INX — Audit Report / Information 2020

Dec 29, 2020

INNOLUX CORPORATION

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND INDEPENDENT AUDITORS’

REPORT DECEMBER 31, 2020 AND 2019

---

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

~1~

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Shareholders of Innolux Corporation:

Opinion

We have audited the accompanying parent company only balance sheets of Innolux Corporation (the “Company”) as at December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

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

Key audit matters

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

~2~

The key audit matters in relation to the financial statements for the year ended December 31, 2020 are outlined as follows:

Inventory valuation

Description

The industry is characterized in its significant fluctuations closely in connection with the economic environment. As the technology evolves rapidly, the launch of new products may cause major changes in consumer demand or due to the update of production approach, the existing products may become obsolete or no longer meet market needs. The Company has evaluated the inventory by taking into account of allowance, obsoleteness or trivial sales amount and the cost has been written down to the net realizable value. The abovementioned allowance for inventory valuation losses mainly arose from the excess of the cost of inventory over the net realizable value of inventory. For details of inventory, please refer to Note 6(7). There is a risk of the excess of the cost of inventory over the net realizable value of inventory as a result of that the amounts of inventories are material and the sales prices of related products may have significant fluctuations because of market demand; we consider inventory valuation a key audit matter.

How our audit addressed the matter

We compared financial statements to ascertain the provision policy on allowance for inventory valuation losses has been consistently applied and assessed the reasonableness of the provision policy; obtained the net realizable value report of inventory used by management for evaluation and obtained an understanding of sales price basis adopted by management for abovementioned inventory along with the related supporting documents; sampled individual inventory item numbers and checked them against historical data on inventory clearance and discount to assess the reasonableness of net realizable value and the appropriateness of valuation basis.

Valuation and impairment of goodwill and property, plant and equipment

Description

For details of the impairment valuation of goodwill and property, plant and equipment, please refer to Notes 6(9) and 6(12).

Innolux Corporation measures the recoverable amount of the cash generating unit to determine whether goodwill and property, plant and equipment may be impaired based on future cash flows with appropriate discount rates, and future cash flows are estimated based on how assets are utilized, duration years of

~3~

assets and projected income and expenses in the future. As these estimates, which are uncertain and dependent upon significant judgment from management, involve several assumptions such as determination of discount rates, expected growth rate and future financial projections, we consider management’s assessment of impairment of goodwill and property, plant and equipment a key audit matter.

How our audit addressed the matter

We assessed the key assumptions used by management in estimating expected future cash flows, including the reasonableness of expected operating revenue, gross profit, changes in expenses, and the basic assumptions applied in expected future cash flows. We also examined the parameters of discount rates, including the risk-free rate of return on equity capital, the risk factor of the industry and the rate of return on similar investments in the market.

Responsibilities of management and those charged with governance for the parent company only financial statements

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

In preparing the parent company only financial statements, management is responsible for assessing 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 audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

~4~

guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

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

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

• B. 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.

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

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

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

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

~5~

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31,2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

PricewaterhouseCoopers, Taiwan February 4, 2021

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

~6~

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(4) 6(5) 7 6(2) 7 6(7) 6(2) 6(3) 6(8) 6(9), 7 and 8 6(10) 6(11) 6(12) and 8 6(30) 6(9) and 8	December 31, 2020 $ 15,501,787 706,299 37,812,579 42,376,926 9,229,916 2,417,099 681,454 25,828,702 1,656,248 53,063 136,264,073 2,350,833 957,222 86,617,745 147,618,538 4,824,282 499,444 17,365,850 7,105,972 1,143,729 268,483,615 $ 404,747,688	December 31, 2019
Current Assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortized cost - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventory 1410 Prepayments 1479 Other current assets 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Financial assets at fair value through other comprehensive income - non- current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets			$ 23,892,085 7,660 17,793,800 31,348,610 8,274,534 620,723 660,155 26,359,099 3,344,555 20,558
			112,321,779
			2,651,408 965,431 83,068,937 164,083,562 5,350,404 527,232 17,446,858 7,339,101 2,011,704
			283,444,637
			$ 395,766,416

(Continued)

~7~

INNOLUX CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

Notes December 31, 2020 December 31, 2019 6(2) $ 3,214,013 $ 345,003 22,957,390 25,060,763 7 49,617,908 61,151,192 6(13) and 7 26,755,991 23,314,297 6(18) and 9 6,144,295 6,772,357 191,985 430,143 6(15) 19,217,495 15,956,013 7 6,667,652 4,297,573 134,766,729 137,327,341 6(14) 5,374,293 - 6(15) 20,381,002 19,550,268 6(30) 1,602,283 1,465,526 4,881,214 4,959,354 6(16) 372,507 536,223 32,611,299 26,511,371 167,378,028 163,838,712 6(19) 97,110,720 97,110,720 2,293,612 - 6(20) 99,707,996 100,362,379 6(21) 7,870,713 7,870,713 7,325,437 4,663,463 29,120,853 29,864,446 6(22) ( 6,059,671) ( 7,325,437 ) 6(19) - ( 618,580 ) 237,369,660 231,927,704 $ 404,747,688 $ 395,766,416

Current Liabilities 2120 Financial liabilities at fair value through profit or loss - current 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2250 Provisions - current 2280 Lease liabilities - current 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Lease liabilities - non-current 2670 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Share capital - common stock 3130 Certificates of entitlement to new shares from convertible bonds 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interest 3500 Treasury shares 3XXX Total equity 3X2X Total liabilities and equity

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

~8~

INNOLUX CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items

Notes 2020 2019 6(23) and 7 $ 265,436,103 $ 249,384,126 6(7)(28) and 7 ( 250,452,241) ( 254,797,481) 14,983,862 ( 5,413,355) 6(28) and 7 ( 1,149,193) ( 1,226,054) ( 4,427,271) ( 4,708,808) ( 11,035,969) ( 11,543,290) ( 16,612,433) ( 17,478,152) ( 1,628,571) ( 22,891,507) 6(24) 271,839 683,012 6(25) and 7 1,874,672 1,418,328 6(26) 68,086 1,344,637 6(27) ( 1,025,357) ( 1,027,787) 2,441,668 2,658,336 3,630,908 5,076,526 2,002,337 ( 17,814,981) 6(30) ( 366,193) 371,991 $ 1,636,144 ($ 17,442,990) 6(16) $ 57,639 ( $ 58,246) 6(22) ( 8,209) ( 145,957) 6(22) 889,942 445,388 6(30) ( 9,886) 86,781 929,486 327,966 6(22) 680,959 ( 2,951,172) 6(22) ( 62,442) ( 85,365) 618,517 ( 3,036,537) $ 1,548,003 ($ 2,708,571) $ 3,184,147 ($ 20,151,561) 6(31) $ 0.17 ($ 1.77) $ 0.17 ( $ 1.77)

4000 Sales revenue 5000 Operating costs 5900 Net operating margin (loss) Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating loss Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit (loss)before income tax 7950 Income tax (expense) benefit 8200 Profit (loss) for the year Other comprehensive income (loss) (net) Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurement of defined benefit plans 8316 Unrealized losses on financial assets at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for under equity method 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8380 Share of other comprehensive loss of subsidiaries, associates and joint ventures accounted for under equity method 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive income (loss) for the year, net of tax 8500 Total comprehensive income (loss) for the year Earnings (loss) per share (in dollars) 9750 Basic earnings (loss) per share 9850 Diluted earnings (loss) per share

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

~9~

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

2019 Balance at January 1 Loss for the year Other comprehensive (loss) income for the year Total comprehensive (loss) income Appropriation of 2018 earnings: Legal reserve Special reserve Cash dividends Recognition of change in equity of associates in proportion to the Company's ownership Recognition of changes in ownership interests in subsidiaries Purchase of treasury shares Cancellation of treasury shares Others Balance at December 31 2020 Balance at January 1 Profit for the year Other comprehensive income for the year Total comprehensive income Appropriation of 2019 earnings: Special reserve Cash dividends from capital surplus Recognition of change in equity of associates in proportion to the Company's ownership Conversion of convertible bonds Recognition of changes in ownership interests in subsidiaries Disposal of investments in equity instruments measured at fair value through other comprehensive income Treasury shares transferred to employees Others Balance at December 31	Notes		Share	capital	capital		Capital surplus				Retained Earnings				Other EquityInterest	Other EquityInterest	Other EquityInterest		Treasuryshares		Total
			Common stock		Certificate of entitlement to new shares from convertible bond				Legal reserve		Special reserve		Unappropriated retained earnings		Financial statements translation differences of foreign operations		Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income
	6(22) 6(21) 6(20) 6(20) 6(19) 6(19)(20) 6(20) 6(22) 6(21) 6(20) 6(20) 6(19)(20) 6(20) 6(19)(20) 6(20)		$ 99,520,720 - - - - - - - - - ( 2,410,000 ) - $ 97,110,720 $ 97,110,720 - - - - - - - - - - - $ 97,110,720		$ - - - - - - - - - - - - $ - $ - - - - - - - 2,293,612 - - - - $ 2,293,612		$ 99,648,115 - - - - - - ( 14,755 ) 24 - 728,956 39 $ 100,362,379 $ 100,362,379 - - - - ( 963,107 ) 21,005 243,805 38 - 42,182 1,694 $ 99,707,996		$ 7,648,437 - - - 222,276 - - - - - - - $ 7,870,713 $ 7,870,713 - - - - - - - - - - - $ 7,870,713		$ 1,090,721 - - - - 3,572,742 - - - - - - $ 4,663,463 $ 4,663,463 - - - 2,661,974 - - - - - - - $ 7,325,437		$ 51,746,175 ( 17,442,990 ) ( 46,597 ) ( 17,489,587 ) ( 222,276 ) ( 3,572,742 ) ( 597,124 ) - - - - - $ 29,864,446 $ 29,864,446 1,636,144 46,111 1,682,255 ( 2,661,974 ) - - - - 236,126 - - $ 29,120,853		( $ 6,461,149 ) - ( 3,036,537 ) ( 3,036,537 ) - - - - - - - - ( $ 9,497,686 ) ( $ 9,497,686 ) - 618,517 618,517 - - - - - - - - ( $ 8,879,169 )		$ 1,797,686 - 374,563 374,563 - - - - - - - - $ 2,172,249 $ 2,172,249 - 883,375 883,375 - - - - - ( 236,126 ) - - $ 2,819,498		$ - - - - - - - - - ( 2,299,624 ) 1,681,044 - ($ 618,580 ) ($ 618,580 ) - - - - - - - - - 618,580 - $ -		$ 254,990,705 ( 17,442,990 ) ( 2,708,571 ) ( 20,151,561 ) - - ( 597,124 ) ( 14,755 ) 24 ( 2,299,624 ) - 39 $ 231,927,704 $ 231,927,704 1,636,144 1,548,003 3,184,147 - ( 963,107 ) 21,005 2,537,417 38 - 660,762 1,694 $ 237,369,660

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

~10~

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) before tax Adjustments Adjustments to reconcile profit (loss) Depreciation and amortization Net loss (gain) on financial assets or liabilities at fair value through profit or loss Compensation cost of share-based payments Share of profit of subsidiaries and associates accounted for under equity method Gain on disposal of investments (Gain) loss on disposal of property, plant and equipment Gain on lease modification Interest income Dividend income Interest expense Foreign exchange (gain) loss Changes in operating assets and liabilities Changes in operating assets Financial assets /liabilities at fair value through profit or loss Accounts receivable Accounts receivable - related parties Other receivables Inventories Prepayments Other current assets Changes in operating liabilities Accounts payable Accounts payable - related parties Other payables Provisions - current Other current liabilities Other non-current liabilities Cash inflow generated from operations Cash paid for income tax Net cash flows from operating activities

Notes 2020 2019 $ 2,002,337 ($ 17,814,981 ) 6(28) 30,901,299 30,888,735 276,999 ( 1,343,327 ) 6(17) 378,311 - ( 2,441,668 ) ( 2,658,336 ) - ( 19,001 ) ( 176,611 ) 1,965 - ( 951 ) 6(24) ( 271,839 ) ( 683,012 ) 6(25) ( 103,079 ) ( 13,301 ) 6(27) 1,025,357 1,027,787 ( 389,832 ) 60,811 ( 1,038,189 ) 477,616 ( 11,028,316 ) 7,827,927 ( 955,382 ) 173,440 701,784 ( 87,150 ) 530,397 446,546 429,534 ( 2,821,526 ) ( 1,252 ) 1,714 ( 2,103,373 ) ( 1,716,365 ) ( 11,533,284 ) ( 1,314,316 ) 113,941 ( 3,801,853 ) ( 628,062 ) ( 10,557 ) 2,370,079 1,113,902 ( 81,561 ) ( 19,085 ) 7,977,590 9,716,682 ( 6,193 ) ( 1,762,721 ) 7,971,397 7,953,961

(Continued)

~11~

INNOLUX CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Increase in other receivables - related parties Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss (Increase) decrease in financial assets at amortized cost - current Increase in investment accounted for under equity method Proceeds from capital reduction of investments accounted for under equity method Proceeds from disposal of investments accounted for under equity method Increase in refundable deposits Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Interest received Dividends received Net cash flows (used in) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings Repayment of long-term borrowings Proceeds from issuance of bonds Increase in other payables - related parties Cash paid from capital surplus Cash dividends paid Interest paid Repayment of the principal portion of lease liabilities Treasury shares transferred to employees Payments to acquire treasury shares Others Net cash flows from (used in) financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Notes 2020 2019 ($ 21,299 ) ($ 266,637 ) ( 199,705 ) ( 145,249 ) 6(2) 1,277,031 35,585 ( 19,988,472 ) 31,933,350 - ( 592,405 ) - 27,397 7 197,629 - ( 496,326 ) ( 20,344 ) 6(33) ( 16,438,552 ) ( 19,876,808 ) 1,378,528 276,715 6(12) - ( 480 ) 291,321 744,541 331,101 583,310 ( 33,668,744 ) 12,698,975 20,000,000 500,000 ( 15,980,000 ) ( 16,210,000 ) 6(34) 8,900,934 - 6(13) and 7 6,026,890 - 6(21) ( 963,107 ) - 6(21) - ( 597,124 ) ( 674,003 ) ( 982,242 ) ( 284,521 ) ( 441,822 ) 279,162 - 6(19) - ( 2,299,624 ) 6(20) 1,694 39 17,307,049 ( 20,030,773 ) ( 8,390,298 ) 622,163 23,892,085 23,269,922 $ 15,501,787 $ 23,892,085

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

~12~

INNOLUX CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2020 AND 2019

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

1. HISTORY AND ORGANIZATION

• (1) Innolux Corporation (the “Company”) was organized on January 14, 2003 under the Act for Establishment and Administration of Science Parks in the Republic of China (R.O.C.). The Company was listed on the Taiwan Stock Exchange Corporation (the “TSEC”) in October 2006. The Company merged with TPO Displays Corporation and Chi Mei Optoelectronics Corporation on March 18, 2010, with the Company as the surviving entity.

• (2) The Company engages in the research, development, design, manufacture, and sales of TFT-LCD panels, modules and monitors of LCD, color filter, and low temperature poly-silicon TFT-LCD.

• THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

• These parent company only financial statements were authorized for issuance by the Board of Directors on February 4, 2021.

• APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate benchmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

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

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

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

the Company

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

~13~

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

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

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

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

==> picture [483 x 50] intentionally omitted <==

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

Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

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

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment. Amendments to IAS 1, ‘Classification of liabilities as current or non-current’

The amendments clarify that classification of liabilities depends on the rights that exist at the end of the reporting period. An entity shall classify a liability as current when it does not have a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. Also, the amendments define ‘settlement’ as the extinguishment of a liability with cash, other economic resources or an entity’s own equity instruments.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

~14~

(1) Compliance statement

These parent company only financial statements are prepared by the Company in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers.

(2) Basis of preparation

• A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

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

• (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

(3) Foreign currency translation

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The parent company only financial statements are presented in New Taiwan dollars, which is the Company’s functional and presentation currency.

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

• (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair

~15~

value are translated using the historical exchange rates at the dates of the initial transactions.

  - (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

• B. Translation of foreign operations

  • (a) The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

    • i. Assets and liabilities for each balance sheet presented are translated at the spot exchange rate at the date of that balance sheet;

    • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

    • iii. All resulting exchange differences are recognized in other comprehensive income.

