KYE - Annual Report 2020 | FinancialReports.eu

Stock Code: 2365

KYE Systems Corp. and Subsidiaries

Consolidated Financial Statements and Independent Auditors’ Report 2020 and 2019

(For the convenience of readers, this English consolidated financial statements and

independent auditors' report are translated from the original Chinese version. The English version is not Audited or Certified by a CPA.)

Address: No. 492, Sec. 5, Chongxin Rd., Sanchong Dist., New Taipei City, Taiwan (R.O.C.) Tel: (02)2995-6645

§TABLE OF CONTENTS§

			FINANCIAL
			STATEMENTS
	ITEM	PAGE	NOTE NO.
I.	Cover	1	-
II.	Table of Contents	2	-
III.	Declaration Letter of Consolidated
	Financial Statements of Affiliated	3	-
	Companies
IV.	Independent Auditors’ Report	4–6	-
V.	Consolidated Balance Sheet	7	-
VI.	Consolidated Statement of Comprehensive Income	8–10	-
VII.	Consolidated Statement of Changes in Equity	11	-
VIII. Consolidated Statement of Cash Flow		12–13	-
IX.	Notes to Consolidated Financial Statements
	(I) Company milestones	14	I.
	(II) Approval date and procedures of the financial statements	14	II.
	(III) Application of new and amended standards and interpretations	14–15	III.
	(IV) Summary of significant accounting policies	15–25	IV.
	(V) Major sources of uncertainty of
	significant accounting judgments,	26	V.
	estimates, and assumptions
	(VI) Description of major accounting titles	26–53	VI.–XXVII.
	(VII) Related party transactions	54–55	XXVIII.
	(VIII) Pledged and mortgaged assets	55	XXIX.
	(IX) Significant contingent liability and unrecognized contractual commitment	55–56	XXX.
	(X) Significant losses from disasters	-	-
	(XI) Significant subsequent events	-	-
	(XII) Others	56–57	XXXI.–XXXII.
	(XIII) Disclosures of notes
	1. Information on major transactions	57–58, 61–66	XXXIII.
	2. Information on investees	57–58, 61–66	XXXIII.
	3. Information on investments in Mainland China	58, 67–68	XXXIII.
	4. Information on major shareholders	58, 69	XXXIII.
	(XIV) Segment information	58–60	XXIV.

Declaration Letter of Consolidated Financial Statements of Affiliated Companies

Considering that the companies to be included into the consolidated financial statements of affiliated companies under the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises” were the same as those to be included into the consolidated financial statements of the parent and subsidiaries under IFRS 10 in 2020 (from January 1 to December 31, 2020), and the related information to be disclosed in the consolidated financial statements of affiliated companies was already disclosed in said consolidated financial statements of the parent and subsidiaries, no consolidated financial statements of affiliated companies were prepared separately. In witness thereof, the Declaration is hereby presented.

Company name: KYE Systems Corp.

Owner: SHIH-KUN TSO

March 25, 2021

Independent Auditors’ Report

To KYE Systems Corp.:

Audit Opinions

We audited the consolidated balance sheets of KYE Systems Corp. and subsidiaries as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flow for the period from January 1 to December 31, 2020 and 2019, and the notes to consolidated financial statements (including the summary of significant accounting policies).

In our opinion, the said consolidated financial statements were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the International Financial Reporting Standards, International Accounting Standards, interpretations and the statements of interpretation approved and released by the Financial Supervisory Commission, and thus presented fairly, in all material aspects, the consolidated financial position of KYE Systems Corp. and subsidiaries as of December 31, 2020 and 2019, and consolidated business performance and cash flow for the period from January 1 to December 31, 2020 and 2019.

Basis of Audit Opinions

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing standards. Our responsibilities under such standards are further described in the “Responsibilities of Accountants for the Audit of Consolidated Financial Statements” section in this report. We were independent of KYE Systems Corp. and subsidiaries in accordance with the Norms of Professional Ethics for Certified Public Accountants and fulfilled our other responsibilities thereunder. We believe that we acquired sufficient and appropriate audit evidence to use as the basis of our audit opinions.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the individual financial statements of KYE Systems Corp. and subsidiaries for the year of 2020. Such matters were addressed during the overall audit of the consolidated financial statements and the process of forming the audit opinions, and thus we did not provide opinions separately towards such matters.

The key audit matters in the consolidated financial statements of KYE Systems Corp. and subsidiaries for the year of 2020 are as follows:

Occurrence of recognition of sales revenue

The sales revenue of KYE Systems Corp. and subsidiaries in 2020 was higher than that in 2019, and the sales revenue from certain sales customers in the current year saw a significant increase from that in the previous year. Since the amount and proportion thereof are a matter of significance, we have deemed the occurrence of recognition of the sales revenue from that certain sales customers to be a key audit matter of the individual financial statements of KYE Systems Corp. and subsidiaries for 2020. For the accounting policy on recognition of revenue, see Notes 4 and 22 to the consolidated financial statements.

The audit procedures we performed for the above-mentioned key audit matter included understanding and testing of the design and implementation effectiveness of the internal controls related to the recognition of sales revenue. We analyzed the reasons for change in the amount of the sales revenue from the above-mentioned sales customers. We conducted an audit by sampling the transaction details of the sales revenue from the above-mentioned sales customers. We also reviewed the relevant shipment certificates and payment receipts to confirm the occurrence of the sales revenue. We reviewed whether there were significant sales returns or discounts subsequently on the part of the above-mentioned sales customers.

Other Matters

KYE Systems Corp. has prepared the individual financial statements for 2020 and 2019, and an audit report with unqualified opinions was issued by us for reference. Responsibilities of the Management and Governing Bodies for Consolidated Financial Statements

The management was responsible for preparation of the consolidated financial statements with fair presentation in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, interpretations and the statements of interpretation approved and released by the Financial Supervisory Commission and maintaining the necessary internal control related to preparation of the consolidated financial statements to ensure that the consolidated financial statements were free of material misstatement due to fraud or errors.

During preparation of the consolidated financial statements, the management was also responsible for evaluating KYE Systems Corp. and subsidiaries’ ability as a going concern, disclosure of the relevant matters and application of the going concern basis of accounting unless the management intended to make KYE Systems Corp. and subsidiaries enter into liquidation or terminate their operations, or there was no other actual and feasible solutions other than liquidation or termination of their operations.

KYE Systems Corp. and subsidiaries’ governance unit (including the Audit Committee) was responsible for supervising the financial reporting procedures.

CPA’s responsibility for the audit of the consolidated financial statements

The purpose of our audit of the consolidated financial statements is to obtain reasonable assurance about whether the consolidated financial statements were free of material misstatements due to fraud or error, with an audit report issued thereafter. Reasonable assurance means high assurance. However, it cannot be guaranteed that no material misstatement contained in the consolidated financial statements will be discovered during an audit conducted in accordance with generally accepted auditing standards. Any misstatement may be due to fraud or error. A misstatement is deemed material if the individual or aggregate amount misstated is reasonably expected to affect the economic decisions made by users of the consolidated financial statements.

We used our professional judgment to be skeptical during the audit conducted based on the generally accepted auditing standards. We also performed the following tasks:

We identified and assessed the risk of any misstatement in the consolidated financial statements due to fraud or error, designed and implemented response measures suitable for the evaluated risks, and acquired sufficient and appropriate audit evidence to use as the basis of our audit opinions. Since fraud may involve collusion, forgery, omission on purpose, fraudulent statements or violation of internal control, we did not find that the risk of misstatement due to fraud was higher than the same due to errors.
We understood the internal control related to the audit to an extent necessary to design audit procedures applicable to the current circumstance. However, the purpose of such work was not to express opinions towards the effectiveness of KYE Systems Corp. and subsidiaries’ internal control.
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We evaluated the appropriateness of the accounting policies adopted by the management and the rationality of the accounting estimates and relevant disclosures made by the management.
We drew a conclusion about the appropriateness of the application of the going concern basis of accounting by the management and whether the event or circumstances which might cause major doubts about KYE Systems Corp. and subsidiaries’ ability as a going concern had any material uncertainty. If any material uncertainty was deemed to exist in such event or circumstance, we must provide a reminder in the consolidated financial statements for the users to pay attention to the relevant disclosure therein, or amend our audit opinions when such disclosure was inappropriate. Our conclusion was based on the audit evidence obtained as of the date of this audit report. However, future events or circumstances might result in a situation where KYE Systems Corp. and subsidiaries would no longer have the ability as a going concern.
We evaluated the overall presentation, structure, and contents of the consolidated financial statements (including relevant notes), and whether the consolidated financial statements presented relevant transactions and events fairly.
We acquired sufficient and appropriate audit evidence of the financial information of the entities comprising the Group to provide opinions towards the consolidated financial statements. We were responsible for guidance, supervision and implementation in relation to the Group’s audit cases and formation of audit opinions for the Group.

The matters for which we communicated with the governing bodies include the planned audit scope and time, as well as major audit findings (including the significant deficiencies of the internal control identified during the audit).

We also provided a declaration of independence to the governing bodies, which assured that we complied with the requirements related to independence in the Norm of Professional Ethics for Certified Public Accountant, and communicated all relationships and other matters (including relevant protective measures) which we deemed to be likely to cause an impact on the independence of CPAs to the governing bodies.

