7(2) ( 4,628,884) ( 75) ( 3,669,401 ) ( 76) 1,601,886 25 1,117,839 24 3,220 - 1,432 - 1,605,106 25 1,119,271 24 6(29)(30) ( 861,507) ( 14) ( 451,722 ) ( 10) ( 89,759) ( 1) ( 97,367 ) ( 2) ( 113,808) ( 2) ( 108,631 ) ( 2) ( 4,164) - ( 5,674 ) - ( 1,069,238) ( 17) ( 663,394 ) ( 14) 535,868 8 455,877 10 6(25) 482 - 3,399 - 6(26) 26,010 - 80,510 2 6(27) ( 77,381) ( 1) ( 107,801 ) ( 2) 6(28) ( 75,806) ( 1) ( 94,946 ) ( 2) 6(7) ( 8,172) - ( 19,370 ) ( 1) ( 134,867) ( 2) ( 138,208 ) ( 3) 401,001 6 317,669 7 6(31) ( 59,178) ( 1) ( 31,575 ) ( 1) $ 341,823 5 $ 286,094 6

4000 Net Revenue 5000 Cost of revenue 5900 Gross profit 5910 Unrealized loss of sales 5950 Net operating profit Operating expenses 6100 Marketing 6200 Administrative 6300 Research and development 6450 Expected credit impairment loss 6000 Total Operating Expenses 6900 Operation interest Other gains and losses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of other comprehensive gain of subsidiaries on investments in equity instruments at fair value 7000 Total Other gains and losses 7900 Net profits before tax 7950 Income tax 8200 Net profits

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Hota Industrial Manufacturing Company Limited Individual Statements of Comprehensive Income 2021 and 2020 January 1 to December 31

(In Thousands of New Taiwan Dollars) (Except for earnings per share of New Taiwan dollars)

Item	Note 6(18) 6(31) 6(31) 6(32) 6(32)	2021	2020 % Amount - $ 1,863 - 9,009 - 11,338 - ( 373) - 21,837 - ( 8,145 ) - 10,321 - ( 4,324 ) - 2,227 - 79 - $ 21,916 5 $ 308,010 1.23 $ 1.23 $	2020
		Amount $ 5,584 ( 582) ( 16,491) ( 1,117) ( 12,606) ( 8,129) 1,514 4,031 1,383 ( 1,201) ($ 13,807) $ 328,016 $			%
Other comprehensive income(loss), net Items Not reclassified to profit or loss 8311 Measure on defined benefit plans 8316 The share of other comprehensive profits and losses of subsidiaries, affiliates and joint ventures recognized using the equity method-items not reclassified to profits and losses 8330 The share of other comprehensive profits and losses of subsidiaries, affiliates and joint ventures recognized using the equity method-items not reclassified to profits and losses - Not reclassified to profit or loss 8349 Income tax related to items not reclassified to profit or loss 8310 Total not reclassified to profit or loss Items that may be reclassified to profit and loss in the future 8361 Currency conversion difference in the conversion of financial statements of foreign operating organizations 8367 Net unrealized appraisal of gains and losses of debt instrument investments measured at fair value through other comprehensive gains and losses 8380 The share of other comprehensive profits and losses of subsidiaries, affiliates and joint ventures recognized using the equity method-items that may be reclassified to profits and losses 8399 Income tax related to items not reclassified to profit or loss 8360 Total Items that may be reclassified to profit and loss 8300 Other comprehensive net gains/losses 8500 Total comprehensive gains/losses Basic earnings per share 9750 Total basic earnings per share Diluted earnings per share 9850 Total diluted earnings per share					- - - -
					-
					- - - -
					-
					-
					6
					1.12
		$		$	1.12

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

Chairman ： Shen, Guo-rong Manager ： Chen, Jun-zhi

Chief accountant ： Chen, Chang-yuan

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Hota Industrial Manufacturing Company Limited Individual Statements of Changes in Equity 2021 and 2020 January 1 to December 31

(In Thousands of New Taiwan Dollars)

Year 2020 BALANCE, JANUARY 1, 2020 Net profits 2020 Other comprehensive gains/losses 2020 Total comprehensive income Earnings distribution and allocation 2019 Legal reserve listed Special reserve listed Common stock cash dividend Share-based payment transaction Dispose of equity instruments measured at fair value through other comprehensive gains and losses Repurchase Treasury stock Logout Treasury stock Balance, December 31,2020 Year 2021 BALANCE, JANUARY 1, 2021 Net profits 2021 Other comprehensive gains/losses 2021 Total comprehensive income Earnings distribution and allocation 2020 Legal reserve listed Common stock cash dividend Cash capital increase Dispose of equity instruments measured at fair value through other comprehensive gains and losses Balance, December 31,2021	Notes		CommonShares		CapitalSurplus			Retained earnings	Retained earnings	Retained earnings		Other	Other	interests	interests		Treasury Stock		Total Equity
							Legal Capital Reserve		Special Capital Reserve		Unappropriated Earnings	Foreign Currency Translation Reserve		Unrealized Gain (Loss) on Assets at Fair Value Through Other Comprehensive Income
	6(23) 6(21)(22) 6(19)(21) 6(23) 6(20) 6(20)(21) 6(23) 6(22) 6(20)(21) 6(23)		$ 2,549,565 - - - - - - - - - ( 4,390 ) $ 2,545,175 $ 2,545,175 - - - - - 250,000 - $ 2,795,175		$ 1,916,204 - - - - - - 20,895 - - ( 30,620 ) $ 1,906,479 $ 1,906,479 - - - - ( 72,675 ) 2,000,000 - $ 3,833,804		$ 593,292 - - - 66,870 - - - - - - $ 660,162 $ 660,162 - - - 29,489 - - - $ 689,651		$ 23,850 - - - - 24,386 - - - - - $ 48,236 $ 48,236 - - - - - - - $ 48,236		$ 1,533,901 286,094 1,360 287,454 ( 66,870 ) ( 24,386 ) ( 509,913 ) - 7,436 - - $ 1,227,622 $ 1,227,622 341,823 5,160 346,983 ( 29,489 ) ( 234,794 ) - 6,271 $ 1,316,593		($ 32,179 ) - ( 10,242 ) ( 10,242 ) - - - - - - - ($ 42,421 ) ($ 42,421 ) - ( 2,715 ) ( 2,715 ) - - - - ($ 45,136 )		($ 16,057 ) - 30,798 30,798 - - - - ( 7,436 ) - - $ 7,305 $ 7,305 - ( 16,252 ) ( 16,252 ) - - - ( 6,271 ) ($ 15,218 )		$ - - - - - - - - - ( 35,010 ) 35,010 $ - $ - - - - - - - - $ -	$ 6,568,576 286,094 21,916 308,010 - - ( 509,913 ) 20,895 - ( 35,010 ) - $ 6,352,558 $ 6,352,558 341,823 ( 13,807 ) 328,016 - ( 307,469 ) 2,250,000 - $ 8,623,105

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

Chairman ： Shen, Guo-rong Manager ： Chen, Jun-zhi

Chief accountant ： Chen, Chang-yuan

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Hota Industrial Manufacturing Company Limited Individual Statement of Cash Flows 2021 and 2020 January 1 to December 31

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Income expense item Depreciation expense Depreciation expense - Right-of-use assets Amortization Interest expense Interest expense-Lease liability Interest income Expected credit loss Share of other comprehensive loss of subsidiaries on investments in equity instruments at fair value Cash increase to retain employee subscription remuneration costs Gain on disposal of intangible assets, net Unrealized sales loss Unrealized exchange loss Changes in assets/liabilities related to operation activities Property net change related to operation activities Notes receivable Accounts receivable Accounts receivable - related parties Other accounts receivable Inventory Other current assets Other noncurrent assets Liabilities net change related to operation activities Notes payable (related parties included) Accounts payable (related parties included) Other payables Other current liabilities Other noncurrent liabilities Cash inflow from operation activities Interest charged Interest paid Income tax paid Net cash inflow by operation activities

Note January 1 to December 31, 2021 January 1 to December 31, 2020 $ 401,001 $ 317,669 6(8)(29) 526,139 561,737 6(9)(29) 10,391 16,602 6(29) 5,971 9,671 6(28) 71,809 90,721 6(9)(28) 3,997 4,225 6(25) ( 482 ) ( 3,399 ) 12(2) 4,164 5,674 6(7) 8,172 19,370 6(19) - 20,895 6(27) ( 5,010 ) ( 2,493 ) ( 3,220 ) ( 1,432 ) 36,514 10,045 ( 15,600 ) ( 9,261 ) ( 418,823 ) 144,012 ( 19,096 ) 680 ( 26,925 ) 212,982 ( 1,005,878 ) 49,220 ( 94,957 ) 12,593 1 ( 360 ) 496,499 43,222 520,825 9,841 282,403 ( 14,861 ) ( 53,542 ) 59,144 ( 1,123 ) ( 2,047 ) 723,230 1,554,450 483 3,402 ( 72,493 ) ( 92,343 ) ( 42,488 ) ( 99,841 ) 608,732 1,365,668

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Hota Industrial Manufacturing Company Limited Individual Statement of Cash Flows 2021 and 2020 January 1 to December 31

CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of: Financial assets at fair value through other comprehensive income – current Proceeds from disposal or redemption of: Financial assets at fair value through other comprehensive income – current Decrease (increase) in financial assets measured at amortized cost Gain financial assets measured at fair value through other comprehensive gains and losses from noncurrent Investment using the equity method Cash dividends from the equity method Acquisitions of Property, plant and equipment Disposal of property, facility and equipment Gain intangible assets Decrease (increase) in refundable deposits Net cash outflow by investing activities Cash flow from financing activities Increase in short-term payables Increase (decrease) in short-term loams Long-term loan repayment Long-term borrowings repayment Lease principal repayment Cash dividends Cash capital increase Treasury stock buyback cost Net cash inflow from financing activities Impact of exchange rate changes on cash and cash equivalents Increase in current cash and cash equivalents Cash and cash equivalents in the beginning of term Cash and cash equivalents in the end of term

(In Thousands of New Taiwan Dollars) Note January 1 to December 31, 2021 January 1 to December 31, 2020 ( $ 1,293 ) $ - 3,907 17,608 55,233 ( 56,749 ) ( 5,401 ) ( 6,503 ) ( 79,925 ) - 1,221 5,363 6(33) ( 1,312,904 ) ( 1,347,423 ) 43,481 7,180 ( 4,839 ) ( 3,287 ) 4,959 1,080 ( 1,295,561 ) ( 1,382,731 ) 6(34) 660,000 40,000 6(34) ( 898,390 ) 841,081 6(34) ( 6,286,414 ) ( 5,505,894 ) 6(34) 5,423,302 5,532,505 6(34) ( 12,169 ) ( 14,809 ) 6(22)(34) ( 307,469 ) ( 509,913 ) 6(20) 2,250,000 - 6(20) - ( 35,010 ) 828,860 347,960 ( 52,970 ) ( 20,782 ) 89,061 310,115 687,561 377,446 $ 776,622 $ 687,561

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

Chairman ： Shen, Guo-rong Manager ： Chen, Jun-zhi Chief accountant ： Chen, Chang-yuan

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Hota Industrial Manufacturing Company Limited Individual Financial Statement Notes 2021 and 2020 January 1 to December 31

(In Thousands of New Taiwan Dollars)

(Unless otherwise specified)

1. HISTORY OF THE COMPANY

Hota Industrial Manufacturing Company Limited (the “Company”), a Republic of China (R.O.C.) corporation, was incorporated in January, 1973 and started to operate at the same time. The Company is a dedicated foundry in the manufacturing and selling gear wheels, shafts and various transmission parts like for automobile, motorbike, agricultural machinery, tooling machinery, etc.

In September 2001, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE).

2. DATE AND PROCEDURE TO APPROVE FINANCIAL REPORTS

The accompanying parent company only financial statements were approved and authorized for issue by the Board of Directors on March 16, 2022.

3. APPLICATION OF NEWLY ISSUED AND REVISED STANDARDS AND INTERPRETATIONS

(1) Application of the amendments to the IFRSs endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers for application starting from 2021 and the IFRSs issued by International Accounting Standards Board (IASB) and endorsed by the FSC with effective date starting 2021

Effective Date Issued New, Revised or Amended Standards and Interpretations by IASB Amendments to IFRS 4 “Temporary exemption from the extension of International Financial Reporting Standard No. January 1, 2021 9” Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16 “Interest Rate January 1, 2021 Benchmark Reform - Phase 2”[January 1, 2021 ] Amendment to IAS 16 “Provisions on the Accounting Treatment of the COVID-19 Pandemic-related Rental April 1, 2021(Note) Concession” Note ： FSC allows to apply from January 1st , 2021 onwards.

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

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

New standards, interpretations and amendments issued by IASB and applicable in 2022 but not yet included in the IFRSs as endorsed by the FSC are as follows:

yet included in the IFRSs as endorsed by the FSC are as follows:
	Effective Date Issued
New, Revised or Amended Standards and Interpretations	by IASB
Amendments to IFRS 3 “Reference to the Conceptual Framework”	January 1, 2022
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before intended use”	January 1, 2022
Amendments to IAS 37 “Onerous Contracts–Cost of Fulfilling a Contract”	January 1, 2022
2018-2020 periodical annual improvements	January 1, 2022

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

(3) The IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC

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

IFRSs as endorsed by the FSC are as follows:
	Effective Date Issued
New, Revised or Amended Standards and Interpretations	by IASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets	To be determined by
To be determined by IASB between an Investor and its Associate or	IASB
Joint Venture”
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17 “Insurance contracts”	January 1, 2023
Amendments to IFRS 17 “Initial application of IFRS 17 and IFRS 9 -	January 1, 2023
Comparative information”
Amendments to IAS 1 “Classification of Liabilities as Current or	January 1, 2023
Noncurrent”
Amendments to IAS 1 “Disclosure of accounting policies”	January 1, 2023
Amendments to IAS 8 “Definition of accounting estimates”	January 1, 2023
Amendments to IAS 12 “Deferred tax related to assets and liabilities	January 1, 2023
arising from a single transaction”

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies adopted in preparation of these consolidated financial statements are listed as below, which have been consistently applied during all reporting periods except other specific illustrations.

(1) Statement of compliance

The individual financial statements of the Company and subsidiaries have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports”.

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(2) Basis for preparation

• 1.Excpet below key items, these individual financial statements have been prepared on the historical cost basis:

  • (1) The calculation of financial assets is through other comprehensive profit and loss calculation of fair value measurement.

  • (2) Determined welfare liabilities are recognized as the net amount of the present value of the definite welfare obligations after the deduction of retirement fund assets.

• 2.The management has to make certain significant accounting estimates based on their professional judgment and decide the accounting policy according to the IFRSs as endorsed by the FSC. Any change in the assumption could result in a significant change in the financial statements. The management of the Bank and subsidiaries believes that the assumptions used in the consolidated statements are appropriate. For highly complicated matters, matters requiring high level of judgments, significant judgments that could have an impact on the consolidated financial statements and estimates and key sources of assumption uncertainty, please refer to Note 5 for further details.

• (3) Foreign currency translations

Items included in the financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollar.

• 1.Foreign currency transaction & balance

• (1) Foreign currency transactions are converted into functional currency using the spot exchange rate on the transaction day or the measurement day, and the conversion difference resulting from such transactions is recognized as the current profit or loss.

• (2) The balance of foreign currency assets & liabilities will be adjusted according to the spot exchange rate on the date of the asset liability balance sheet, and the conversion difference resulting from the adjustment shall be recognized as current profit and loss.

• (3) The balance of foreign currency non-monetary assets & liabilities that is measured at fair value through other comprehensive gains and losses is evaluated and adjusted at the spot exchange rate on the reporting date. The conversion difference arising from the adjustment is recognized in other comprehensive gains and losses; The fair value measurement is based on the historical exchange rate on the initial transaction date.

• (4) All currency exchange profits and losses are listed in “other profit and loss” in the income statement.

• Conversion of foreign operating agencies

• (1) Functional currency and expression currency are different from all group entities, associated enterprises & joint agreements, and their operating results and financial status are converted into expression currency as following:

  • A.The assets & liabilities expressed in each asset liability table are converted at the closing exchange rate on the asset liability table date;

  • B.The income & expenses expressed in each consolidated income statement are converted at the current average exchange rate;

  • C.All conversion differences resulting from the conversion are recognized as other consolidated profits and losses.

• (2) When the foreign operating organization that is part of the disposition or sale is a subsidiary company, the accumulated exchange difference recognized as other comprehensive gains and losses will be re-attributed to non-controlling interests of the foreign operating organization. However, even if the Company still retains the partial rights and interests of the former subsidiary, it has lost the control of the foreign operating agency’s subsidiary company, it will deal with the entire right and interest of

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the foreign operating agency.

• (4) The classification standards of current & non-current for assets and liabilities

• 1.Assets that meet one of the following conditions are classified as current assets:

  • (1) Assets were expected to realize in normal business cycle or they are intended to be sold or consumed.

  • (2) Assets were held on the purpose of transaction.

  • (3) Assets expected to realize within 12 months after the reporting date.

  • (4) Cash and cash equivalents are included except those who are subject to restrictions on exchange or use to pay off debts at least 12 months after the date of the reporting date.

  • The Company classifies those not meeting above conditions to be non-current assets.

• Liabilities that meet 1one of the following conditions are classified as current liabilities:

  • (1) Assets were expected to realize in normal business cycle.

  • (2) Assets were held on the purpose of transaction.

  • (3) Liabilities expected to realize within 12 months after the reporting date.

  • (4) It is not possible to defer the repayment period without any condition at least 12 months after the date of the reporting date. Indebtedness clauses which may lead to liquidation by issuing equity instruments, depending on the choice of the trading counterparty, do not affect their classification.

The Company classifies those not meeting above conditions to be non-current liabilities.