  • (b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Company retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

  • (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Company retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

• (4) Classification of current and non-current items

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

  • (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

  • (b) Assets held mainly for trading purposes;

  • (c) Assets that are expected to be realized within twelve months from the balance sheet date;

  • (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

  • (a) Liabilities that are expected to be settled within the normal operating cycle;

  • (b) Liabilities arising mainly from trading activities;

  • (c) Liabilities that are to be settled within twelve months from the balance sheet date;

~16~

• (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

• (5) Cash equivalents

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

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

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.

• D. The Company recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

• (7) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value: The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

• (8) Financial assets at amortized cost

• A. Financial assets at amortized cost are those that meet all of the following criteria:

  • (a) The objective of the Company’s business model is achieved by collecting contractual cash flows.

  • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

~17~

• B. On a regular way purchase or sale basis, financial assets at amortized cost are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.

• D. The Company’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

• (9) Accounts receivable

• A. Accounts receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• C. The Company’s operating pattern of accounts receivable that are expected to be factored is for the purpose of receiving contract cash flow and selling, and the accounts receivable are subsequently measured at fair value, with any changes in fair value recognized in other comprehensive income.

• (10) Impairment of financial assets

• For accounts receivable that have a significant financing component, at each reporting date, the Company recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that do not contain a significant financing component, the Company recognizes the impairment provision for lifetime ECLs.

(11) Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is met:

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.

• C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.

(12) Operating leases (lessor)

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

~18~

(13) Inventories

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

• (14) Investments accounted for under the equity method / subsidiaries and associates

• A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

• B. Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• C. The Company's share of its subsidiaries' post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognize losses proportionate to its ownership.

• D. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.

• E. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• F. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.

• G. Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies

~19~

of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• H. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Company’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

• I. Pursuant to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation.

• (15) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

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

Buildings and structures 3~51years

• Machinery and equipment 5~9 years

~20~

Other equipment 2~6 years

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

• A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognized as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:

• (a) Fixed payments, less any lease incentives receivable; and

• (b) Variable lease payments that depend on an index or a rate.

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

• C. At the commencement date, the right-of-use asset is stated at cost comprising the following:

• (a) The amount of the initial measurement of lease liability; and

• (b) Any lease payments made at or before the commencement date.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized as an adjustment to the right-of-use asset.

(17) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 25 ~ 50 years.

(18) Intangible assets

• A. Goodwill arises in a business combination accounted for by applying the acquisition method.

• B. Patent, royalties and other intangible assets are amortized on a straight-line basis over their estimated useful lives of 2 ~ 10 years.

(19) Impairment of non-financial assets

• A. The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal

~21~

should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

• B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use are evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.

• C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

(20) Borrowings

• A. Borrowings comprise long-term and short-term bank borrowings and other short-term loans. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

• B. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.

• (21) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(22) Financial liabilities at fair value through profit or loss

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.

• B. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.

• (23) Convertible bonds payable (convertible bonds which are hybrid financial instruments) Convertible bonds issued by the Company contain conversion options (that is, the bondholders have

~22~

the right to convert the bonds into the Company’s common shares, but not exchanging a fixed amount of cash for a fixed number of common shares), call options and put options. The Company classifies the bonds payable upon issuance as a financial liability or an equity instrument in accordance with the contract terms. They are accounted for as follows:

• A. The embedded conversion options, call options and put options are recognized initially at net fair value as ‘financial assets or financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognized as ‘gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss’.

• B. The host contracts of bonds are initially recognized at the residual value of total issue price less the amount of ‘financial assets or financial liabilities at fair value through profit or loss’ as stated above. Any difference between the initial recognition and the redemption value is accounted for as the premium or discount on bonds payable and subsequently is amortized in profit or loss as an adjustment to the ‘finance costs’ over the period of circulation using the effective interest method.

• C. Any transaction costs directly attributable to the issuance are allocated to each liability component in proportion to the initial carrying amount of each abovementioned item.

• D. When bondholders exercise conversion options, the liability component of the bonds (including bonds payable and ‘financial assets or financial liabilities at fair value through profit or loss’) shall be remeasured on the conversion date. The issuance cost of converted common shares is the total book value of the abovementioned liability component.

(24) Derecognition of financial liabilities

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

• (25) Provisions

Provisions (including warranties, litigations, etc.) are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

(26) Employee benefits

• A. Short-term employee benefits

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

~23~

B. Pensions

• (a) Defined contribution plans

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

(b) Defined benefit plans

     - i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

     - ii. Remeasurements arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.

• C. Employees’ compensation and directors’ remuneration

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

• (27) Employee share based payment

• For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and nonvesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.

• (28) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

~24~

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

• D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed.

• E. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from research and development expenditures to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(29) Treasury shares

Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs, is included in equity attributable to the Company’s equity holders.

(30) Revenue recognition

• A. The Company is primarily engaged in manufacture and sale of TFT-LCD panel products. The Company recognizes revenue when the right of control is transferred to the customer when the products are delivered to customer and the Company has no unperformed obligation that could affect customer acceptance of the product. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

• B. Sales revenue is calculated based on the contract price, net of volume discounts and sales returns and discounts. Revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts/ sales discounts and allowances. Accumulated experience is used to estimate and provide for the volume discounts, sales discounts and allowances, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each

~25~

reporting date. A refund liability is recognized for expected volume discounts, sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made, which is consistent with market practice.

• C. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

(31) Business combinations

• A. The Company uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Company measures at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be measured at the acquisition-date fair value.

• B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree recognized and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognized directly in profit or loss on the acquisition date.

5. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgments in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. For the information of critical accounting judgments, estimates and key sources of assumption uncertainty is addressed below:

(1) Critical accounting estimates and assumptions

The Company makes estimates and assumptions based on the expectation of future events that are believed to be reasonable under the circumstances at the end of the reporting period. The resulting accounting estimates might be different from the related actual results. The estimates and assumptions

~26~

that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

• A. Impairment assessment of goodwill

The impairment assessment of goodwill relies on the Company’s subjective judgment, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. Please refer to Note 6(12) for the information of goodwill impairment.

• B. Impairment assessment of tangible and intangible assets (excluding goodwill) The Company assesses impairment based on its subjective judgment and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilized and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Company strategy might cause material impairment on assets in the future. Please refer to Notes 6(9) and 6(12) for the information of impairment assessment impairment.

• C. Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgments and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand, demand deposits and checking accounts Time deposits	December 31,2020 15,501,787 $ - 15,501,787 $	December 31, 2019
		16,396,085 $ 7,496,000
		23,892,085 $

• A. The Company associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The above time deposits expire in 3 months and risks of changes in their values are remote.

~27~

(2) Financial assets and liabilities at fair value through profit or loss

==> picture [484 x 279] intentionally omitted <==

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

Assets December 31, 2020 December 31, 2019
Current items
Financial assets mandatorily measured at fair value
through profit or loss
Forward foreign exchange contracts $ 706,299 $ 7,660
Non-current items
Financial assets mandatorily measured at fair value
through profit or loss
Listed stocks $ 823,286 $ 420,524
Unlisted stocks 1,527,547 2,230,884
$ 2,350,833 $ 2,651,408
Liabilities
Current items
Financial liabilities held for trading
Convertible bonds derivative instruments $ 3,208,560 $ -
Forward foreign exchange contracts 5,453 345,003
$ 3,214,013 $ 345,003
----- End of picture text -----

• A. The Company sold $2,536,122 of stocks at fair value during the year ended December 31, 2020 and the amount of receivables (shown as other receivables) outstanding as of December 31, 2020 was $1,259,091.

• B. The Company entered into a ‘Share Issuance and Asset Purchase Agreement’ with Nanjing Huadong Electronic Information & Technology Co., Ltd (Huadong Electronic) during the year ended December 31, 2020. Refer to Note 9(2) for relevant information.

• C. The non-hedging derivative financial assets and liabilities transaction information are as follows:

			December 31,	2020			December 31,	2019
	Contract		Amount		Contract		Amount
Derivative financial	(Notional Principal)				(Notional Principal)
assets and liabilities	(in	thousands)		Contract Period	(in	thousands)		Contract Period
Current items
Forward foreign	USD (sell)	$	170,000	2020/11-2021/02	USD (sell)	$	37,000	2019/12-2020/01
exchange contracts	JPY (buy)		17,711,370	2020/11-2021/02	JPY (buy)		4,040,505	2019/12-2020/01
Forward foreign	TWD (sell)		4,034,150	2020/11-2021/02	EUR (sell)		35,000	2019/12-2020/03
exchange contracts	JPY (buy)		15,000,000	2020/11-2021/02	HKD (buy)		304,588	2019/12-2020/03
Forward foreign	USD (sell)		1,154,000	2020/10-2021/04	HKD (sell)		646,350	2019/11-2020/03
exchange contracts	RMB (buy)		7,666,078	2020/10-2021/04	USD (buy)		82,500	2019/11-2020/03
Forward foreign	USD (sell)		140,000	2020/12-2021/01	USD (sell)		30,000	2019/12-2020/01
exchange contracts	TWD (buy)		3,924,200	2020/12-2021/01	TWD (buy)		896,400	2019/12-2020/01
Forward foreign					TWD (sell)		11,287,592	2019/09-2020/04
exchange contracts					JPY (buy)		39,900,000	2019/09-2020/04

~28~

The Company entered into forward foreign exchange contracts to hedge exchange rate risk of import and export proceeds in foreign currency. However, these contracts are not accounted for using hedge accounting.

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

December 31, 2020 December 31, 2019

Non-current items Equity instruments Unlisted stocks $ 957,222 $ 965,431

• A. The Company has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income.

• B. For information on other comprehensive income for fair value change recognized by the Company for the years ended December 31, 2020 and 2019, please refer to Note 6(22) “Other equity”.

(4) Financial assets at amortized cost

December 31, 2020 December 31, 2019 Current items Time deposits with maturity over three months $ 37,812,579 $ 17,793,800

The Company recognized $148,649 and $348,442 of interest income arising from the financial assets at amortized cost for the years ended December 31, 2020 and 2019, respectively.

(5) Accounts receivable

Accounts receivable
A. The aging analysis of accounts receivable is as follows: December 31,2020 Accounts receivable 42,586,299 $ Less: Allowance for uncollectible accounts 209,373) ( ( 42,376,926 $ December 31,2020 Not past due 42,107,184 $ Up to 60 days 293,547 61 to 180 days 127,536 Over 180 days 58,032 42,586,299 $	December 31,2019 31,557,983 $ 209,373) 31,348,610 $ December 31,2019
	31,116,246 $ 372,085 46,259 23,393 31,557,983 $

• A. The aging analysis of accounts receivable is as follows:

The above aging analysis was based on past due date.

• B. As of December 31, 2020 and 2019, accounts receivable were all from contracts with customers. As of January 1, 2019, the balance of receivables from contracts with customers amounted to $39,385,910.

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

(6) Transfer of financial assets

• A. Transferred financial assets that are derecognized in their entirety

The Company entered into a factoring agreement with financial institutions to sell its accounts

~29~

receivable. Under the agreement, the Company is not obligated to bear the default risk of the transferred accounts receivable, but is liable for the losses incurred on any business dispute. The Company does not have any continuing involvement in the transferred accounts receivable. Thus, the Company derecognized the transferred accounts receivable. As of December 31, 2020, the transferred accounts receivable had all been collected.

B. The Company has no transfer of financial assets on December 31, 2019.

(7) Inventories

nventories
Raw materials and supplies Work in progress Finished goods	December 31,2020 3,341,200 $ 12,238,343 10,249,159 25,828,702 $	December 31,2019
		2,921,564 $ 13,561,743 9,875,792
		26,359,099 $

For the years ended December 31, 2020 and 2019, the Company recognized cost of goods sold for inventories that have been sold at $250,353,029 and $254,720,156 and recognized net inventory loss at $99,212 and $77,325 due to write down (reversal) of cost of scrap inventories to net realizable value, respectively.

(8) Investments accounted for under the equity method

value, respectively. nvestments accounted for under the equity method
Subsidiaries: Landmark International Ltd. Innolux Holding Limited Innolux Hong Kong Holding Limited Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Japan Co., Ltd. InnoJoy Investment Corporation Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoCare Optoelectronics Corporation GIO Optoelectronics Corp. Innolux Singapore Holding Pte. Ltd. Others Associates: Ampower Holding Ltd. FI Medical Device Manufacturing Co., Ltd. Others	December 31,2020 46,506,951 $ 18,213,825 6,857,505 6,051,929 2,089,039 2,263,222 1,424,059 879,672 429,093 314,178 248,673 93,365 834,982 377,751 33,501 86,617,745 $	December 31,2019
		44,796,827 $ 17,999,010 6,029,594 5,866,239 2,058,019 1,298,925 1,499,000 875,925 249,967 312,376 460,523 288,962 865,362 427,338 40,870
		83,068,937 $

A. The Company’s subsidiaries

Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s consolidated financial statements as of and for the year ended December 31, 2020.

~30~

B. The Company’s associates

The operating results of the Company’s share in all individually immaterial associates are summarized below:

ummarized below:
Profit for the year from continuing operations Other comprehensive loss - net of tax ( Total comprehensive income	Years ended December 31,
	2020 176,561 $ 62,442) ( 114,119 $	2019
		307,307 $ 85,424) 221,883 $

(9) Property, plant and equipment

									2020
			At January1			Additions			Disposals			Transfer		At	December 31
Cost:
Land		$	3,852,792		$	-		$	-		$	-		$	3,852,792
Buildings			177,931,127			325,360	(		383,892)			869,866			178,742,461
Machinery and equipment			471,569,307			2,236,789	(		6,673,937)			8,711,016			475,843,175
Other equipment			39,735,000			15,039	(		1,190,779)			3,611,856			42,171,116
			693,088,226			2,577,188	(		8,248,608)			13,192,738			700,609,544
Accumulated depreciation
and impairment:
Buildings	(		116,872,483)	(		7,336,500)			379,139			-	(		123,829,844)
Machinery and equipment	(		389,884,488)	(		19,019,880)			5,577,453	(		65,027)	(		403,391,942)
Other equipment	(		34,313,323)	(		3,870,917)			1,090,099			65,027	(		37,029,114)
	(		541,070,294)	(		30,227,297)			7,046,691			-	(		564,250,900)
Unfinished construction and
equipment under acceptance			12,065,630			11,220,536			-	(		12,026,272)			11,259,894
		$	164,083,562											$	147,618,538
									2019
			At January1			Additions			Disposals			Transfer		At	December 31
Cost:
Land		$	3,852,792		$	-		$	-		$	-		$	3,852,792
Buildings			174,483,964			416,472	(		57,696)			3,088,387			177,931,127
Machinery and equipment			463,136,186			2,346,130	(		1,668,329)			7,755,320			471,569,307
Other equipment			36,714,927			1,974	(		2,477,295)			5,495,394			39,735,000
			678,187,869			2,764,576	(		4,203,320)			16,339,101			693,088,226
Accumulated depreciation
and impairment:
Buildings	(		109,727,532)	(		7,157,774)			49,674	(		36,851)	(		116,872,483)
Machinery and equipment	(		371,350,695)	(		19,154,978)			1,455,347	(		834,162)	(		389,884,488)
Other equipment	(		31,406,700)	(		3,836,924)			2,419,620	(		1,489,319)	(		34,313,323)
	(		512,484,927)	(		30,149,676)			3,924,641	(		2,360,332)	(		541,070,294)
Unfinished construction and
equipment under acceptance			10,513,199			15,552,556			-	(		14,000,125)			12,065,630
		$	176,216,141											$	164,083,562

~31~

• A. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

• B. As of December 31, 2020 and 2019, the prepayments for business facilities which have not yet entered the factory (shown as ‘other non-current assets’) amounted to $234,124 and $1,500,976, respectively.

• C. Information on impairment assessments is provided in Note 6(12).

• －

• (10) Leasing arrangements lessee

• A. The Company leases various assets including land. Rental contracts are typically made for periods of 9 to 28 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

• B. Short-term leases with a lease term of 12 months or less comprise office and equipment. Lowvalue assets comprise computer equipment.

• C. The carrying amount of right-of-use assets and the depreciation charge are as follows:

		December 31,2020		December	31,2019	31,2019
		Carryingamount		Carryingamount
Land	$	4,824,282	$	5,350,404
		Years ended	December 31,
		2020		2019
	Depreciation charge		Depreciation			charge
Land	$	464,820	$		481,210
The information on profit and loss accounts	relating to lease contracts is		as follows:
		Years ended	December 31,
		2020		2019
Items affecting profit or loss
Interest expense on lease liabilities	$	93,960	$		105,436
Expense on variable lease payments		44,841				46,472
Expense on leases of low-value assets		36,425				36,954
Expense on short-term lease contracts		20,668				20,780

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

• E. For the years ended December 31, 2020 and 2019, the Company’s total cash outflow for leases were $450,234 and $651,464, respectively.