The key audit matters in the audit of the consolidated financial statements of KYE Systems Corp. and subsidiaries for 2020 were determined by us from the matters addressed in our communication with the governing bodies. We specified such matters in the audit report except when public disclosure of certain matters was prohibited by related laws or regulations, or in very exceptional circumstances, we determined not to cover such matters in the audit report as we could reasonably expect that the negative impact of the coverage would be greater than the public interest brought.

Deloitte Taiwan CPA Mei-Hui Wu CPA Yao-Lin Huang Approval No. from the Securities and Approval No. from the Financial Supervisory Futures Commission Commission Tai-Cai-Zheng-Liu-Zi No. 0920123784 Jin-Guan-Zheng-Shen-Zi No. 1060004806

March 25, 2021

KYE Systems Corp. and Subsidiaries Consolidated Balance Sheet December 31, 2020 and 2019

Unit: NTD thousand

Code 1100 1110 1120 1170 1197 1200 130X 1470 11XX 1517 1550 1600 1755 1760 1840 194D 1990 15XX 1XXX Code 2170 2200 2230 2280 2320 2399 21XX 2540 2570 2580 2640 2670 25XX 2XXX 3110 3200 3310 3320 3350 3300 3400 31XX 36XX 3XXX	Asset Current assets Cash and cash equivalents (Notes 4 and 6) Financial assets measured at fair value through profit or loss – current (Notes 4 and 7) Financial assets measured at fair value through other comprehensive income – current (Notes 4 and 8) Notes and accounts receivable (Notes 4, 9 and 22) Finance leases receivable – current (Notes 4 and 10) Other receivables (Note 4) Inventory (Notes 4 and 11) Other current assets Total current assets Non-current assets Financial assets measured at fair value through other comprehensive income – non-current (Notes 4, 8, and 13) Investment under the equity method (Notes 4 and 13) Property, plant and equipment (Notes 4, 14 and 29) Right-of-use assets (Notes 4 and 15) Investment property – net (Notes 4, 16 and 29) Deferred income tax assets (Notes 4 and 24) Finance leases receivable – non-current (Notes 4 and 10) Other non-current assets (Notes 4 and 30) Total non-current assets Total assets Liabilityand equity Current liabilities Notes and accounts payable (Notes 18 and 28) Other payables (Note 19) Current income tax liabilities (Notes 4 and 24) Lease liabilities – current (Notes 4, 15 and 28) Long-term loans maturing within one year (Notes 17 and 29) Other current liabilities Total current liabilities Non-current liabilities Long-term loans (Notes 17 and 29) Deferred income tax liabilities (Notes 4 and 24) Lease liabilities – non-current (Notes 4, 15 and 28) Net defined benefit liabilities – non-current (Notes 4 and 20) Other non-current liabilities – others (Note 4) Total non-current liabilities Total liabilities Equity attributable to the owner of the parent company (Note 21) Share capital Common stock Capital reserves Retained earnings Legal reserves Special reserves Undistributed earnings (losses to be covered) (Notes 4, 8 and 13) Total retained earnings Other equity (Notes 4, 8 and 13) Total equity of the owner of parent company Non-controlling equity Total equity Total liabilities and equity		December 31,2020	December 31,2020	% 38 - 1 4 - - 7 3 53 6 8 18 1 9 3 - 2 47 100 4 2 1 1 - 2 10 6 1 1 1 - 9 19 61 10 11 12 4 27 18 ) 80 1 81 100		December 31,2019	December 31,2019
			Amount $ 1,403,681 1,713 43,724 126,219 8,159 4,735 264,415 94,126 1,946,772 199,242 286,435 666,311 46,541 337,099 118,889 8,783 87,470 1,750,770 $ 3,697,542 $ 145,870 97,499 24,264 30,604 8,095 64,855 371,187 229,905 24,554 34,481 31,654 3,586 324,180 695,367 2,245,285 382,898 428,064 429,317 144,615 1,001,996 661,077 ) 2,969,102 33,073 3,002,175 $ 3,697,542				Amount $ 1,484,681 - 71,056 97,197 4,378 9,354 222,782 78,173 1,967,621 375,520 284,928 494,591 91,301 369,143 141,022 10,093 93,467 1,860,065 $ 3,827,686 $ 139,801 119,046 3,345 35,456 - 43,325 340,973 100,000 16,688 70,831 31,723 2,782 222,024 562,997 2,345,385 456,206 452,988 496,095 91,702 ) 857,381 429,317 ) 3,229,655 35,034 3,264,689 $ 3,827,686		%
		(		(		( (		( (	39 - 2 2 - - 6 2 51 10 8 13 2 10 4 - 2 49 100 4 3 - 1 - 1 9 3 - 2 1 - 6 15 61 12 12 13 3 ) 22 11 ) 84 1 85 100

The attached notes are part of the consolidated financial statements.

Chairman: Shih-Kun Tso

Manager: Shih-Kun Tso

Accounting Manager: An-Min Kao

KYE Systems Corp. and Subsidiaries Consolidated Statement of Comprehensive Income January 1 to December 31, 2020 and 2019

Unit: NTD thousand; EPS unit: NTD

Code Operating revenue (Notes 4, 22 and 28) 4100 Sales revenue 4800 Other operating revenues 4000 Total operating revenues Operating costs 5110 Cost of sales (Notes 4, 11, 23 and 28) 5000 Total operating costs 5900 Operating gross profit Operating expenses (Notes 4, 9, 20 and 23) 6100 Marketing expenses 6200 Administrative expense 6300 R&D expense 6450 Expected profit on reversal of credit impairment 6000 Total operating expenses 6900 Net operating profit Non-operating revenue and expense 7020 Other profits and losses (Notes 4, 23 and 32) 7060 Share of profit/loss of associates under equity method (Notes 4 and 13)		2020		% 99 1 100 69 69 31 6 15 - - 21 10 2 -		2019
		Amount $ 1,643,434 9,835 1,653,269 1,137,698 1,137,698 515,571 106,373 253,154 2,131 7,882 ) 353,776 161,795 28,407 1,224						%
	(						100 - 100 72 72 28 9 16 - - 25 3 4 ( 2 )

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Code 7100 Interest income (Note 4) 7215 Profit (loss) on disposal of investment property (Notes 4 and 16) 7510 Interest expense (Notes 4 and 28) 7670 Impairment loss (Notes 4, 13 and 16) 7000 Total of other non-operating revenues and expenses 7900 Net profit before tax 7950 Income tax expense (Notes 4 and 24) 8200 Net profit in the year Other comprehensive income (Note 4) Titles not reclassified as profit or loss: 8311 Remeasurement of the defined benefits plan (Note 20) 8316 Unrealized profit/loss on valuation of investment in equity instruments measured at fair value through other comprehensive income 8320 Share of other comprehensive income of associates under the equity method (Note 13) 8349 Income tax relating to non-reclassified items (Note 24) 8310	2020	% - ( 1 ) - - 1 11 2 9 - ( 11 ) ( 1 ) ( 2 ) ( 14 )	2019
	Amount $ 8,954 ( 9,000 ) ( 4,156 ) ( 2,552 ) 22,877 184,672 37,767 146,905 ( 21 ) ( 183,432 ) ( 17,609 ) ( 21,947 ) ( 223,009 )		Amount $ 15,743 148,639 ( 12,739 ) ( 58,702 ) 121,911 175,192 20,528 154,664 ( 2,778 ) ( 7,072 ) ( 3,676 ) 26,837 13,311	%
				1 9 ( 1 ) ( 3 ) 8 11 1 10 - ( 1 ) - 2 1

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Code Titles potentially reclassified as profit or loss subsequently: 8361 Exchange differences from the translation of foreign operations’ financial statements 8370 Share of other comprehensive income of associates under the equity method (Note 13) 8399 Income tax related to items likely to be reclassified as profit or loss (Note 24) 8360 8300 Other net comprehensive income 8500 Total comprehensive income in the year Net profit/loss is attributable to: 8610 the owner of parent company 8620 non-controlling equity 8600 Total comprehensive income attributable to: 8710 the owner of parent company 8720 non-controlling equity 8700 EPS (Note 25) 9710 Basic EPS 9810 Diluted EPS	2020	% ( 1 ) - - ( 1 ) ( 15 ) ( 6 ) 9 - 9 ( 6 ) - ( 6 )	2019
	Amount ( $ 24,913 ) 1,654 4,631 ( 18,628 ) ( 241,637 ) ($ 94,732 ) $ 146,236 669 $ 146,905 ( $ 95,331 ) 599 ($ 94,732 ) $ 0.64 $ 0.64		Amount ( $ 27,057 ) ( 2,863 ) 4,297 ( 25,623 ) ( 12,312 ) $ 142,352 $ 151,480 3,184 $ 154,664 $ 139,730 2,622 $ 142,352 $ 0.65 $ 0.64	%
				( 2 ) - - ( 2 ) ( 1 ) 9 10 - 10 9 - 9

The attached notes are part of the consolidated financial statements.