• (5) Cash equivalents

Cash equivalents refer to short-term and highly liquid investments that can be converted into fixed amount of cash at any time and the risk of value deviation is very small.

(6) Financial assets measured at fair value through profit and loss

1. Refers to financial assets that are not measured at amortized cost or at fair value through other comprehensive gains and losses. Financial assets that are measured at amortized cost or at fair value through other comprehensive gains and losses. When the measurement can be eliminated or significantly reduced or the recognition is not consistent, the Group specifies at the time of initial recognition as measured at fair value through profit and loss of financial assets.

2. The Company adopts trading day accounting for financial assets that are measured at fair value for the through gains and losses of transactions in compliance with customary transactions.

3. The Company is initially measured at fair value, and related transaction costs are recognized in profit and loss. And then, its profit or loss is recognized at fair value.

4. When the right to receive dividends is confirmed, the economic benefits related to the dividends are likely to flow in. And then the amount of dividends can be reliably measured, the Group recognizes dividend income in the profit and loss.

5. (7) The calculation of financial assets is through other comprehensive profit and loss calculation of fair value measurement.

6. Regarding the non-cancellable option at the time of initial recognition, the fair value change of the investment of equity tools not holding for trading is reported to other comprehensive gains and losses. Or at the same time, it meets the following investment conditions:

   • (1) Holding the financial assets under the business model for the purpose of collecting contractual cash flow & selling.

   • (2) Cash flow that the financial assets generate during the specific contract terms is entirely for the payment of the principal amount and for the circulation the interest and interest of the principal amount.

7. The Company adopts trading day accounting for financial assets that are measured at fair

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value for the through gains and losses of transactions in compliance with customary transactions.

1. The Company is initially measured at fair value, and related transaction costs are recognized in profit and loss. Then, its profit or loss is recognized at fair value.

   • (1) Changes in the fair value of equity tools are recognized in other comprehensive profits and losses, and are recognized before they are to be delisted. Cumulative gains and losses listed in other comprehensive gains and losses or subsequent losses and losses cannot be reclassified to gains & losses, and transferred to retained earnings. When the right to receive dividends is confirmed, the economic benefits related to the dividends are likely to flow in, & the amount of dividends can be reliably measured, the company recognizes the dividend income in the profit and loss.

   • (2) Changes in the fair value of debt instruments are recognized in other comprehensive profit and loss, impairment losses, interest income and foreign currency exchange gains and losses before delisting are recognized in profit and loss. And when delisting, accumulated gains or losses previously recognized in other comprehensive profit and loss would re-classify as profit and loss instead of equity.

2. (8) Financial assets at amortized cost

3. Refers to those who meet the following conditions at the same time:

   • (1) Holding the financial asset under the operating model for the purpose of obtaining the total cash flow from the contract.

   • (2) Cash flow that the financial assets generate during the specific contract terms is entirely for the payment of the principal amount and for the circulation the interest and interest of the principal amount.

4. The company adopts trade-day accounting for financial assets that comply with transaction conventions which are measured at amortized cost after sale.

5. At the time of initial recognition, the company calculates the transaction as a cost measurement based on its fair value, and subsequently adopts the effective interest method to recognize the interest income during the circulation period according to the amortization procedure and recognition of the impairment loss. In addition, when listing, the profit or loss is recognized in profit and loss.

6. The company holds fixed deposits that do not meet the cash equivalents. Due to the short holding period, the effect of discounting is not significant, and it is measured by the amount of investment.

7. (9) Accounts Receivable & Invoices

8. Refers to the accounts & invoices that have been unconditionally received in exchange for the right to the value of the transfer of goods or services in accordance with the contract.

9. Short-term accounts receivable & notes that are interests unpaid, which the discount has little impact. The Company uses the original invoice amount to measure the amount.

10. The business model of the company’s expected sale of accounts receivable is to collect contractual cash flow & sell, and then to be measured at fair value, and changes are recognized as other comprehensive profits and losses.

11. (10)Financial asset impairment

12. On every day of the balance sheet of assets, the company invests in debt instruments measured at fair value through other comprehensive gains and losses & receivables from financial assets measured at amortized cost and part of the account that contains major financial affairs. After considering all reasonable and corroborative information (including forward-looking information), for those whose credit risk has not increased significantly since the initial recognition, the amount of loss will be adjusted against the expected credit loss for 12 months. For those whose credit risk has increased significantly since the initial recognition, the credit

21

loss balance shall be adjusted against the loss based on the expected credit loss amount during the duration. Regarding accounts receivable or contract assets that do not include major components in financial statements, the balance of losses is offset against the amount of expected credit losses during the duration.

• (11)Derecognition of financial assets

The Company derecognizes a financial asset only when situation happens as follow:

1. The contractual rights to the cash flows from the financial asset expire.

2. The contractual rights to the cash flows from the financial asset have been transferred and all the risks and rewards of the financial asset ownership have been removed.

3. The contractual rights to the cash flows from the financial asset have been transferred and the Company doesn’t reserve the control of the financial asset.

4. (12)Lease transaction of the Company as a Lessor, Lease account receivable / Operating lease Rental income from operating lease excluding any incentive given to the lessee, is recognized on a straight-line basis over the term of the lease.

5. (13)Inventory

Inventories are recognized at the lower of cost or net realizable value where cost is calculated by the weighted average method. The costs of finish goods and work-inprocess include raw material, direct labor, other direct costs, and manufacturing cost related to production apportioned according to normal production capacity, except the cost of financing. When comparing the cost and the net realizable value is lower, the item-by-item comparison method is adopted. The net realizable value of the inventory is determined mainly based on the price estimated during the normal business process deduct cost assumptions of future demand and related variable sales expense.

(14)Investments Accounted for Using Equity Method / Subsidiary, Associates, and Joint venture

1. Subsidiary refers to an entity under the command of the Company (include structural entity). When the Company is exposed to variable remuneration from the entity’s participation or has rights to such variable remuneration, and when it has the ability to influence the remuneration through the power of the entity, the Company controls the entity.

2. The unrealized gains and losses arising from transactions between the Company and its subsidiaries have been eliminated. The accounting policies of the subsidiaries have been adjusted as necessary and are consistent with the policies adopted by the Company.

3. The company recognizes the amount of profit and loss obtained by the subsidiary as the current profit and loss, and the amount of other comprehensive income after the acquisition is recognized as other comprehensive income. If the company recognizes the loss of a subsidiary is equal to or exceeds the equity in the subsidiary, the Company continues to recognize the loss based on the shareholding ratio.

4. If the change in the shareholding of the subsidiary company does not lead to loss control (transaction with non-controlling power), it will be treated as an equity transaction, which means that it will be regarded as a transaction with the owner. The difference between the adjusted amount of non-controlling interests and the fair value of the consideration paid or received is directly connected and recognized as equity.

5. An associate is an entity over which the Company has significant influence and that is not a subsidiary. Usually, the Company owns directly or indirectly over 20% of the voting right. Under the equity method, an investment in an associate is initially recognized at its cost of acquisition.

6. The Company recognizes the share of income after acquisition as income of current period, and the share of other comprehensive income after acquisition as other comprehensive

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income. The share of loss of any associate has equal or exceed the Company’s equity including any other unsecured receivables, the Company shall not recognize any further loss, except statutory obligation, presumptive obligation, or payables for the associate.

1. Equity changes against non-income or other comprehensive income without influence on the shareholding percentage of the associate, the Company shall recognize the share of equity changes as capital reserve.

2. The unrealized gain/loss of the transaction between the Company and the association has been eliminated by the adjustment to the share of its equity except clear evidence indicates the assets transferred have been impaired. The accounting policies of the association have been adjusted for sure and consistent with that of the Company.

3. When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the net value of the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to “Capital reserve” and “Investments Accounted for Using Equity Method.” If the Company’s investment percentage is reduced due to the additional subscription to the shares of associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income related to that associate shall be reclassified to profit or loss on the same basis.

4. In accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, the current profit and loss and other comprehensive income of the individual financial report shall be the same as the current profit and loss and other comprehensive income in the financial report prepared on a consolidated basis attributable to the owners of the parent company. The reported owner’s equity shall be the same as the equity attributable to the owner of the parent company in the financial report prepared on the basis of the merger.

5. (15)Property, Plant and Equipment

6. Property, Plant and Equipment are accounted on the basis of acquisition cost, and the relevant interest during the acquisition and construction period is capitalized.

7. Subsequent costs are accounted in the book amount of the asset or recognized as a separate asset only when the future economic benefits related to the item are likely to flow into the Company and the cost of the item can be reliably measured. The book amount of the replacement shall be delisted. All other maintenance costs are recognized as current profit and loss when incurred.

8. Property, plant, and equipment are measured at the cost model. Except for land without depreciation, other depreciation is calculated on a straight-line basis based on the estimated useful lives. If the Property, Plant, and Equipment components are significant, their depreciation shall be separately enlisted.

9. The Company reviews the residual value, estimated useful lives, and depreciation method of each asset at the end of the fiscal year. If the expectation of the residual value or the estimated useful lives is different from the previous estimation, or the expected consumption pattern for the future benefits contained in the asset changes significantly, it shall be handled on the date incurred in accordance with International Accounting Standard No. 8, “Accounting Policies, Changes in Accounting Estimates and Errors”. Estimated Useful Lives of Assets are listed below:

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Buildings and Construction (including ancillary works)	6	~	50 years
Mechanical equipment	4	~	26 years
Transportation equipment	3	~	16 years
Utility equipment	5	~	16 years
Other equipment	2	~	25 years

(16)Lease transaction as a Lessee － Right-of-use Assets / Lease Liabilities

1. The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of the lease properties. Payments of lease contracts for short-term leases (leases of machinery and equipment and others) and low value assets leases are recognized as expenses on a straight-line basis during the lease period.

2. Lease liabilities are measured at the present value of the unpaid lease payments discounted by the lessee’s incremental borrowing rates at the commencement date of the lease. Lease payments include:

Fixed payments, deduct collectable lease incentives.

  - Thereafter, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease period. When the lease period or lease payment changes due to non-contract modification, the Company re-measures the lease liabilities with a corresponding adjustment to the right-of-use assets.

1. Right-of-use assets are measured at cost on the commencement date of the lease, where the cost including:

   • (1) The initial measurement of lease liabilities;

   • (2) Any lease payment at or before the commencement date;

   • (3) Any initial direct cost happened on the asset.

   • Subsequent measurement is calculated as cost less accumulated depreciation against whether the estimated useful lives of assets or the lease terms is earlier. When the lease liabilities were remeasured, right-of-use assets are adjusted by the remeasurement of the lease liabilities.

2. For lease modifications that reduce the range of the lease, the lessee will reduce the book value of the right-of-use asset to reflect the partial or full termination of the lease, and the difference between it and the remeasured amount of the lease liability is recognized in profit or loss.

3. (17)Investment property

Initial recognition of investment properties shall be recognized at cost of acquisition, and subsequent measurement shall be presented at cost model.

• (18)Intangible Assets

• Computer software

  • Computer software is recognized at the cost and straight-line amortized according to its estimated useful life of 1 to 3 years.

• Intangible assets, such as Royalties for technology transfer, are straight-line amortized on their estimated useful life of 1 year.

• (19)Impairment of non-financial assets

The Company estimates the recoverable amount of assets that show signs of impairment on the date of the balance sheet. When the recoverable amount is lower than its book value, the impairment loss is recognized. Recoverable amount refers to the higher value of an asset at fair value minus the cost of disposal or its value use. When there is none or reduction of impairment in the assets recognized in the previous year, the impairment loss shall be

24

reversed, but the book value increment of the asset by the reverse of the impairment loss shall not exceed the book value of the asset which was assumed no impairment and was deducted depreciation or amortization.

(20)Loan

Loan refers to long-term and short-term loans borrowed from banks. The Company measures its fair value minus transaction costs at initial recognition. Subsequently, for any difference between the price after deducting transaction costs and the redemption value, the interest expenses during the circulation period use the effective interest method to recognize profit and loss in the amortization procedure.

• (21)Account Payable and Note Payable

• Note payable refers to debts arising from the purchase of raw materials, commodities or labor services on credit and arising from business or non-business factors.

• Due to the discount has little effect, short-term accounts payables and note payables that interest unpaid, the Company uses the initial invoice amount to measure.

• (22)Derecognition of Financial Liabilities

When the contractual obligations are fulfilled, canceled, or expired, the Company will derecognize the financial liabilities.

• (23)Employee Benefits

• Short-term employee benefits

  • Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid as an expense in exchange for service rendered by employees.

• Retirement benefits

  • (1) Defined contribution plans

For defined contribution plans, the amount of the retirement fund on the basis of employee’s responsibilities is recognized as the cost of the benefit plan of the current period.

• (2) Defined benefit plans

  • A. The net benefit liabilities under the defined benefit plan are calculated by discounting the number of future benefits the employee earned now or in the past, and the present value of defined benefit liabilities on the date of the balance sheet deduct the fair value of the beneficial asset. The net benefit liabilities are determined by the actuary’s calculations every year using the Projected Unit Credit Method. The discount rate refers to the market rate of return of government bonds (on the balance sheet date).

  • B. Remeasurement from the defined benefit plan is recognized in other comprehensive income of the current period, and reflected in retained earnings.

• Remuneration of employees, directors and supervisors

• Remuneration of employees, directors and supervisors are recognized as expenses and liabilities when there are legal or expected obligations and the amount can be reasonably estimated. If there is a discrepancy between the actual and estimated allotment and the subsequent resolution of the shareholders’ meeting, it shall be dealt with the Changes in Accounting Estimates.

(24)Share based payment

The share based payment agreement for equity delivery refers to the employee services obtained by measuring the fair value of the equity instruments given on the grant date, which is recognized as remuneration costs during the vested period, and the equity is relatively adjusted. The fair value of equity instruments should reflect the effects of both acquired and non-vested conditions on the market price. The recognized remuneration

25

cost is adjusted in accordance with the expected amount of rewards that meet the service conditions and the non-market price vested conditions until the final recognized amount is recognized by the vested amount on the vesting date.

• (25)Income Tax

• Income taxes include current and deferred income taxes. Except for the income tax items included in other comprehensive income or equity, which are separately listed in other comprehensive income or directly listed in the Equity, the income tax is recognized in the income.

• The Company calculates the current income tax based on the tax rate that has been legislated on the balance sheet date of the country where it operates and generates taxable income. The management regularly evaluates the status of income tax declarations with respect to applicable income tax regulations and, where applicable, estimates the income tax liabilities based on the expected taxes to be paid to the taxation authority. Income Tax Act. In the next year after the subsequent earnings are generated, after the shareholders’ meeting ratified the earning distribution proposal, the distribution of actual earnings will be confirmed and the retained earnings income tax expenses will be recognized.

• Deferred income tax adopts the balance sheet method, and recognizes the temporary difference between the tax base of assets and liabilities and their book amounts in the consolidated balance sheet. Deferred income tax liabilities arising from the goodwill originally recognized are not recognized. If the deferred income tax originates from the original recognition of assets or liabilities in the transaction and does not affect accounting profits or accounting at the time of the transaction. Tax income (taxable loss) is not recognized. If the temporary difference caused by investing in a subsidiary company, the Company can control the timing of the reversion of the temporary difference, and the temporary difference will not be recognized if it is likely that it will not revert in the foreseeable future. Deferred income tax adopts the tax rate (and Tax Acts) that has been enacted on the balance sheet date and is expected to apply when the relevant deferred income tax asset is realized or the deferred income tax liability is settled.

• Deferred tax assets are recognized within the scope where temporary differences are likely to be used to offset future taxable income, and unrecognized and recognized deferred tax assets are reassessed on each balance sheet date.

• When there is a legal enforcement right to offset the recognized current income tax assets and liabilities, and there is an intention to pay off on a net basis or to realize assets and liabilities at the same time, the current income tax assets and current income tax liabilities are mutually exclusive. When there is statutory enforcement power to offset the current income tax assets and current income tax liabilities, and the deferred income tax assets and liabilities are generated by the same taxpayer taxed by the same tax authority, or by different taxpayers but each entity intends to the deferred income tax assets and liabilities are offset against each other when the net basis is settled or the assets and liabilities are realized at the same time.

• (26)Shares

• Common shares are classified as Equity. The net amount directly attributable to the increase in the issuance of new shares or stock options after deduction of taxes is listed as a price reduction in Equity.

• When the Company buys back the outstanding shares, the payment of consideration including any increase costs directly attributed and excluding tax, is recognized as a deduction of Equity. When the purchased shares are reissued afterward, the payment

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of consideration received will deduct any increase costs directly attributed and income tax influence, the difference against the book value of the shares will be recognized as an adjustment to Equity.

(27)Dividend distribution

Dividend to the shareholders of the Company is based on the resolution of the shareholders’ meeting of the company and recognized in the financial statements. Cash dividends are recognized as Liability; Stock dividends are recognized as Stock dividends to be distribute, and will be transferred to common shares on the base date for the issuance of new shares.

(28)Revenue recognition

The Company manufactures and sells gear wheels, shafts, and various transmission components products. Revenue is the fair value of the received or receivable for the sales of goods to customers outside the Company in normal business activities, expressed in deducting sales tax, sales returns, quantity discounts, and discounts. Revenue is recognized when the control power of the product is transferred to the customer, which means when the product is delivered to the customer and the Company has no uncompleted contractual obligations that may affect the customer's acceptance of the product. When the control of the product has been transferred to the customer, the Company neither continues to participate in the management of the product nor maintains effective control over the product, and the customer accepts the product according to the sales contract, and there is objective evidence showing that all acceptance terms have been met, the delivery of the product assures.

• (29)Government Grant

The Government Grant can be reasonably assured that an enterprise will comply with the conditions imposed, and it will be recognized at its fair value. If the nature of the Government Grant is to compensate for the Company's expenses, it will be recognized as the current profit and loss on the basis of the system during the occurrence of the related expenses. Government Grant related to real estate, housing, and equipment is recognized as non-current liabilities and as current profits and losses based on the estimated useful life of the relevant assets using the straight-line method.