~32~

(11) Investment property

Investment property
Cost: Land Buildings Accumulated depreciation and impairment: Buildings ( Cost: Land Buildings Accumulated depreciation and impairment: Buildings (		2020	At December 31 188,247 $ 439,228 627,475 128,031) 499,444 $ At December 31 188,247 $ 439,228 627,475 100,243) 527,232 $
	At January1 188,247 $ 439,228 627,475 100,243) ( 527,232 $	Additions - $ - - 27,788) ( 2019
	At January1 188,247 $ 439,228 627,475 75,505) ( 551,970 $	Additions - $ - - 24,738) (

The fair value of the investment property held by the Company as at December 31, 2020 and 2019 was $2,035,178 and $1,906,827, respectively. The amounts mentioned above represent valuation results of comparative method based on market trading information categorized within Level 3 in the fair value hierarchy.

(12) Intangible assets

• A. Intangible assets are goodwill, payments for TFT-LCD related technology and royalty. Details of intangible assets are as follows:

of intangible assets are as follows:	s follows:
At January1 Additions Cost: Patents and royalty 8,158,285 $ - $ Goodwill 17,096,628 - Others 4,520,618 - ( 29,775,531 - ( Accumulated amortization and impairment: Patents and royalty 8,151,569) ( 5,144) ( Others 4,177,104) ( 176,250) ( 12,328,673) ( 181,394) ( 17,446,858 $			2020
			Disposals - $ - 15,042) 15,042) - 15,042 15,042	Transfer At December 31 26,150 $ 8,184,435 $ - 17,096,628 74,236 4,579,812 100,386 29,860,875 - 8,156,713) ( - 4,338,312) ( - 12,495,025) ( 17,365,850 $	At December 31

~33~

At January1 Additions Cost: Patents and royalty 8,154,685 $ - $ Goodwill 17,096,628 - Others 4,471,948 480 ( 29,723,261 480 ( Accumulated amortization and impairment: Patents and royalty 8,147,365) ( 4,204) ( Others 3,976,232) ( 228,907) ( 12,123,597) ( 233,111) ( 17,599,664 $			2019
			Disposals - $ - 28,035) 28,035) - 28,035 28,035

B. Details of amortization on intangible assets are as follows:

Operating costs Operating expenses	2020 2019 59,515 $ 84,397 $ 121,879 148,714 181,394 $ 233,111 $ Years ended December 31,	2020 2019 59,515 $ 84,397 $ 121,879 148,714 181,394 $ 233,111 $ Years ended December 31,
		84,397 $ 148,714 233,111 $

• C. The Company is primarily engaged in the manufacture of TFT-LCD products, which is a single cash-generating unit. The Company performed impairment analysis for recoverable amount of the goodwill at each reporting date and used the value in use as the basis for calculation of the recoverable amount. The value in use was calculated based on the estimated present value of future cash flows for five years, which was discounted at the discount rate of 12.07% and 12.51%, respectively, for the years ended December 31, 2020 and 2019, to reflect the specific risks of the related cash generating units. The future cash flows were estimated based on the future revenue, gross profit, and other operating costs each year. Based on the evaluation above, the Company did not recognize impairment loss on goodwill for the years ended December 31, 2020 and 2019, respectively.

(13) Other payables

respectively. Other payables
Other personnel expenses Loans from related parties Payable on machinery and equipment Repairs and maintenance expense payable Utilities expense payable Processing fee payable Other payables	December 31,2020 6,726,431 $ 5,972,310 2,696,540 2,462,924 1,060,801 998,668 6,838,317 26,755,991 $	December 31,2019
		7,009,823 $ - 5,337,368 2,400,555 1,045,366 338,407 7,182,778
		23,314,297 $

~34~

(14) Bonds payable

Bonds payable
			December 31,2020
Bonds payable		$	6,231,424
Less: Discount on bonds payable	(		857,131)
		$	5,374,293
A. The issuance of unsecured overseas convertible bonds by the Company in 2019
The terms of the first unsecured overseas convertible bonds issued by the		Company in 2019 are
as follows

• (a) The Company issued USD 300 million, 0% first unsecured overseas convertible bonds, as approved by the regulatory authority on January 15. The bonds mature 5 years from the issue date (January 22, 2020 ~ January 22, 2025) and will be redeemed in cash at face value at the maturity date.

• (b) The bondholders have the right to ask for conversion of the bonds into common shares of the Company during the period from the date after three months of the bonds issue to 30 days before the maturity date, except for the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.

• (c) The conversion price of the bonds is adjusted based on the pricing model in the terms of the bonds. As of December 31, 2020, the conversion price was $10.59 (in dollars) (using the exchange rate 1 USD: 29.913 NTD).

• (d) The bondholders have the right to require the Company to redeem bonds at the price of the bonds’ face value in whole or partially on the date of three years after the bond issuance.

• (e) Under the terms of the bonds, all bonds repurchased (including from secondary market), early redeemed and matured by the Company, or converted and sold back by the bondholder will be cancelled and not to be reissued.

• (f) As of December 31, 2020, some convertible bonds were calculated at the conversion price at the time of conversion. Refer to Note 6(19) for relevant information.

• B. Regarding the issuance of convertible bonds, the non-equity conversion options, redeem options and put options were separated from their host contracts and were recognized in ‘financial assets or liabilities at fair value through profit or loss’ in net amount in accordance with IFRS 9 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts.

~35~

- (15) Long term borrowings

==> picture [480 x 161] intentionally omitted <==

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

Type of loans Period December 31, 2020 December 31, 2019
Syndicated bank loans 2016/12/6 $ 39,750,000 $ 35,730,000
~2024/4/15
Less:
Administrative expenses charged
by syndicated banks ( 151,503) ( 223,719)
Current portion (includes
administrative expenses) ( 19,217,495) ( 15,956,013)
$ 20,381,002 $ 19,550,268
Range of interest rates 1.79%~2.07% 1.74%~2.07%
----- End of picture text -----

• A. Please refer to Note 8 for the information on assets pledged as collateral for long-term borrowings.

• B. The syndicated loan agreements specified that the Company shall meet covenants on current ratio, liability ratio, interest coverage, and tangible net equity, based on the Company’s annual consolidated financial statements audited by independent auditors. The Company’s financial ratios on the consolidated financial statements for the years ended December 31, 2020 and 2019 are in compliance with the covenants on the syndicated loan agreement.

• C. For repayment of borrowings from financial institutions and financing mid-term working capital fund, the Board of Directors approved the signing of a syndicated loan with financial institution in the amount of $37.5 billion on May 5, 2020. As of December 31, 2020, the loan has yet to be drawn down.

(16) Pensions

• A. Defined benefit pension plan

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

~36~

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

				December 31,2020 December 31,2019	December 31,2020 December 31,2019	December 31,2020 December 31,2019	December 31,2020 December 31,2019	December 31,2020 December 31,2019	December 31,2020 December 31,2019
Present value of defined benefit obligation				2,127,700 $ $					2,128,296
Fair value of plan assets			(	1,970,661) (					1,835,192)
Net defined benefit liability				$	157,039 $				293,104
(c) Movements in net defined benefit	liabilities are as follows:
	Present value of
		defined benefit					Fair value of		Net defined
			obligation				plan assets	benefit liability
Year ended December 31, 2020
Balance at January 1		$	2,128,296			$	1,835,192	$	293,104
Current service cost				5,756			-		5,756
Interest expense/income				18,071			15,959		2,112
				23,827			15,959		7,868
Remeasurements:
Return on plan assets
(excluding amounts included in
interest income or expense)				-			47,211	(	47,211)
Change in financial assumptions			148,100				-		148,100
Experience adjustments	(		158,528)				-	(	158,528)
Benefits paid	(			13,995)	(		13,995)		-
	(			24,423)			33,216	(	57,639)
Contribution for the year				-			86,294	(	86,294)
Balance at December 31		$	2,127,700			$	1,970,661	$	157,039

~37~

	Present value of	Present value of
	defined benefit				Fair value of			Net defined
		obligation			plan assets		benefit liability
Year ended December 31, 2019
Balance at January 1	$	2,000,113		$	1,686,545		$	313,568
Current service cost		6,039			-			6,039
Interest expense/income		24,926			21,572			3,354
		30,965			21,572			9,393
Remeasurements:
Return on plan assets
(excluding amounts included in
interest income or expense)		-			53,738	(		53,738)
Change in demographic assumptions	(	3,324)			-	(		3,324)
Change in financial assumptions		121,231			-			121,231
Experience adjustments	(	5,923)			-	(		5,923)
Benefits paid	(	14,766)	(		14,766)			-
		97,218			38,972			58,246
Contribution for the year		-			88,103	(		88,103)
Balance at December 31	$	2,128,296		$	1,835,192		$	293,104

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

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

Discount rate Future salary increases	Years ended December 31,	Years ended December 31,
	2020 0.40% 1.50%	2019
		0.85% 1.50%

~38~

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table.

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

==> picture [448 x 199] intentionally omitted <==

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

Discount rate Future salary increases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2020
Effect on present
value of defined
benefit obligation ($ 83,849) $ 87,979 $ 81,342 ($ 78,113)
Discount rate Future salary increases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2019
Effect on present
value of defined
benefit obligation ($ 76,642) $ 80,299 $ 79,573 ($ 76,346)
----- End of picture text -----

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

  - (f) As of December 31, 2020, the weighted average duration of the retirement plan is 16 years.

• B. Defined contribution pension plan

  • (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  • (b) The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2020 and 2019 were $930,738 and $967,971, respectively.

• (17) Share-based payment

• A. For the year ended December 31, 2020, the share-based payment arrangements of the Company were as follows. Refer to Note 6(17) of the consolidated financial statements for the year ended December 31, 2020 for the information regarding the share-based payment arrangements of the Company’s subsidiaries.

~39~

Type of loans Quantity granted arrangement Grant date (inthousand units) Treasury stock transferred to employees 2020/8/17 80,000	Contract period Vesting (inyears) conditions - Vested immediately

• B. The information on fair value of treasury stock transferred to the employees is as follows:

Type of loans arrangement Grant date Treasury stock transferred to employees 2020/8/17	Fair value Price Exercise Price per unit (in dollars) (in dollars) (in dollars) 8.27 3.5 4.77

• C. For the years ended December 31, 2020 and 2019, the Company recognized expenses of $378,311 and $0, respectively, on share-based payment transaction.

(18) Provisions-current

Provisions-current
At January 1, 2020 Additions during the year Used (unused amounts reversed) during the year ( At December 31, 2020	Warranty 3,962,332 $ 1,269,820 2,184,242) 3,047,910 $	Litigation and others 2,810,025 $ 286,360 - ( 3,096,385 $	Total
			6,772,357 $ 1,556,180 2,184,242) 6,144,295 $

A. Warranty

The Company provides warranty on TFT-LCD panel products sold. Provision for warranty is estimated based on historical warranty data of TFT-LCD panel products.

• B. Litigation and others

Litigation and other provisions for the Company are related to patents of TFT-LCD panel products and anti-trust litigations. For information on estimation of provisions, please refer to Note 9(1).

(19) Share capital

• A. As of December 31, 2020, the Company’s authorized and outstanding capital were $105,000,000 and $97,110,720, with a par value of $10 (in dollars) per share, respectively. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding (including certificate of entitlement to new shares from convertible bonds) are as follows:

~40~

At January 1 Stocks converted from bonds Treasury stock transferred to employees Stocks retired At December 31	2020 2019 Number of ordinary Number of ordinary shares (inthousand units) shares (inthousand units) 9,631,072 9,952,072 229,361 - 80,000 - - 321,000) ( 9,940,433 9,631,072

• B. The Company’s bonds totalling USD 81,200 thousand (face value) had been converted into $2,293,612 of ordinary shares (229,361 thousand shares) with a par value of $10 (in dollars) per share during the year ended December 31, 2020, which resulted in ‘capital surplus, additional paid-in capital arising from bond conversion’ of $243,805. As of December 31, 2020, the registration has not yet been completed and therefore the shares were shown as ‘certificate of entitlement to new shares from convertible bonds’.

• C. Treasury shares

• (a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

shares are as follows:
Number of ordinary shares (in thousands) Book value At January 1 80,000 618,580 $ Treasury stock transferred to employees 80,000) ( 618,580) ($ Retirement for the year - - Cancellation for the year - - ( At December 31 - - $ 2020	Number of ordinary shares (in thousands) Book value - - $ 321,000 2,299,624 241,000) 1,681,044) ( 80,000 618,580 $ 2019
	Number of ordinary shares (in thousands) - 321,000 241,000) ( 80,000

In 2019, the Company repurchased shares in order to transfer to employees and maintain the Company’s credit rating and shareholders’ equity. In November 2019, the Company cancelled the treasury shares which used to maintain the Company’s credit rating and shareholders’ equity in accordance with Securities and Exchange Act.

• (b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus.

• (c) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and the shareholder's rights should not be enjoyed before it is reissued.

~41~

  - (d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within five years from the reacquisition date and shares not reissued within the five-year period are to be cancelled.

  - (e) For the year ended December 31, 2020, treasury stocks transferred to employees of the Company and subsidiaries were 80,000 thousand shares, and cost of employees’ compensation and transferred amount were $381,600 and $279,162, respectively. The aforementioned amount is higher than the carrying amount of treasury stock. Thus, the differences were recognized as share capital generated from treasury stock transactions.

• (20) Capital surplus

• Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paidin capital each year. Accumulated deficit shall first be covered by retained earnings before the capital reserve can be used to cover the accumulated deficit.

2020

			2020
Sharepremium At January 1 97,202,453 $ Cash dividends from capital surplus 963,107) ( Conversion of convertible bonds 243,805 Recognition of changes in ownership interests in subsidiaries - Recognition of change in equity of associates in proportion to the Company's ownership - Treasury stock transferred to employees - Others 1,694 At December 31 96,484,845 $ Share premium At January 1 99,614,690 $ Cancellation of treasury shares 2,412,276) ( Recognition of changes in ownership interests in subsidiaries - Recognition of change in equity of associates in proportion to the Company's ownership - Others 39 At December 31 97,202,453 $	Sharepremium 97,202,453 $ 963,107) ( 243,805 - - - 1,694 96,484,845 $	Treasury share transactions 3,141,232 $ - - - - 42,182 3,183,414 $	Changes in ownership interests in subsidiaries
			24 $ - - 38 - - - 62 $ 2019

~42~

(21) Retained earnings

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be offset against prior years’ operating losses, then set aside 10% of the remaining amount as legal reserve (until the legal reserve equals the paid-in capital). Preferred dividend shall be distributed after setting aside or reversing a special reserve according to related regulations. The appropriation of the remaining amount along with the unappropriated earnings from previous years shall be proposed by the Board of Directors and resolved by the shareholders. The Company is in an emerging industry which is growing rapidly, and has a capital intensive business. The Company is at the stage of stable growth. In line with the Company’s long-term financial plan in the future, investment environment and business competition situation, the appropriation of dividends shall be proposed by the Board of Directors and resolved by the shareholders, taking into account the future capital expenditure budget and capital requirement of the Company. However, the stock dividends distributed to shareholders shall not exceed twothirds of distributable dividends in current period.

• B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.

• C. The details of the 2019 deficit compensation which was approved at the stockholders’ meeting in June 2020 and the appropriation of 2018 net income which was approved at the stockholders’ meeting in June 2019 are as follows:

==> picture [458 x 15] intentionally omitted <==

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

Years ended December 31,
----- End of picture text -----

Legal reserve Provision of special reserve Cash dividends	2019	Dividends per share (in dollars) - $	2018
	Amount - $ 2,661,974 - 2,661,974 $		Amount 222,276 $ 3,572,742 597,124 4,392,142 $	Dividends per share (in dollars)
				0.06 $

Further, the stockholders’ meeting in June 2020 approved a resolution to distribute cash dividends amounting to $963,107 at $0.1 (in dollars) per share from capital surplus

~43~

(22) Other equity items

Other equity items
				2020
			Financial assets at
			fair value through
		Currency	other comprehensive
		translation		income		Total
At January 1	($	9,497,686)	$	2,172,249	($	7,325,437)
Revaluation - gross		-	(	8,209)	(	8,209)
Disposal of investments in equity
instruments measured at fair value
through other comprehensive income		-	(	236,126)	(	236,126)
Currency translation differences		680,959		-		680,959
Share of other comprehensive loss
of subsidiaries and associates	(	62,442)		889,942		827,500
Effect of income tax		-		1,642		1,642
At December 31	($	8,879,169)	$	2,819,498	($	6,059,671)
				2019
				Financial assets at
				fair value through
		Currency	other comprehensive
		translation		income		Total
At January 1	($	6,461,149)	$	1,797,686	($	4,663,463)
Revaluation - gross		-	(	145,957)	(	145,957)
Currency translation differences	(	2,951,172)		-	(	2,951,172)
Share of other comprehensive loss
of subsidiaries and associates	(	85,365)		445,388		360,023
Effect of income tax		-		75,132		75,132
At December 31	($	9,497,686)	$	2,172,249	($	7,325,437)

(23) Operating income

Operating income
TFT-LCD products	Years ended December 31,
	2020 265,436,103 $	2019
		249,384,126 $

The Company derives revenue from the transfer of goods at a point in time.