Chairman: Shih-Kun Tso Manager: Shih-Kun Tso

Accounting Manager: An-Min Kao

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KYE Systems Corp. and Subsidiaries Consolidated Statement of Changes in Equity January 1 to December 31, 2020 and 2019

Unit: NTD thousand

					Equityattributable to the owner of theparent company						Total equity
	Share capital $ 2,345,385 - - - - - - - - - 2,345,385 - - - - - - - 100,100 ) - - - $ 2,245,285		Capital reserves $ 503,164 - - 46,908 ) - - - 50 ) - - 456,206 - - 93,815 ) - - - - 21,348 841 ) - - $ 382,898		Retained earnings		Treasurystocks $ - - - - - - - - - - - - - - - - - 78,752 ) 78,752 - - - $ -

(		( ( ( (		(		(		( ( ( ( ( ( (	( ( (	( ( ( ( ( ( ( (	$ 3,168,811 - - 46,908 ) 154,664 12,312 ) 142,352 50 ) 484 - 3,264,689 - - 93,815 ) 146,905 241,637 ) 94,732 ) 78,752 ) - 7,345 2,560 ) - $ 3,002,175

Chairman: Shih-Kun Tso

Manager: Shih-Kun Tso

Accounting Manager: An-Min Kao

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KYE Systems Corp. and Subsidiaries Consolidated Statement of Cash Flow January 1 to December 31, 2020 and 2019

Unit: NTD thousand

Code Cash flow from operating activities A00010 Net profit before tax in the year A20010 Profit and expense/loss: A20100 Depreciation expense A29900 Reversal of allowances for inventory devaluation losses A20200 Amortization expenses A22700 Loss (profit) on disposal of investment property – net A21200 Interest income A20300 Expected profit on reversal of credit impairment A24100 Unrealized profit (loss) of foreign currency exchange – net A21300 Dividend income A20900 Interest expenses A20400 Profit on the valuation of financial assets measured at fair value through profit or loss A22300 Share of profit/loss of associates under equity method A22500 Loss (profit) on the disposal and obsolescence of property, plants, and equipment – net A23100 Profit on investment disposal – net A23500 Impairment loss from financial assets A23700 Impairment loss from non-financial assets A30000 Net changes in operating assets and liabilities A31115 Financial assets mandatorily measured at fair value through profit or loss A31150 Notes and accounts receivable A31180 Other receivables A31200 Inventory A31240 Other current assets A32150 Notes and accounts payable A32180 Other payables A32230 Other current liabilities A32240 Net defined benefit liabilities A33000 Cash inflow from operations A33100 Interest received A33200 Dividend received A33500 Income tax paid AAAA Net cash inflow from operating activities		2020 $ 184,672 61,724 48,636 ) 10,086 9,000 8,954 ) 7,882 ) 4,438 ) 4,164 ) 4,156 1,713 ) 1,224 ) 590 412 ) - - 412 15,733 ) 4,492 2,902 ) 17,167 ) 4,091 18,699 ) 942 51 ) 148,190 8,993 4,164 2,488 ) 158,859		2019
	( ( ( ( ( ( ( ( ( ( ( ( ( (		( ( ( ( ( ( ( ( ( ( (	$ 175,192 62,955 73,605 ) 17,019 148,639 ) 15,743 ) 1,824 ) 2,448 838 ) 12,739 - 38,050 21,633 ) 3,369 ) 38,202 20,500 21,611 103,477 26,709 23,444 6,501 19,496 ) 3,489 15,467 ) 7,378 ) 244,344 15,491 838 19,008 ) 241,665

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Code Cash flows from investing activities B02700 Acquisition of property, plants, and equipment B05500 Disposal of investment property B06700 Increase in other non-current assets B00020 Disposal of financial assets measured at fair value through other comprehensive income B06100 Decrease in finance leases receivable B03700 Decrease (increase) in guarantee deposits paid B05400 Acquisition of investment property B02800 Disposal of property, plants, and equipment B00010 Acquisition of financial assets measured at fair value through other comprehensive income BBBB Net cash inflows (outflows) from investing activities Cash flows from financing activities C01600 Borrowing of long-term loans C04500 Distribution of cash dividends C04900 Cost of repurchasing treasury stocks C04020 Repayment of the principal of lease liabilities C05600 Interest paid C03000 Increase (Decrease) in guaranteed deposits received C04300 Increase (Decrease) in other liabilities C00200 Decrease in short-term loans C01700 Repayment of long-term loans C00600 Decrease in short-term notes payable CCCC Net cash outflow from financing activities DDDD Effect of changes in exchange rate on cash and cash equivalents EEEE Increase (decrease) in cash and cash equivalents in the year E00100 Balance of cash and cash equivalents – beginning of the year E00200 Balance of cash and cash equivalents – ending of the year		2020 $ 196,939 ) 26,851 14,383 ) 13,005 5,519 3,938 2,843 ) 95 34 ) 164,791 ) 138,000 93,815 ) 78,752 ) 34,927 ) 4,109 ) 766 3 - - - 72,834 ) 2,234 ) 81,000 ) 1,484,681 $ 1,403,681		2019
	( ( ( ( ( ( ( ( ( ( ( (		( ( ( ( ( ( ( ( ( ( ( ( ( ( (	$ 39,425 ) 1,150,895 49,760 ) - 4,527 2,244 ) 148,749 ) 155,417 44,460 ) 1,026,201 - 46,908 ) - 31,103 ) 11,984 ) 2,481 ) 3 ) 500,000 ) 312,576 ) 149,984 ) 1,055,039 ) 23,684 ) 189,143 1,295,538 $ 1,484,681

The attached notes are part of the consolidated financial statements.

Chairman: Shih-Kun Tso Manager: Shih-Kun Tso

Accounting Manager: An-Min Kao

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KYE Systems Corp. and Subsidiaries Notes to Consolidated Financial Statements January 1 to December 31, 2020 and 2019

(All amounts are in NTD thousand unless otherwise specified)

I. Company Milestones

The Company was established in November 1983, originally under the name of KYE Systems Ltd., which was changed to KYE Systems Corp. in November 1988, and became a public listed company in 1991. The Company’s stock was listed for trading on the Taiwan Stock Exchange on November 3, 1997.

We mainly focus our business on the manufacturing, processing, and sale of computer peripheral products such as mice, keyboards, and card readers, video-image products, including web cameras and security control cameras, and consumer electronic products, like headsets, speakers, and gaming products.

The consolidated financial statements were stated in the Company’s functional currency, NTD.

II. Approval date and procedures of the financial statements

The consolidated financial statements were proposed at the Board meeting and subsequently released on March 25, 2021.

III. Application of new and amended standards and interpretations

(I) The International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), interpretations (IFRIC) and the statements of interpretation (SIC) (hereinafter collectively referred to as “IFRSs”) approved and released by the Financial Supervisory Commission (hereinafter referred to as “FSC”) were applied for the first time.

We expected no other material changes to the accounting policies of the Company and subsidiaries after adopting the amended IFRSs approved and released by the FSC.

(II) FSC-approved IFRSs applied in 2021

Effective date as per the New/Amended/Revised standards and interpretations IASB Amendment to IFRS 4: “Extension of the Temporary Effective from the date of Exemption from Applying IFRS 9” publication. Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and Effective during the annual IFRS 16: “Interest Rate Benchmark Reform – reporting period Phase 2” beginning from January 1, 2021. Amendment to IFRS 16: “COVID-19-Related Rent Effective during the annual Concessions” reporting period beginning from, June 1, 2020.

Up to the approval and release date of the consolidated financial statements, the Company and subsidiaries assessed the effects of the above-mentioned amendments to the standards and interpretation on the financial position and performance on a continuous basis. The relevant effects would be disclosed after the assessment.

(III) IFRSs published by the IASB but not yet approved and released by the FSC

Effective date as per the New/Amended/Revised standards and interpretations IASB (Note 1) “Annual Improvements to 2018–2020 Cycle” January 1, 2022 (Note 2)

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Effective date as per the IASB (Note 1)(Note 1)Note 1))

New/Amended/Revised standards and interpretations IASB (Note 1)(Note 1)Note 1)) Amendment to IFRS 3: “Changes in Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28: “Sale or Undetermined Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendment to IFRS 17 January 1, 2023 Amendment to IAS 1: “Classification of Liabilities January 1, 2023 as Current or Non-current” Amendment to IAS 1: “Disclosure of Accounting January 1, 2023 (Note 6) Policies” Amendment to IAS 8: “Definition of Accounting January 1, 2023 (Note 7) Estimates” Amendment to IAS 16: “Property, Plant and January 1, 2022 (Note 4) Equipment – Proceeds before Intended Use” Amendment to IAS 37: “Onerous Contracts – Cost of January 1, 2022 (Note 5) Fulfilling a Contract”

Note 1: Unless otherwise specified, the above-mentioned new/amended/revised standards or interpretation shall become effective in the annual reporting periods beginning on or after each effective date for such standards or interpretation.
Note 2: The amendment to IFRS 9 applies to exchanges or modifications of the terms of financial liabilities that occur during the annual reporting period beginning from January 1, 2022. The amendment to IAS 41 “Agriculture” applies to measurement of fair values during the annual reporting period beginning from January 1, 2022. The amendment to IFRS 1 “First-time Adoption of IFRSs” applies retroactively to the annual reporting period beginning from January 1, 2022.
Note 3: The amendment applies to business mergers with an acquisition date during the annual reporting period beginning from January 1, 2022.
Note 4: The amendment applies to plants, property and equipment that are brought to the locations and conditions necessary for them to be capable of operating in the manner intended by the management on or after January 1, 2021.
Note 5: The amendment applies to contracts whose obligations have not been completely fulfilled on or after January 1, 2022.
Note 6: The amendment applies prospectively to the annual reporting period beginning from January 1, 2023.
Note 7: The amendment applies to changes in accounting estimates and policies that occur during the annual reporting period beginning from January 1, 2023.