5. SIGNIFICANT SOURCES OF UNCERTAINTY IN MAJOR ACCOUNTING JUDGMENTS, ASSUMPTIONS, AND ESTIMATES

When the Company prepared this consolidated financial report, the management has used its judgment to determine the accounting policy and made accounting estimations and assumptions based on reasonable expectations of future events on the circumstances at the balance sheet date. The major accounting judgments and assumptions may be different from the actual results and will be continuously evaluated and adjusted from historical experience and other factors. These estimations and assumptions have the risk that the book value of assets and liabilities will be adjusted significantly in the next fiscal year.

Please follow explanations on major accounting judgments, assumptions, and uncertainty of estimations:

(1) Major Judgments on Accounting Policy

1. Financial assets, impairment on equity investment

2. According to International Financial Reporting Standards (IFRS) No. 9, the Company requires a major judgment to determine whether an individual financial asset as equity investment impairs. When taking the judgment, the Company assessed whether the fair value of individual equity investment is lower than its cost, based on the consideration of the financial health and the short-term business prospects of the investee, including the factors of the industry performance, technical changes, operating performance, and

27

financing cash flow.

1. Financial assets, impairment on Account Receivable According to International Financial Reporting Standards (IFRS) No. 9, the Company requires a major judgment to determine whether an individual financial asset as Account Receivable impairs. The Company assesses the recoverability of Accounts receivable of the individual customer and the estimated amount of impairment, including the factors of financing capability, repayment conditions, and debt negotiation.

2. (2) Major Accounting estimates and assumptions

Since inventory is priced at the lower of cost and net realizable value, the Company should use judgment and estimation to determine the inventory net realizable value on the balance sheet date. Because technology evolves fast, the Company assesses the amount of inventory on the balance sheet due to normal loss, obsolescence, or no-market sales value, and reduces the inventory cost to the net realizable value. This inventory evaluation is mainly based on the product demand in a specific period in the future as the estimation basis, so significant adjustments may occur.

The Company’s book value of inventory is NT$ 2,681,916 thousand on December 31, 2021.

1. EXPLANATION OF IMPORTANT ACCOUNTING SUBJECTS

(1) Cash and Cash equivalents

ash and Cash equivalents
Cash on hand and working capital Demand Deposit Foreign Currency Deposit Total	Dec. 31,2021	Dec. 31,2020 $ 290 253,061 434,210 $ 687,561
	$ 300 535,483 240,839
	$ 776,622

1. The Company maintains good credit quality with financial institutions and interacts with many financial institutions to disperse credit risks. The possibility of defaults is expected to be very low.

2. The Company has not provided cash or cash equivalents as pledges.

(2) Fair Value Through Other Comprehensive Income (FVTOCI) Financial Assets

Item	Dec. 31,2021 Dec. 31,2020
Current item:
Equity Instruments
Listed company stocks	$ 80,383 $ 82,997
Evaluation adjusted	( 2,162) ( 6,958)
Total	$ 78,221 $ 76,039
Non-Current item:
Equity Instruments
Non-listed company stocks	$ 82,984 $ 77,583
Evaluation adjusted	( 28,671) ( 19,933)
Total	$ 54,313 $ 57,650

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1. The Company chose to classify the equity of strategic investments as financial assets measured at Fair Value Through Other Comprehensive Income (FVTOCI). The fair values of these investments as of December 31, 2021, and 2020 were NT$ 132,534 thousand and NT$ 133,689 thousand respectively.

2. The details of FVTOCI financial assets recognized in income and comprehensive income are listed below:

listed below:
FVTOCI Equity Instruments FVTOCI recognition adjusted Derecognition of cumulative gains to be	Year 2021	Year 2020 $16,445 ($ 7,436)
	$ 5,689
	($ 6,271)

1. Regardless of the collateral held or other credit enhancements, the maximum amount of credit risk exposure of the Company outstanding FVTOCI financial assets on December 31, 2021, and 2020 were NT 132,534 thousand and NT 133,689 thousand respectively.

2. Risk and Fair Value information of the FVTOCI financial assets, please refer to notes 12 (2) and (3) for details.

3. (3) Amortized cost of financial assets

and (3) for details. ortized cost of financial assets
Item Current item: Time Deposits (over 3 months) Restricted deposit	Dec. 31, 2021 $ 622 1,499 $ 2,121	Dec. 31, 2020
		$ 617 56,738
		$ 57,355

1. Regardless of the collateral held or other credit enhancements, the maximum amount of credit risk exposure of the Company’s outstanding Amortized cost financial assets on December 31, 2021, and 2020 were NT$ 2,121 thousand and NT$ 57,355 thousand respectively.

2. The Company provides time deposits as pledge guarantees, please refer to Note 8 for details.

3. (4) Account receivable and Note Receivable

ccount receivable and Note Receivable
Note Receivable(NR) Account Receivable(AR) Less：Allowance	Dec. 31, 2021 $ 25,442 $ 2,488,092 ( 15,486) $ 2,472,606	Dec. 31, 2020
		$ 9,842
		$ 2,053,820 ( 12,486)
		$ 2,041,334

1. Aging schedule of Account receivable and Note receivable is listed below:

Not Overdue Within 120 days 121-240 days 241-360 days Over 361 days	Dec. 31,2021 AR NR $ 2,182,357 $ 25,442 255,755 - 32,338 - 7,614 - 10,028 - $2,488,092 $25,442	Dec. 31,	2020
	AR $ 2,182,357 255,755 32,338 7,614 10,028 $2,488,092	AR $ 1,856,081 150,940 25,708 14,063 7,028 $2,053,820	NR
			$ 9,842 - - - -
			$ 9,842

The above is an aging schedule based on the number of overdue days.

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1. As of December 31, 2021, December 31, 2020, and January 1, 2020, the balance of account receivable (including note receivable) between the Company and its customers was NT$ 2,513,534 thousand, NT$ 2,063,662 thousand, and NT$ 2,171,714 thousand respectively.

2. The Company signed a non-recourse factoring contract with E.Sun Bank and O-Bank. As of December 31, 2021, and 2020, the expected sale of accounts receivable (belonging to FVTOCI financial assets) was NT$734,618 thousand and NT$727,869 thousand respectively. On December 31, 2021, the valuation adjustmeNT$ recognized in FVTOCI financial assets was NT$9,046 thousand; in addition, accumulated other comprehensive income reclassified to profits and losses was NT$6,975 thousand. For information about the transfer of financial assets, please refer to Note 6 (5).

3. Regardless of the collateral held or other credit enhancemeNT$s, the maximum amouNT$ of credit risk exposure of the Company’s outstanding note receivable on December 31, 2021, and 2020 were NT$ 25,442 thousand and NT$ 9,842 thousand respectively; the maximum amount of credit risk exposure of the Company’s outstanding account receivable on December 31, 2021, and 2020 were NT$ 2,488,092 thousand and NT$ 2,053,820 thousand respectively.

4. For information on the credit risk information of Account receivable and bills, please refer to Note 12 (2).

5. (5) Transfer of Financial Assets

6. Delist all financial assets transferred.

7. The Company signed an account receivable factoring contract with O-Bank in January 2018. According to the contract, when the Company sells account receivable to O-Bank, the bank prepays approximately 90% of AR to the Company, 10% remains will be paid to the Company until the bank collects all the AR. The Company waives the risk of uncollectible accounts receivable but bears the burden by commercial disputes. The Company neither provides collaterals nor any continuous participation in all AR transferred, so the Company has already delisted the accounts receivable sold.

8. As of December 31, 2021, and 2020, the Company has delisted the AR, and the relevant information unexpired is as follows:

Dec. 31, 2021

Financing objects	AR sold	Amount delisted	Amount prepaid	Amount Rate range unpaid (%)
O-Bank	$ 282,452	$ 282,452 $ 254,055 Dec. 31,2020		$ 28,397 0.75~0.95
Financing objects	AR sold	Amount delisted	Amount prepaid	Amount Rate range unpaid (%)
O-Bank	$ 178,478	$ 178,478	$ 160,550	$ 17,928 0.85~1.15

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(6) Inventory

(6)	Inventory	Inventory	Inventory
(7)	Dec. 31,2021 Cost Allowanceforpricereduction BookValue Raw Material $ 820,685 ($ 12,789) $ 807,896 Work in Process 1,117,198 ( 20,786) 1,096,412 Finish Goods 829,735 ( 52,127) 777,608 Total $ 2,767,618 ($ 85,702) $ 2,681,916 Dec. 31,2020 Cost Allowanceforpricereduction BookValue Raw Material $ 393,470 ($ 9,876) $ 383,594 Work in Process 733,801 ( 15,790) 718,011 Finish Goods 622,969 ( 48,536) 574,433 Total $ 1,750,240 ($ 74,202) $ 1,676,038 Inventory cost recognized by the Company as expenses in the current period: Year 2021 Year 2020 Cost of inventory sold $ 4,700,373 $ 3,705,452 Allowances of loss for price decline and idle inventory 11,500 6,106 Income of the sale of scraps and obsoletes ( 82,974) ( 42,070) Other ( 15) ( 87) $ 4,628,884 $ 3,669,401 Investments under Equity method Dec. 31,2021 Dec. 31,2020 Subsidiaries: Hezuan Investment $ 283,620 $ 300,309 CAPTAIN HOLDING CO., LTD. 151,788 158,697 Wuxi Hota Precision Gear Co., Ltd. 30,838 45,693 HOWIN PRECISION CO., LTD. 81,141 83,835 HOTATECH, INC. 229,841 217,917 Juda Intelligent Technology Co., Ltd. 4,983 4,994 Hefu Construction Co., Ltd. 67,746 - Associations: KAO FONG MACHINERY CO., LTD. 14,998 15,984 TAIWAN PYROLYSIS & ENERGY 3,736 3,736 TAKAWA SEIKI, INC. 4,437 3,472 LING WEI CO., Ltd. 44,396 29,723 917,524 864,360 Less: Accumulated Loss ( 3,736) ( 3,736) $ 913,788 $ 860,624
			$ 283,620 $ 300,309 151,788 158,697 30,838 45,693 81,141 83,835 229,841 217,917 4,983 4,994 67,746 - 14,998 15,984 3,736 3,736 4,437 3,472 44,396 29,723
			917,524 864,360 ( 3,736) ( 3,736)
			$ 913,788 $ 860,624

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1. Subsidiary

For information about the Company’s subsidiary companies, please refer to Note 4 (3) of the consolidated financial report of the Company in the year 2021.

1. Associated companies

2. The book value of the Company’s non-significant Associations and the share of their business results for each of the companies is as follows:

On December 31, 2021, and 2020, the book values of the Company’s non-significant Associations are NT$63,830 thousand and NT$49,179 thousand respectively.

Continuing business unit’s current net profit (loss) Other comprehensive income (net after tax) Total comprehensive income for the current period	$ (	Year 2021 5,195 12,438) 7,243)	$	Year 2020 504 7,014 7,518
	($		$

• (1) The Company holds less than 20% of the shares of Kao Fong Machinery Co., Ltd., but because the Company has the ability to influence its financial and operational policies, it is classified as an Association of the Company.

• (2) The Company’s investment in Kao Fong Machinery Co., Ltd. has a public quote, and its fair value was NT$ 10,067 thousand and NT$ 10,318 thousand as of December 31, 2021, and 2020, respectively.

• (3) The Company has assessed Taiwan Pyrolysis & Energy Regeneration Corp. has ceased business and has no actual operations. Therefore, the entire investment is listed as an impairment loss of NT$ 3,736 thousand.

• The details of the share of the profits and losses of Associations and Joint ventures that adopt the equity method are as follows:

the equity method are as follows:
Subsidiary & Association Invested Hezuan Investment CAPTAIN HOLDING CO., LTD. Wuxi Hota Precision Gear Co., Ltd. HOWIN PRECISION CO., LTD. HOTATECH, INC. Juda Intelligent Technology Co., Ltd. Hefu Construction Co., Ltd. KAO FONG MACHINERY CO., LTD. LING WEI CO., Ltd. TAKAWA SEIKI, INC.		Investment Profits (losses)
	($ ( ( ( ( ( (	Year 2021 5,485) 6,861) 14,501) 2,250) 16,428 11) 254) 281) 3,969 1,074 8,172)	($ ( ( ( ( (	Year 2020 2,725) 12,872) 8,319) 829) 4,895 24) - 95) 62 537 19,370)
	($		($

The share of the profits and losses of the Subsidiaries and Associations recognized for the investment using the equity method is based on the evaluation of the financial statements of the investee companies that have been reviewed by the accountant during the same period.

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(8) Real Estate, Plants and Equipment

Cost Lands Buildings Machinery and Equipment Other equipment Projects incomplete and equipment to be inspected Subtotal Accumulated Depreciation Buildings Machinery and Equipment Other equipment Subtotal Total	Balance, begin $ 1,683,566 3,221,064 7,382,212 680,570 1,020,006 $13,987,418 Balance, begin $ 733,199 2,451,203 326,198 $ 3,510,600 $10,476,818	Additions $ 860 153,252 521,035 184,558 740,718	Year 2021 Disposals	Transfers $ 57,431 805,615 177,211 - ( 983,001)	Balance, End $ 1,741,857 4,177,825 8,012,372 804,446 743,439
			$ - ( 2,106) ( 68,086) ( 60,682) ( 34,284)
		$ 1,600,423 Additions $ 93,047 334,552 98,540	($ 165,158) Disposals	$ 57,256	$ 15,479,939 Balance, End $ 824,947 2,720,503 364,602
				Transfers $ - - -
			($ 1,299) ( 65,252) ( 60,136)
		$ 526,139	($ 126,687)	$-	$ 3,910,052 $ 11,569,887

Cost Lands Buildings Machinery and Equipment Other equipment Projects incomplete and equipment to be inspected Subtotal Accumulated Depreciation Buildings Machinery and Equipment Other equipment Subtotal Total	Balance, begin	Additions	Year 2020 Disposals $ - ( 900) ( 102,358) ( 144,805) -	Transfers $ - 11,371 242,601 16,263 ( 55,454) $ 214,781 Transfers $ - - - $-	Balance, End $1,683,566 3,221,064 7,382,212 680,570 1,020,006 $13,987,418 Balance, End $ 733,199 2,451,203 326,198 $3,510,600 $10,476,818
	$ 1,683,566 3,193,626 6,984,234 692,561 529,704 $13,083,691 Balance, begin	$ - 16,967 257,735 116,551 545,756
		$ 937,009	($ 248,063) Disposals ($ 450) ( 98,121) ( 144,805) ($ 243,376)
		Additions
	$ 645,925 2,215,051 331,263 $ 3,192,239 $ 9,891,452	$ 87,724 334,273 139,740
		$ 561,737

1. The major components of the buildings of the Company, including structure and elevators, are depreciated for 50 years and 6 years respectively.

2. For information about real estate, plants, and equipment as collaterals, please refer to Note 8 in detail.

3. Capitalization amount of interest expense, and interest rate range for real estates, plants, and equipment:

Capitalization Amount Interest Rate Range	Year 2021 $20,994 1.17%	Year 2020 $16,688 1.20%

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(9) Lease transaction as a Lessee

1. The subject assets of the Company lease include land, buildings, official vehicles, etc. The lease period usually ranges from 1 to 38 years. A lease contract is an individual negotiation and contains a variety of different terms and conditions. Except that the leased assets cannot be used as collateral for loans, there are no other restrictions.

2. The lease period of the photocopiers leased by the Company shall not exceed 12 months.

3. The book values of the right-to-use assets and the depreciation expenses recognized information are as follows:

information are as follows:
Lands Buildings Lands Buildings Transportation equipment	Dec. 31,2021 Book Value $ 242,514 8,010 $250,524 Year 2021 Depreciation $ 6,929 3,462 - $10,391	Dec. 31,2020
		Book Value
		$ 249,443 7,655
		$257,098
		Year 2020
		Depreciation
		$ 6,953 5,594 4,055
		$16,602

1. The increase in the right-to-use assets of the Company in the year 2021 and 2020 was NT$ 3,817 thousand and NT$ 3,717 thousand, respectively.

2. Information about the profit and loss for the lease contracts are as follows:

Items affecting current profit and loss Interest expense on lease liability Expenses for short-term lease contracts Lease modification benefits	Year 2021 $ 3,997 3,449 57	Year 2020
		$ 4,225 3,835 276

1. The total lease cash outflows of the Company in 2021 and 2020 were NT$ 19,615 thousand and NT$22,869 thousand respectively.

2. (10)Lease transaction as a Lessor

3. The subject assets leased by the Company include buildings, machinery, and equipment. The lease contract period usually ranges from 3 to 20 years. The lease contract is based on a separate agreement and contains various terms and conditions.

4. The benefits of the Company based on the business leases recognized in the year 2021 and 2020 are as follows:

2020 are as follows:
Rental income Rental income recognized as variable lease payments	Year 2021 $ 4,016 1,616	Year 2020
		$ 6,767 1,281

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1. The analysis of the expiry date of payment of the Company’s operating lease is as follows:

Year 2021 Year 2022 Year 2023 Year 2024 Year 2025 Year 2026 After Year 2027 Total	Dec. 31,2021 4,016 Year 2020 3,332 Year 2021 202 Year 2022 50 Year 2023 50 Year 2024 50 Year 2025 500 After Year 2026 $ 8,200 Total	Dec. 31,2020 $ 7,569 3,438 341 50 50 50 550 $ 12,048

(11)Investment properties

estment properties
At January 1 Cost Accumulated loss At January 1 Reclassification(Note) At December 31 At December 31 Cost Accumulated loss	Year 2021 Lands $ - - $- $ - 30,387 $ 30,387 $ 30,387 - $ 30,387	Year 2020
		Lands
		$ - -
		$-
		$ - -
		$-
		$ - -
		$-

Note: Transferred from “Real Estate, Plants and Equipment”.