(24) Interest income

The Company derives revenue from the transfer of Interest income	goods at a point in time.	goods at a point in time.
Interest income from bank deposits Interest income from financial assets at amortized cost	Years ended December 31,
	2020 123,190 $ 148,649 271,839 $	2019
		334,570 $ 348,442 683,012 $

~44~

(25) Other income

Service income Compensation income Rental revenue Dividends revenue Other income

Years endedDecember31,	Years endedDecember31,
2020 582,125 $ 283,755 173,644 103,079 732,069 1,874,672 $	2019
	531,516 $ 89,135 172,075 13,301 612,301 1,418,328 $

(26) Other gains and losses

Other gains and losses
		Years ended	December 31,
		2020	2019
Net gain on financial assets and liabilities at	$	2,120,827	654,547 $
fair value through profit or loss
Net currency exchange (loss) gain	(	980,511)	327,080
Others (losses) gains	(	1,072,230)	363,010
	$	68,086	1,344,637 $

(27) Finance costs

Finance costs
		Years ended	December	31,
		2020		2019
Interest expense:
Bank borrowings	$	666,675	$	921,958
Convertible bonds		252,686		-
Others		105,996		105,829
	$	1,025,357	$	1,027,787

(28) Expenses by nature

Expenses by nature
Employee benefit expense: Salaries and other short-term employee benefits Post-employment benefits Employee stock options Depreciation Amortization	Years ended December 31,
	2020 24,113,283 $ 938,606 378,311 30,719,905 181,394 56,331,499 $	2019
		25,218,680 $ 977,364 - 30,655,624 233,111 57,084,779 $

(29) Employees’ compensation and directors’ remuneration

A. According to the Articles of Incorporation, of the Company, a ratio of profit of the current year distributable, after covering accumulated losses, shall be distributed as employees' compensation

~45~

and directors’ remuneration. The ratio shall not be lower than 5% for employees’ compensation and shall not be higher than 0.1% for directors’ remuneration.

• B. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at $139,349 and $0, respectively; while directors’ remuneration was accrued at $2,144 and $0, respectively. The aforementioned amounts were recognized in expenses.

The expenses recognized for 2020 were accrued based on the earnings of current year. The employees’ compensation and directors’ remuneration were $139,349 and $2,144 in the form of cash, respectively, as resolved by the Board of Directors on February 4, 2021. The accrued amounts were in agreement with the amount of recorded expense for the year ended December 31, 2020.

For the year ended December 31, 2019, the Company incurred net loss and had an accumulated deficit. Thus, there was no distribution of employees' compensation and directors’ remuneration as resolved by the Board of Directors on February 13, 2020.

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

• A. Income tax expense

• (a) Components of income tax expense:

website of the Taiwan Stock Exchange. e tax ome tax expense Components of income tax expense:
Current tax: Current tax on profit for the year Prior year income tax overestimation Total current tax Deferred tax: Origination and reversal of temporary differences Loss carryforward Income tax expense (benefit)	2020 2019 6,193 $ 15,706 $ - 887,644) ( 6,193 871,938) ( 482,817 533,493 122,817) ( 33,546) ( 366,193 $ 371,991) ($ Years ended December 31,
	2020 6,193 $ - ( 6,193 ( 482,817 122,817) ( ( 366,193 $ (

• (b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

follows:
		Years ended	December	31,
		2020		2019
Changes in fair value of financial assets	($	1,642)	($		75,132)
at fair value through other comprehensive
income
Remeasurement of defined benefit
obligation		11,528	(		11,649)
	$	9,886	($		86,781)

~46~

B. Reconciliation between income tax expense and accounting profit:

							Years	ended	December	December	December	31,
							2020					2019
	Tax calculated based on profit before		tax and		$		400,467		($			3,562,996)
	statutory tax rate
	Effects from items disallowed by	tax regulation					165,153		(			410,070)
	Prior year income tax overestimation							-	(			887,644)
	Separate taxation						6,193						15,706
	Change in assessment of realization of deferred
	tax assets			(			205,620)					4,473,013
	Tax expense (benefit)				$		366,193		($			371,991)
	Amounts of deferred tax assets or		liabilities	as			a result of temporary differences						and loss
	carryforward are as follows:
							2020
								Recognized
								in	other
							Recognized in	comprehensive
			January1				profit or loss	income				December31
	Deferred tax assets:
	-Temporary differences:
	Sales returns and discount provisions	$	668,568		($		33,633)	$		-		$	634,935
	Accrued royalties and warranty
	provisions		1,556,050		(		246,247)			-			1,309,803
	Unrealized loss on financial
	instruments		659,943		(		67,469)			1,642			594,116
	Others		647,364				1,289	(		11,528)			637,125
	Loss carryforward		3,807,176				122,817			-			3,929,993
		$	7,339,101		($		223,243)	($		9,886)		$	7,105,972
	-Deferred tax liabilities:
	Unrealized exchange gain	($	225,400)			$	77,526	$		-	($		147,874)
	Amortization charges on goodwill	(	948,863)		(		96,906)			-	(		1,045,769)
	Others	(	291,263)		(		117,377)			-	(		408,640)
		($	1,465,526)		($		136,757)	$		-	($		1,602,283)
		$	5,873,575		($		360,000)	($		9,886)		$	5,503,689

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

~47~

2019

Recognized in January1 profit or loss Deferred tax assets: Temporary differences: Sales returns and discount provisions 475,725 $ 192,843 $ Accrued royalties and warranty provisions 1,539,307 16,743 Unrealized exchange loss 162,222 162,222) ( Unrealized loss on financial instruments 511,246 73,565 Others 704,624 68,909) ( Loss carryforward 3,773,630 33,546 7,166,754 $ 85,566 $ Deferred tax liabilities: Unrealized exchange gain - $ 225,400) ($ Amortization charges on goodwill 851,958) ( 96,905) ( Others 28,055) ( 263,208) ( 880,013) ($ 585,513) ($ 6,286,741 $ 499,947) ($

Recognized in other comprehensive income December31 - $ 668,568 $ - 1,556,050 - - 75,132 659,943 11,649 647,364 - 3,807,176 86,781 $ 7,339,101 $ - $ 225,400) ($ - 948,863) ( - 291,263) ( - $ 1,465,526) ($ 86,781 $ 5,873,575 $

D. Expiration dates of unused loss carryforward and amounts of unrecognized deferred tax assets are as follows:

are as follows:
	December 31,2020
Amount filed Year incurred / assessed 2011 Assessed 2012 Assessed 2016 Assessed 2019 Filed	Unused amount 23,790,717 $ 42,430,348 1,051,680 21,206,403 88,479,148 $	Unrecognized deferred tax assets 18,507,136 $ 33,007,169 818,117 16,496,761 68,829,183 $	Usable untilyear
			2021 2022 2026 2029

December 31, 2019

		December 31,2019
Year incurred 2011 2012 2016 2019	Amount filed / assessed Assessed Assessed Assessed Estimated	Unused amount 24,283,146 $ 42,430,348 1,051,680 22,482,711 90,247,885 $	Unrecognized deferred tax assets 19,161,131 $ 33,480,565 829,850 17,740,459 71,212,005 $	Usable untilyear
				2021 2022 2026 2029

~48~

• E. The amounts of deductible temporary differences that were not recognized as deferred tax assets are as follows:

are as follows:
	December 31,2020	December 31,2019
Deductible temporary differences	1,446,656 $	2,357,855 $

• F. The Company has not recognized taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2020 and 2019, the amounts of temporary differences unrecognized as deferred tax liabilities were $33,493,308 and $30,463,120, respectively.

• G. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

(31) Earnings (loss) per share

==> picture [480 x 252] intentionally omitted <==

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

Years ended December 31,
2020 2019
Basic earnings (loss) per share
Net income (loss) for the year $ 1,636,144 ($ 17,442,990)
Weighted average number of ordinary shares
outstanding (shares in thousands) 9,664,728 9,857,385
Basic earnings (loss) per share (in dollar) $ 0.17 ($ 1.77)
Diluted earnings (loss) per share
Profit (loss) of ordinary shareholders $ 1,636,144 $ 17,442,990
Weighted average number of ordinary shares
outstanding (shares in thousands) 9,664,728 9,857,385
Assumed conversion of all dilutive potential
ordinary shares:
-
-Employees’ compensation 9,883
9,674,611 9,857,385
Diluted earnings (loss) per share (in dollar) $ 0.17 ($ 1.77)
----- End of picture text -----

For the year ended December 31, 2020, the Company’s convertible bonds were not included in the calculation of diluted earnings (loss) per share due to its anti-dilutive effect.

(32) Business combinations

On September 18, 2019, the Company acquired 39% of the share capital of GIO Optoelectronics Corp. for $192,405, which the ownership change from 24% to 63%, and obtained control over GIO Optoelectronics Corp.. The main business of GIO Optoelectronics Corp. is LCD glass substrate processing, LED lighting and its control power supply. As a result of the acquisition, the Company is expected to increase economic scale and strategic synergy. Please refer to Note 6(32) of consolidated financial statements for year ended December 31, 2020 for related information.

~49~

(33) Supplemental cash flow information

Investing activities with partial cash payments:

Supplemental cash flow information Investing activities with partial cash payments:
Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment ( Cash paid during the year	2020 2019 13,797,724 $ 18,317,132 $ 5,337,368 6,897,044 2,696,540) 5,337,368) ( 16,438,552 $ 19,876,808 $ Years ended December 31,
	2020 13,797,724 $ 5,337,368 2,696,540) ( 16,438,552 $

(34) Changes in liabilities from financing activities

For the year ended December 31, 2020, liabilities from financing activities include other payables - related parties, bonds payable, long-term borrowings and lease liabilities. Changes in those items result from cash flow from financing activities, discount, conversion and amortization of bonds payable as well as changes in exchange rate. The summarized significant changes are as follows and other information is provided in the parent company only statements of cash flows.

		2020
		Bonds payable
At January 1	$	-
Changes in cash flow from financing activities		8,900,934
Impact of changes in foreign exchange rate	(	346,191)
Conversion of convertible bonds	(	2,010,773)
Convertible bonds derivative instruments on the issue date	(	1,422,363)
Amortization of discounts on convertible bonds		252,686
At December 31	$	5,374,293

For the year ended December 31, 2019, changes in liabilities from financing activities pertain to changes in cash flow from financing activities. Please refer to the parent company only statements of cash flows.

~50~

7. RELATED PARTY TRANSACTIONS

(1) Names and relationship of related parties

LATED PARTY TRANSACTIONS Names and relationship of related parties
Names of relatedparties	Relationship with theCompany
Hon Hai Precision Industry Co., Ltd. and its subsidiaries Cheng Mei Materials Technology Corporation and its subsidiaries (Note 1) FI Medical Device Manufacturing Co., Ltd. GIO Optoelectronics Corp. (Note 2) Leadtek Global Group Limited Lakers Trading Limited Innolux Hong Kong Limited InnoCare Optoelectronics Corporation Innolux USA Inc. Innolux Optoelectronics India Private Limited Foshan Innolux Optoelectronics Ltd. CarUX Technology Inc. Ningbo Innolux Optoelectronics Ltd. Warriors Technology Investments Ltd Innolux Japan Co., Ltd.	Other related party Other related party Associate The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary

(Note 1) In May 2020, the Company no longer serves as a director, so it is listed as a non-related party.

(Note 2) In the third quarter of 2019, the ownership change from 24% to 63%, which change associate into company’s subsidiary.

For the more information about the Company and other subsidiaries, please refer to Note 4(3) of the consolidated financial report for the year ended December 31, 2020.

(2) Significant related party transactions

A. Operating revenue

nificant related party transactions Operating revenue
Sales of goods: Subsidiaries Other related parties Associates	Years ended December 31,
	2020 29,594,397 $ 8,099,268 432 37,694,097 $	2019
		28,465,661 $ 9,318,267 15,206
		37,799,134 $

The collection period was mainly 30~90 days upon shipment or on a monthly-closing basis to related parties. The sales prices and the trading terms to related parties above were not significantly different from those of sales to third parties.

~51~

B. Purchases of goods

Purchases of goods
		Years ended	December	31,
		2020		2019
Purchases of goods:
Other related parties	$	1,369,547	$	2,719,580
Associates		197,889		1,521,975
Subsidiaries		121,196		102,061
	$	1,688,632	$	4,343,616

The payment term was 30~120 days to related parties after transaction date, and 30~180 days to non-related parties after delivery or on a monthly-closing basis. The purchase prices and the payment terms from related parties above were not materially different from those of purchases from third parties.

C. Consigned processing

• (a) Consigned processing

third parties. signed processing onsigned processing
Processing expense: Subsidiaries - Lakers Trading Ltimited - Others Other related parties Associates	Years ended December 31,
	2020 26,356,710 $ 66,830,110 716 - 93,187,536 $	2019
		49,727,197 $ 39,397,047 - 1 89,124,245 $

(b) Balance of consigned processing at the end of year (shown as “other payables”)

Payables to related parties: Subsidiaries Other related parties	December 31,2020 971,788 $ 543 972,331 $	December 31,2019
		321,461 $ - 321,461 $

The Company subcontracted the processing of products of associates in Mainland China. The processing fees were mainly charged based on cost plus method.

D. Service revenue (Shown as “other revenue”)

Service revenue (Shown as“other revenue”)
Service revenue: Subsidiaries - Foshan Innolux Optoelectronics Ltd. Associates	Years ended December 31,
	2020 61,933 $ 40,082 102,015 $	2019
		104,577 $ 61,082 165,659 $

~52~

E. Service expense (Shown as “manufacturing costs and operating expenses”)

F.

Receivables from related parties (a) The receivables from related parties arise mainly from sales transactions. The receivables are due 30~90 days after the date of sale. The receivables are unsecured in nature and bear no interest. 2020 2019 Service expense: Subsidiaries 1,180,430 $ 1,359,810 $ Years ended December 31, December 31,2020 December 31,2019 Accounts receivable: Subsidiaries - Innolux USA Inc. 4,358,767 $ 4,928,163 $ - Others 2,693,867 1,208,439 Other related parties 2,177,282 2,450,269 9,229,916 8,586,871 Less: Transfer to other receivables - 312,337) ( 9,229,916 $ 8,274,534 $

• (b) The abovementioned receivables from related parties that exceed normal granting periods were transferred under ‘Other receivables – related parties’.

• G. Other receivables from related parties

Other receivables from related parties
Other receivables: Accounts receivables transferred to other receivables Subsidiaries - Innolux Optoelectronics India Private Limited Other receivables Subsidiaries - CarUX Technology Inc. - InnoCare Optoelectronics Corporation - Others Associates Other related parties	December 31,2020 - $ 488,643 52,679 136,588 2,644 900 681,454 $	December 31,2019
		312,337 $ - 199,470 127,614 2,627 18,107 660,155 $

~53~

H. Payables to related parties

Accounts payable: Subsidiaries - Foshan Innolux Optoelectronics Ltd. - Ningbo Innolux Optoelectronics Ltd. - Innolux Hong Kong Limited - Lakers Trading Limited - Leadtek Global Group Limited - Others Other related parties Associates	December31,2020 20,055,436 $ 14,160,794 9,038,281 - - 5,867,952 495,445 - 49,617,908 $	December31,2019 - $ - 9,253,496 28,993,554 21,378,911 40,011 1,371,232 113,988 61,151,192 $

The payables to related parties arise mainly from purchase and consigned processing transactions and are due 30~120 days after the date of purchase. The payables bear no interest.