IV. Summary of significant accounting policies
(I) Statement of compliance
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The consolidated financial statements were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs approved and released by the FSC.

(II) Basis for preparation

Except for the financial instruments measured at fair value, the consolidated financial statements were prepared on the basis of historical cost.

Fair value measurement is classified into Level 1, 2, and 3 based on the degree
to which an input is observable and the significance of the input:
Level 1 inputs: The quoted price in an active market for identical assets or liabilities that are accessible on the measurement date (before adjustment).
Level 2 inputs: Other than the quoted prices included in Level 1, the inputs that are observable for assets or liabilities directly (namely, the price) or indirectly (namely, presumed from the price).
Level 3 inputs: The inputs that are not observable for assets or liabilities.
(III) Classification of current and non-current assets and liabilities
- Current assets include:
Assets held mainly for the purpose of trading;
Assets expected to be realized within 12 months after the balance sheet date; and
Cash or cash equivalents (excluding those that are restricted for being used for exchange or settlement of liabilities within 12 months after the balance sheet date).
- Current liabilities include:
Liabilities held mainly for the purpose of trading;
Liabilities to be settled within 12 months after the balance sheet date, (irrelevant with whether any long-term refinancing or payment rearrangement agreement has been completed after the balance sheet date but before the date of release of financial statements; such liabilities are still current liabilities); and
Liabilities whose due date cannot be unconditionally extended to more than 12 months after the balance sheet date. However, the terms and conditions of the liabilities that may, at the option of the counterparty, result in settlement of the liabilities by issuance of equity instruments do not affect the classification of liabilities.

Assets or liabilities that were not the above-mentioned current assets or current liabilities were classified as non-current assets or non-current liabilities.

(IV) Basis for consolidation

The consolidated financial statements were financial statements including the Company and the entities controlled thereby (subsidiaries). The operating profits and losses of acquired or disposed subsidiaries from the acquisition date to the disposal date in the period were included in the consolidated statement of comprehensive income. The subsidiaries’ financial statements were adjusted to have their accounting policies be consistent with those of the Company and subsidiaries. All the transactions, account balances, profits, and expenses/losses between entities were removed during preparation of the consolidated financial statements. The subsidiaries’ total comprehensive income was attributable to the owner of the Company and the non-controlling equity, even when this resulted in the non-controlling equity having a deficit balance.

Changes to the Company and subsidiaries’ equity ownership in a subsidiary were treated as equity transactions when they did not result in a loss of control. The

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Company and subsidiaries’ book value and the non-controlling equity were adjusted to reflect the changes in their relative equity in the subsidiary. The difference between the adjusted amount of the non-controlling equity and the fair value of any paid or received consideration was directly recognized in equity and attributable to the owner of the Company.

When the Company and subsidiaries lost control of a subsidiary, the profit or loss on disposal was the difference between the following two amounts: (1) The total fair value of the received consideration and the residual investment in the former subsidiary on the loss of the control date, and (2) the total book value of the former subsidiary’s assets (including goodwill), liabilities, and the non-controlling equity on the loss of control date. For total amounts related to the subsidiary in other comprehensive income, the Company and subsidiaries treated them with the same accounting treatment as the basis which our direct disposal of relevant assets or liabilities shall be in accordance with.

The amount initially recognized and related to the residual investment in the former subsidiary was the fair value on the loss of control date.

For the subsidiaries’ details, shareholding ratios, and business operations, please refer to Note 12 “Subsidiary,” Table 5 “Name and Territory of Investees and Other Relevant Information,” and Table 6 “Information on Investments in Mainland China.”

(V) Foreign currency

During preparation of each entity’s financial statements, the transactions using currencies other than the entity’s functional currency (foreign currencies) were stated in the functional currency at the exchange rate on the date of transaction.

Monetary items in foreign currencies were translated at the closing exchange rate on each balance sheet date. Exchange differences arising from settlement or translation of the monetary items were recognized in profit or loss of the period.

Non-monetary items in foreign currencies measured at fair value were translated at the exchange rate on the date of determining the fair value, and the exchange differences resulting therefrom were recognized in profit or loss of the period. However, when changes in the fair value were recognized in other comprehensive income, the exchange differences arising therefrom were recognized in the same.

Non-monetary items in foreign currencies measured at historical cost were translated at the exchange rate on the date of transaction and were not retranslated.

During preparation of the consolidated financial statements, the assets and liabilities of foreign operations (including the subsidiaries and associates within countries in which they operate or currencies they used which were different from those of the Company) were translated into NTD at the exchange rate on each balance sheet date. Their profit and expense/loss items were translated at the average exchange rate of the period, and the exchange differences resulting therefrom were recognized in other comprehensive income (and attributable respectively to the owner of the Company and the non-controlling equity).

If the Company and subsidiaries disposed of all the equity of the foreign operations or partially disposed of the equity of the foreign operations subsidiary but lost the control thereover, or the retained equity after disposal of the foreign operation was related to financial assets and treated with the same accounting policy as the one for financial instruments, all the accumulated exchange differences attributable to the owner of the Company and related to the foreign operation would be reclassified as profit or loss.

When partial disposal of the foreign operations subsidiary did not lead to loss of

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control, any accumulated exchange differences were reattributed in proportion to the subsidiary’s non-controlling equity but not recognized in profit or loss. For any other partial disposal of foreign operations, any accumulated exchange differences were reclassified as profit or loss based on the proportion of the disposal.

(VI) Inventory

Inventory included raw materials, finished goods and work-in-progress goods. The inventory was measured based on the lower of cost or net realizable value. The cost and the net realizable value were compared on the basis of the individual item. Net realizable value refers to the estimated selling price in a normal situation less the estimated cost needed to complete the work and the estimated cost needed to complete the sale. The standard cost plus or less the difference allocated was used to calculate the inventory cost. The inventory was mainly measured based on the standard cost and then adjusted on the balance sheet date to be close to the cost calculated using the weighted average method.

(VII) Investment in associates

An associate refers to a company having a significant effect on the Company and subsidiaries, but is not a subsidiary or joint venture.

The Company and subsidiaries adopted the equity method for investment in associates.

Under the equity method, the investment in associates was initially recognized at its costs, and the amount of increase or decrease in the book value of such investment after the date of acquisition depended on the Company and subsidiaries’ shares of profit/loss and other comprehensive income in associates and joint ventures and the distributed profits. In addition, changes to the Company and subsidiaries’ equity in associates were recognized based on our shareholding ratio.

When the acquisition cost exceeded the Company and subsidiaries’ shares of the net fair value of the associates’ identifiable assets and liabilities on the date of acquisition, such excess was recognized in goodwill which was included in the book value of such investment and might not be amortized. When the Company and subsidiaries’ shares of the net fair value of the associates’ identifiable assets and liabilities on the date of acquisition exceeded the acquisition cost, such excess was recognized in profit or loss of the period.

When the Company and subsidiaries did not subscribe for new shares issued by associates based on our shareholding ratios, resulting in changes to the shareholding ratio and consequently the net equity value of investment and the capital reserve – changes in the net equity of associates and joint ventures recognized under equity method was adjusted based on the aforesaid changes. However, if the subscription or acquisition of the shares was not based on the shareholding ratio, leading to a decrease in the Company’s ownership equity in the associates, the amount related to the associates in other comprehensive income were reclassified according to the percentage of such decrease and treated with the same accounting treatment basis as the one which the associates’ direct disposal of relevant assets or liabilities should be in accordance with. If the said adjustment should be debited to capital reserves, and the balance of capital reserves arising from investment under the equity method was insufficient to be offset, the difference was debited to retained earnings.

When the Company and subsidiaries’ shares of losses in the associate were equal to or exceeded our equity in the associate, we stopped further recognition for loss. The Company and subsidiaries recognized additional losses and liabilities only when any legal obligation or constructive obligation was incurred or the Company made payment on behalf of the associate.

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For impairment evaluation, the Company and subsidiaries tested the entire investment book value (including goodwill) for impairment as a single asset by comparing the recoverable amount and book value of the investment. Any recognized impairment loss was not allocated to any assets constituting any part of the investment book value. Any reversal of the impairment loss was recognized to the extent that the recoverable amount of the investment subsequently increased.