1. Rental income and direct operational expenses of the investment properties:

Year 2021 Year 2020 Direct operating expenses incurred by investment properties that do not generate rental income in the current period $ 186 $ -

1. As of December 31, 2021 the fair value of investment properties held by the Group was NT$ 32,986 thousand, which belongs to Level 3 fair value measurements was adjusted by each individual factor based on the recent transaction price of comparable targets similar to the location of investment properties, and other considerations such as location, scale and purpose, etc.

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(12)Other non-current assets

er non-current assets
Prepayment for equipment Refundable deposits Prepayment for land purchases Other non-current assets	Dec. 31, 2021 $ 34,544 1,645 207,240 - $ 243,429	Dec. 31, 2020
		$ 450,755 6,604 87,818 241
		$ 545,418

The Company acquired land number #1088, Guang zheng Section, Dali District, Taichung City, with a book value of NT$ 87,818 thousand. The land was registered as Special Agriculture Zone, Grade D Construction Land and Homeland Conservation Zone on June 21, 2021. The transfer of ownership registration was completed on July 21, 2021.

(13)Short-term Loan

Property of Loan Dec. 31, 2021 Rate range Collaterals Bank Loan Secured Loan $ 120,000 0.9% Land, Buildings, machinery and equipment Credit Loan 827,263 0.59%~1.11% $ 947,263 Property of Loan Dec. 31, 2020 Rate range Collaterals Bank Loan Secured Loan $ 134,464 0.85%~0.92% Land, Buildings, machinery and equipment Credit Loan 1,715,906 0.68%~1.25% $ 1,850,370

(14)Short-term notes & bills payable

Bills finance company Land Bills Mega Bills China Bills Bills finance company E.Sun Bills Mega Bills China Bills	Dec. 31, 2021 $ 960,000 100,000 200,000 $ 1,260,000 Dec. 31, 2020 $ 300,000 100,000 200,000 $ 600,000	Rate of issuance Collaterals 0.58% Note 1 0.92% - 0.92% - Rate of issuance Collaterals 1.39% Note 2 0.92% - 0.92% -

Note 1 ： Land Bills credit line is the combined credit line from the Syndicated Loans of Land Bank of Taiwan.

The combined book value is NT 960,000 thousand.

Note 2 ： E.Sun Bills credit line is the combined credit line from the Syndicated Loans of E.Sun Bank. The combined book value is NT 300,000 thousand.

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(15)Other Payables

er Payables
Dec. 31,2021 Dec. 31,2020 Salary Payable $ 91,637 $ 84,421 Employee’s compensation and Remuneration payable to directors 12,100 10,237 Equipment payment payable 168,452 90,079 Freight payable 239,534 50,718 Other payable 284,008 199,579 $795,731 $435,034 g-term Loan Property of Loan Loan period and repayment method Interest rate range Collaterals Dec. 31, 2021 Syndicated secured Loans – E.Sun Bank Since March 24, 2024, every 6 months, repayment in installments until March 24, 2026 1.79% Plants, office buildings and machinery equipment $ 850,000 Secured Loan Sequentially due before May 30, 2039. Repayments in installments. 0.00%~1.34% Land, machinery and equipment 2,431,193 Credit Loan Sequentially due before Jul. 18, 2026. Repayments in installments. 0.00%~1.21% - 2,244,723 5,525,916 Less: Long-term loans due within one year or one operating cycle (listed other current liabilities) ( 860,341) Less: Government grant discount ( 50,855) $ 4,614,720	Dec. 31,2020
	$	84,421 10,237 90,079 50,718 199,579
	$	435,034
		Dec. 31, 2021
		$ 850,000 2,431,193 2,244,723
		5,525,916 ( 860,341) ( 50,855) $ 4,614,720

(16)Long-term Loan

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Property of Loan Loan period and repayment method Interest rate range Collaterals Syndicated secured Loans – E.Sun Bank Since July 15, 2016, every 6 months, repayment in installments until July 22, 2022 1.79% Plants, office buildings and machinery equipment Secured Loan Sequentially due before May 30, 2039. Repayments in installments. 0.00%~1.50% Land, machinery and equipment Credit Loan Sequentially due before Jul. 18, 2026. Repayments in installments. 0.10%~1.21% - Less: Long-term loans due within one year or one operating cycle (listed other current liabilities) Less: Government grant discount

Dec. 31, 2020 $ 1,333,704 2,673,254 2,382,070

6,389,028 ( 1,997,512) ( 46,789) $ 4,344,727

• 1.(1) One March 24, 2021, the Company signed a Syndication Loan Contract with a group of banks formed by Taiwan Land Bank and E.Sun Bank, etc., with a total credit line of NT$ 5,000,000 thousand, and Taiwan Land Bank as the managing bank, for repay loans to financial institutions and to enrich mid-term working capital. As of December 31, 2021, the allocated amount was NT$ 850,000 thousand, and the undrawn amount was NT$ 4,150,000 thousand.

  • In addition to other relevant regulations, the above-mentioned syndication loan contract includes the following restrictions: during the credit period, the following financial ratios shall be maintained, and be reexamined in the financial statements verified by the accountant every six months.

  • A. The current ratio [current assets/(current liabilities minus the one-year maturity amount of the credit line and amount of the short-term commerical papers payable of the credit line)] shall keep at 100% (inclusive) or more.

  • B. The financial liabilities ratio [ (Short-term loans+short-term commerical papers payable + one-year maturity amount of long-term loans+corporate bonds+long-term loan)/tangible assets net value] shall keep below 200% (inclusive).

  • C. Tangible assets (net value minus intangible assets): shall not less than NT 4 billion.

• (2) During the credit period and the provisions of the syndication loan contract, the company must follow specific financial ratios at the end of the year and half of the year, such as the current ratio, debt to equity ratio, and interest protection multiple requirements. As of December 31, 2021, the Company has not violated the above restrictions.

• On July 18 and December 13, 2019, the Company signed a loan contract at low-interest rate with First Bank to enrich mid-term working capital and for payments of machinery equipment purchases. The loan interest is calculated and paid monthly at the two-year fixed deposit flexible interest rate of Chunghwa Post Co., Ltd., with an annual interest

38

rate of 0.1%, and will be adjusted when the pricing interest rate is changed.

• (17)Government Grant

The Company obtained government preferential interest rate loans from Taiwan Business Bank, First Bank, and Taiwan Cooperative Bank of the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan”. As of December 31, 2021, the total amount was NT$ 2,399,600 thousand is used for operating turnover, purchasing machinery and equipment, and building factories. The loan will be repaid from August 2021 to November 2029. Based on the market interest rate at the time of 1.40%~ 1.50%, the total fair value of the borrowing is estimated to be NT$ 1,749,128 thousand, and the difference between the amount obtained and the fair value of the borrowing is NT$ 50,855 thousand, which is regarded as a government low-interest grant and recognized as Deferred income (listed in the table “Other non-current liabilities”). The deferred income that exceeds the paid-in period shall be transferred to other income in a straight line method.

• (18)Pension

• 1.(1) The Company and its domestic subsidiaries have established Defined benefit retirement measures in accordance with the provisions of the “Labor Standards Act”, which are applicable to service years of all regular employees before the implementation of the “Labor Pension Regulations” on July 1, 2005, and the follow-up service years of employees who choose to comply the Labor Standards Act after the implementation of the “Labor Pension Regulations”. For employees who meet the retirement conditions, the pension payment is calculated based on the length of service and the average salary of the 6 months before retirement. Two bases are given for each year of service within 15 years (inclusive), and one base is given for each year of service over 15 years, but the cumulative maximum is limited to 45 bases. The Company allocates 2% of the total salary per month as the retirement fund, which is deposited in Bank of Taiwan by a special account named the Labor Pension Fund Supervisory Committee. In addition, the Company should calculate the amount of pensions for those who meet the statutory retirement conditions in the next year before the end of each year and make a provision for the difference before the end of March of the following year.

  • (2) The amounts recognized on the balance sheet are as follows:

The present value of net defined benefit obligation Fair value of project assets Net defined benefit liabilities	Dec. 31, 2021 $ 175,877 ( 111,543)	Dec. 31, 2020 $ 187,305 ( 108,267) $ 79,038
	$ 64,334

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(3) The changes to the present value of Defined Benefits are as follows:

Year 2021 Balance on Jan. 1 Current Service Cost Interest Expense (Income) Remeasurement: Planned asset earning (Exclude money in interest income or expenses) Changes by Demographic assumptions impact Changes by Financial assumptions impact Changes by Plan reduction Adjustment by Experience Provision to the Pension fund Pension payment Balance on Dec. 31	Present value of Defined benefit obligation $ 187,305 570 543 188,418 - 388 - ( 5,400) 1,096 ( 3,916) - ( 8,625) $ 175,877	Fair value of project	Net defined benefit
		assets ($ 108,267) - ( 317) ( 108,584) ( 1,668) - - - - ( 1,668) ( 9,916) 8,625 ($ 111,543)	liabilities $ 79,038 570 226 79,834 ( 1,668) 388 - ( 5,400) 1,096 ( 5,584) ( 9,916) - $ 64,334

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Year 2020 Balance on Jan. 1 Current Service Cost Interest Expense (Income) Remeasurement: Planned asset earning (Exclude money in interest income or expenses) Changes by Demographic assumptions impact Changes by Financial assumptions impact Changes by Plan reduction Adjustment by Experience Provision to the Pension fund Pension payment Balance on Dec. 31	Present value of Defined benefit obligation	Fair value of project assets	Net defined benefit liabilities
	$ 212,024 1,063 1,327 214,414 - - 5,178 ( 155) ( 3,086) 1,937 - ( 29,046) $ 187,305	($ 122,938) - ( 776) ( 123,714) ( 3,955) - - - - ( 3,955) ( 9,644) 29,046 ($ 108,267)	$ 89,086 1,063 551 90,700 ( 3,955) - 5,178 ( 155) ( 3,086) ( 2,018) ( 9,644) - $ 79,038

(4) The assets of the Company’s defined benefit pension fund are items within the scope and amount of entrusted business projects stipulated by the Bank of Taiwan in accordance with Article 6 of the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund”. The annual investment plan of the fund (that is, deposits in domestic and overseas financial institutions, investment in domestic and overseas listings, over-the-counter or private equity securities, investment in domestic and overseas real estate securitization products, etc.) to handle entrusted business, and related operation are supervised by the Pension Fund Supervision Committee. When using the fund, the minimum income of its annual final accounting distribution shall not be lower than the income calculated based on the two-year time deposit interest rate of local banks in Taiwan. If it is insufficient, it shall be supplemented by the State Treasury after approval by the competent authority. As of December 31, 2021, and 2020, the fair value of the fund’s total assets, please refer to the report published by the Government on the annual use of labor pension funds.

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(5) The summary of the actuarial assumptions regarding pension Year 2021 Discount Rate 0.70% Future salary increase rate 3.00%	payments is as follows: Year 2020
	0.30%
	3.00%

The hypothesis of the future mortality rate is based on the fifth empirical life chart of the Taiwan Life Insurance.

The analysis of the defined benefit plan affected by changes in the main actuarial assumptions adopted is as follows:

assumptions adopted is as	follows:
Dec. 31, 2021 Impact on the present value of Defined benefit obligation Dec. 31, 2020 Impact on the present value of Defined benefit obligation	Discount Rate +0.25% -0.25% ($ 3,265) $ 3,382 ($ 3,722) $ 3,861	Future salary increase rate
	+0.25% ($ 3,265) ($ 3,722)	+0.25% $ 3,297 $ 3,749	-0.25% ($ 3,201) ($ 3,635)

The above sensitivity analysis is based on the analysis of the impact of a single hypothesis change while other assumptions remain unchanged. In practice, many changes in assumptions may be relevant.

The sensitivity analysis system is consistent with the calculation method of the net pension liabilities of assets and liabilities.

• (6) The Company’s estimated payment for the retirement plan in the year 2022 is NT$ 8,456 thousand.

changes in assumptions may be relevant. The sensitivity analysis system is consistent with the calculation method of the net pension liabilities of assets and liabilities. (6) The Company’s estimated payment for the retirement plan in the year 2022 is NT$ 8,456 thousand.	changes in assumptions may be relevant. The sensitivity analysis system is consistent with the calculation method of the net pension liabilities of assets and liabilities. (6) The Company’s estimated payment for the retirement plan in the year 2022 is NT$ 8,456 thousand.
(7) As of December 31, 2021, the weighted average duration of the retirement plan was 7
years. An analysis of the grant date of the retirement payment is as follows:
Less than 1 year	$ 21,066
1~2 years	8,737
2~5 years	61,104
More than 5 years	93,253
	$184,160

• 2.(1) Since July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution plan procedure in accordance with the “Labor Pension Act”, which are applicable to domestic employees. The Company applies the labor retirement pension system stipulated by the “Labor Pension Act” for employees’ choice, with a monthly contribution of 6% of the salary to the employee’s personal account of The Bureau of Labor Insurance, and the payment depends on the employee’s personal pension. The amount of the special account and accumulated income is received in the form of a monthly pension or a lump-sum pension.

• (2) In the year 2021 and 2020, the company recognized the cost of retirement payment according to the above-mentioned method are NT$ 23,972 thousand and NT$ 28,682

42

thousand respectively. The deferred income that exceeds the paid-in period shall be transferred to other income in a straight line method.

(19)Share-Based Payments

1. The Company’s share-based payments of 2020 are as follows:

Types of Agreements Cash capital increase to retain employee subscription	Grant Date December 15, 2020	Grant Amount 1,393 units	Contract Period NA	Vesting Conditions Immediately vested

For the year ended December 31, 2021: None.

1. The Group used the stock closing market prices as fair value measurement for the transaction of share-based payments at the grant date. The relevant information are as follows:

follows:
Types of Agreements Grant Date Cash capital increase to retain employee subscription December 15, 2020	Stock Value	Strike Price Expected volatility 90 -	Expected	Expected duration -	Expected	Per Unit Risk-free interest rate Fair Value - 15
					dividend	rate -
	105				-

1. Expenses arising from share-based payment transaction are as follow:

Equity-settled	Year 2021 $ -	Year 2020
		$ 20,895

(20) Shares

1. As of December 31, 2021, Company’s authorized capital was NT$3,500,000,000 and the paid-in capital was NT$2,795,175,000, consisting of 279,518 thousand shares of common stock with a par value of NT$10 per share. As of December 31, 2021, total outstanding shares were 279,518 thousand.

The Company’s common stock shares outstanding (shares in thousands) at the beginning and at the end of the year are as follows:

At January 1 Cash capital increase Stock repurchase (Note) At December 31	Year 2021 254,518 25,000 - $ 279,518	Year 2020
		254,957 - (439)
		$ 254,518

• Note: The Company was approved by the resolution of the Board of Directors to decrease in treasury stock of 439 thousand shares. The record date of capital reduction for the decrease in treasury stock was August 14, 2020, and the alteration registration had been made on August 27, 2020.

• The Company was approved by the resolution of the Board of Directors on September 10, 2020 to issue common stock of 25,000 thousand shares by cash capital increase, with a par value of NT$10 and the issuance at premium of NT$90 per share, that had been approved and effected by the competent authority on October 8, 2020. The record of the cash capital increase was February 1, 2021, and that the alteration registration had been made on February 26, 2021.

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1. Treasury Stock

   • (1) For considerations of Company management, by the resolution of the Board of Directors on March 26, 2020, it is decided to buy back the Company stock of the number of 6,000 thousand shares with the buyback price between NT$60 and NT$90 from March 27, 2020 to May 26, 2020. As of December 31, 2020, 439 thousand shares have been bought back by the Company with the total amount of NT$35,010,000.

   • (2) According to the Securities and Exchange Act, the number of shares bought back may not exceed ten percent of the total number issued and outstanding shares of the Company. The total amount of the shares bought back may not exceed the amount of retained earnings plus premium on capital stock plus realized capital reserve.

   • (3) The shares bought back by the Company in accordance with the Securities and Exchange Act shall not be pledged. Before transfer, the shareholder’s rights shall not be enjoyed.

   • (4) Pursuant to the Securities and Exchange Act, where the buyback is for transferring shares to its employees shall be transferred within five years from the date of buyback. The shares not transferred within the said time limit shall be deemed as not issued by the Company, and amendment registration shall be processed. Where the buyback is required to maintain the Company’s credit and shareholders’ rights and interests, and the shares so purchased are cancelled for which amendment registration shall be effected within six months from the date of buyback.

2. (21)Capital reserve

May be used to offset a deficit, distribute cash dividends or capital surplus Additional paid-in capital May be used to offset a deficit only Changes in ownership interests in subsidiaries Gain from asset disposition May not be used for any purpose Cash capital increase to retain employee subscription	Dec. 31,2021 $ 3,804,533 5,667 309 23,295	Dec. 31,2020 $ 1,879,608 5,667 309 23,295

1. According to the Company Act, except for offsetting a deficit from capital reserve of the income derived from the issuance of new shares at a premium or the income from endowments received by the Company, where the Company incurs no loss, it may distribute by issuing new shares which shall be distributable as dividend shares to its original shareholders in proportion to the number of shares being held by each of them or by cash. The Securities and Exchange Act also provides that when capital reserve is capitalized, the combined amount of any portions capitalized in any one year may not exceed ten percent of paid-in capital. The Company shall not use the capital reserved to make good its capital loss, unless the surplus reserve is insufficient to make good such loss.

2. An amount transferred to capital reserve from the income derived from the issuance of new shares at a premium in the preceding paragraph, may not be capitalized until the fiscal year after the competent authority for company registrations approves registration.