I. Advance receipts

Advance receipts: Subsidiaries Other related parties	December 31, 2020 1,668,557 $ 5,949 1,674,506 $	December 31,2019 9,254 $ 1,196 10,450 $

J. Property transactions

Purchase of property

(a) Acquisition of property, plant and equipment:

		Years ended	December 31,	December 31,
		2020		2019
Other related parties	$	59,339	$		37,804
Subsidiaries		55,521			84,012
Associates		-			3,031
	$	114,860	$		124,847
Period-end balances arising from purchases of property (shown as “other payables”):
		December 31,2020		December	31,2019
Subsidiaries	$	78	$		15,416
Other related parties		50,366		1,122,193
	$	50,444	$	1,137,609

(b) Period-end balances arising from purchases of property (shown as “other payables”):

~54~

Sale of property

(a) Proceeds from sale of property and gain on disposal:

Subsidiaries Other related parties Associates	Disposal Gain (loss) Disposal Gain (loss) proceeds on disposal proceeds on disposal 1,147,181 $ 1,750 $ 258,682 $ 107 $ - - 16,479 1,739) ( - - 594 594 1,147,181 $ 1,750 $ 275,755 $ 1,038) ($ Year ended December 31, 2020 Year ended December 31,2019
	Disposal proceeds 1,147,181 $ - - 1,147,181 $

• (b) Period-end balances arising from sale of property (shown as ‘other receivables-related parties’):

Subsidiaries - CarUX Technology Inc. - InnoCare Optoelectronics Corporation - Others Other related parties	December 31,2020 455,717 $ - 1,819 - 457,536 $	December 31, 2019
		- $ 186,639 39,448 16,161 242,248 $

Disposal of other assets

In the first quarter of 2020, the Company disposed its subsidiary, CarUX Technology Inc., for proceeds of $197,629 to adjust the investment structure. The transaction pertained to reorganization so that no gain or loss is recognized. The difference between consideration and carrying amount is recognized as capital surplus. Refer to Note 4(3) of the consolidated financial statements for relevant information.

• K. Loans to/from related parties

Loans from related parties

(a) Outstanding balance (shown as ‘other payables’):

rying amount is recognized as capital surplus. Refer to Note 4(3) of the tements for relevant information. ns to/from related parties ns from related parties Outstanding balance (shown as ‘other payables’):	consolidated financial
Subsidiaries - Warriors Technology Investments Ltd - Innolux Japan Co., Ltd.	December31,2020
	3,360,640 $ 2,611,670 5,972,310 $

The loans from subsidiaries are repayable with one year. Refer to table 1 for information on loans to/from related parties.

(b) Interest expense

loans to/from related parties. Interest expense
Subsidiaries	Year ended December 31,2020
	3,223 $

~55~

The Company had no aforementioned loans from related parties during the year ended December 31, 2019.

(3) Key management compensation

December 31, 2019. Key management compensation
Salaries and other short-term employee benefits Shared-based payments Post-employment benefits	Years ended December 31,
	2020 53,576 $ 22,096 747 76,419 $	2019
		62,575 $ - 636
		63,211 $

8. PLEDGED ASSETS

The Company’s assets pledged as collateral are as follows:

==> picture [497 x 114] intentionally omitted <==

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

Book value
Pledged asset December 31, 2020 December 31, 2019 Purpose
Property, plant and equipment $ 92,981,667 $ 95,714,220 Long-term loans
Intangible assets - 27 Long-term loans
Other non-current assets
- Refundable deposits 784,601 359,383 Litigation guarantee
$ 93,766,268 $ 96,073,630
----- End of picture text -----

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

－ (1) Contingencies Significant Litigations

• A. In March 2019, the Company received a sanction to the Company and the related employees and managers from Brazil Administrative Council for Economic Defense - CADE for the 2006 TFTLCD pricing collaborations involving Chi Mei Optoelectronics Corporation. The fine was paid off on May 8, 2019 and it was confirmed by the representative lawyer of CADE that the Company obeyed the sanction.

• B. The Company’s subsidiary in U.S. received a civil complaint from the government of Puerto Rico in September 2018, claiming that the company, together with other defendants of Taiwan, Japan and South Korea TFT -LCD companies, had unjustified enrichment from the TFT-LCD pricing collaborations in 2006 and requested monetary compensation. The U.S. subsidiary of the company has appointed a lawyer to handle the lawsuit.

• C. Eidos Displays, LLC and Eidos III, LLC (“Eidos”) filed a lawsuit against the Company and American subsidiary with the United States District Court for the Eastern District of Texas on April 25, 2011, alleging infringement of its patent. In December 2013, the magistrate judge granted summary judgment that the Eidos patent is invalid. In January 2014, the presiding judge confirmed the summary judgment.

• In February 2014, Eidos appealed to the United States Court of Appeals for the Federal Circuit (CAFC). In March 2015, the CAFC reversed the district court’s judgment and remanded the case

~56~

back to the district court for further proceedings. In June 2017, the jury determined that some products of the Company and American subsidiary directly infringed the patent and awarded damages for Eidos. On March 5, 2018, the district court entered judgment. In January 2020, the Company reached an agreement on the main settlement terms with Eidos during the third mediation. In April 2020, the court granted the judgment that the case shall be closed by mutually performing the settlement terms and the lawsuits have no effect on the Company’s financial position and operations.

• D. On July 10, 2018, Vista Peak Ventures, LLC (VPV) filed four complaints against the Company in the United States District Court for the Eastern District of Texas, alleging the infringement of several of its patents. The Company reached settlements with VPV for the aforementioned lawsuits and acquired relevant patent portfolio licensing in the first quarter of 2019. VPV also dismissed the action and the lawsuits have no effect on the Company’s financial position and operations.

• E. On March 23, 2018, Chongqing HKC Optoelectronics Technology Co., Ltd. (HFC) filed five complaints against the subsidiaries of the Company, Ningbo Innolux Optoelectronics Ltd., Foshan Innolux Optoelectronics Ltd. as well as their customers and terminal distributors of TV products with the Fifth Intermediate People’s Court in Chongqing, alleging the infringement of its patents. Ningbo Innolux Optoelectronics Ltd. submitted a request of patent invalidity to the National Intellectual Property Administration, PRC upon the patents asserted in the complaints. As of May 21, 2019, all five patents asserted by HKC were declared invalid by the National Intellectual Property Administration, PRC. The five lawsuits that were previously disclosed were allegedly withdrawn by the Chongqing court on June 18, 2019. Thus, the lawsuits have no effect on the Company’s financial position and results of operations.

• F. On September 1, 2020, Granville Technology Group Limited, VMT Limited and OT Computers Limited (all under liquidation) jointly filed a civil complaint against the Company with the Senior Courts of England and Wales, claiming that the Company, together with other defendants of Taiwan and South Korea TFT -LCD companies, shall be liable for damages incurred from the TFT-LCD pricing collaborations in 2006. The Company has appointed a lawyer to handle the lawsuit.

• G. On December 18, 2020, the claimants, SAMSUNG ELECTRONICS CO. LIMITED, SAMSUNG ELECTRONICS TAIWAN CO. LIMITED, SAMSUNG ELECTRONICS (UK) LIMITED, SAMSUNG SEMICONDUCTOR EUROPE LIMITED and SAMSUNG DISPLAY CO. LMITED, jointly filed a civil complaint against the Company with the Business and Property Courts of England and Wales, claiming that the Company shall have the responsibility to pay equitable and fair share of compensation in terms of the settlement agreement that the first to fourth claimants entered into with the particular UK authorities for the TFT-LCD pricing collaborations in 2006. The Company has appointed a lawyer to handle the lawsuit.

• H. The Company had assessed and recognized related losses and liabilities as shown in ‘provisionscurrent’ for the aforementioned investigation relating to anti-trust laws and patent litigation.

~57~

(2) Commitments

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

December 31, 2020 December 31, 2019 Property, plant and equipment $ 12,236,324 $ 16,748,092

B. Outstanding letters of credit The outstanding letters of credit for the purchase of property, plant and equipment are as follows: December 31, 2020 December 31, 2019 Outstanding letters of credit $ 63,015 $ 266,384

• C. The Company entered into a conditional ‘Share Issuance and Asset Purchase Agreement’ with Huadong Electronic. Huadong Electronic plans to issue shares to the shareholders of TPV Technology Limited, including the Company, in order to obtain 49% equity interest of TPV Technology Limited. However, the transaction will take effect when all preconditions are met.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Company’s objectives are to maintain an optimal capital structure, and constructively reduce the debt ratio and the cost of capital in order to maximize shareholders' equity.

• (2) Financial instruments

• A. Financial instruments by category

For information of the Company’s financial assets (financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, financial assets at amortized cost, cash and cash equivalents, accounts receivable (including related parties) and other receivables (including related parties)) and financial liability (financial liabilities at fair value through profit or loss, accounts payable (including related parties), other payables, lease liability, corporate bonds payable and long-term borrowings (including current portion)), please refer to Note 6 and parent company only balance sheets.

• B. Financial risk management policies

• (a) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial position and financial performance. The Company uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2)).

• (b) Risk management is carried out by the treasury department under policies approved by the board of directors. The Company’s treasury identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas and matters, such as

~58~

foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment by excess liquidity.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Company operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company used in various functional currency, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

• ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their entire foreign exchange risk exposure via the Company’s treasury departments. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Company use forward foreign exchange contracts. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency.

• iii. The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). Based on the simulations performed, the impact on pre-tax profit of a 1% exchange rate fluctuation would be an decrease of $46,132 and $99,086 for the years ended December 31, 2020 and 2019, respectively. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

December 31, 2020 December 31, 2019

Foreign Currency Amount (In Thousands) Financial asstes Monetary items USD 2,685,590 $ RMB 314,765 JPY 1,240,453 EUR 3,414 HKD 13,321 Non-monetary items USD 2,852,662 $ JPY 7,560,763 HKD 351,054 Monetary items USD 2,569,866 $ JPY 32,788,133 EUR 8,547 HKD 73,107 Financial liabilities	Exchange Rate (Note) 28.48 4.36 0.28 35.02 3.67 28.48 0.28 3.67 28.48 0.28 35.02 3.67	Book Value (NTD) 76,485,603 $ 1,372,375 347,327 119,558 48,888 81,243,814 $ 2,117,014 1,288,368 73,189,784 $ 9,180,677 299,316 268,303	Foreign Currency Amount (In Thousands) 2,338,309 $ 20,232 195,929 3,403 658,804 2,621,279 $ 7,456,590 549,225 2,419,642 $ 35,486,130 5,503 122	Exchange Rate (Note) 29.98 4.30 0.28 33.59 3.85 29.98 0.28 3.85 29.98 0.28 33.59 3.85	Book Value (NTD)
					70,102,504 $ 86,998 54,860 114,307 2,536,395 78,585,944 $ 2,087,845 2,114,516 72,540,867 $ 9,936,116 184,846 470

~59~

  - Note: Exchange rate represents the amount of NT dollars for which one foreign currency could be exchanged.

• iv. Total exchange (loss) gain including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2020 and 2019 amounted to ($980,511) and $327,080, respectively.

• Price risk

• i. The Company is exposed to equity securities price risk because of investments held by the Company and classified on the parent company only balance sheet as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done by the Company in respect of the targets and stages.

• ii. The Company’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 20% with all other variables held constant, pre-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $470,167 and $530,282, respectively; other comprehensive gains and losses would have increased/decreased by $191,444 and $193,086, respectively.

• Cash flow and fair value interest rate risk

• i. The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During the years ended December 31, 2020 and 2019, the Company’s borrowings at variable rate were denominated in the NTD.

• ii. The Company analyzes its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.

• iii. If the borrowing interest rate of NTD had increased/decreased by 0.25% with all other variables held constant, pre-tax profit for the years ended December 31, 2020 and 2019 would have decreased/increased by $99,375 and $89,325, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows. As at December 31, 2020 and 2019, without

~60~

taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income, financial assets at amortized cost and accounts receivable held by the Company was its carrying amount.

• ii. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the managements. The utilization of credit limits is regularly monitored.

• iii. The Company adopts the following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments are past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• iv. The Company adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.

• v. The Company classifies customer’s accounts receivable in accordance with credit rating of customer, credit risk on trade and customer types. The Company applies the simplified approach using provision matrix to estimate expected credit loss.

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

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

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

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

• vii. The Company adjusted forward looking information based on historical and timely information to assess the default possibility of accounts receivable.

• According to abovementioned consideration and information, the Company does not expect any significant default possibility of accounts receivable.

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

allowance for accounts receivable are as follows:
At January 1 (December 31) At January 1 (December 31)	2020
	Accounts receivable
	209,373 $ 2019
	Accounts receivable
	209,373 $

~61~

• ix. The Company’s financial assets at amortized cost have low credit risk, the Company did not recognize significant loss allowance in accordance with 12 months expected credit losses.

• (c) Liquidity risk

• i. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and external regulatory or legal requirements.

• ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Company’s treasury. Company treasury invests surplus cash in interest bearing savings accounts, time deposits, money market deposits and marketable securities. The Company chooses instruments that are with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. These are expected to readily generate cash inflows for managing liquidity risk.

• iii. The information below analyzes the Company’s non-derivative financial liabilities and netsettled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

December31,2020 Bonds payable Lease liability Long-term borrowings (including current portion) December31,2019 Lease liability Long-term borrowings (including current portion)	Less than 1year - $ 227,273 19,250,000 Less than 1year 524,360 $ 15,980,000	Between 1 and3 years 6,231,424 $ 1,363,639 8,200,000 Between 1 and3 years 1,048,720 $ 19,350,000	Between 3 and5 years - $ 1,136,365 12,300,000 Between 3 and5 years 1,048,720 $ 400,000	Over 5 years - $ 2,870,936 - Over 5 years 3,386,241 $ -	Total
					6,231,424 $ 5,598,213 39,750,000 Total
					6,008,041 $ 35,730,000

Note: The Company applied a 1-year grace period for land rental payment starting from September 2020. The payment is repayable in 36 equal monthly installments for 3 years.

~62~

Except for the above, the non-derivative and derivative financial liabilities of the Company are all due within one year.

(3) Fair value estimation

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks and on-the-run bonds is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in derivative instruments is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in equity investment without active market is included in Level 3.

• B. Fair value information of investment property at cost is provided in Note 6(11).

• C. Financial instruments not measured at fair value

• The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, financial assets at amortized cost, accounts payable, other payables, lease liability, corporate bonds payable and long-term borrowings (including current portion) are approximate to their fair values.

• D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

• (a) The related information of natures of the assets and liabilities is as follows:

December31,2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Forward exchange contracts Financial assets at fair value through other comprehensive income Equity securities	Level 1 823,286 $ - - 823,286 $	Level 2 - $ 706,299 - 706,299 $	Level3 1,527,547 $ - 957,222 2,484,769 $	Total
				2,350,833 $ 706,299 957,222
				4,014,354 $

~63~

==> picture [466 x 373] intentionally omitted <==

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

December 31, 2020 Level 1 Level 2 Level 3 Total
Liabilities
Recurring fair value measurements
Financial liabilities at fair value
through profit or loss
- -
Forward exchange contracts $ $ 5,453 $ $ 5,453
Convertible bonds derivative
- -
instruments 3,208,560 3,208,560
-
$ $ 5,453 $ 3,208,560 $ 3,214,013
December 31, 2019 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
-
Equity securities $ 420,524 $ $ 2,230,884 $ 2,651,408
- -
Forward exchange contracts 7,660 7,660
Financial assets at fair value
through other comprehensive
income
- -
Equity securities 965,431 965,431
$ 420,524 $ 7,660 $ 3,196,315 $ 3,624,499
Liabilities
Recurring fair value measurements
Financial liabilities at fair value
through profit or loss
- -
Forward exchange contracts $ $ 345,003 $ $ 345,003
----- End of picture text -----

• (b) The methods and assumptions the Company used to measure fair value are as follows:

• i. The instruments the Company used market quoted prices as their fair values (that is, Level

  • 1) are listed below by characteristics:

Listed shares Emerging stocks Corporate bond Market quoted price Closing price Last transaction price Weighted average quoted price

• ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the parent company only balance sheet date.

• iii. When assessing non-standard and low-complexity financial instruments, for example, foreign exchange swap contracts, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

~64~

• iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts and foreign exchange swap contracts are usually valued based on the current forward exchange rate. Convertible bonds derivative instruments are measured by using appropriate option pricing models (binary tree model for convertible bond pricing).

• v. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Company’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Company’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the parent company only balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

• vi. The Company takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Company’s credit quality.

• E. For the years ended December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.