Once the investment was not classified as an investment in associates, the Company and subsidiaries stopped using the equity method and measured the retaining earnings of the former associate at fair value. The differences between the fair value of retaining earnings, proceeds from disposal, and the investment book value on the date when the equity method was discontinued were recognized in the profit or loss of the period. Besides, for total amounts related to the associate in other comprehensive income, the basis of accounting treatment thereof was the same as the basis on which the associate’s direct disposal of relevant assets or liabilities should be in accordance with. When the investment in associates became the investment in joint ventures, or the investment in joint ventures became the investment in associates, the Company and subsidiaries continued to use the equity method but did not remeasure the retained earnings.

The profit or loss generated from the upstream, downstream, and side stream transactions between the Company and subsidiaries and the associate was recognized in the consolidated financial statements to the extent that such profit or loss was irrelevant to the Company and subsidiaries’ equity in the associate.

(VIII) Property, plant and equipment

The property, plant and equipment was recognized in accordance with the cost and subsequently measured based on the cost net of accumulated depreciation and accumulated impairment losses.

Each significant part of the property, plant and equipment was separately depreciated on the straight-line basis over its useful life. When the lease term was less than the useful life, the depreciation was recognized over the lease term. The Company and subsidiaries review the estimated useful life, residual value, and method of amortization at least at the end of each year and prospectively recognize the effect of changes in accounting estimates.

For the derecognition of property, plants, and equipment, the difference between the net disposal proceeds and the asset book value was recognized in profit or loss

(IX) Investment property

An investment property refers to a property held for earning rent income or for capital appreciation, or both.

The investment property was initially measured based on the cost (including transaction cost) and subsequently measured based on the cost net of accumulated depreciation and accumulated impairment losses. The investment property was depreciated on the straight-line basis.

The investment property under construction was recognized based on the cost net of accumulated impairment losses. The cost included professional service fees and the loan costs eligible for capitalization. Depreciation of the assets started when the assets were ready for their intended use.

For derecognition of the investment property, the difference between the net disposal proceeds and the asset book value was recognized in profit or loss

(X) Impairment of property, plant and equipment, right-of-use assets, and intangible assets (excluding goodwill)

The Company and subsidiaries assessed whether there were any signs indicating

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that any tangible and/or intangible assets (except for goodwill) might be impaired on each balance sheet date. If there was any of such signs of impairment, the recoverable amount of the asset was estimated. When the recoverable amount of an individual asset could not be estimated, the Company and subsidiaries estimated the recoverable amount of the cash-generating unit to which the asset belonged. Corporate assets were amortized on a reasonable and consistent basis to an individual cash-generating unit or the smallest group of cash-generating units.

The recoverable amount was the higher of the fair value less costs of sale and the value in use. When the recoverable amount of an individual asset or cash-generating unit was less than the book value, the book value of the individual asset or cash-generating unit was adjusted down to the recoverable amount, and the impairment loss was recognized in profit or loss.

When the impairment loss was reversed subsequently, the book value of the asset or cash-generating unit was adjusted up to the revised recoverable amount. However, the increased book value did not exceed the book value (less the amortization or depreciation) determined under the circumstance that the impairment loss of the asset or cash-generating unit was not recognized in the previous year. The reversal of the impairment loss was recognized in profit or loss.

(XI) Financial instruments

Financial assets and financial liabilities were recognized in the consolidated balance sheet when the Company or subsidiaries became a party to the financial instrument contract.

For initial recognition of the financial assets and financial liabilities, when the financial assets or financial liabilities were not measured at fair value through profit or loss, the assets or liabilities were measured at the fair value plus any transaction cost directly attributable to acquisition or issuance of the financial assets or financial liabilities. Any transaction cost measured at fair value through profit or loss directly attributable to the acquisition or issuance of the financial assets or financial liabilities was immediately recognized in profit or loss. Financial assets

The regular transactions of financial assets were recognized and removed based on the accounting on the transaction date.

Type of measurement

The financial assets held by the Company and subsidiaries were the financial assets measured at fair value through profit or loss, financial assets measured at amortized cost, and investment in equity instruments measured at fair value through other comprehensive income.

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

The financial assets measured at fair value through profit or loss were measured at fair value, and any profits or losses (excluding any dividends or interest generated from the financial asset) from remeasurement of the financial assets were recognized in profit or loss. For the determination of fair value, see Note 27.

(2) Financial assets measured at amortized cost

When the Company and subsidiaries’ investment in financial assets met the following two conditions at the same time, it was classified as financial assets measured at amortized cost:

A. The investment in financial assets held under a business model with the purpose of holding financial assets to collect contractual cash flows, and
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B. The contractual terms gave rise on specified dates to cash flows that were solely payments of principal and interest on the principal amount outstanding.

After the financial assets (including cash and cash equivalents, accounts receivable measured at amortized cost, other receivables and guarantee deposits paid) measured at amortized cost were initially recognized, the financial assets were measured based on the amortized cost equal to the total book value determined under the effective interest method less any impairment losses, and any profit or loss from foreign currency translation was recognized in profit or loss.

Except for the following two circumstances, the interest income was calculated as the effective interest rate times the total book value of financial assets:

A. For purchased or originated credit-impaired financial assets, the interest income was calculated as the credit-adjusted effective interest rate times the amortized cost of the financial assets.
B. For financial assets originally not purchased or originated credit-impaired but subsequently becoming credit-impaired, the interest income was calculated as the effective interest rate times the amortized cost of the financial assets in the next reporting period after the credit impairment

Credit-impaired financial assets represent significant financial difficulties confronting the issuer or debtor, default, the circumstance that the debtor is likely to file for bankruptcy or other financial reorganization, or that the active market of financial assets disappeared due to financial difficulties.

Cash equivalents include highly liquid time deposits that could be converted into defined amounts of cash at any time within 1 year after the date of acquisition and were subject to an insignificant risk of changes in value, and were used to meet short-term cash commitments.

(3) Investment in equity instruments measured at fair value through other comprehensive income

At initial recognition, the Company and subsidiaries might make an irrevocable election to measure the investment in equity instruments held not for trading and not recognized by the acquirer in a business merger or with consideration at fair value through other comprehensive income.

Investment in equity instruments measured at fair value through other comprehensive income was measured at fair value. Subsequent changes in the fair value were recognized in other comprehensive income and accumulated in other equity. For disposal of the investment, any cumulative profits or losses were directly transferred to retained earnings and not reclassified as profit or loss.

After the Company and subsidiaries’ right of receiving dividends was determined, the dividends from investment in equity instruments measured at fair value through other comprehensive income were recognized in profit or loss except that such dividends apparently represented a partial return of the investment cost.

Impairment of financial assets

We assessed impairment losses on the financial assets (including

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accounts receivable) measured according to amortized cost based on the expected credit losses on each balance sheet date.

Loss allowances for accounts receivable were recognized based on the lifetime expected credit losses We first assessed whether the credit risk on other financial assets significantly increased after the initial recognition. When the increase was not significant, the loss allowance for the financial assets was recognized based on the 12-month expected credit losses. When the increase was significant, it was recognized based on the lifetime expected credit losses.

The expected credit losses were the average credit losses weighted by the risk of default. 12-month expected credit losses represent the expected credit losses on financial instruments from any potential default within 12 months after the reporting date. Lifetime expected credit losses represent the expected credit losses on financial instruments from any potential default during the expected lifetime.

For the purpose of internal credit risk management, when any internal or external information indicating that a debtor was not able to pay off their debts was determined to exist by the Company and subsidiaries without consideration of the collateral held, the financial assets were deemed to be defaulted on.

The impairment loss on all financial assets was deducted from the book value of the financial assets through allowance accounts.

3. Removal of financial assets

The Company and subsidiaries removed financial assets only when the contractual rights on the cash flows from the assets became invalid, or the financial assets and almost all the risks and returns over the ownership of the financial assets were transferred to other companies.

For removal of the entire financial assets measured at amortized cost, the differences between the book value and the received consideration were recognized in profit or loss. For removal of the entire investments in equity instruments measured at fair value through other comprehensive income, the cumulative profits or losses were directly transferred to retained earnings and not reclassified as profit or loss.

Equity instrument

The debt and equity instruments issued by the Company and subsidiaries were classified as financial liabilities or equity based on the definition of substance and financial liabilities and equity instruments under the terms and conditions in the contracts.

The equity instruments issued by the Company or subsidiaries were recognized based on the payment net of the direct cost of issuance.

When a reacquired equity instrument was originally owned by the Company, the reacquisition was recognized as a deduction to equity. Purchase, sale, issuance or cancellation of the equity instruments owned by the Company were not recognized in profit or loss.

Financial liabilities

1. Subsequent measurement

All financial liabilities were measured at amortized cost under the effective interest method.

2. Removal of financial liabilities

For removal of financial liabilities, the differences between the book value and the consideration paid (including any non-cash assets transferred and any

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liabilities assumed) were recognized in profit or loss.

(XII) Liability reserve

Amounts recognized in liability reserves (including the contractual obligation to maintain or restore infrastructures before they were returned to the grantor, which were specified in service concession arrangements) were the best estimates of the expenses needing to settle the obligation on the balance sheet date with consideration of the risks and uncertainty of the obligation. The liability reserves were measured based on the discounted cash flow estimated to settle the obligation.