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Changes in capital reserve are as follows:

Year 2021

	Year 2021	Year 2021
Beginning balance Cash capital increase Capital reserve to distribute cash dividends Balance at the end of 2021	Additional paid-in capital Stock option Gain from asset disposition $1,877,208 $23,295 $ 309 2,000,000 - - ( 72,675) - - $3,804,533 $23,295 $ 309		Gain from	Changes in ownership interests in subsidiaries $ 5,667 - - $ 5,667	Total $1,906,479 2,000,000 ( 72,675)
	$1,877,208 2,000,000 ( 72,675) $3,804,533	$23,295 - - $23,295
					$3,833,804

Year 2020

	Year 2020	Year 2020
Beginning balance Cash capital increase Treasury stock disposition Balance at the end of 2020	Additional paid-in capital Stock option Gain from asset disposition $1,907,828 $ - $ 309 - 23,295 - ( 30,620) - - $1,877,208 $23,295 $ 309		Gain from	Changes in ownership interests in subsidiaries $ 5,667 - - $ 5,667	Total $1,913,804 23,295 ( 30,620) $1,906,479
	$1,907,828 - ( 30,620) $1,877,208	$ - 23,295 - $23,295

1. By the resolution of the Board of Directors on March 17, 2021, and approval of the Shareholder’s Meeting on July 20, 2021, the Company shall allocate cash dividends from capital reserve with a distribution of NT$0.26 per share and the total dividends will be NT$72,675,000.

(22)Retained earnings

1. Under the Company’s Articles of Incorporation, when there is net profit for each fiscal year, except for income tax payment, the Company shall offset a deficit in priority, and set aside 10% of the balance as legal reserve. After setting aside in accordance with the laws and regulations or as reversal of special reserve, “preferred stock is distributed preferably from the current year shall distribute and accumulated unappropriated dividends from each previous fiscal year.” When there is profit for each fiscal year, the Company shall set aside not less than 2% as employees’ compensation and not more than 5% as bonus to directors; the rest plus unappropriated earnings of the last fiscal year shall be proposed the surplus earning distribution and presented to the shareholders’ meeting for approval.

2. The Company dividend policy is as follows: taking into consideration of the Company capital demand and sound financial structure, and cooperating with business growth, the board of directors shall prepare the proposal of surplus earning distribution taking into consideration of the Company profitability and the business operation demand, and report to the shareholders’ meetings for resolution. The proposal of surplus earning distribution prepared by the board of directors shall have total dividends distributed between 30% and 80% of the current year earnings, provided however, the ration for cash dividend shall not lower than 20% of total distribution.

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1. Legal reserve can only be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership; where legal reserve is distributed by issuing new shares or by cash, only the portion of legal reserve which exceeds 25 percent of the paid-in capital may be distributed.

2. 4.(1) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

3. (2) At the time of initial application of IFRS, special reserve set aside, referred in Rule No. Financial-Supervisory-Securities-Issuing-1010012865 issued on April 6, 2012, shall be transferred into retained earnings from unrealized revaluation increments and cumulative translation adjustment under equity upon the acceptance of application of IFRS 1 exemption. However, the Group has negative number in net effect of retained earnings, special reserve is no need to be set aside.

4. The appropriations of earnings for 2021 and 2020 had been resolved at the Board of Directors on March 16, 2022 and the shareholders’ meeting on July 20, 2021, respectively. Details are summarized below:

		Year 2021		Year 2020
		Dividends per share		Dividends per share
	Amount	(indollars)	Amount	(indollars)
Capital reserve to
distribute cash dividends	$ -	$ -	$ 72,675	$ 0.26
Legal reserve	35,326		29,489
Special reserve	12,118		-
Cash dividends	381,541	1.37	234,794	0.84

The appropriations of earnings for 2021 is waiting for the approval at the meeting of shareholders of the Company.

1. Please refer to Note 6(30) for employees’ compensation and directors’ remuneration.

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(23)Other equity items

Other equity items
At January 1 Evaluation adjusted – Company – Associates Valuation adjustments transfer into retained earnings Differences for foreign currency translation: – Company – Tax for Company – Associates – Tax for Associates At December 31 At January 1 Evaluation adjusted – Company – Associates Valuation adjustments transfer into retained earnings Differences for foreign currency translation: – Company – Tax for Company – Associates – Tax for Associates At December 31			Year 2021
	Financial statements translation differences of foreign operations		Debit instrument unrealized profit (loss) measured at fair value through other comprehensive income Equity instrument unrealized profit (loss) measured at fair value through other comprehensive income Total
	($ 42,421) - - - ( 8,129) 1,361 4,031 22		($ 10,560) $ 17,865 1,514 ( 582) - ( 17,184) - ( 6,271) - - - - - - - - ($ 9,046) ($ 6,172) Year 2020		($ 35,116) 932 ( 17,184) ( 6,271) ( 8,129) 1,361 4,031 22 ($ 60,354)
	($ 45,136) Financial statements translation differences of foreign operations ($ 32,179) - - - ( 8,145) 2,192 ( 4,324) 35 ($ 42,421)
		Financial statements translation differences of foreign operations	Debit instrument unrealized profit (loss) measured at fair value through other comprehensive income Equity instrument unrealized profit (loss) measured at fair value through other comprehensive income		Total
		($ 32,179) - - - ( 8,145) 2,192 ( 4,324) 35	($ 20,881) 10,321 - - - - - - ($ 10,560)	$ 4,824 9,009 11,468 ( 7,436) - - - - $ 17,865	($ 48,236) 19,330 11,468 ( 7,436) ( 8,145) 2,192 ( 4,324) 35 ($ 35,116)
		($ 42,421)

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(24)Operating revenue

ing revenue
		Year	2021		Year	2020
Revenue from contracts with customers	$		6,230,770	$		4,787,240

1. Disaggregation of revenue from contracts with customers The Company derives revenue from the transfer of goods at a point in time in the following major product lines and geographical regions:

Revenue from external customer contracts Revenue recognition time Revenue recognition at a point of time Revenue from external customer contracts Revenue recognition time Revenue recognition at a point of time				Year 2021	Year 2021	Year 2021	Year 2021	Year 2021
				Transmissioncomponentsforcar
		USA		China		Taiwan		Other regions		Total
	$3,973,691 $3,973,691		$883,914 $883,914		$302,771 $1,070,394 $302,771 $1,070,394 Year 2020				$6,230,770 $6,230,770
			Transmissioncomponentsforcar
	USA		China		Taiwan		Other regions		Total
	$3,707,168 $3,707,168		$184,870 $184,870		$202,262 $202,262		$ 692,940 $ 692,940		$4,787,240 $4,787,240

1. Contract assets and contract liabilities: None.

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(25)Interest income

				Year 2021					Year 2020
	Interest income from bank deposits			$		470			$			665
	Financial assets at amortized cost
	Interest income					3						9
	Other interest income					9						2,725
				$		482			$			3,399
(26) Other	income
				Year 2021					Year 2020
	Rental income			$	5,632				$			8,048
	Dividend revenue				2,941							4,093
	Government grants income				10,401					52,683
	Other income-other				7,036					15,686
				$	26,010				$	80,510
(27) Other	gains and losses
				Year 2021					Year 2020
	Foreign exchange losses			($		82,448)			($		110,570)
	Gains on disposals of	property, plant and
	equipment					5,010						2,493
	Gains on lease modification						57					276
	Total			($		77,381)			($		107,801)
(28) Finance costs
				Year 2021					Year 2020
	Interest expense from	bank borrowings		$	92,803				$ 107,409
	Less: Qualifying capitalization of		interest(		20,994)			(		16,688)
	Subtotal				71,809						90,721
	Interest expense-lease liabilities				3,997							4,225
	Finance costs			$	75,806				$		94,946
(29) Expenses by nature
			Year 2021						Year 2020
		Operating Operating			Operating				Operating
		Costs	Expenses	Total		Costs			Expenses			Total
Employee	benefit expense	$656,231 $158,456		$814,687	$576,042				$167,579			$743,621
Depreciation on property, plant
and equipment		506,791	19,348	526,139	540,619				21,118			561,737
Depreciation on right-of-use
assets		8,590	1,801	10,391		9,812			6,790			16,602
Amortization of intangible assets		4,222	1,749	5,971		7,634			2,037			9,671

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(1) Employee benefit expense

Salaries and wages Labor and health insurance Pension Directors’ remuneration Other personnel expenses		Year 2021			Year 2020
	Operating Costs	Operating Expenses	Total	Operating Costs	Operating Expenses	Total
	$527,811 55,257 19,876 - 53,287 $ 656,231	$116,500 11,617 11,074 13,713 5,552 $ 158,456	$644,311 66,874 30,950 13,713 58,839 $ 814,687	$465,738 50,949 18,797 - 40,558 $ 576,042	$129,062 11,634 11,342 10,328 5,213 $ 167,579	$594,800 62,583 30,139 10,328 45,771 $ 743,621

1. The number of employees for the current year and previous year were 1,011 and 995, respectively, and among them, directors who were not concurrent employees, are 10 and 10, respectively.

2. The average of employee benefit expense for the current year was NT$800,000 ( 『 Total of employee benefit expense for the current year - Total of directors’ remuneration 』 / 『 Number of employees for the current year - Number of directors who were not concurrent employees 』 ). The average of employee benefit expense for the previous year was NT$745,000 ( 『 Total of employee benefit expense for the previous year - Total of directors’ remuneration 』 / 『 Number of employees for the previous year - Number of directors who were not concurrent employees 』 ).

3. The average employees’ salaries and wages for the current year was NT$644,000 (Total of salaries and wages for the current year / 『 Number of employees for the current year - Number of directors who were not concurrent employees 』 ) .

4. The average employees’ salaries and wages for the previous year was NT$604,000 (Total of salaries and wages for the previous year / 『 Number of employees for the previous year - Number of directors who were not concurrent employees 』 ).

5. The average of changes employees’ salaries and wages adjustment went up 6.62% ( 『 The average employees’ salaries and wages for the current year - The average employees’ salaries and wages for the previous year 』 / The average employees’ salaries and wages for the previous year).

6. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall not be less than 2% for employees’ compensation and shall not be higher than 5% for directors’ remuneration.

7. The Company has established an auditing committee, hence there is no supervisor.

8. The Company directors’ emoluments include directors’ reward, transportation allowance, directors’ remuneration. Directors’ reward shall refer to the pay levels adopted by peer companies, transportation allowance shall be paid according to his/her attendance to the Board of Directors, and in compliance with the Articles of Incorporation, the directors’ remuneration shall be allocated prepared by the Remuneration Committee and represented to the Board of Directors for resolution, and report to the Shareholders’ Meeting. Managerial officers and employees’ emoluments include salaries and wages, bonus, employees’ compensation, employee stock option certificates, etc., taking into consideration of the responsibility carried of that position, and refer to the pay levels

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adopted by peer companies and individual performance. Evaluation result of each employee performance review is included in calculation basis of salaries and wages. Managerial officers’ bonus and emoluments shall be prepared and approved by the Remuneration Committee and by the resolution of the Board of Directors.

1. For the years ended December 31, 2021 and 2020, employee’s compensation and directors’ remuneration were accrued at as follows:

Employee’s compensation Directors’ remuneration	Year 2021 $ 8,500 3,600 $ 12,100	Year 2020 $ 6,716 3,521 $ 10,237

The aforementioned amounts were recognized in salary expenses. The employees’ compensation and directors’ remuneration were estimated and accrued based on 2.04% and 0.86% of distributable profit of current year for the year ended December 31, 2021. The employees’ compensation and directors’ remuneration resolved by the Board of Directors on March 16, 2022, were NT$8,500,000 and NT$3,600,000, and the employees’ compensation will be distributed in the form of cash.

Employees’ compensation of 2020 as resolved by the Board of Directors was in agreement with those amounts recognized in the 2020 financial statements.

Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(30)Income tax

1. Income tax expense

2. (1) Components of income tax expense

Current tax: Current tax on profits for the current income Surtax on undistributed retained earnings Tax effect of investment tax credits Prior year income tax underestimation (overestimation) Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	Year 2021 $ 90,396 1,530 ( 26,749) ( 440) 64,737 ( 5,559) $ 59,178	Year 2020 $ 71,727 3,376 ( 32,127) 2,196 45,172 ( 13,597) $ 31,575

(2) Income tax related to components of other comprehensive income:

Exchange difference on translation of foreign operations Remeasurements of defined benefit obligation Other comprehensive income	Year 2021 $ 1,383 ( 1,117) $ 266	Year 2020 $ 2,227 ( 373) $ 1,854

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1. Reconciliation between income tax expense and accounting profit:

Tax calculated based on profit before tax and statutory tax rate Tax effect disallowed by tax regulation Exempt from income tax pursuant to the Income Tax Act Tax effect of investment tax credits Prior year income tax underestimation (overestimation) Surtax on undistributed retained earnings Income tax expense	Year 2021 $ 83,101 1,736 - ( 26,749) ( 440) 1,530 $ 59,178	Year 2020 $ 65,198 888 ( 7,956) ( 32,127) 2,196 3,376
		$ 31,575

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

tax are as follows:
Deferred tax assets: - temporary differences: Losses on foreign long-term equity investments Allowance for inventory valuation and obsolescence losses Unappropriated accrued pension Allowance for uncollectible Remeasurements of defined benefit obligation Differences between the accounting treatment and tax regulations in right-of- use assets Unrealized employees’ bonus Unrealized profit on intercompany sales Unrealized foreign exchange loss Subtotal - Deferred income tax liabilities: Differences between the accounting treatment and tax regulations in depreciation on property, plant and equipment Exchange difference on translation of foreign operations Land value increment tax Subtotal Total			Year 2021
		January1	Recognized in profit or loss	Recognized in other comprehensive income	December 31
		$ 14,869 14,840 2,969 3,054 7,845 3,365 1,723 3,436 8,503 $ 60,604 ($ 48,901) ( 4,039) ( 1,417) ($ 54,357)	($ 2,128) 2,300 ( 2,940) 43 - ( 355) - ( 644) 2,975 ($ 749) $ 6,308 - - $ 6,308 $ 5,559	$ - - - - ( 1,117) - - - - ($ 1,117) $ - 1,383 - $ 1,383 $ 266	$ 12,741 17,140 29 3,097 6,728 3,010 1,723 2,792 11,478 $ 58,738 ($ 42,593) ( 2,656) ( 1,417) ($ 46,666)

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Year 2020

Deferred tax assets: - temporary differences: Losses on foreign long-term equity investments Allowance for inventory valuation and obsolescence losses Unappropriated accrued pension Allowance for uncollectible Remeasurements of defined benefit obligation Differences between the accounting treatment and tax regulations in right-of-use assets Unrealized employees’ bonus Unrealized profit on intercompany sales Unrealized foreign exchange loss Subtotal - Deferred income tax liabilities: Differences between the accounting treatment and tax regulations in depreciation on property, plant and equipment Exchange difference on translation of foreign operations Land value increment tax Subtotal Total		January1	Recognized in profit or loss	Recognized in other comprehensive income	December 31
		$ 13,380 13,619 4,979 2,499 8,218 403 1,723 3,722 6,494 $ 55,037 ($ 56,558) ( 6,266) ( 1,417) ($ 64,241)	$ 1,489 1,221 ( 2,010) 555 - 2,962 - ( 286) 2,009 $ 5,940 $ 7,657 - - $ 7,657 $ 13,597	$ - - - - ( 373) - - - - ($ 373) $ - 2,227 - $ 2,227 $ 1,854	$ 14,869 14,840 2,969 3,054 7,845 3,365 1,723 3,436 8,503 $ 60,604 ($ 48,901) ( 4,039) ( 1,417) ($ 54,357)

1. The Company and its subsidiaries’, HOWIN and HOZUAN, profit-seeking enterprise annual income tax return up to 2019 had been examined by the tax authorities.

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(31) Earnings per share Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary share Employee’s compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary share Employee’s compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares		Year 2021
	Amount after tax	Weighted average number of ordinary shares of outstanding (Sharesin thousands)	Earnings per share (indollars)
	$ 341,823 341,823 - $ 341,823	277,326 277,326 106 277,432 Year 2020	$ 1.23 $ 1.23
	Amount after tax	Weighted average number of ordinary shares of outstanding (Sharesin thousands)	Earnings per share (indollars)
	$ 286,094 286,094 - $ 286,094	254,625 254,625 118 254,743	$ 1.12 $ 1.12

The Corporation presumes that the resulting potential shares will be included in the weighted average number of shares outstanding used in the calculation of diluted earnings per share, if the shares have a dilutive effect.

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(32)Supplemental cash flow information

Investing activities with partial cash payments:

Purchase of property, plant and equipment Add: Opening balance of payable equipment Ending balance of prepayment for equipment Acquisition of other noncurrent assets-Land Transferred to investment properties Less: Ending balance of payable equipment Opening balance of prepayment for equipment Cash paid during the year	Year 2021 $ 1,657,679 90,079 34,544 119,422 30,387 ( 168,452) ( 450,755) $ 1,312,904	Year 2020 $ 1,151,790 205,324 450,755 2,905 - ( 90,079) ( 373,272) $ 1,347,423

(33)Changes in liabilities from financing activities

Short-term borrowings At January 1 $ 1,850,370 Changes in cash flow from financing activities ( 898,390) Increase during the year - Changes in other non-cash items - Impact of changes in foreign exchange rate ( 4,717) At December 31 $ 947,263 Short-term borrowings At January 1 $ 1,000,753 Changes in cash flow from financing activities 841,081 Increase during the year - Changes in other non-cash items - Impact of changes in foreign exchange rate 8,536 At December 31 $ 1,850,370		Year 2021	Year 2021
	Short-term borrowings	Short-term commercial Lease Long-term Dividends Liabilities from financing paperspayable liabilities loans payable activities-gross
		$ 600,000 660,000 - - -	$260,664 $6,389,028 $ - $9,100,062 ( 12,169)( 863,112 ) (307,469) ( 1,421,140) - - 307,469 307,469 7,209 - - 7,209 - - - ( 4,717) $255,704 $5,525,916 $- $7,988,883 Year 2020
	$ 947,263	$1,260,000
	Short-term borrowings	Short-term commercial Lease Long-term Dividends Liabilities from financing paperspayable liabilities loans payable activities-gross
		$ 560,000 40,000 - - -	$286,298 $6,362,417 $ - $8,209,468 ( 14,809) 26,611 (509,913) 382,970 - - 509,913 509,913 ( 10,825) - - ( 10,825) - - - 8,536 $260,664 $6,389,028 $- $9,100,062
	$ 1,850,370	$ 600,000

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7. RELATED PARTY TRANSACTIONS

(1)	Names of related parties and relationship Name of related parties HOZUAN INVESTMENT CO., LTD.(HOZUAN) HOWIN PRECISION CO., LTD.(HOWIN) HEFU CONSTRUCTION CO., LTD.(HEFU) WUXI HOTA PRECISION GEAR CO., LTD.(WUXI HOTA) HOTATECH, INC.(HOTATECH) CAPTAIN HOLDING CO., LTD. TAIWAN PYROLYSIS & ENERGY REGENERATION CORP. KAO FONG MACHINERY CO., LTD.(KAO FONG) TAKAWA SEIKI, INC.(TAKAWA) LING WEI CO., Ltd.(LING WEI) UNISON INC.(UNISON) HOWON POWERTRAIN CO., LTD.(HOWON) GLOBAL TECHNOS LTD.(GLOBAL) GUO-RONG SHEN MAIN DRIVE CORPORATION QIAN ZUAN CO., LTD. TAIPEI GAOHE CHUNGUI CHARITY FOUNDATION	Relationship with the Group Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Associate Associate Associate Associate Associate Other related parties Other related parties Other related parties Other related parties Chairman of the Foundation is same as that of the Company.