• F. The following table presents the changes in Level 3 instruments for the years ended December 31, 2020 and 2019:

2020 and 2019:
			2020		2019
Financial assets at fair value through profit or
loss / Financial asset at fair value through
other comprehensive income			Equitysecurities
At January 1		$	3,196,315	$	1,205,669
Gains and losses recognized in profit or loss			1,794,355		1,414,152
Gains and losses recognized in other
comprehensive income	(		8,209)	(	145,957)
Acquired in the year			34,972		49,904
Disposed in the year	(		2,532,664)		-
Transfers to Level 3			-		708,132
Proceeds from capital reduction			-	(	35,585)
At December 31		$	2,484,769	$	3,196,315

~65~

Financial liabilities at fair value through profit or loss At January 1 Gains and losses recognized in profit or loss Issued in the year At December 31	2020
	Derivativeinstruments
	- $ 1,786,197 1,422,363
	3,208,560 $

• G. Because TPV Technology Limited was delisted since November 2019 due to its privatization and there is insufficient observable market information, therefore, the Company transferred the fair value from Level 1 to Level 3 at the end of the month when the event occurred.

• H. Investment management segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

• Investment management segment set up valuation policies, valuation processes and rules for measuring fair value of financial instruments and ensure compliance with the related requirements in IFRS.

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

Non-derivative equity instrument: Unlisted shares	Fair value Significant at December Valuation unobservable 31,2020 technique input 1,003,886 $ Market comparable companies Price to sales ratio multiple, price to book ratio multiple Discount for lack of marketability 1,289,423 Using the last transaction price in an inactive market Discount for lack of marketability 191,460 Net asset value Discount for lack of marketability	Range (Weighted Relationship of average) inputs to fairvalue 0.62~3.08 (0.29) The higher the multiple, the higher the fair value 30% (12%) The higher the discount for lack of marketability, the lower the fair value 23% (12%) The higher the discount for lack of marketability, the lower the fair value 5% (0%) The higher the discount for lack of marketability, the lower the fair value	Relationship of inputs to fairvalue

~66~

Derivative instrument liabilities: Convertible bond Non-derivative equity instrument: Unlisted shares	Fair value Significant at December Valuation unobservable 31,2020 technique input 3,208,560 Binary tree model for convertible bond pricing Volatility rate Fair value Significant at December Valuation unobservable 31,2019 technique input 3,196,315 $ Market comparable companies price to sales ratio multiple, price to book ratio multiple Discount for lack of marketability	Range (Weighted Relationship of average) inputs to fair value 48.6% The higher the volatility, the higher the fair value Range (Weighted Relationship of average) inputs to fair value 0.61~3.6 (0.91) The higher the multiple, the higher the fair value 30%~50% (30%) The higher the discount for lack of marketability, the lower the fair value

• J. The Company has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed:

have changed:
Financial assets Equity instrument Financial liabilities Derivative instruments Financial assets Equity instrument	Input 2,484,769 $ 3,208,560 Input 3,196,315 $	Change ± 1% ± 1% Change ± 1%	December 31,2020
			Favourable Unfavourable Favourable Unfavourable change change change change 15,275 $ 15,275) ($ 9,572 $ 9,572) ($ 32,403 31,780) ( - - December 31,2019 Recognized in other Recognized inprofit or loss comprehensive income	Recognized in other comprehensive income
					Unfavourable change
			Favourable Unfavourable change change 22,309 $ 22,309) ($	Favourable Unfavourable change change 9,654 $ 9,654) ($	Unfavourable change

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: Please refer to Table 1.

~67~

• B. Provision of endorsements and guarantees to others: None.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to Table 2.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to Table 3.

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

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

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to Table 4.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to Table 5.

• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(2).

• J. Significant inter-company transactions during the reporting periods: Please refer to Table 6.

• (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to Table 7.

• (3) Information on investments in Mainland China

• A. Basic information: Please refer to Table 8.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to Table 1, 4, 5 and 6.

14. SEGMENT INFORMATION

None.

~68~

Innolux Corporation

Table 1

Loans to others

Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2020	Balance as at December 31, 2020	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a singleparty	Ceiling on total loansgranted	Footnote
													Item	Value
1 1 1 1 1 2 3 3 4 4	Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innocom Technology (Shenzhen) Co., Ltd. Nanjing Innolux Technology Ltd. Innolux Japan Co., Ltd. Innolux Japan Co., Ltd. Warriors Technology Investments Ltd Warriors Technology Investments Ltd	Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Shanghai Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Innolux Corporation Lakers Trading Limited Innolux Corporation Lakers Trading Limited	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties Related parties	4,365,984 $ 2,182,992 2,401,291 1,790,053 4,365,984 218,299 2,611,670 2,611,670 3,360,640 3,067,312	4,365,984 $ 2,182,992 2,401,291 1,790,053 3,711,087 - 2,611,670 - 3,360,640 -	4,365,984 $ 1,528,094 1,702,734 1,135,156 2,619,591 - 2,611,670 - 3,360,640 -	2.00% 2.00% 2.00% 2.00% 2.00% 0.00% 1.00% 0.00% 0.00% 0.00%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	$ - - - - - - - - - -	Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support Operating support	$ - - - - - - - - - -	- - - - - - - - - -	$ - - - - - - - - - -	23,437,016 23,437,016 23,437,016 23,437,016 23,437,016 1,220,292 7,674,648 7,674,648 12,505,452 12,505,452	23,437,016 23,437,016 23,437,016 23,437,016 23,437,016 1,220,292 7,674,648 7,674,648 12,505,452 12,505,452	A A A A A A A A A A

Note A:

1.For loans obtained for short-term financing, financial limit on loans granted to a single party shall not exceed 10% of the Group’s net equity, based on the most recent audited financial statements of the creditor.

2.The financial limit on loans granted shall not exceed 40% of the creditor’s net equity. If it is for short-term capital needs, the limit shall not exceed 30% of the creditor’s net equity.

• 3.The policy for loans granted to direct or indirect wholly-owned ultimate parent company or overseas subsidiaries is as follows: for short-term capital needs, financial limit is not restricted to the abovementioned two rules, however,

• financial limit on total loans granted and limit on loans granted to a single party for the overseas subsidiaries should not exceed 200% of the creditor’s net equity.

Table 1, Page 1

Innolux Corporation

Holding of marketable securities at the end of the year (not including subsidiaries, associates and joint ventures)

December 31, 2020

Table 2

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December 31,2020	As of December 31,2020		Footnote
				Number of shares	Book value	Ownership (%)	Fair value
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation InnoJoy Investment Corporation Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd.	Common stock	None None Other related party None None None None None None None None None None None None None	Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss	900,000 60,200,000 14,234,041 57,211,305 1,669,000 1,209 477,142 927,452 1,439,180 315,000 6,964,222 2,887,500 7,347,144 9,049,000 - 30,599,775	$ 6,075 1,289,423 191,460 632,185 191,101 - 40,589 957,222 - 3,480 211,016 41,400 160,902 1,113,027 685,090 158,443	1 3 19 9 - - 12 4 3 - 5 4 7 5 - 8	$ 6,075 1,289,423 191,460 632,185 191,101 - 40,589 957,222 - 3,480 211,016 41,400 160,902 1,113,027 685,090 158,443
	AvanStrate Inc. TPV Technology Limited Chi Lin Optoelectronics Co., Ltd. Cheng Mei Materials Technology Corporation General Interface Solution (GIS) Holding Limited Allied Material Technology Corp. Obsidian Sensors, Inc. VIZIO. Inc. Trillion Science, Inc. Cheng Mei Materials Technology Corporation Advanced Optoelectronic Technology, Inc. eChem solutions Corp. EPILEDS Co., Ltd. Fitipower Integrated Technology Inc. 上海辰岱投資中心(有限合夥) Shenzhen Tiandeyu Electronics Co., Ltd.

Table 2, Page 1

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December 31,2020	As of December 31,2020		Footnote
				Number of shares	Book value	Ownership (%)	Fair value
Warriors Technology Investments Ltd Warriors Technology Investments Ltd Warriors Technology Investments Ltd Warriors Technology Investments Ltd Warriors Technology Investments Ltd Warriors Technology Investments Ltd Warriors Technology Investments Ltd Nets trading Ltd.	OED Holding Ltd. Obsidian Sensors, Inc. Kymeta Corporation General Interface Solution (GIS) Holding Limited CJK Associates Co., Ltd. Perinnova Limited KA Imaging Inc. PilotTech Global Fund	None None None None None Other related party Other related party None	Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss	16,000,000 414,136 1,027,371 22,525,000 4,000 1,900 1,819,240 90	$ 12,744 35,229 14,288 2,579,113 4,872 520 16,337 23,347	6 11 - 7 14 19 11 -	$ 12,744 35,229 14,288 2,579,113 4,872 520 16,337 23,347

Table 2, Page 2

Innolux Corporation

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital

Year ended December 31, 2020

Investor Table 3	Marketable securities (Note 1)	General ledger account	Counterparty (Note 2)	Relationship with the investor (Note 2)	Balance as at January1,2020(Note 4)	Balance as at January1,2020(Note 4)	Addition(Note 3)	Addition(Note 3)		Disposal(Note 3)	Disposal(Note 3)		Balance as at December 31,2020(Note 5) Expressed in thousands of NTD (Except as otherwise indicated)	Balance as at December 31,2020(Note 5) Expressed in thousands of NTD (Except as otherwise indicated)
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount
Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited CarUX Holding Limited CarUX Holding Limited CARUX TECHNOLOGY PTE. LTD. CARUX TECHNOLOGY PTE. LTD. Innolux Hong Kong Holding Limited CarUX Holding Limited CARUX TECHNOLOGY PTE. LTD.	Innolux Europe B.V. Innolux Optoelectronics Hong Kong Holding Limited Innolux Europe B.V. Innolux Optoelectronics Hong Kong Holding Limited Innolux Europe B.V. Innolux Optoelectronics Hong Kong Holding Limited CarUX Holding Limited CARUX TECHNOLOGY PTE. LTD. CarUX Technology Inc.	Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method Investments accounted for using equity method	- - - - - - - - -	- - - - - - - - -	375,810 162,897,802 - - - - 9,500,000 9,400,000 -	$ 377,076 1,598,956 - - - - 285,546 282,539 -	- - 375,810 162,897,802 375,810 162,897,802 39,875,280 39,875,280 140,000,000	$ - - 464,341 1,818,180 464,341 1,818,180 1,195,262 1,195,262 1,400,000	375,810 162,897,802 375,810 162,897,802 - - - - -	$ 464,341 1,818,180 464,341 1,818,180 - - - - -	$ 377,076 1,598,956 464,341 1,818,180 - - - - -	(Note 6) (Note 6) (Note 6) (Note 6) - - - - -	- - - - 375,810 162,897,802 125,231,749 125,131,749 140,000,000	$ - - - - 436,612 1,872,445 3,895,283 3,892,513 1,436,674

Table 3, Page 1

Investor	Marketable securities (Note 1)	General ledger account	Counterparty (Note 2)	Relationship with the investor (Note 2)	Balance as at January1,2020(Note 4)	Balance as at January1,2020(Note 4)	Addition(Note 3)	Addition(Note 3)		Disposal(Note 3)	Disposal(Note 3)		Balance as at December 31,2020(Note 5)	Balance as at December 31,2020(Note 5)
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount
Innolux Corporation	TPV Technology Limited	Financial assets at fair value through profit or loss	-	-	150,500,000	$ 2,113,966	-	$ -	( 90,300,000)	$ 2,532,664	$ 2,532,664	(Note 7)	60,200,000	$ 1,289,423

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Fill in the columns the counterparty and relationship if securities are accounted for using the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more. Note 4: The balance at January 1, 2020 includes the investment income (loss) and cumulative translation adjustments.

Note 5: The balance at December 31, 2020 includes the investment income (loss), cumulative translation adjustments, gains (losses) on valuation and shares transferred.

Note 6: There was no income or loss as it was accounted as reorganization.

Note 7: There was no gain or loss on disposal as gains or losses on valuation were recognised under IFRS.

Table 3, Page 2

Innolux Corporation

Table 4

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Innolux USA Inc. Innolux Hong Kong Limited Hongfujin Precision Electronics (Yantai) Co., Ltd. Hon Hai Precision Industry Co., Ltd. CARUX TECHNOLOGY PTE. LTD. Lakers Trading Limited InnoCare Optoelectronics Corporation Foshan Innolux Optoelectronics Ltd. Honfujin Precision Electronics (Chongqing) Co., Ltd. Shenzhen Fugui Precision Industrial Co., LTD FIH (Hong Kong) Limited COMPETITION TEAM IRELAND LIMITED Hongfujin Precision Industry (Wuhan) Co.,Ltd.	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Same major stockholder An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd.	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	18,559,893 $ 5,491,141 3,876,859 2,320,933 2,223,300 1,356,544 952,627 802,468 722,635 324,861 319,345 301,600 101,503	7 2 1 1 1 1 - - - - - - -	60-90 days 60 days 60 days 90 days 60 days 60 days 60-90 days 60 days 45 days 60 days 60 days 45 days 90 days	Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales Similar with general sales	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	4,358,767 $ - 598,634 1,193,923 1,619,004 - 918,101 58,592 50,130 41,345 99,057 96,519 -	8 - 1 2 3 - 2 - - - - - -

Table 4, Page 1

Differences in transaction

terms compared to third party

							Differences in transaction terms compared to third party	Differences in transaction terms compared to third party
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			transactions		Notes/accounts receivable(payable)		Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Shanghai Innolux Optoelectronics Ltd.	Cheng Mei Materials Technology Corporation Hon Hai Precision Industry Co., Ltd. FI Medical Device Manufacturing Co., Ltd. Lakers Trading Limited Innolux Hong Kong Limited Foshan Innolux Optoelectronics Ltd. Leadtek Global Group Limited Ningbo Innolux Display Ltd. Ningbo Innolux Optoelectronics Ltd. Lakers Trading Limited Leadtek Global Group Limited Innolux Hong Kong Limited Lakers Trading Limited Innolux Hong Kong Limited	Other related party Same major stockholder Other related party An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary A subsidiary of the Company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	Purchases Purchases Purchases Processing expense Processing expense Processing expense Processing expense Processing expense Processing expense Processing revenue Processing revenue Processing revenue Processing revenue Processing revenue	912,669 $ 441,318 197,889 26,356,710 21,442,637 14,691,092 10,510,381 9,749,556 9,042,628 16,194,375 10,563,942 15,354,830 10,446,549 5,631,825	- - - 11 9 6 4 4 4 35 31 100 36 81	90 days after acceptance 90 days 30 days after acceptance 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days	Single purchases target, no basis for comparison Single purchases target, no basis for comparison Single purchases target, no basis for comparison Cost plus Cost plus Cost plus Cost plus Cost plus Cost plus Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	- $ 483,523) ( - - 9,038,281) ( 20,055,436) ( - 5,846,718) ( 14,160,794) ( - - 7,751,062 - 1,443,648	- 1 - - 12 28 - 8 19 - - 100 - 75	A

Table 4, Page 2

Differences in transaction

							Differences in transaction	Differences in transaction
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			terms compared to third party transactions		Notes/accounts receivable(payable)		Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Innocom Technology (Shenzhen) Co., LTD CarUX Technology Inc. Innolux Europe B.V. Innolux Japan Co., Ltd. Ningbo Innolux Optoelectronics Ltd. Innolux Hong Kong Limited InnoCare Optoelectronics Corporation Ningbo Innolux Display Ltd. InnoCare Optoelectronics Corporation InnoCare Optoelectronics Corporation Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. InnoCare Optoelectronics Corporation	Lakers Trading Limited Innolux Corporation Innolux Corporation Innolux Corporation Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. InnoCare Optoelectronics Japan Co., Ltd. Ningbo Innolux Optoelectronics Ltd. InnoCare Optoelectronics USA, INC. Ningbo Innolux Electronics Ltd. Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. FI Medical Device Manufacturing Co., Ltd.	An indirect wholly-owned subsidiary Ultimate parent company Ultimate parent company Ultimate parent company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary Same major stockholder Same major stockholder Other related party	Processing revenue Processing revenue Service revenue Service revenue Sales Sales Sales Sales Sales Sales Purchases Purchases Purchases	225,607 $ 1,388,848 837,822 315,775 6,089,981 4,338,257 1,605,777 1,114,450 704,961 307,105 1,771,118 1,583,931 849,414	100 100 90 71 13 10 70 3 31 13 4 4 43	60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 90 days after goods are shipped 90 days after goods are shipped 30 days after acceptance	Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference No material difference	530,594 $ 442,099 156,065 46,042 1,728,246 1,867,924 352,180 252,859 214,161 49,646 544,023) ( 459,642) ( 114,512) (	100 100 84 86 10 12 50 3 30 7 6 6 10

Table 4, Page 3

Differences in transaction

							Differences in transaction	Differences in transaction
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			terms compared to third party transactions		Notes/accounts receivable(payable)		Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd.	Ningbo Cheng Mei Materials Technology Co., Ltd. Cheng Mei Materials Technology Corporation Hon Hai Precision Industry Co., Ltd. Hon Hai Precision Industry Co., Ltd. Ningbo Cheng Mei Materials Technology Co., Ltd. Ningbo Cheng Mei Materials Technology Co., Ltd.	Other related party Other related party Same major stockholder Same major stockholder Other related party Other related party	Purchases Purchases Purchases Purchases Purchases Purchases	487,392 $ 321,661 178,961 164,912 129,233 113,642	1 1 1 - - -	90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped 90 days after goods are shipped	Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions Similar with general transactions	No material difference No material difference No material difference No material difference No material difference No material difference	- $ - 18,590) ( 49,354) ( - -	- - - - - -	A A A A

(Note A) It was recognized as a non-related party in May 2020.