(XIII) Recognition of revenue

After our recognition of performance obligations under a contract with clients, we allocated the transaction price to each performance obligation and recognized the allocated amount in revenue after each performance obligation was met.

Revenue from sale of goods

The revenue from sale of goods was generated from the sale of computer peripherals. Once the computer peripherals were delivered to the client-designated location, the client was entitled to the products’ price determination and right of use, had the main responsibility to resell the products, as well as taking the risk that the products might become out-of-fashion. Therefore, the revenue and accounts receivable were recognized at the point of time.

When exporting raw materials for processing, the control over the ownership of processed products was not transferred, and thus the revenue for the export of raw materials was not recognized.

Service income

The service income was generated from provision of services under a contract and recognized based on the progress in completion of the contract.

(XIV) Lease

We assessed whether an agreement was (or contained) a lease on the date of entering into the agreement.

The Company and subsidiaries were the lessors

The lease was classified as a finance lease when almost all the risks and returns attached to the ownership of assets were transferred to the lessee according to the agreement, and all the other leases were classified as operating leases.

For our sublease of right-of-use assets, the classification of the sublease was determined based on the right-of-use asset (instead of the underlying asset). However, when the main lease was recognized in the Company and subsidiaries’ short-term leases to which the exemption of recognition was applied, the sublease was classified as an operating lease.

Fixed payments were included in the lease payments under finance leases. Net investment in a lease was measured based on the total present value of the lease payment receivable and the unguaranteed residual value plus the initial direct cost and recognized in finance leases receivable. The finance profits were allocated to each accounting period to reflect our fixed rate of return available for undue net investment in the lease in each respective period.

The lease payment under operating leases less the lease incentives was recognized in profit on the straight-line basis over the lease term. The original direct costs generated from the acquisition of the operating leases plus the book value of underlying assets were recognized in expenses on the straight-line basis over the lease term.

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The Company and subsidiaries were the lessees

The lease payment from the leases of low-value underlying assets to which the exemption of recognition was applied and short-term leases were recognized in expenses on the straight-line basis over the lease term, while right-of-use assets and lease liabilities with respect to other leases were recognized on the lease commencement date.

The right-of-use assets were initially measured based on the cost (including the initial recognized amount of lease liabilities, the lease payment paid before the lease commencement date less the lease incentives received, the initial direct cost and the cost estimated to restore the underlying asset) and subsequently measured based on the cost net of accumulated depreciation and accumulated impairment losses, and then the remeasurement of the lease liabilities was adjusted. The right-of-use assets were separately presented in the consolidated balance sheet.

The right-of-use assets were depreciated on the straight-line basis over the period from the lease commencement date to the expiration of the useful life or the lease term, whichever was sooner.

The lease liabilities were initially measured based on the present value of lease payments (including fixed payments). If the interest rate implicit in a lease could be readily determined, the lease payments were discounted at the interest rate. When such interest rate could not be readily determined, the lessee’s incremental borrowing rate of interest was used.

Subsequently, the lease liabilities were measured at amortized cost under the effective interest method, and the interest expenses were amortized over the lease term. When any changes in the lease term resulted in changes to the future lease payments, we remeasured the lease liabilities and adjusted the right-of-use assets accordingly. However, the residual remeasurement was recognized in profit or loss when the book value of right-of-use assets was reduced to zero. The lease liabilities were separately presented in the consolidated balance sheet.

(XV) Employee benefits

1. Post-employment benefits

Every pension fund contributed under the defined pension appropriation plan was recognized in expanses during the period when employees provided services.

Defined retirement benefit costs (including servicing costs, net interest and remeasurement) under the defined retirement benefit plan were calculated actuarially using the projected unit credit method. Service costs (including current service costs) and net interest on net defined benefit liabilities (assets) were recognized in employee benefit expenses when they were incurred. Remeasurement (including actuarial profits or losses, changes in the effect of asset limits, and return on plan assets net of interest) was recognized in other comprehensive income and presented in retained earnings when it occurred. It was not reclassified as profit or loss in the subsequent periods.

Net defined benefit liabilities represented the contribution deficit of the defined retirement benefit plan. Net defined benefit assets shall not exceed the present value of contribution refunded from the defined retirement benefit plan or future deductible contribution.

2.

Other long-term employee benefits

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The accounting treatment for other long-term employee benefits was the same as the one for the defined retirement benefit plan. However, any relevant remeasurement was recognized in profit or loss.

(XVI) Income tax

The tax expenses were the total of current income and deferred income taxes.
1. Current income tax

The Company and subsidiaries determine the current income in accordance with the laws enacted by the authority of the income tax return filing jurisdictions to calculate the income tax payable.

The additional income tax on undistributed earnings calculated according to the Income Tax Act of the Republic of China (Taiwan) was recognized in the year when the related resolution was made at the shareholders’ meeting.

The adjustments to the income tax payable in the previous year were recognized in the current income tax.

Deferred income tax

The deferred income tax was calculated based on the temporary difference between the book value of assets and liabilities in the book and the tax base for calculation of taxable income. Deferred income tax liabilities were generally recognized based on all taxable temporary differences; deferred income tax assets were recognized when we were likely to have taxable income available to offset the income tax arising from deductible temporary differences, loss carryforwards, purchase of machine/equipment, R&D and talent training.

Taxable temporary differences generated from investment in subsidiaries and associates were recognized in deferred income tax liabilities except that the Company and subsidiaries could control the timing of the reversal of the temporary taxable differences, and that such differences were not likely to be reversed in the foreseeable future. Deductible temporary differences related to such investment and equity were recognized, to the extent that they were expected to be reversed in the foreseeable future, in deferred income tax assets only when we were likely to have taxable income adequate to realize the temporary differences.

The book value of deferred income tax assets was reviewed at each balance sheet date. When any of the deferred income tax assets was not likely to have taxable income adequate to return all or part of the assets anymore, the book value thereof was reduced. Those that were not originally recognized in deferred income tax assets were reviewed at each balance sheet date. When any of those was likely to generate taxable income adequate to return all or part of the assets in the future, the book value thereof was increased.

The deferred income tax assets and liabilities were measured at the tax rate of the period in which the liabilities or assets were expected to be settled or realized. The tax rate was subject to the tax rate and tax laws legislated or substantively legislated on the balance sheet date. The deferred income tax liabilities and assets were measured to reflect the tax on the balance sheet date arising from the method that we expected to use to recover or settle the book value of the liabilities and assets.

3.

Current and deferred income taxes

The current and deferred income taxes were recognized in profit or loss other than those related to the titles stated as other comprehensive income or as equity directly, which were recognized in other comprehensive income separately or in equity directly.

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V. Major sources of uncertainty of significant accounting judgments, estimates, and assumptions

For adoption of the accounting policies, our management must make judgments, estimates, and assumptions related to the information that could not be readily acquired from other sources based on historical experience and other relevant factors. The actual results might differ from those estimates.

The Company and subsidiaries take the economic impact caused by COVID-19 into the consideration of significant accounting estimates, and the management will continue to review the estimates and basic presumptions. When the amendments to the estimates only affected the current period, they were recognized in the period in which they were made; when the amendments to the estimates affected the current and future periods at the same time, they were recognized in the period in which they were made and the future period.

VI. Cash and cash equivalents

and the future period. h and cash equivalents
December 31,2020 Cash on hand and petty cash $ 2,733 Bank check and demand deposit 900,312 Cash equivalents Repurchase of commercial papers 50,426 Time deposit 450,210 $ 1,403,681 ncial instruments measured at fair value through profit or loss December 31,2020	December 31,2019
	$ 1,908 856,952 150,147 475,674 $ 1,484,681 December 31,2019

VII. Financial instruments measured at fair value through profit or loss

Financial assets – current Mandatory measurement at fair value through profit or loss Non-derivative financial assets Domestic non-listed (non-OTC) common stocks $ 1,713 $ - Financial assets measured at fair value through other comprehensive income December 31, 2020 December 31, 2019 Current Investment in equity instruments measured at fair value through other comprehensive income Domestic listed (OTC) common stocks $ 43,724 $ 71,056 Non-current Investment in equity instruments measured at fair value through other comprehensive income Overseas non-listed (non-OTC) common stocks $ 115,501 $ 214,905 Domestic non-listed 72,761 25,031

VIII. Financial assets measured at fair value through other comprehensive income

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(non-OTC) common stocks Domestic listed (OTC) common stocks Domestic non-listed (non-OTC) preferred stocks Total	10,950 30 $ 199,242	135,554 30 $ 375,520

The Company and subsidiaries invested in the equity instruments according to their medium and long-term strategies and expected to gain profits through long-term investment. Since the Company and subsidiaries’ management deemed that the recognition of short-term changes in the investment’s fair value in profit or loss was not consistent with the said long-term investment plan, they opted to have the investment be measured at fair value through other comprehensive income.

In July, August, September and November 2020, the Company and subsidiaries made adjustment to their investment positions and sold the shares of Solteam Incorporation and part of those of Coretek Opto Corporation and Link Legend Co., Ltd. at a fair value of NTD13,005,000. Other related equity – unrealized valuation loss on financial assets measured at fair value through other comprehensive income, amounting to NTD1,604,000, was carried forward to retained earnings.