(2) Significant related party transactions

1.Operating revenue

Sale of goods: Subsidiaries Associates Other related parties Total	Year 2021 $ 60,624 2,611 286 $ 63,521	Year 2020 $ 47,323 1,084 11,842 $ 60,249

The Company sells to the related parties with standard sales price and payment term 30~180 days. Payment term for general customers is 90~180 days.

1. Purchasing

Purchase of goods: Associates Other related parties	Year 2021 $ - - $-	Year 2020 $ 98 127 $ 225

Purchasing by the Company is conducted under standard pricing and conditions, and payment will be done within 30~120 days after the acceptance of goods.

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3. Manufacturing overhead -processing cost

Subsidiaries Associates	Year 2021 $ 62,754 91,011 $ 153,765	Year 2020 $ 58,309 49,467 $ 107,776

Processing cost for the Company is conducted under standard processing price and conditions, and payment will be done within 60~120 days after the acceptance of goods. 4. Rental income

Associates	Year 2021 $ 600	Year 2020 $ 600

Rental of the aforesaid leasing object is calculated based on the rentals in the neighborhood and the leasing area, and the rental shall be collected every 30 days. 5. Rental

Associates	Year 2021 $-	Year 2020 $ 1,259

Rental of the aforesaid leasing object is calculated based on the rentals in the neighborhood and the leasing area, and the rental shall be paid by monthly.

1. Commission

HOTATECH	Year 2021 $ 33,730	Year 2020 $ 31,455

Commission of the Company is based on the sales volume of a variety of models for different customers, that shall be paid to the subsidiaries pursuant to the agreed ratio. 7. Receivables from related parties

Receivables from related parties
Accounts receivable: Subsidiaries Associates Other related parties Subtotal Other receivables: Subsidiaries Subtotal Total	Dec. 31, 2021 $ 36,913 792 56 37,761 498 498 $ 38,259	Dec. 31, 2020 $ 18,374 291 - 18,665 55
		55
		$ 18,720

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8. Payables to related parties

Accounts payable: Subsidiaries Subtotal Other Payables： Subsidiaries Associates Other related parties Subtotal Total	Dec. 31, 2021 $ 30,790 30,790 256 7,727 121 8,104 $ 38,894	Dec. 31, 2020 $ 24,400 24,400 222 6,606 234 7,062 $ 31,462

9. Other non-current assets

• Subsidiaries of the Company hold agricultural land that land alternation is not yet accomplished, hence it is temporarily registered under the Chairman’s name of the parent Company. It is agreed that the Chairman cannot exercise any action to that agricultural land.

10. Property transactions

(1) Purchase of property transaction:

Purchase of property, plant and equipment Subsidiaries Associates Other related parties	Year 2021 $ 6,120 8,566 2,125 $ 16,811	Year 2020 $ - 11,899 1,619 $ 13,518

• (2) Disposal of property, plant and equipment

		Year 2021	Year 2021		Year 2020	Year 2020
	Disposal	proceeds	Gains(losses) from disposal	Disposal proceeds		Gains(losses) from disposal
Subsidiaries	$	34,284	$-	$	-	$-

(3) Purchase of property transaction outstanding balance:

Purchase of property, plant and equipment Associates Other related parties	Dec. 31, 2021 $ - 417 $ 417	Dec. 31, 2020 $ 324 80 $ 404

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11. Endorsement provided to related parties

Information of endorsement provided to others is provided in Note 13(1)2.

(3) Key management compensation

Other short-term employee benefits Post-employment benefits Total	Year 2021 $ 32,176 1,191 $ 33,367	Year 2020 $ 41,591 1,197 $ 42,788

8. PLEDGED ASSETS

Book value

Pledged asset Property, plant and equipment Financial assets at amortized cost	Dec. 31, 2021 $ 7,455,383 1,499 $ 7,456,882	Dec. 31, 2020 $ 5,207,687 56,738 $ 5,264,425	Purpose Long-term loan, Short-term borrowings Project guarantee deposit, L/C

9. COMMITMENTS AND CONTINGENCIES

1. As of December 31, 2021 and 2020, Letter of Credit issued but not used for purchasing of raw material and machinery equipment was NT$259,579,000 and NT$153,517,000, respectively

2. Capital expenditure on contract signed but not occurred yet

Property, plant and equipment

Dec. 31, 2021 $ 1,310,218	Dec. 31, 2020 $ 354,170

10. LOSSES DUE TO MAJOR DISASTERS

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

1. OTHERS

(1) Capital management

The Company’s managing capital is based on industry scale of operating business, taking into consideration of the industry future growth and product developments, and sets up an appropriate market share, according to that, plans corresponding capital expenditure. In addition to calculate demanded working capital based on financial operating plans, and finally determine an appropriate cost structure by considering operating income and cash flow arising from product competitivity.

The Company monitors its working capital through regularly reviewing the ratio of liabilities to assets. The ratio of liabilities to assets of the Group for the years ended December 31, 2021 and 2020, is as follows:

Total liabilities Total assets Ratio of liabilities to assets	Dec. 31, 2021 $ 10,871,184 19,494,289 55.77%	Dec. 31, 2020 $ 10,650,032 17,002,590 62.64%

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(2) Financial instruments

1. Financial instruments by category

Financial assets Financial asset at fair value through other comprehensive income Investment in designated equity instruments Accounts receivable Financial asset at amortized cost /loans and accounts receivable Cash and Cash equivalents Financial assets at amortized cost Notes receivable Accounts receivable (including related parties) Other receivables Refundable deposits Financial liabilities Short-term borrowings Short-term commercial papers payable Notes payable Accounts payable Other Payables Long-term loan (including the expiration within a year or an operating cycle) Lease liability	Dec. 31, 2021 $ 132,534 734,618 776,622 2,121 25,442 1,775,749 67,702 1,645 $ 3,516,433 Dec. 31, 2021 $ 947,263 1,260,000 921,500 958,995 795,731 5,475,061 $ 10,358,550 $ 255,704	Dec. 31, 2020 $ 133,689 727,869 687,561 57,355 9,842 1,332,130 40,778 6,604 $ 2,995,828 Dec. 31, 2020 $ 1,850,370 600,000 425,000 438,171 435,034 6,342,239 $ 10,090,814 $ 260,664

1. Financial risk management policies

(1) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk, and price risk), credit risk and liquidity risk.

(2) Risk management is carried out by a central treasury department (Company treasury). Company treasury identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units, such as foreign exchange risk, interest rate risk, credit risk and derivative and non-derivative financial instruments, and investment of excess liquidity.

1. Significant financial risks and degrees of financial risks

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The current year found no major changes but the following explanation, please refer to 2021 Consolidated Financial Statements Note (12).

• (1) Market risk

Foreign exchange risk

• A. The Company operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD, EUR, JPY and RMB. Foreign exchange rate risk arises from future commercial transactions and recognized assets and liabilities.

• B. The Company’s businesses involve some non-functional currency operations (the Company and part of subsidiaries’ functional currency: TWD, part of subsidiaries’ functional currency: USD and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(BLANK BELOW)

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Dec. 31, 2021

(Foreign currency: functional currency) Financial assets Monetary items USD：TWD EUR：TWD JPY：TWD RMB：TWD THB：TWD Investments under Equity method USD：TWD RMB：TWD Financial liabilities Monetary items USD：TWD EUR：TWD JPY：TWD RMB：TWD CHF：TWD	Book Value Foreign currency (in thousands)Exchange rate (NTD)	Sensitivityanalysis
		Degree of variation Effect of profit or loss Effect of other comprehensive income
	$ 82,656 27.68 $2,287,918 5,431 31.32 170,099 71,941 0.24 17,266 24,972 4.34 108,378 35,131 0.83 29,159 $ 160 27.68 4,437 7,106 4.34 30,838 $ 1,063 27.68 $ 29,424 651 31.32 20,389 386,464 0.24 92,751 1,182 4.34 5,130 5,686 30.18 171,603	1% $ 22,879 $ - 1% 1,701 - 1% 173 - 1% 1,084 - 1% 292 - 1% - $ 44 1% - 308 1% $ 294 $ - 1% 204 - 1% 928 - 1% 51 - 1% 1,716

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(Foreign currency: functional currency) Financial assets Monetary items USD：TWD EUR：TWD JPY：TWD RMB：TWD CHF：TWD Investments under Equity method USD：TWD RMB：TWD Financial liabilities Monetary items USD：TWD EUR：TWD JPY：TWD RMB：TWD	Dec. 31,2020
	Book Value Sensitivity analysis Foreign currency (in thousands) Exchange rate (NTD) Degree of variation Effect ofprofit or loss Effect of other comprehensive income
	$ 73,873 28.48 $2,103,903 1% $ 21,039 $ - 7,375 35.02 258,273 1% 2,583 - 44,196 0.28 12,375 1% 124 - 5,484 4.38 24,003 1% 240 - 2,107 32.31 68,067 1% 681 - $ 122 28.48 $ 3,475 1% $ - $ 35 10,432 4.38 45,693 1% - 457 $ 520 28.48 $ 14,810 1% $ 148 $ - 103 35.02 3,607 1% 36 - 26,998 0.28 7,559 1% 76 - 547 4.38 2,394 1% 24 -

(BLANK BELOW)

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• C. Total exchange loss (including amounts realized and unrealized) arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2021 and 2020, amounted to NT$82,448,000 and NT$110,570,000, respectively.

Price risk

• A. The Company is exposed to price risk as the Company holds equity securities financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. In order to manage price risk of the investments in equity instruments, the Company diversifies its portfolio and executing based on the limits set by the Group.

• B. The Company’s primary investments are in equity instruments and open-end funds issued by domestic companies, which equity instruments price will be affected due to uncertainties of future value on the investment targets. If that equity instruments price increase or decrease 5% with all other factors remain constant, gains or losses in equity instruments at fair value through other comprehensive income increased of NT$6,627,000 and NT$6,684,000, respectively.

Cash flow and fair value interest risk

• A. The Company’s interest risk primarily comes from long-term loans at floating rates, that the Group is exposed to cash flow interest rate risk. As of December 31, 2021 and 2020, the Company’s loans at floating interest rates are denominated in New Taiwan Dollars.

• B. When the loans denominated in New Taiwan Dollars increase or decrease by 0.25% with all other factors remain constant, profit before tax for 2021 and 2020 decreased or increased NT$13,688,000 and NT$15,856,000, respectively, mainly caused by variations of the interest expenses from bank loans at floating rates.

• (2) Credit risk

• A. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable and notes receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost and at fair value through other comprehensive income.

• B. For banks and financial institutions, only well-known rated parties with optimal credit rating in domestic or overseas are acceptable by the Company, and the Company cooperates with couple of banks and financial institutions in the meantime, instead of only a single party to reduce credit risk. Financial services or terms and conditions of loans provided by banks and institutions are according to the Company internal delegation of authority, that shall be executed by approval of the Board of Directors or delegated supervisors. Any paper that can only be signed with correspondent banks and financial institutions, shall be inspected by specialists of legal department or legal consultants to avoid legal risk. The Company periodically reviews the correspondent banks and financial institutions about their credit ratings and service conditions, qualities and contacts, and according to operating conditions, the Company periodically monitors to maintain reasonable credit limits and utilization of credit limits that ensures to satisfy the operational needs.

• C. The Company adopts the following assumptions under IFRS 9, if there has been a significant increase in credit risk on that instrument since initial recognition: (A) When the contract payments were past due over 30 days based on the terms,

64

there has been a significant increase in credit risk on that instrument since initial recognition.

• (B) Bond investments traded at Taipei Exchange (“TPEx”) is recognized as low credit risk when that instruments in the balance sheet are as investment grade rated by any of external rating agencies.

• D. When independent credit rating set for an investment target is downgraded by two levels, the Company’s judgement on that investment has been a significant in credit risk.

• E. When the default rate of an investment target is more than 47.36%, the Company’s judgement on that investment has been a significant in credit risk.

• F. The Company adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 360 days.

• G. The Company classifies customers’ accounts receivable in accordance with customer rating types. The Company applies the modified approach using provision matrix to estimate expected credit loss under the provision matrix basis.

• H. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

• (A) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

• (B) The disappearance of an active market for that financial asset because of financial difficulties;

• (C) Default or delinquency in interest or principal repayments;

• (D) Adverse changes in national or regional economic conditions that are expected to cause a default.

• I. The Company wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Company will continue executing the recourse procedures to secure their rights.

• J. The Company used the forecast ability to adjust historical and timely information to assess the default possibility of accounts receivable. As of December 31, 2021 and 2020, the provision matrix is as follows:

Not Overdue Within 120 days 121-240 days 241-360 days Over 361 days Total Not Overdue Within 120 days 121-240 days 241-360 days Over 361 days Total	Dec. 31, 2021 Expected loss rate Total book value	Dec. 31, 2021 Expected loss rate Total book value	Loss allowance $ 179 892 781 3,606 10,028
	0.01% $ 2,182,357 0.35% 255,755 2.42% 32,338 47.36% 7,614 100% 10,028 $ 2,488,092 Dec. 31, 2020 Expected loss rate Total book value	$ 2,182,357 255,755 32,338 7,614 10,028
		$ 2,488,092	$ 15,486
			Loss allowance $ 179 892 781 3,606 7,028
	0.01% 0.59% 3.04% 25.64% 100%	$ 1,856,081 150,940 25,708 14,063 7,028
		$ 2,053,820	$ 12,486

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• K. Movements in relation to the Company applying the simplified approach to provide loss allowance for accounts receivable are as follows:

At January 1 Provision for impairment loss Write-off uncollectible accounts At December 31	Year 2021 Account receivable $ 12,486 4,164 ( 1,164) $ 15,486	Year 2020 Account receivable
		$ 9,708 5,674 ( 2,896) $ 12,486

The Group’s recognized loss allowance of impairment loss amounted to NT$3,000,000 and NT$2,778,000 for the years ended December 31, 2021 and 2020, respectively.

• (3) Liquidity risk

• A. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Group treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times, so that the Company will not violate the relevant limits or terms of loans. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements.

• B. The loan limits of NT$3,359,292,000 have not been utilized.

• C. The Company’s non-derivative financial liabilities in the following table are categorized based on the maturity date and are analyzed based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Dec. 31, 2021

Dec. 31, 2021
	Less than	Between 3 months	Between		Between	More than
Non-derivative financial liabilities:	3 months	and 1year	1 and 2years		2 and 5years	5years	Total
Short-term borrowings	$820,858	$133,015	$	-	$ -	$ -	$953,873
Short-term notes payable	1,260,000	-		-	-	-	1,260,000
Notes payable	565,120	356,380		-	-	-	921,500
Accounts payable	958,995	-		-	-	-	958,995
Other Payables	750,534	45,197		-	-	-	795,731
Lease liabilities	4,486	13,457	17,392		30,631	275,310	341,276
Other current liabilities	6,470	9,309		-	-	-	15,779
Long-term loans (including the expiration	163,079	754,090	1,188,397		2,144,690	1,654,860	5,905,116
within a year or an operating cycle)

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Dec. 31, 2020

Dec. 31, 2020
Less than Non-derivative financial liabilities: 3 months Short-term borrowings $ 1,762,078 Short-term notes payable 600,000 Notes payable 119,592 Accounts payable 342,111 Other Payables 370,425 Lease liabilities 3,134 Other current liabilities 69,321 Long-term loans (including the expiration within a year or an operating cycle) 2,212,899	Between 3 months and 1 year $ 90,731 - 305,408 96,060 64,609 9,403 - 1,627,155	Between Between More than 1 and 2 years 2 and 5 years 5 years Total $ - $ - $ - $ 1,852,809 - - - 600,000 - - - 425,000 - - - 438,171 - - - 435,034 12,537 28,651 284,487 338,212 - - - 69,321 933,131 986,543 763,339 6,523,067
Short-term borrowings Short-term notes payable Notes payable Accounts payable Other Payables Lease liabilities Other current liabilities Long-term loans (including the expiration within a year or an operating cycle)

(3) Fair value information

1. Valuation technique is adopted for financial and non-financial instruments fair value measurements; each degree is defined as follows:

2. The first level (Level 1): Those derived from quoted prices (unadjusted) in active market for identical assets or liabilities on the date of measurement. Active market indicates a market in which transaction for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. All of the Company’s investments fair value in listed stocks and active market derivatives are included.

The second level (Level 2): Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly.

The third level (Level 3): Fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data. The Company’s investments in inactive market derivatives are included.