Table 4, Page 4

Innolux Corporation

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

December 31, 2020

			December 31, 2020
Table 5 Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31, 2020 (Note A)	Turnover rate	Overdue receivables		Allowance for doubtful accounts Amount collected subsequent to the balance sheet date Expressed in thousands of NTD (Except as otherwise indicated)
					Amount	Action taken
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Nanjing Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Innolux Hong Kong Limited Ningbo Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Innocom Technology (Shenzhen) Co., Ltd. Innolux Corporation Innolux Corporation	Innolux USA Inc. CARUX TECHNOLOGY PTE. LTD. Hon Hai Precision Industry Co., Ltd. InnoCare Optoelectronics Corporation Hongfujin Precision Electronics (Yantai) Co., Ltd. Innolux Corporation Innolux Corporation Innolux Corporation Innolux Hong Kong Limited Innolux Corporation Nanjing Innolux Technology Ltd. Ningbo Innolux Display Ltd. Innolux Hong Kong Limited Lakers Trading Limited CarUX Technology Inc. CARUX TECHNOLOGY PTE. LTD.	An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary Same major stockholder A subsidiary of the Company An indirect wholly-owned subsidiary of Hon Hai Precision Industry Co., Ltd. Ultimate parent company Ultimate parent company Ultimate parent company An indirect wholly-owned subsidiary Ultimate parent company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary	4,358,767 $ 1,619,004 134,483 (Shown as other receivables) 1,193,923 918,101 598,634 488,643 (Shown as other receivables) 20,055,436 14,160,794 9,038,281 7,751,062 5,846,718 1,867,924 1,728,246 1,443,648 530,594	4.00 2.75 - 1.91 1.22 8.16 - 1.58 1.46 2.34 1.94 3.50 2.75 4.59 4.32 0.53	- $ 402,296 - 23,720 770,445 - 14,545,879 8,772,176 - 3,646,291 2,379,309 - 345,534 - - 463,785	- Subsequent collection - Subsequent collection Subsequent collection - Subsequent collection Subsequent collection - Subsequent collection Subsequent collection - Subsequent collection - - Subsequent collection	2,195,261 $ - 214,984 35,670 376,084 6,043,472 3,605,398 - 2,931,358 3,887,542 582,275 1,190,114 1,049,037 530,594 197,865 -	- $ - - - - - - - - - - - - - - -

Table 5, Page 1

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31, 2020 (Note A)	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
CarUX Technology Inc. InnoCare Optoelectronics Corporation Ningbo Innolux Display Ltd. InnoCare Optoelectronics Corporation Innolux Europe B.V. Lakers Trading Limited	Innolux Corporation InnoCare Optoelectronics Japan Co., Ltd. Ningbo Innolux Optoelectronics Ltd. InnoCare Optoelectronics USA, INC. Innolux Corporation Innolux Corporation	Ultimate parent company An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary An indirect wholly-owned subsidiary Ultimate parent company Ultimate parent company	524,284 $ (Shown as other receivables) 442,099 352,180 252,859 214,161 156,065	- 6.28 4.57 4.39 5.26 6.90	472,813 $ - 143,057 - 112,613 1,189	- Subsequent collection - Subsequent collection - Subsequent collection	524,284 $ 142,445 114,127 146,956 74,473 93,532	- $ - - - - -

Note A ： For the information on receivables of loans to related parties reaching NT$100 million or 20% of paid-in capital or more, please refer to Table 1.

Table 5, Page 2

Innolux Corporation

Table 6

Expressed in thousands of NTD

Significant inter-company transactions during the reporting period

Year ended December 31, 2020

(Except as otherwise indicated)

Number (Note A)	Companyname	Counterparty	Relationship (Note B)		Transaction(Note D and E)	Transaction(Note D and E)
				General ledger account	Amount	Transaction terms (Note C)	Percentage of consolidated total operatingrevenues or total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1	Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innocom Technology (Shenzhen) Co., LTD Innocom Technology (Shenzhen) Co., LTD	Lakers Trading Limited Lakers Trading Limited Innolux Hong Kong Limited Innolux Hong Kong Limited Innolux Hong Kong Limited Leadtek Global Group Limited Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Innolux USA Inc. Innolux USA Inc. CarUX Technology Inc. InnoCare Optoelectronics Corporation InnoCare Optoelectronics Corporation CARUX TECHNOLOGY PTE. LTD. CARUX TECHNOLOGY PTE. LTD. CARUX TECHNOLOGY PTE. LTD. Lakers Trading Limited Lakers Trading Limited	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3	Sales Processing expense Sales Processing expense Accrued expenses Processing expense Processing expense Accrued expenses Sales Processing expense Accrued expenses Processing expense Accrued expenses Sales Accounts receivable Other receivables Sales Accounts receivable Sales Accounts receivable Other receivables Processing revenue Accounts receivable	1,356,544 $ 26,356,710 5,491,141 21,442,637 9,038,281) ( 10,510,381 9,042,628 14,160,794) ( 802,468 14,691,092 20,055,436) ( 9,749,556 5,846,718) ( 18,559,893 4,358,767 488,643 952,627 918,101 2,223,300 1,619,004 134,483 225,607 530,594	- - - - - - - - - - - - - - - - - - - - - - -	1 10 2 8 2 4 3 4 - 5 5 4 2 7 1 - - - 1 - - - -

Table 6, Page 1

Transaction (Note D and E)

Number (Note A)	Companyname	Counterparty	Relationship (Note B)	General ledger account	Amount	Transaction terms (Note C)	Percentage of consolidated total operatingrevenues or total assets
2 2 3 3 4 4 5 5 5 6 7 7 7 8 9 9 10 10 10 10 10 11 11 12	Nanjing Innolux Optoelectronics Ltd. Nanjing Innolux Optoelectronics Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Shanghai Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Innolux Japan Co., Ltd. CarUX Technology Inc. CarUX Technology Inc. InnoCare Optoelectronics Corporation InnoCare Optoelectronics Corporation InnoCare Optoelectronics Corporation InnoCare Optoelectronics Corporation InnoCare Optoelectronics Corporation Innolux Europe B.V. Innolux Europe B.V. Lakers Trading Limited	Innolux Hong Kong Limited Innolux Hong Kong Limited Nanjing Innolux Technology Ltd. Nanjing Innolux Technology Ltd. Innolux Hong Kong Limited Innolux Hong Kong Limited Leadtek Global Group Limited Ningbo Innolux Display Ltd. Ningbo Innolux Display Ltd. Lakers Trading Limited Lakers Trading Limited Ningbo Innolux Optoelectronics Ltd. Ningbo Innolux Optoelectronics Ltd. Innolux Corporation Innolux Corporation Innolux Corporation Ningbo Innolux Electronics Ltd. InnoCare Optoelectronics Japan Co., Ltd. InnoCare Optoelectronics Japan Co., Ltd. InnoCare Optoelectronics USA, INC. InnoCare Optoelectronics USA, INC. Innolux Corporation Innolux Corporation Innolux Corporation	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Processing revenue Accounts receivable Sales Accounts receivable Processing revenue Accounts receivable Processing revenue Sales Accounts receivable Processing revenue Processing revenue Sales Accounts receivable Service revenue Processing revenue Accounts receivable Sales Sales Accounts receivable Sales Accounts receivable Service revenue Accounts receivable Other receivables	15,354,830 $ 7,751,062 4,338,257 1,867,924 5,631,825 1,443,648 10,563,942 6,089,981 1,728,246 16,194,375 10,446,549 1,114,450 252,859 315,775 1,388,848 442,099 307,105 1,605,777 352,180 704,961 214,161 837,822 156,065 524,284	- - - - - - - - - - - - - - - - - - - - - - - -	6 2 2 - 2 - 4 2 - 6 4 - - - 1 - - 1 - - - - - -

Note A: The information of transactions between the Company and the consolidated subsidiaries should be noted in “Number” column.

(1) Number 0 represents the parent company.

(2) The subsidiaries are numbered in order from number 1.

Note B: 1 refers to the parent company to the subsidiary.

3 refers to the subsidiary to the subsidiary.

Note C: Except for no comparable transactions from related parties, sales prices were similar to non-related parties transactions and the collection period was mainly 30~90 days; the purchases from related parties were at market prices and payment term was 30~120 days upon receipt of goods.

Note D: Amount disclosure standard: purchases, sales and receivables from related parties in excess of $100 million or 20% of capital. Note E: For the information on transactions between the Company and the consolidated subsidiaries relating to nature of loan, please refer to Table 1.

Table 6, Page 2

Innolux Corporation

Information on investees

Table 7

Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2020	as at December 31,2020	Net profit (loss) of the investee for the year ended December 31, 2020	Investment income (loss) recognized by the Company for the year ended December 31,2020	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation Innolux Corporation	Innolux Holding Limited Keyway Investment Management Limited Landmark International Ltd. Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Singapore Holding Pte. Ltd. Leadtek Global Group Limited Yuan Chi Investment Co., Ltd. InnoJoy Investment Corporation InnoCare Optoelectronics Corporation Innolux Japan Co., Ltd. iZ3D, Inc. GIO Optoelectronics Corp. Ampower Holding Ltd.	Samoa Samoa Samoa BVI Hong Kong Singapore BVI Taiwan Taiwan Taiwan Japan USA Taiwan Cayman	Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Distribution company Investment company Investment company Holdings, R&D, manufacturing and distribution company Holdings, R&D and distribution company Research and development and sale of 3D flat monitor Holdings, R&D, manufacturing and distribution company Investment holdings	$ 6,192,509 62,197 33,438,542 3,674,115 3,231,780 754,943 - 1,217,235 1,674,054 200,000 1,682,751 - 308,993 1,717,714	$ 6,192,509 62,197 33,438,542 3,674,115 3,231,780 754,943 - 1,217,235 1,674,054 200,000 1,682,751 - 308,993 1,717,714	180,568,185 1,656,410 709,450,000 146,847,000 1,158,844,000 25,400,000 50,000,000 - 167,405,392 20,000,000 98 4,333 27,812,188 14,062,500	100 100 100 100 100 100 100 100 100 100 54 35 63 50	$ 18,213,825 93,365 46,506,951 6,051,929 6,857,505 248,673 1,424,059 879,672 2,263,222 429,093 2,089,039 - 314,178 834,982	$ 222,572 3,041 971,588 88,589 855,636 ( 205,278) 61 3,744 99,424 167,269 95,805 - 10,003 62,094	$ 222,572 3,041 971,588 88,589 855,636 ( 205,278) 61 3,744 99,424 167,269 52,156 - 6,305 31,047

Table 7, Page 1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2020	as at December 31,2020	Net profit (loss) of the investee for the year ended December 31, 2020	Investment income (loss) recognized by the Company for the year ended December 31,2020	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
Innolux Corporation Innolux Corporation Innolux Holding Limited Innolux Holding Limited Innolux Holding Limited Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited Innolux Hong Kong Holding Limited CarUX Holding Limited CARUX TECHNOLOGY PTE. LTD. CARUX TECHNOLOGY PTE. LTD. CARUX TECHNOLOGY PTE. LTD. Innolux Japan Co.,Ltd. Rockets Holding Limited Rockets Holding Limited Suns Holding Ltd Innolux Europe B.V.	FI Medical Device Manufacturing Co., Ltd. eLux, Inc. Rockets Holding Limited Suns Holding Ltd Lakers Trading Limited Toppoly Optoelectronics (Cayman) Ltd. Innolux Hong Kong Limited Innolux Japan Co.,Ltd. CarUX Holding Limited CARUX TECHNOLOGY PTE. LTD. Innolux Optoelectronics Hong Kong Holding Limited Innolux Europe B.V. CarUX Technology Inc. Innolux USA, Inc. Stanford Developments Limited Nets Trading Ltd. Warriors Technology Investments Ltd Innolux Technology Germany GmbH	Taiwan USA Samoa Samoa Samoa Cayman Hong Kong Japan Cayman Singapore Hong Kong Netherlands Taiwan USA Samoa Samoa Samoa Germany	Production and selling of the absorption for medical element R&D of MicroLED technology Investment holdings Investment holdings Distribution company Investment holdings Distribution company Holdings, R&D and distribution company Investment holdings Holdings and distribution company Investment holdings Holding, distribution and R&D testing company R&D, manufacturing and distribution company Distribution company Investment holdings Investment company Investment company Testing and maintenance company	$ 73,500 91,155 5,222,180 555,422 - 3,650,192 - 1,815,603 3,772,473 3,769,371 1,818,180 464,341 1,400,000 369,092 5,391,125 27,477 555,422 33,735	$ 73,500 91,155 5,222,180 555,422 - 3,650,192 - 1,815,603 294,690 291,588 - - - 369,092 5,391,125 27,477 555,422 33,735	7,350,000 300,000 160,504,550 18,177,052 1 146,817,000 35,000,000 82 125,231,749 125,131,749 162,897,802 375,810 140,000,000 12,842 164,000,000 900,001 18,177,052 100,000	49 28 100 100 100 100 100 46 100 100 100 100 100 100 100 100 100 100	$ 377,751 33,501 11,744,047 6,252,728 216,977 6,051,597 1,213,197 1,748,285 3,895,283 3,892,513 1,872,445 436,612 1,436,674 826,092 11,718,556 25,363 6,252,726 17,421	$ 352,801 ( 62,744) 140,264 82,308 - 88,589 434,366 95,805 390,504 390,593 242,705 41,862 32,495 96,636 140,771 ( 507) 82,308 2,748	$ 172,872 ( 27,358) 140,264 82,308 - 88,589 434,366 43,649 390,504 390,593 242,705 41,862 32,495 96,636 140,771 ( 507) 82,308 2,748

Table 7, Page 2

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2020	as at December 31,2020	Net profit (loss) of the investee for the year ended December 31, 2020	Investment income (loss) recognized by the Company for the year ended December 31,2020	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
Innolux Singapore Holding Pte. Ltd. Innolux Singapore Holding Pte. Ltd. Innolux Singapore Holding Pte. Ltd. Yuan Chi Investment Co., Ltd. Yuan Chi Investment Co., Ltd. InnoCare Optoelectronics Corporation InnoCare Optoelectronics Corporation GIO Optoelectronics Corp.	Innolux Optoelectronics India Private Limited Innolux Optoelectronics Philippines Corp. Innolux Optoelectronics Malaysia SDN. BHD. GIO Optoelectronics Corp. Innolux Optoelectronics India Private Limited InnoCare Optoelectronics Japan Co., Ltd. InnoCare Optoelectronics USA, INC. Double Star Inc.	India Philippines Malaysia Taiwan India Japan USA Mauritius	Distribution company Manufacturer and distribution company Manufacturer and distribution company Holdings, R&D, manufacturing and distributor company Distribution company Distribution company Distribution company Investment holdings	$ 607,284 28,733 121,179 858 - 87,149 27,963 298,113	$ 302,198 28,733 121,179 858 - 87,149 27,963 298,113	144,095,499 5,000,000 16,000,000 77,235 1 30,010 900,000 10,000,000	100 100 100 - - 100 100 100	$ 100,057 28,074 115,513 872 - 118,528 37,895 99,349	($ 205,675) ( 274) 394 10,003 ( 205,675) 34,426 11,712 ( 2,369)	($ 205,675) ( 274) 394 18 - 34,426 11,712 ( 2,369)