IX. Notes and accounts receivable

es and accounts receivable
Notes and accounts receivable Measurement at amortized cost Total book value Less: Loss allowance	December 31,2020 $ 134,613 ( 8,394 ) $ 126,219	December 31,2019
	(	(	$ 113,571 16,374 ) $ 97,197

We provided an average 60-day loan period for the sale of goods, and interest did not accrue on unpaid accounts receivable.

In order to mitigate the credit risk, our management set the credit authorization quota and approved credit authorization to ensure that appropriate actions were adopted for the recovery of overdue accounts receivable. In addition, the Company and subsidiaries reviewed the recoverable amount of accounts receivable separately on the balance sheet date to make sure that the appropriate impairment loss of the accounts receivable that could not be recovered was recognized. As such, our management considered that the Company and subsidiaries’ credit risk was reduced significantly.

We recognized the loss allowance for accounts receivable based on the lifetime expected credit losses. The lifetime expected credit losses were calculated using a provision matrix with consideration of the clients’ historical default record and current financial position, industrial and economic environment, and GDP forecasts and industrial prospects. Since our historical experience with credit losses showed no significant difference in the type of loss between different clients, the clients were not further classified in the provision matrix. We only set the expected credit loss rate based on the aging of accounts receivable.

When there was any evidence showing that the counterparty was facing serious financial difficulties and we could not estimate a reasonable recoverable amount, the Company and subsidiaries directly wrote off the related accounts receivable, continued to claim for payment, and recognized the recovered amount therefrom in profit or loss.

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Our loss allowance for accounts receivable measured using the provision matrix are as follows:

December 31, 2020

are as follows: December 31, 2020
Percentage of expected credit loss Total book value Loss allowance (lifetime expected credit losses) Amortized cost December 31, 2019 Percentage of expected credit loss Total book value Loss allowance (lifetime expected credit losses) Amortized cost		Account age for no more than 60 days	Account age for 61–90 days			Account age for 91–120 days		Account age for more than 120 days		Total
	(	0%–1% $ 105,704 288 ) $ 105,416 Account age for no more than 60 days	1%–5% $ 21,108 ( 305 ) $ 20,803 Account age for 61–90 days			5%–10% $ - - $ - Account age for 91–120 days	(	100% $ 7,801 7,801 ) $ - Account age for more than 120 days	(	- $ 134,613 8,394 ) $ 126,219 Total
	(	0%–1% $ 92,388 291 ) $ 92,097	(	1%–5% $ 4,892 148 ) $ 4,744	(	5%–10% $ 395 39 ) $ 356	(	100% $ 15,896 15,896 ) $ -	(	- $ 113,571 16,374 ) $ 97,197

December 31, 2019

The information of changes in loss allowance for accounts receivable is as follows: 2020 2019 Balance – beginning of the year $ 16,374 $ 18,496 Plus: Impairment loss reversed in the year ( 7,882 ) ( 1,824 ) Differences from the translation of foreign currencies ( 98 ) ( 298 ) Balance – ending of the year $ 8,394 $ 16,374 Finance leases receivable December 31,2020 December 31,2019 Undiscounted lease payments 1st year $ 8,374 $ 4,527 2nd year 7,740 4,527 3rd year 1,142 4,527 4th year - 1,132 Lease payments receivable 17,256 14,713 Less: Unearned financial income ( 314 ) ( 242 ) Net investment in a lease (presented as finance leases receivable) $ 16,942 $ 14,471 Book value of finance leases receivable Current $ 8,159 $ 4,378 Non-current 8,783 10,093 $ 16,942 $ 14,471	The information of changes in loss allowance for accounts receivable is as follows: 2020 2019 Balance – beginning of the year $ 16,374 $ 18,496 Plus: Impairment loss reversed in the year ( 7,882 ) ( 1,824 ) Differences from the translation of foreign currencies ( 98 ) ( 298 ) Balance – ending of the year $ 8,394 $ 16,374 Finance leases receivable December 31,2020 December 31,2019 Undiscounted lease payments 1st year $ 8,374 $ 4,527 2nd year 7,740 4,527 3rd year 1,142 4,527 4th year - 1,132 Lease payments receivable 17,256 14,713 Less: Unearned financial income ( 314 ) ( 242 ) Net investment in a lease (presented as finance leases receivable) $ 16,942 $ 14,471 Book value of finance leases receivable Current $ 8,159 $ 4,378 Non-current 8,783 10,093 $ 16,942 $ 14,471	The information of changes in loss allowance for accounts receivable is as follows: 2020 2019 Balance – beginning of the year $ 16,374 $ 18,496 Plus: Impairment loss reversed in the year ( 7,882 ) ( 1,824 ) Differences from the translation of foreign currencies ( 98 ) ( 298 ) Balance – ending of the year $ 8,394 $ 16,374 Finance leases receivable December 31,2020 December 31,2019 Undiscounted lease payments 1st year $ 8,374 $ 4,527 2nd year 7,740 4,527 3rd year 1,142 4,527 4th year - 1,132 Lease payments receivable 17,256 14,713 Less: Unearned financial income ( 314 ) ( 242 ) Net investment in a lease (presented as finance leases receivable) $ 16,942 $ 14,471 Book value of finance leases receivable Current $ 8,159 $ 4,378 Non-current 8,783 10,093 $ 16,942 $ 14,471
	$ 18,496 ( 1,824 ) ( 298 ) $ 16,374 December 31,2019
	(	$ 4,527 4,527 4,527 1,132 14,713 242 ) $ 14,471 $ 4,378 10,093 $ 14,471

X. Finance leases receivable

The Company and subsidiaries subleased the premises and buildings in Neihu District and the plant in Dongguan to another company with a fixed lease payment of

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NTD3,807,000 and NTD4,567,000 collected respectively on a yearly basis. Since the remaining lease term in the main lease agreement was transferred due to the sublease, the sublease was classified as a finance lease.

The interest rate implicit in a lease during a lease term was not changed as of December 31, 2020. The annual interest rate implicit in the finance lease was 1.50%.

We measured the loss allowance for the finance leases receivable based on the lifetime expected credit losses. Since there were no overdue or unrecovered finance leases receivable as of the balance sheet date, and with consideration of the counterparty’s historical default record and collateral value, we believed that the aforesaid finance leases receivable was not impaired.

XI. Inventory

ntory
Finished good Work in process Raw materials	December 31,2020 $ 130,290 80,419 53,706 $ 264,415	December 31,2019
			$ 96,204 74,710 51,868 $ 222,782

The cost of sales related to inventories in 2020 and 2019 was NTD1,137,698,000 and NTD1,150,387,000, respectively. The amounts of NTD48,636,000 and NTD73,605,000 from reversal of allowances for inventory devaluation losses were included in the cost of sales in 2020 and 2019, respectively.

XII. Subsidiary

(I) Subsidiaries included in the consolidated financial statements Entities in the consolidated financial statements are as follows:

Name of Investor The Company KYE Systems (Hong Kong) Corp. Genius Holding Co., Ltd.	Name of the Subsidiary Genius Holding Co., Ltd. Chung-Chiang Investment Co., Ltd. Hung-Cheng Investment Co., Ltd. KYE Systems Europe GmbH KYE International Corporation KYE Systems (Hong Kong) Corp. Digilife Technologies Co., Ltd. DIGILIFE PTY LTD Genius Labuan Inc. Globalink Holding Co., Ltd. KYE Systems America Corporation Moustek Investment Co., Ltd. KYE Trade (HK) Co., Ltd. KYE Inc.	Nature of Business Investment holdings Investment business Investment business Sales of computer peripherals and consumer electronic products Sales of computer peripherals and consumer electronic products Sales of computer peripherals and consumer electronic products Digital video/audio products Tourism and real estate development Sales of computer peripherals and consumer electronic products Investment holdings Sales of computer peripherals and consumer electronic products Investment holdings Sales of computer peripherals and consumer electronic products Investment holdings	Shareholding Ratio December 31, 2020 December 31, 2019 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 94.61% 91.37% `－` 39.20% 100.00% 100.00% 100.00% 100.00% `－` 98.31% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%	Descripti on
			December 31, 2020 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 94.61% `－` 100.00% 100.00% `－` 100.00% 100.00% 100.00%
				`－` `－` `－` Note 1 `－` `－` Note 2 Note 3 `－` `－` Note 4 `－` `－` `－`

(Continued to next page)

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(Continued from previous page)

Name of Investor Digilife Technologies Co., Ltd. Life Technologies Co., Ltd. LIFE TECHNOLOGIES (HONG KONG) CO., LIMITED KYE Inc. Dong-Guan Kunying Computer Products Co., Ltd. Moustek Investment Co., Ltd.	Name of the Subsidiary Life Technologies Co., Ltd. DIGILIFE PTY LTD. LIFE TECHNOLOGIES (HONG KONG) CO., LIMITED ZISER TECHNOLOGIES (SHENZHEN) CO., LTD. Dong-Guan Kunying Computer Products Co., Ltd. Suo-Yi Technology (Shanghai) Ltd. You-Xiang Technology (Shanghai) Ltd. Dongguan Gaoying Electronic Technology Co., Ltd.	Nature of Business Indirect investments and trading business in third-party countries and in Mainland China Tourism and real estate development Indirect investments and processing businesses in third-party countries and in Mainland China Sale of digital video/audio products Manufacturing and sales of computer mice and computer game consoles - - Sales of computer peripherals and consumer electronic products	Shareholding Ratio December 31, 2020 December 31, 2019 100.00% 100.00% 100.00% 60.80% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% `－` `－` `－` `－` 100.00% 100.00%	Descripti on
			December 31, 2020 100.00% 100.00% 100.00% 100.00% 100.00% `－` `－` 100.00%
				- Note 3 - - - Note 5 Note 5 -

  - Note 1: KYE Systems Europe GmbH terminated its business operations in December 2017 and is currently under liquidation.