1. The Company’s financial instruments which are not at fair value measurements are including cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable, and other payables, book value of them are reasonable approximation of fair value.

2. The Company’s financial and non-financial instruments measured at fair value are basically categorized in nature, characteristic and risk, and degree of assets and liabilities. The information is as follows:

(1) Category of assets and liabilities by nature:

Dec. 31, 2021 Assets Recurring fair value Financial assets at FVTOCI -Equity securities -Account receivable Total	$	Level 1 78,221 - 78,221	$	Level 2 - 734,618 734,618	$	Level 3 54,313 - 54,313	Total $ 132,534 734,618 $ 867,152
	$		$		$

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Dec. 31, 2020 Assets Recurring fair value Financial assets at FVTOCI -Equity securities -Account receivable Total	Level 1 $ 76,039 - $ 76,039	Level 2 $ - 727,869 $ 727,869	Level 3 $ 57,650 - $ 57,650	Total $ 133,689 727,869 $ 861,558

• (2) Valuation techniques and assumptions of fair value measurement adopted by the Company are as follows:

Fair value inputs (i.e. as Level 1) adopted quoted market prices by the Company, which instruments are listed by characteristic as follows:

Quoted market prices	Publicly traded stocks	Open-end funds Net value at valuation date
	Closing price at valuation date

1. Transferring between Level 1 and Level 2 was not happened for the years of 2021 and 2020.

2. Movements of Level 3 in the following table is shown for the years of 2021 and 2020:

Beginning balance Purchase in the current year Profit recognized in other comprehensive income Balance, end of year	Year 2021 $ 57,650 5,401 ( 8,738) $ 54,313	Year 2020 $ 74,492 6,503 ( 23,345) $ 57,650

1. Sensitivity analysis of quantitative data and movements of material unobservable inputs for Level 3 fair value measurements, which valuation models are as follows:

		for Level 3 fair value measurements, which valuation models are as follows:
Equity securities Stocks from venture capital companies Equity securities Stocks from venture capital companies		Dec. 31, 2021 Fair value Valuation technique Material unobservable inputs Range (Weighted average) Relation of inputs and fair value
		$ 18,909 Comparable to listed companies pursuant to the Company Act Price-book ratio multiplier $ 6,400 The higher the multiplier, the higher the fair value. 38,671Net assets valuation method Not applicable 39,924 Not applicable Dec. 31, 2020 Fair value Valuation technique Material unobservable inputs Range (Weighted average) Relation of inputs and fair value $ 17,726 Comparable to listed companies pursuant to the Company Act Price-book ratio multiplier $ 1,311 The higher the multiplier, the higher the fair value. 39,934Net assets valuation method Not applicable 39,924 Not applicable

1. Valuation model and parameter is adopted by the Company with careful evaluation; however, a result may be varied when using different valuation model or parameter. For financial assets and financial liabilities categorized in Level 3, if valuation parameter changes, the effects of the current year profit or loss and other comprehensive income are

68

as follows:

Financial assets Equity instruments Financial assets Equity instruments	Inputs Change		Dec. 31,2021	Dec. 31,2021	Dec. 31,2021
		Recognized Favorable change	in profit or loss Unfavorable change	Recognized in other comprehensive income Favorable change Unfavorable change
	Market price Price-book ratio ±1% Inputs Change	$-	$- $ 543 Dec. 31,2020		($ 543)
		Recognized Favorable change	in profit or loss Unfavorable change	Recognized in other comprehensive income Favorable change Unfavorable change
	Market price Price-book ratio ±1%	$-	$-	$ 577	($ 577)

- (4) Evaluation of the impact of COVID 19 epidemic

Due to the impact of various epidemic prevention measures promoted by the government for the COVID-19 and the significant increase in international shipping costs (listed as operating expenses), the Group has taken countermeasures and continued to manage related matters. The plans have been carried on by the Group are as follows:

1. According to the increase in international shipping costs, the trade term for the partial customers have been adjusted to FCA (Free Carrier).

2. As the government promotes policies of reducing cross-border movements of people and postponing the entering of migrant workers, the Group has increased the employment of dispatch workers to supplement the manpower.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

1. Loans to others: Please refer to table 1.

2. Provision of endorsement and guarantees to others: Please refer to table 2.

3. Holding of marketable securities at the end of period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

4. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None.

5. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

6. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

7. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: None.

8. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.

9. Trading in derivative instruments undertaken during the reporting periods: None.

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1. Significant inter-company transactions during the reporting periods: Please refer to able 4.

2. (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.

• (3) Information on investments in Mainland China

• Relevant information on investments in the Mainland area: Please refer to table 6.

• Limits of investments in the Mainland area: Please refer to table 6.

• Significant transactions, pricing, payment terms and unrealized gains or losses, either directly or indirectly through a third area, with investee companies in the Mainland Area.

• Purchase amounts of the year 2021 between the Company and each investee in Mainland China are not reaching 10% of the Company total purchase amounts. Purchasing is conducted to general purchase price and is paid in advance.

• (4) Major shareholders’ information

• Major shareholders information: There is no information that any of shareholders holds 5% or more of common stock.

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No No (Note 1) Table 1	Creditor	Borrower	General ledger account	Is a Related party	Maximum outstanding balance during the year ended 2021/12/31	Actual amount drawn down Interest rate(%) Nature of loan (Note 4) Amount of transactio ns with the borrower 12,000 $ 12,000 $ 2.50 2 - $ - - 2.00 2 - 6,000 6,000 2.50 2 - Hota Industrial Manufacturing Company Limited Loans to Others Year ended December 31, 2021 Balance at December 31,2021	Actual amount drawn down Interest rate(%) Nature of loan (Note 4) Amount of transactio ns with the borrower 12,000 $ 12,000 $ 2.50 2 - $ - - 2.00 2 - 6,000 6,000 2.50 2 - Hota Industrial Manufacturing Company Limited Loans to Others Year ended December 31, 2021 Balance at December 31,2021	Actual amount drawn down Interest rate(%) Nature of loan (Note 4) Amount of transactio ns with the borrower 12,000 $ 12,000 $ 2.50 2 - $ - - 2.00 2 - 6,000 6,000 2.50 2 - Hota Industrial Manufacturing Company Limited Loans to Others Year ended December 31, 2021 Balance at December 31,2021	Actual amount drawn down Interest rate(%) Nature of loan (Note 4) Amount of transactio ns with the borrower 12,000 $ 12,000 $ 2.50 2 - $ - - 2.00 2 - 6,000 6,000 2.50 2 - Hota Industrial Manufacturing Company Limited Loans to Others Year ended December 31, 2021 Balance at December 31,2021	Actual amount drawn down Interest rate(%) Nature of loan (Note 4) Amount of transactio ns with the borrower 12,000 $ 12,000 $ 2.50 2 - $ - - 2.00 2 - 6,000 6,000 2.50 2 - Hota Industrial Manufacturing Company Limited Loans to Others Year ended December 31, 2021 Balance at December 31,2021	Reason for short-term financing	Allowance for doubtful accounts	Item Value Limit on loans granted to a single party (Note 3) Ceiling on total loans granted (Note 2) Remarks - $ 1,724,621 $ 3,449,242 $ - 1,724,621 3,449,242 - 1,724,621 3,449,242 (In Thousands of New Taiwan Dollars) (Unless otherwise specified) Collaterals	Item Value Limit on loans granted to a single party (Note 3) Ceiling on total loans granted (Note 2) Remarks - $ 1,724,621 $ 3,449,242 $ - 1,724,621 3,449,242 - 1,724,621 3,449,242 (In Thousands of New Taiwan Dollars) (Unless otherwise specified) Collaterals	Item Value Limit on loans granted to a single party (Note 3) Ceiling on total loans granted (Note 2) Remarks - $ 1,724,621 $ 3,449,242 $ - 1,724,621 3,449,242 - 1,724,621 3,449,242 (In Thousands of New Taiwan Dollars) (Unless otherwise specified) Collaterals	Item Value Limit on loans granted to a single party (Note 3) Ceiling on total loans granted (Note 2) Remarks - $ 1,724,621 $ 3,449,242 $ - 1,724,621 3,449,242 - 1,724,621 3,449,242 (In Thousands of New Taiwan Dollars) (Unless otherwise specified) Collaterals	Item Value Limit on loans granted to a single party (Note 3) Ceiling on total loans granted (Note 2) Remarks - $ 1,724,621 $ 3,449,242 $ - 1,724,621 3,449,242 - 1,724,621 3,449,242 (In Thousands of New Taiwan Dollars) (Unless otherwise specified) Collaterals
													Item	Value
0 0 0	Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited	YUNG-CHIN DEVELOP FORGINGCO., LTD. HOWON POWERTRAIN CO., LTD. CHIEN LI INDUSTRIAL CO., LTD.	Other receivables Other receivables Other receivables	N Y N	14,338 $ 55,360 6,000	12,000 $ - 6,000	12,000 $ - 6,000	2.50 2.00 2.50	2 2 2	- $ - -	Purchase of equipment Purchase of equipment Purchase of equipment	- $ - -		- $ - -	1,724,621 $ 1,724,621 1,724,621	3,449,242 $ 3,449,242 3,449,242

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

• (1)The Company is ‘0’.

• (2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: The ceiling on total loans to others is the Company net assets, the limit is 40% of the Company net assets.

Note 3: Limit on loans granted for a single party is 20% of the net assets of the Company.

Note 4: (1) For business transactions.

• (2) For short-term financing.

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Hota Industrial Manufacturing Company Limited Provision of Endorsements and Guarantees to Others Year ended December 31, 2021

Table 2

(In Thousands of New Taiwan Dollars) (Unless otherwise specified)

0 Hota Industrial Manufacturin g Company Limited 0 Hota Industrial Manufacturin g Company Limited No (Note 1) Endorser/ Guarantor	Partybeingendorsed/guaranteed	Limit on endorsements/ guaranteees provided for a single party （Note 3）	Maximum outstanding endorsement/ guarantee amount as of December 31, 2021 （Note 4）	Oustanding endorsement/ guarantee amount at December 31, 2021 （Note 5）	298,833 $ - $ 3.55 3,449,242 $ 193,760 - 2.26 3,449,242 Acutal amount drawn down （Note 6） Amount of endorsement s/ guarantee secured with collateral Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company (%) Ceiling on total amount of endorsements/ guarantees provided （Note 3）	Provision of endorsements/ guarantees by parent company to subsidiary (Note 7)	Provision of endorsements/ guarantees by subsidiary to parent company (Note 7)	Provision of endorsements/ guarantees to the party in Mainland China (Note 7)	Remarks
	Companyname Relationship with the endorser/ guarantor (Note 2) Howon(Whaian) Automobile Components Company Limited (2) Wuxi Hota Precision Gear Co., Ltd. (2)
		1,724,621 $ 1,724,621	304,480 $ 193,760	304,480 $ 193,760		Y Y	N N	N N

• Note 1 ： The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

• (2)The subsidiaries are numbered in order starting from ‘1’.

• Note 2 ： Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories; fill in the number of category each case belongs to:

• (1) A company with which the Company conducts business.

• (2)A company in which the Company directly, and indirectly, holds more than 50% of the voting shares.

• (3)A company which directly, and indirectly, holds more than 50% of the voting shares in the Company.

• (4)Companies in which the Company directly, and indirectly, holds more than 90% of the voting shares.

• (5)A company fulfilling its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

• (6)A company where all capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentages.

• (7) Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other. Note 3 ： The guarantees and endorsements for a single party should not exceed 20% of the Company’s net assets, The ceiling on total amount of endorsements/guarantees provided to others by the Company is 40% of the Company’s net assets.

• Note 4 ： The maximum balance of the endorsement guarantee for others in the current year.

• Note 5 ： The ending balances of Howon automobile components and Wuxi Hoda’s endorsement guarantee are USD 11,000 thousand and USD 7,000 thousand, respectively, which are calculated based on the original exchange rate. Note 6 ： Should enter the actual amount spent by the endorsed company within the range of the endorsed guarantee balance.

• Note 7 ： Y is required only for those who belong to the parent company of the listed counter to endorse the subsidiary company, those who belong to the subsidiary company to endorse the parent company of the listed counter,

• and those who belong to the mainland area endorsement.

72

Hota Industrial Manufacturing Company Limited

Holding of marketable securities (not including subsidiaries, associates and joint ventures) December 31, 2021

Table 3

(In Thousands of New Taiwan Dollars) (Unless otherwise specified)

As of December 31, 2021

Securities held by	Types of marketable securities	Name of marketable securities	Relationship with the securities issuer	General ledger account	Number of shares	Book Value	Shareholdingratio	Fair Value	Remarks
Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited	Stock Stock Stock Stock Stock Stock Ball card	Shin Kong Financial Holding Co., Ltd.(2888) World Known MFG (Cayman) Limited Hwa Fong Rubber Ind. Co., Ltd.(2109) BMB Venture Capital Investment Corporation World Known MFG. Co., Ltd. MAIN DRIVE CORPORATION TAICHUNG INTERNATIONALENTERTAINMENT CORPORATION	- - The chairman of the company is the chairman of the company The chairman of the company is the chairman of the company - The chairman of the company is a director of the company The chairman of the company is a director of the company	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 Evaluation adjusted Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Evaluation adjusted	2,957,688 974,000 1,714,679 3,314,182 689,189 3,900,000 -	29,077 $ 4,740 46,566 80,383 2,162) ( 78,221 $ 33,142 $ 7,832 39,000 3,010 82,984 28,671) ( 54,313 $	- - - 9.28 4.05 10.78 0.09	32,682 $ 16,732 28,807 78,221 $ 13,608 $ 11,076 20,389 9,240 54,313 $

Note 1 ： The securities mentioned in this table refer to the stocks, bonds, beneficiary certificates and securities derived from the above items that fall within the scope of the International Financial Reporting Standard No. 9 “Financial Instruments Note 2 ： If the securities issuer is not a related party, this column is not required.

Note 3 ： If measured by fair value, please fill in the book value of column B after fair value evaluation adjustments and deduct accumulated impairment; if it is not measured by fair value, please fill in the original acquisition cost or amortized cost

deduction of accumulated impairment in the book value column B The book balance.

Note 4 ： The listed securities have users who are restricted due to the provision of guarantees, pledged loans, or other agreed upon agreement. The remarks column should indicate the number of guarantees or pledged shares, the amount of pledges, and the circumstances of restricted use.

73

Hota Industrial Manufacturing Company Limited

Significant inter-company transactions during the reporting period

For the year ended December 31, 2021

Table 4

(In Thousands of New Taiwan Dollars) (Unless otherwise specified)

Transaction

						Transaction	(Unless otherwise	specified)
No (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)	Remarks
0 0 0 0 0 0 0	Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited Hota Industrial Manufacturing Company Limited	HOTATECH INC. HOTATECH INC. HOTATECH INC. HOWON POWERTRAIN CO., LTD. HOWON POWERTRAIN CO., LTD. HOWIN PRECISION CO., LTD. HOWIN PRECISION CO., LTD. Hefu Construction Co., Ltd.	1 1 1 1 1 1 1 1	Sales Account receivable Commission expense Sales Account receivable Processing costs Accounts payable Other receivables	27,920 $ 12,017 33,730 24,982 17,127 62,754 30,790 34,284	According to the general priceand conditions, the paymentwill be collected within 180 days after shipment. Payment is received within 90 days after shipment. Based on the sales of specificmodels shipped by the parent company to specific customers, calculated according to acertain percentage. According to the general price and conditions, payment will be made within 30~180 days after acceptance of each different model. Payment will be made within 30~180 days after acceptance of each different model. According to the general processing price and conditions, payment will be made within 120 days after acceptance. Payment within 120 days after acceptance. According to the agreement of both parties.	0.42% 0.06% 0.50% 0.37% 0.08% 0.94% 0.15% 0.16%	Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4

Note 1 ： The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

• (1) Parent company is ‘0’.

• (2)The subsidiaries are numbered in order starting from ‘1’.

Note 2 ： Relationship between transaction company and counterparty is classified into the following three categories:

(1)Parent company to subsidiary.

• (2)Subsidiary to parent company.

• (3)Subsidiary to subsidiary 。

Note 3 ： Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and consolidated total operating revenues for income statement accounts.

Note 4 ： Transaction amounts account for at least NT$10 million.