Table 7, Page 3

Innolux Corporation

Information on investments in Mainland China

Year ended December 31, 2020

Investee in Mainland China Table 8	Main business activities	Paid-in capital (Note A)	Investment method (Note C)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31,2020	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31,2020	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2020	Net income of investee for the year ended December 31, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for year ended December 31, 2020(Note B)	Expressed in thousands of NTD (Except as otherwise indicated) Book value of investments in Mainland China as of December 31,2020 Accumulated amount of investment income remitted back to Taiwan as of December 31,2020 Footnote	Expressed in thousands of NTD (Except as otherwise indicated) Book value of investments in Mainland China as of December 31,2020 Accumulated amount of investment income remitted back to Taiwan as of December 31,2020 Footnote	Expressed in thousands of NTD (Except as otherwise indicated) Book value of investments in Mainland China as of December 31,2020 Accumulated amount of investment income remitted back to Taiwan as of December 31,2020 Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Innocom Technology (Shenzhen) Co., LTD Guangzhou OED Technologies Co., Ltd. Ningbo Innolux Optoelectronics Ltd. Foshan Innolux Optoelectronics Ltd. Ningbo Innolux Display Ltd. Nanjing Innolux Technology Ltd. Nanjing Innolux Optoelectronics Ltd. Shanghai Innolux Optoelectronics Ltd. Foshan Innolux Logistics Ltd. GIO (Maanshan) Optoelectronics Co., Ltd. Ningbo Innolux Electronics Ltd. Shenzhen PixinLED Technology Co.,Ltd.	Manufacturing and selling of LCD backend module and related components Manufacturing and selling of electronic paper Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Purchases and sales of monitor-related components Manufacturing and selling of LCD backend module and related components Manufacturing and selling of LCD backend module and related components Warehousing services Manufacturing R&D, Manufacturing and selling of LCD backend module and related components Development and selling of MINI LED	$ 4,670,720 296,767 8,828,800 10,907,840 4,556,800 59,808 4,442,880 598,080 42,720 284,800 67,087 43,648	2 2 2 2 2 2 2 2 2 2 1 3	$ 3,614,446 56,960 209,757 10,907,840 4,556,800 59,808 4,102,134 - 42,720 284,800 - -	$ - - - - - - - - - - - -	$ - - - - - - - - - - - -	$ 3,614,446 56,960 209,757 10,907,840 4,556,800 59,808 4,102,134 - 42,720 284,800 - -	$ 140,770 160,561 417,233 192,623 359,418 70,601 17,988 242,705 2,998 ( 2,370) 26,528 ( 2,618)	100 4 100 100 100 100 100 100 100 63 100 100	$ 140,770 - 417,233 194,937 359,418 70,601 17,988 242,705 2,998 ( 1,498) 26,528 ( 2,618)	$ 11,718,508 18,948 20,506,150 20,736,609 5,263,115 610,146 5,441,431 1,872,445 88,726 62,628 105,055 39,961	$ 1,056,274 - 4,916,643 - - - - - - - - -	2.1 2.2 2.3 2.3 2.3 2.4 2.4 2.5 2.6 2.7

Table 8, Page 1

Ceiling on investments in Mainland China:

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2020	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Innolux Corporation	24,317,045 $	30,850,437 $	(Note D)

Note A: The relevant figures were listed in NT$. Where foreign currencies were involved, the figures were converted to NT$ using exchange rate. Note B: Profit or loss recognized for the year ended December 31, 2020 was audited by independent auditors. Note C: The investment methods are as follows:

1. Directly investing in Mainland China.

2. Through investing in companies in the third area, which then invested in the investee in Mainland China.

3. 2.1. Through investing in Stanford Developments Limited in the third area, which then invested in the investee in Mainland China.

4. 2.2. Through investing in Warriors Technology Investments Ltd in the third area, which then invested in the investee in Mainland China.

5. 2.3. Through investing in Landmark International Ltd. in the third area, which then invested in the investee in Mainland China.

6. 2.4. Through investing in Toppoly Optoelectronics (Cayman) Ltd. in the third area, which then invested in the investee in Mainland China.

7. 2.5. Through investing in Innolux Optoelectronics Hong Kong Holding Limited in the third area, which then invested in the investee in Mainland China.

8. 2.6. Through investing in Keyway Investment Management Limited in the third area, which then invested in the investee in Mainland China.

9. 2.7. Through investing in Double Star Inc. in the third area, which then invested in the investee in Mainland China.

10. Others.

The company invested via the company investment entities in Mainland China to invest in Shenzhen PixinLED Technology Co.,Ltd. Except for the investment via the holding companies in Mainland China, other investments shall not be approved by Investment Commission of the Ministry of Economic Affairs.

Note D: In accordance with “Rules Governing Applications for Investment or Technical Cooperation in Mainland China”, the Company has obtained the certificate of being qualified for operating headquarters, issued by the Industrial Development Bureau of the Ministry of Economic Affairs, the ceiling amount of the investment in Mainland China is not applicable to the Company.

• Ⅰ. The amount approved by the Investment Commission of Ministry of Economic Affairs (MOEA) is USD 10,000 thousand, Amlink (Shanghai) Ltd. has finished liquidation in December 2019 but has not yet applied for the cancellation of investment with the Investment Commission of MOEA.

II. The amount approved by the Investment Commission of Ministry of Economic Affairs (MOEA) is USD 34,676 thousand, Interface Technology (ChengDu) Co., Ltd. disposed the equity interest held in its parent company, General Interface Solution (GIS) Holding Limited, on the open market but has not yet applied for the cancellation of investment with the Investment Commission of MOEA.

III. The Group adjusted the investment structure in the fourth quarter of 2020. InnoCare Optoelectronics Corporation acquired 100% of shares in Ningbo Innolux Electronics Ltd. The investment amount of InnoCare Optoelectronics Corporation

to Ningbo Innolux Electronics Ltd. approved by the Investment Commission of Ministry of Economic Affairs (MOEA) is USD 3,172 thousand. However, as of December 31, 2020, the investment amount has not yet been remitted.

Table 8, Page 2

INNOLUX CORPORATION SUMMARY OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 1

==> picture [506 x 14] intentionally omitted <==

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

Item Abstract Amount
----- End of picture text -----

Petty cash Cash in banks Demand deposits Foreign deposits USD 454,951 In thousands Exchange rate 28.48 JPY 437,270 In thousands Exchange rate 0.276 EUR 1,349 In thousands Exchange rate 35.02 HKD 581 In thousands Exchange rate 3.673 KRW 78,116 In thousands Exchange rate 0.026 RMB 24,128 In thousands Exchange rate 4.365	265 $ 2,266,965 12,957,010 120,818 47,235 2,133 2,047 105,314 15,501,787 $

Summary 1,Page1

INNOLUX CORPORATION SUMMARY OF ACCOUNTS RECEIVABLE DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 2

Summary 2
Items	Abstract		Amount	Remark
Third parties Company A Company B Company C Company D Company E Company F Others Less: Allowance loss		(	6,500,972 $ 3,987,795 2,668,385 2,496,822 2,347,718 2,292,185 22,292,422 42,586,299 209,373) 42,376,926 $	Balance of individual customers is under 5% of this account's balance.

(Remainder of page intentionally left blank)

Summary 2,Page1

INNOLUX CORPORATION SUMMARY OF INVENTORY DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 3

==> picture [505 x 126] intentionally omitted <==

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

Item Abstract Cost Market price Remark
Raw materials $ 3,341,200 $ 3,408,609 Use net realizable value
as market price
Work in process 12,238,343 22,711,032 Use net realizable value
as market price
Finished goods 10,249,159 14,006,638 Use net realizable value
as market price
$ 25,828,702 $ 40,126,279
----- End of picture text -----

(Remainder of page intentionally left blank)

Summary 3,Page1

INNOLUX CORPORATION

MOVEMENT SUMMARY OF INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

YEAR ENDED DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 4

Summary 4
Name	BeginningBalance			A	d	dition	De	ductions		EndingBalanc	e		Ma net	rket value or equityvalue		Valuation Basis	Pledged as Collateral
	In Thousand Shares		Amount	In Thousand Shares		Amount	In Thousand Shares	Amount	In Thousand Shares	Percentage of Ownership		Amount	Unit Price		Total Amount
Landmark International Ltd. Innolux Holding Limited Toppoly Optoelectronics (B.V.I.) Ltd. Innolux Hong Kong Holding Limited Innolux Japan Co., Ltd. Leadtek Global Group Limited InnoJoy Investment Corporation Yuan Chi Investment Co., Ltd. InnoCare Optoelectronics Corporation Innolux Singapore Holding Pte. Ltd. GIO Optoelectronics Corp. Ampower Holding Ltd. FI Medical Device Manufactiurng Co., Ltd. Others	709,450 180,568 146,847 1,158,844 - 50,000 167,405 - 20,000 25,400 27,812 14,063 7,350 -		44,796,827 $ 17,999,010 5,866,239 6,029,594 2,058,019 1,499,000 1,298,925 875,925 249,967 460,523 312,376 865,362 427,338 329,832 83,068,937 $	- - - - - - - - - - - - - -		1,724,843 $ 416,406 185,690 862,186 52,156 61 964,297 3,747 187,716 - 7,365 31,047 172,873 25,232 4,633,619 $	- - - - - - - - - - - - - -	14,719) ($ 201,591) ( - 34,275) ( 21,136) ( 75,002) ( - - 8,590) ( 211,850) ( 5,563) ( 61,427) ( 222,460) ( 228,198) ( 1,084,811) ($	709,450 180,568 146,847 1,158,844 - 50,000 167,405 - 20,000 25,400 27,812 14,063 7,350 -	100% 100% 100% 100% 54% 100% 100% 100% 100% 100% 63% 50% 49% -		46,506,951 $ 18,213,825 6,051,929 6,857,505 2,089,039 1,424,059 2,263,222 879,672 429,093 248,673 314,178 834,982 377,751 126,866 86,617,745 $	- - - - - - - - - - - - - -		46,506,951 $ 18,213,825 6,051,929 6,857,505 2,089,039 1,424,059 2,263,222 879,672 443,102 248,673 301,123 834,982 377,751 108,085 86,599,918 $	Equity method " " " " " " " " " " " " "	None " " " " " " " " " " " " "

Note 1: Additions include gains on investment accounted for using equity method, change in investee’s net equity value, cumulative translation adjustment, recognition of unrealized gain on investees’ financial instruments and reorganization.

Note 2: Deductions include losses on investment accounted for using equity method, change in investee’s net equity value, cumulative translation adjustment, cash dividend received, recognition of unrealised loss on investees’ financial instruments and reorganization.

Summary 4,Page1

INNOLUX CORPORATION SUMMARY OF ACCOUNTS PAYABLE DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 5 Items	Abstract		Amount	Remark
Third parties Company A Company B Others				Balance of individual suppliers is under 5% of this account's balance.

Summary 5,Page1

INNOLUX CORPORATION SUMMARY OF OPERATING REVENUE YEAR ENDED DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 6
Item	Quantity (in thousands)	Amount
TFT-LCD products	415,314	265,436,103 $

(Remainder of page intentionally left blank)

Summary 6,Page1

INNOLUX CORPORATION SUMMARY OF OPERATING COSTS YEAR ENDED DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 7

Summary 7
Item	Amount
Beginning raw materials Incoming inventory Less: Ending raw materials Scrapping materials Sale of materials Material consumption Direct labor Manufacturing expenses Manufacturing costs Add: Beginning work in process Incoming inventory Less: Ending work in process Scrapping work in process Cost of finished goods Add: Beginning finished goods Acquisition of finished goods Less: Ending finished goods Cost of goods manufactured Add: Cost of sales of materials Loss on scrapping inventory Less: Gain on reversal of decline in inventory valuation Operating cost	3,123,743 $ 77,202,599 3,574,169) ( 27,750) ( 362,988) ( 76,361,435 10,733,654 157,341,831 244,436,920 14,500,252 4,192,892 13,091,676) ( 94,644) ( 249,943,744 10,559,223 450,868 10,963,794) ( 249,990,041 362,988 122,394 23,182) ( 250,452,241 $

Summary 7,Page1

INNOLUX CORPORATION SUMMARY OF MANUFACTURING EXPENSES YEAR ENDED DECEMBER 31, 2020 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 8

Summary 8
Items		Amount	Remark
Processing fee	$	95,764,706
Depreciation and amortization		27,859,783
Utilities expense		11,921,812
Repairs and maintenance expense		9,160,901
Others		12,634,629	Balance of individual accounts is
			under 5% of this account's balance.
	$	157,341,831
	(Remainder of page intentionally left blank)

Summary 8,Page1

INNOLUX CORPORATION SUMMARY OF OPERATING EXPENSES YEAR ENDED DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 9

==> picture [508 x 219] intentionally omitted <==

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

General and Research and
administrative development
Items Selling expenses expenses expenses Total Remark
Wages and salaries $ 251,328 $ 1,266,315 $ 3,885,343 $ 5,402,986
Depreciation expenses 632 381,011 2,509,704 2,891,347
Royalty expenses - - 1,283,590 1,283,590
Indirect materials 207 1,292 1,589,519 1,591,018
Professional
16,318 1,214,141 147,046 1,377,505
service expenses
Others 880,708 1,564,512 1,620,767 4,065,987 Balance of individual
accounts is under 5%
of this account’s
balance.
$ 1,149,193 $ 4,427,271 $11,035,969 $16,612,433
----- End of picture text -----

(Remainder of page intentionally left blank)

Summary 9,Page1

INNOLUX CORPORATION

SUMMARY OF EMPLOYEE BENEFITS, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES BY FUNCTION

YEAR ENDED DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 10

Summary 10
By nature Employee Benefit Expense Wages and salaries Labor and health insurance Pension Directors' compensation Options Others Depreciation Amortization			Year ended December31,2020								Year ended December31,2019
		Classified as Operating Costs	Classified as OperatingExpenses			Classified as Non- operatingExpenses		Total		Classified as Operating Costs	Classified as OperatingExpenses			Classified as Non- operatingExpenses		Total
		15,728,521 $ 1,395,323 666,929 - 173,734 882,010 18,846,517 $ 27,800,268 $ 59,515 $		5,402,986 $ 439,449 271,677 12,474 204,577 252,520 6,583,683 $ 2,891,347 $ 121,879 $		- $ - - - - - - $ 28,290 $ - $		21,131,507 $ 1,834,772 938,606 12,474 378,311 1,134,530 25,430,200 $ 30,719,905 $ 181,394 $		16,332,054 $ 1,514,393 700,751 - - 913,537 19,460,735 $ 27,817,879 $ 84,397 $		5,715,555 $ 485,140 276,613 8,710 - 249,291 6,735,309 $ 2,812,694 $ 148,714 $		- $ - - - - - - $ 25,051 $ - $		22,047,609 $ 1,999,533 977,364 8,710 - 1,162,828 26,196,044 $ 30,655,624 $ 233,111 $

Note:

1. As at December 31, 2020 and 2019, the Company had 28,078 and 29,555 employees, including 3 and 4 non-employee directors, respectively.

2. Company additionally disclose the following information：

(1) Average employee benefit expense in current year was $905, average employee benefit expense in previous year was $886.

(2) Average employees salaries in current year was $753, average employees salaries in previous year was $746.

(3) Adjustments of average employees salaries was 0.94%.

(4) The Company has set up an audit committee so there is no supervisor’s remuneration.

Summary 10,Page1

INNOLUX CORPORATION

SUMMARY OF EMPLOYEE BENEFITS, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES BY FUNCTION (Cont.) YEAR ENDED DECEMBER 31, 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Summary 10

• (5) The Company’s salary and compensation policy (including directors, supervisors, managers and employees) is as follows:

The Company puts emphasis on employee compensation and benefits, and sets up a reward policy that is reasonable internally and competitive externally.

• A. Directors and managers: The remuneration committee is responsible for setting up the remuneration for directors and managers. After taking comprehensive consideration for the Company’s operational performance (including financial and non-financial points of view), personal performance and responsibilities the correlation and rationality between the development trend of the industry and the future operational risks, as well as referring to the external market levels, the remuneration committee reviews the individual salary and remuneration for directors and managers and proposes it to the Board of Directors for approval.

• B. Employees: The Company conducts periodical market surveys and reviews to provide a salary level that surpasses the laws and regulations which is externally competitive. Each of employees' salaries are determined by their positions, education and work experience, length of professional service and work performance. The Company also considers and compares with the external market salary surveys to plan a more competitive salary and compensation scheme for employees, which will not be different because of the factors such as gender, age, marriage, race, nationality, religion and political views. The Company strives to build a high-quality work environment with well-established benefits.

Summary 10,Page2