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Hota Industrial Manufacturing Company Limited Information on Investees (not including investees in Mainland China) For the year ended December 31, 2021

Table 5

Table 5 Investor Investee （Note 1、2）	Location	Main business activities	Initial invest	ment amount	Shares hel	d as Decembe	r 31,2021	Net profit (loss) of the investee for the year ended December 31,2021	(Unless otherwise specified) (In Thousands of New Taiwan Dollars) Investment income (loss) recognized by the Company for the year ended December 31,2021 Remarks
			As at December 31,2021	As at December 31,2020	Number of Shares	Percentage (%)	Book Value
Hota Industrial Manufacturing Company Limited Hezuan Investment Hota Industrial Manufacturing Company Limited CAPTAIN HOLDING CO., LTD. Hota Industrial Manufacturing Company Limited HOTATECH,INC. Hota Industrial Manufacturing Company Limited HOWIN PRECISION CO., LTD. Hota Industrial Manufacturing Company Limited Juda Intelligent Technology Co., Ltd. Hota Industrial Manufacturing Company Limited Hefu Construction Co., Ltd. Hota Industrial Manufacturing Company Limited KAO FONG MACHINERY CO., LTD. Hota Industrial Manufacturing Company Limited TAIWAN PYROLYSIS & ENERGY REGENERATION CORP. Hota Industrial Manufacturing Company Limited TAKAWA SEIKI, INC. Hota Industrial Manufacturing Company Limited LING WEI CO., Ltd. Hezuan Investment KAO FONG MACHINERY CO., LTD. HOWIN PRECISION CO., LTD. KAO FONG MACHINERY CO., LTD. HOTATECH,INC. UNISON INVESTMENT CO., INC.	Taiwan Seychelles USA Taiwan Taiwan Taiwan Taiwan Taiwan USA Taiwan Taiwan Taiwan USA	Investment activities Holding company Sell variuos precision gears for automobiles Manufacturing of internal combustion engines and piston rings for automobiles and motorbikes, andwholesale of hardware parts and metalparts Manufacturing and selling various precision gears and shafts for automobiles Construction and investment development of residences, apartments and mixed residential office buildings Manufacturing and trading of various machine tools, plastic injection molding machines, hand tools and mechanical equipment, etc. Removal, storage and treatment ofgeneral and hazardous industrial waste. Machinery traders and agents. Hardware wholesale industry. Manufacturing and trading of various machine tools, plastic injection molding machines, hand tools and mechanical equipment, etc. Manufacturing and trading of various machine tools, plastic injection molding machines, hand tools and mechanical equipment, etc. Sell variuos precision gears for automobiles	167,190 $ 326,073 173,638 41,450 5,000 68,000 11,400 12,500 3,607 36,338 187,141 677 82,236	167,190 $ 326,073 173,638 41,450 5,000 - 11,400 12,500 3,607 24,413 187,141 677 82,236	25,221,000 10,602,990 530,200 7,305,147 500,000 68,000,000 838,878 375,000 120,000 3,633,750 16,501,826 49,471 236,341	100.00 100.00 100.00 61.05 83.33 50.00 0.78 25.00 40.00 45.00 15.28 0.05 100.00	283,620 $ 151,788 229,841 81,141 4,983 67,746 14,998 - 4,437 44,396 253,848 885 58,936) (	5,485) ($ 6,861) ( 16,428 3,685) ( 13) ( 507) ( 36,126) ( - 2,686 8,820 36,126) ( 36,126) ( -	5,485) ($ 6,861) ( 16,428 2,250) ( 11) ( 254) ( 281) ( - 1,074 3,969 5,518) ( 17) ( -	Subsidiaries(Note 4) Subsidiaries(Note 4) Subsidiaries(Note 4) Subsidiaries(Note 4) Subsidiaries(Note 4) Subsidiaries(Note 4) Invested company evaluatedby equity method(Note 3) Invested company evaluatedby equity method(Note 1) Invested company evaluatedby equity method Invested company evaluatedby equity method Invested company evaluatedby equity method(Note 2、3) Invested company evaluatedby equity method(Note 2、3) Second-tier subsidiary (Note 2)

Note 1 ： The book value of the long-term investment is the balance after the impairment loss of 3,736 thousand has been recognized. Note 2 ： Recognize investment gains and losses through each subsidiary. Note 3 ： KAO FONG MACHINERY CO., LTD.is jointly held by Hota Industrial Manufacturing CO., LTD. And Howin Precision Company Limited and Hozuan investment Company Limited. Its total shareholding ratio is 16.11%, and the investment loss recognized by the Group totals 5,816 thousand. Note 4 ： The transactions were eliminated when preparing the consolidated financial statements.

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Table 6

Hota Industrial Manufacturing Company Limited Information on Investment in Mainland China For the year ended December 31, 2021

(In Thousands of New Taiwan Dollars) (Unless otherwise specified)

Investee in Mainland China Main business activities Paid-in capital Investment method （Note 1）	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2021	Invested	Amount	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2021	Net income of investee for the year ended December 31, 2021	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31,2021	Book value of investment in Mainland China as of December 31,2021	Accumulated amount of investment income remitted back to Taiwan as of December 31,2021	Remarks
		Reitted to Mainland China	Remitted back to Taiwan
Wuxi Hota Precision Gear Co., Ltd. Manufacturing and sell various of precision gears for automobiles and motorbikes. 166,080 $ 1 HOWON POWERTRAIN CO., LTD. Manufacturing and selling of automobile gearboxes and gears. 293,408 2	160,544 $ 293,408	- $ -	- $ -	160,544 $ 293,408	14,502) ($ 9,712) (	100.00 100.00	14,502) ($ 9,712) (	30,838 $ 163,806	- $ -	Note 2、4 Note 3、4

Note 1 ： Investment methods are classified into the following three categories:

(1) Directly invest in a company in Mainland China.

(2) Investments through a holding company registered in a third region.

(3) Others

Note 2 ： Wuxi Hoda Precision gear Company Limited the paid-in capital is US$6,000,000, accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020 is US$5,800,000. Note 3 ： Howon(Whaian)automobile components Company Limited the paid-in capital is US$10,600,000,accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020 is US$10,600,000. Note 4 ： Paid-in capital was converted at the exchange rate of NTD 27.68: USD 1 prevailing on December 31, 2021.

Accumulated amount of Investment amount Ceiling on investments remittance from Taiwan to approved by the in Mainland China Mainland China as of Investment imposed by the December 31, 2021 Commission investment Hota Industrial $ 453,952 $ 453,952 $ 5,173,863 Manufacturing Company Limited

Note 1 ： According to the limit stipulated in the letter No. 006130 of the Securities and Futures Commission (90) of the SFC of the Ministry of Finance of the Ministry of Finance on November 16, 2001. Note 2 ： Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2021 is US$16,400,000.

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Accounts Receivable - Net December 31, 2021

List 1 Customers Name Abstract	(In Thousands of New Taiwan Dollars) Amount Remarks $ 963,306 612,871 241,142 670,773 Balance of each individual customer exceeds no more than 5% of the account. 2,488,092 ( 15,486) $ 2,472,606
Customer A Customer B Customer C Others Less: Allowance for doubtful accounts

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Inventories December 31, 2021

List 2

(In Thousands of New Taiwan Dollars)

Items	Amount Secured by market price Collateralized Costs Net realizable value
	Costs
Raw Material Work in Process Finish Goods Less: Allowance for inventory valuation and obsolescence losses	$ 820,685 1,117,198 829,735

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Movements of Investments for Using Equity Method From January 1, 2021 To December 31, 2021

List 3

(In Thousands of New Taiwan Dollars)

Items	Items	Items	Items	Items	Items
	Shares	Amount Shares	Amount Shares	Amount Shares Shareholding ratio Amount Unitprice
Long-term equity investment for using equity method: Hezuan Investment 25,221 CAPTAIN HOLDING., LTD. 10,603 Wuxi Hota Precision Gear Co., Ltd. - HOWIN PRECISION CO., LTD. 7,305 HOTATECH, INC 530 Juda Intelligent Technology Co., Ltd. 500 Hefu Construction Co., Ltd. - KAO FONG MACHINERY CO., LTD. 839 TAIWAN PYROLYSIS & ENERGY REGENERATION CORP. 375 LING WEI CO., Ltd. 2,441 TAKAWA SEIKI, INC. 120 Less: Accumulated impairment		$300,309 - 158,697 - 45,693 - 83,835 - 217,917 - 4,994 - - 6,800 15,984 - 3,736 - 29,723 1,193 3,472 - 864,360 ( 3,736) $860,624	$ 2,767 - - - - - - - - - - - 68,000 141 - - - 16,262 - 965 - 88,135 - $88,135	($19,456) 25,221 100% ( 6,909) 10,603 100% ( 14,855) - 100% ( 2,694) 7,305 61.05% 11,924 530 100% ( 11) 500 83.33% ( 254) 68,000 50.00% ( 1,127) 839 0.78% - 375 25% ( 1,589) 3,634 45% - 120 40% ( 34,971) - ($34,971)	283,620 11.25 151,788 14.32 30,838 1.00 81,141 11.11 229,841 433.66 4,983 9.97 67,746 1.00 14,998 17.88 3,736 9.96 44,396 12.22 4,437 36.98 917,524 ( 3,736) $913,788

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Movements of Property, Plant and Equipment From January 1, 2021 To December 31, 2021

List 4 Items	Beginning balance Original cost Revaluation reserve Additions Deductions Transfers	(In Thousands of New Taiwan Dollars) Balance, end of year Original cost Revaluation reserve Collateralized or pledged

「 Please refer to Note 6(8) and 8 for information of Property, plant and equipment 」 .

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Movements of Accumulated Depreciation on Property, Plant and Equipment From January 1, 2021 To December 31, 2021

List 5				(In	Thousands of New Taiwan Dollars)
	Balance, beginning of
Items	year	Additions	Deductions	Transfers	Balance, end ofyear
Please refer to Note 6(8) and 8 for information of「Property, plant and equipment」.

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Short-term Borrowings December 31, 2021

	HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Short-term Borrowings December 31, 2021
List 6 Types of loans Description	(In Thousands of New Taiwan Dollars) Balance, end ofyear TermofContract Range of interest ratePledged orCollateralizedRemarks
First Bank Collateralized borrowing Taiwan Business Bank Credit Loan First Bank Credit Loan E.SUN Bank Credit Loan Hua Nan Bank Credit Loan Bank SinoPac Credit Loan Cathay United Bank Credit Loan Yuanta Bank Credit Loan	$ 120,000 110.12.24~111.01.21 0.9% Land, Buildings 34,980 Nov. 25, 2021~Jun. 6, 2022 0.9% 232,283 Aug. 17, 2021~Jun. 21, 2022 0.59%~1.11% 180,000 Oct. 14, 2021~Jan. 14, 2022 0.8% 100,000 Dec. 28, 2021~Mar. 28, 2022 0.9% 80,000 Dec. 28, 2021~Feb. 25, 2022 0.9% 100,000 Dec. 29, 2021~Mar. 29, 2022 0.8% 100,000 Dec. 8, 2021~Mar. 8, 2022 0.8% 827,263 $ 947,263

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Statement of Short-term Bills Payable December 31, 2021

List 7 Items Guaranteed or accepted by Term of Contract Range of interest rate		(In Thousands of New Taiwan Dollars) Amount Remarks Unamortized discount on short-termbills payable BookValue
	Issueamount
Short-term commercial papers payable Land Bank of Taiwan Syndicated loans Nov. 22, 2021~ Mar. 22, 20220.58% Short-term commercial papers payable Mega International Commercial Bank Dec. 10, 2021~ Jan. 7, 2022 0.92% Short-term commercial papers payable The Chinese Bank Dec. 9, 2021~ Jan. 6, 2022 0.92%	$ 960,000 100,000 200,000	$ - $ 960,000 - 100,000 - 200,000 $- $ 1,260,000
	$ 1,260,000

83

HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Notes Payable

December 31, 2021

List 8 Name ofSupplier Abstract	(In Thousands of New Taiwan Dollars) Amount Remarks $ 921,500
Supplier A

84

HOTA	INDUSTRIAL MANUFACTURING COMPANY	INDUSTRIAL MANUFACTURING COMPANY	INDUSTRIAL MANUFACTURING COMPANY	LIMITED
	Accounts	Payable
	December	31, 2021
List 9			(In Thousands of New Taiwan Dollars)
Name ofSupplier	Abstract		Amount	Remarks
Supplier A		$	151,762
Supplier B			67,814
Supplier C			67,569
				Balance of each
				individual supplier
				exceeds no more
				than 5% of the
Others			671,850	account.
Total		$	958,995

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Long-term Loans December 31, 2021

List 10 Lender Abstract

(In Thousands of New Taiwan Dollars) Amountof loansTermofContract Interest rate Pledged or Collateralized Remarks

Syndication of 12 banks, including Land Bank of Taiwan Syndicated secured loan Taiwan Business Bank Secured loan Hua Nan Bank Secured loan O-Bank Secured loan Land Bank of Taiwan Secured loan Chang Hwa Bank Secured loan Taiwan Cooperative Bank Secured loan First Bank Secured loan Shanghai Commercial & Savings Bank Secured loan

$ 850,000 Mar. 24, 2024~Mar. 24, 2026 1.79% Plants, office buildings and machinery equipment 527,121Apr. 25, 2008~Nov. 28, 2032 0.00%~1.30%Land and machinery equipment 107,888Jan. 24, 2017~Sep. 28, 2026 1.12% Machinery equipment 16,746Apr. 15, 2015~Apr. 15, 2022 1.21% Machinery equipment 965,521Mar. 25, 2016~Sep. 27, 2038 1.20~1.34% Land, machinery and equipment 331,632Feb. 26, 2016~May. 30, 2039 1.13~1.27% Land and machinery equipment 240,000Aug. 31, 2021~Aug. 31, 2037 1.30% Land, machinery and equipment 212,160Dec. 13, 2019~Nov. 15, 2029 0.10% Machinery equipment 30,125Apr. 26, 2017~Nov. 15, 2022 1.15% Machinery equipment

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

- Long term Loans (continued) December 31, 2021

	Long-term Loans (continued) December 31, 2021
List 10 Lender Abstract	(In Thousands of New Taiwan Dollars) Amount of loans Term of Contract Interest rate Pledged or Collateralized Remarks $ 176,649May. 28, 2019~May 15, 20260.00% 196,428Jul. 18, 2019~Jul. 18, 2026 0.10% 849,233Aug. 15, 2019~Sep. 2, 20290.90% 49,413Mar. 17, 2015~Aug. 25, 20220.83%~1.21% 80,000Jul. 23, 2021~Jul. 23, 2024 0.98% 200,000Aug. 27, 2021~Feb. 27, 20221.00% 393,000Oct. 20, 2021~Mar. 24, 20220.95% 300,000 Oct. 8, 2021~Oct. 26, 2022 0.90% 4,675,916 ( 860,341) ( 50,855) $ 4,614,720
Taiwan Business Bank Credit Loan First Bank Credit Loan Taiwan Cooperative Bank Credit Loan O-Bank Credit Loan Yuanta Bank Credit Loan JihSun Bank Credit Loan Mizuho Bank Credit Loan Agricultural Bank of Taiwan Credit Loan Less: Long-term loans due within one year Less: Government grant discount

87

HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Operating Revenue From January 1, 2021 To December 31, 2021

List 11 Items Unit Quantity	(In Thousands of New Taiwan Dollars) Amount Remarks
Gear and shaft for motorcycles In thousands 827 Gear and shaft for automobiles In thousands 9,208 Gear and shaft for others In thousands 1,341 Less: Sales returns and allowances	$ 537,086 5,344,095 383,585 6,264,766 ( 33,996) $ 6,230,770

88

HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Operating Costs From January 1, 2021 To December 31, 2021

HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Operating Costs From January 1, 2021 To December 31, 2021	HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Operating Costs From January 1, 2021 To December 31, 2021
List 12 (In Thousands of New Taiwan Dollars) Items Amount
Beginning raw materials and supplies Add: Material purchased for current period Less: Ending balance of raw materials and supplies Raw materials and supplies sold Transferred into various expenses Raw materials and supplies consumed for current period Direct labor Manufacturing overhead Production costs Add: Beginning work in process Material purchased for current period Transferred from finished goods Less: Ending balance of work in process Semi-finished goods sold Cost of finished goods Add: Beginning finished goods Finished goods purchased for current period Gain on finished goods inventory Less: Ending balance of finished goods Reclassified as work in process Reclassified as fixed assets Transferred into various expenses Cost of production and sales Add: Cost of raw materials and supplies sold Semi-finished goods sold Other Allowance for inventory valuation and obsolescence losses Less: Income of the sale of scraps and obsoletes Operating costs	$ 393,470 2,415,699 ( 820,685) ( 14,995) ( 9,475)
	1,964,014 396,998 2,953,881
	5,314,893 733,801 100,653 3,096,635 ( 1,117,198) (20,014)
	8,108,770 622,969 2,696 15 ( 829,735) ( 3,146,477) ( 79,221) (13,653)
	4,665,364 14,995 20,014 ( 15) 11,500 ( 82,974)
	$ 4,628,884

89

HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Manufacturing Overhead From January 1, 2021 To December 31, 2021

List 13 Items Abstract	(In Thousands of New Taiwan Dollars) Amount Remarks $ 1,409,647 515,381 109,638 919,215 Each individual account exceeds no more than 5% of the account. $ 2,953,881
Processing costs Depreciation expense Salaries and wages Other expenses

90

HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Operating Expenses From January 1, 2021 To December 31, 2021

List 14 Items	Sales and marketing expenses	General and administrative expenses	(In Thousands of New Taiwan Dollars) Research & development expenses Total Remarks	(In Thousands of New Taiwan Dollars) Research & development expenses Total Remarks
Salaries and wages Shipping expenses Commission expenses Professional service fees Depreciation expenses Export charges Utilities expenses Tool fees Insurance expenses Expected credit impairment losses Other expenses	$ 33,903 668,162 68,303 16 3,684 51,683 4,959 - 5,320 4,164 25,477	$ 48,050 2 - 5,238 7,835 - 4,012 - 2,402 - 22,220	$ 45,621 77 - 989 9,630 - 6,888 22,645 5,963 - 21,995	$ 127,574 668,241 68,303 6,243 21,149 51,683 15,859 22,645 13,685 4,164 69,692 Each individual account exceeds no more than 5% of the account. $ 1,069,238
	$ 865,671	$ 89,759	$ 113,808

91

HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED Other Gains and Losses

From January 1, 2021 To December 31, 2021

List 15

(In Thousands of New Taiwan Dollars)

Items Abstract

Amount

Remarks

「 Please refer to Note 6(27) for information of Other Gains and Losses 」 .

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HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Finance Costs

From January 1, 2021 To December 31, 2021

List 16

(In Thousands of New Taiwan Dollars)

Items

Abstract

Amount Remarks

「 Please refer to Note 6(28) for information of Finance Costs 」 .

93

HOTA INDUSTRIAL MANUFACTURING COMPANY LIMITED

Functional Summary of Employee Benefit, Depreciation, Depletion and Amortization Occurred in Current Period From January 1, 2021 To December 31, 2021

List 17

(In Thousands of New Taiwan Dollars)

By function By nature	Year 2021	Year 2021	Year 2021	Year 2020	Year 2020	Year 2020
	Attributable to operating costs	Attributable to operating expenses	Total	Attributable to operating costs	Attributable to operating expenses	Total
Please refer to Note 6(29) (30) for information of「Functional Summary of Employee Benefit, Depreciation, Depletion and Amortization Occurred in Current Period」.

94