  - Note 2: Digilife Technologies Co., Ltd. made an offer for capital increase in cash in June 2020. The Company purchased 20,560,000 shares, and its shareholding percentage increased from 91.37% to 94.61%.

  - Note 3: In November 2020, the Company sold all the shares of DIGILIFE PTY LTD held by it to Digilife Technologies Co., Ltd. The transaction was deemed by the Company to be an equity transaction since it did not change the Company’s control of DIGILIFE PTY LTD.

  - Note 4: KYE Systems America Corporation was completely liquidated in February 2020.

  - Note 5: So-Yi Technology (Shanghai) Ltd., and You-Xiang Technology (Shanghai) Ltd., applied for establishment in January 2015. However, as of December 31, 2020, no capital had been invested in both companies, and both companies had not operated.

(II) Subsidiaries not included in the consolidated financial statements: None.
(III) Information on subsidiaries holding important non-controlling equity: None.
XIII. Investment under the equity method Investment in associates

Investment under the equity method Investment in associates
Important associates TIMING PHARMACEUTICAL CO., LTD. (Timing Pharmaceutical Company) Individual unimportant associates	December 31,2020 $ 211,917 74,518 $ 286,435	December 31,2019
			$ 216,851 68,077 $ 284,928

(I) Important associates
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CompanyName Timing Pharmaceutical Company	Ratio of shareholdings	and votingrights
	December 31,2020 22.64%	December 31,2019
		22.64%

For the above-mentioned associate information related to the nature of business, main territory, and the country in which the company is registered, please refer to Table 5 “Name and Territory of Investees and Other Relevant Information.”

The investment in Timing Pharmaceutical Company was recognized in non-current financial assets measured at fair value through other comprehensive income on December 31, 2018. The Company and subsidiaries purchased 3,000,000 shares from Timing Pharmaceutical Company with NTD44,460,000 in January 2019, increasing the shareholding ratio to 22.64%. Due to its significant impact, the purchase was stated in investment under the equity method. A loss of NTD240,960,000 was recognized in the disposal of equity instruments measured at fair value through other comprehensive income and then stated as a deduction from equity.

Our management performed the impairment test for Timing Pharmaceutical Company, our investee, in 2019. The result showed that the recoverable amount of the investment was less than the book value. The impairment was caused mainly due to Timing Pharmaceutical Company’s overall profit, which was not as good as expected. Therefore, the Company and subsidiaries recognized an impairment loss of NTD38,202,000 using the investment under the equity method in 2019.

The following financial information summary was prepared based on our associates’ IFRS consolidated financial statements. It also reflected the adjustments made after using the equity method.

made after using the equity method.
2020 Current assets $ 841,264 Non-current assets 1,716,927 Current liabilities ( 968,981 ) Non-current liabilities ( 326,989 ) Equity 1,262,221 Non-controlling equity ( 326,274 ) $ 935,947 The Company and subsidiaries’ shareholding ratio 22.64% The Company and subsidiaries’ interests $ 211,917 Investment book value $ 211,917 Operating revenue $ 798,199 Current net loss ( $ 30,726 ) Other comprehensive income 7,243 Total comprehensive income ($ 23,483 ) ummary of individual unimportant associates 2020	2019
	$ 730,975 1,858,092 ( 964,118 ) ( 330,567 ) 1,294,382 ( 336,641 ) $ 957,741 22.64% $ 216,851 $ 216,851 $ 761,813 ( $ 167,643 ) ( 13,278 ) ($ 180,921 ) 2019

made after using the equity method.

2020
Current assets
$ 841,264
Non-current assets
1,716,927
Current liabilities
(
968,981 )
Non-current liabilities
(
326,989
)
Equity
1,262,221
Non-controlling equity
(
326,274
)
$ 935,947
The Company and subsidiaries’
shareholding ratio
22.64%
The Company and subsidiaries’
interests
$ 211,917
Investment book value
$ 211,917
Operating revenue
$ 798,199
Current net loss
( $ 30,726 )
Other comprehensive income

7,243

Total comprehensive income
($ 23,483
)
ummary of individual unimportant associates
2020

2019

$ 730,975
1,858,092
(
964,118 )
(
330,567
)
1,294,382
(
336,641
)
$ 957,741
22.64%
$ 216,851
$ 216,851
$ 761,813
( $ 167,643 )
(
13,278
)
($ 180,921
)
2019

(II) Summary of individual unimportant associates

The Company and subsidiaries’ shares

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Net profit (loss) in the year Other comprehensive income ( Total comprehensive income (	$ 7,799 ( $ 7,927 ) 17,596 ) ( 3,533 ) $ 9,797 ) ($ 11,460 )

Our shares of profit or loss and other comprehensive income using the investments under equity method were calculated based on the CPA-audited financial statements in the same period other than those in Digilife (Thailand) Co., Ltd., and Timing Pharmaceutical Company, which were calculated based on their financial statements not audited by CPAs. However, our management considered that significant impacts would not result from a situation where the investees’ financial statements were not audited by CPAs.

XIV. Property, plant and equipment

					Premises and	Premises and		Machine and	Machine and			Leasehold	Leasehold		Miscellaneous	Miscellaneous	Miscellaneous
			Land			buildings		equipment				improvement			equipment				Total
Cost
Balance on January 1,
2020		$	339,557		$	174,704		$	258,471			$	68,589		$	217,460		$	1,058,781
Addition			130,074			46,493			3,832				10,086			6,454			196,939
Disposal			-			-	(		59,742	)	(		163	)	(	9,241	) (		69,146	)
Net exchange
differences			-			119			528		(		2	)	(	757	) (		112	)
Transfer of account titles			-			-			-				3,185			-			3,185
Balance on December
31, 2020		$	469,631		$	221,316		$	203,089			$	81,695		$	213,916		$	1,189,647
Accumulated
depreciation and
impairment
Balance on January 1,
2020		$	11,046		$	83,367		$	220,999			$	42,184		$	206,594		$	564,190
Disposal			-			-	(		59,062	)	(		163	)	(	9,236	) (		68,461	)
Depreciation expense			-			3,998			8,259				14,245			2,170			28,672
Net exchange
differences			-			118	(		444	)	(		2	)	(	737	) (		1,065	)
Balance on December
31, 2020		$	11,046		$	87,483		$	169,752			$	56,264		$	198,791		$	523,336
Net amount on
December 31, 2020		$	458,585		$	133,833		$	33,337			$	25,431		$	15,125		$	666,311
Cost
Balance on January 1,
2019		$	429,714		$	218,654		$	323,492			$	68,344		$	224,470		$	1,264,674
Addition			-			-			34,692				917			3,816			39,425
Disposal	(		90,157 )	(		43,816	) (		99,704	)	(		667	)	(	10,483	) (		244,827	)
Net exchange
differences			-	(		134	) (		33	)	(		5	)	(	343	) (		515	)
Transfer of account titles			-			-			24				-			-			24
Balance on December
31, 2019		$	339,557		$	174,704		$	258,471			$	68,589		$	217,460		$	1,058,781
Accumulated
depreciation and
impairment
Balance on January 1,
2019		$	11,046		$	82,409		$	310,323			$	29,206		$	213,320		$	646,304
Disposal			-	(		2,906	) (		99,669	)	(		667	)	(	7,801	) (		111,043	)
Depreciation expense			-			3,996			10,448				13,649			1,420			29,513
Net exchange
differences			-	(		132	) (		103	)	(		4	)	(	345	) (		584	)
Balance on December
31, 2019		$	11,046		$	83,367		$	220,999			$	42,184		$	206,594		$	564,190
Net amount on
December 31, 2019		$	328,511		$	91,337		$	37,472			$	26,405		$	10,866		$	494,591

32 -

The Company and subsidiaries’ property, plants, and equipment were depreciated on the straight-line basis over the following useful lives:

ht-line basis over the following useful	lives:
Premises and buildings	10 to 55 years
Machine and equipment	2 to 12 years
Leasehold improvement	4 to 15 years
Miscellaneous equipment
Transport equipment	2 to 10 years
Office equipment	1 to 13 years
Passenger and freight
elevators	15 years
Others	2 to 10 years

For the amount of property, plants and equipment pledged by the Company and subsidiaries as collateral for loans, see Note 29.

XV.Lease agreement

(I) Right-of-use assets

bsidiaries as collateral for loans, see Note 29. greement ight-of-use assets
December 31,2020 Book value of right-of-use assets Building $ 41,228 Office equipment 412 Transport equipment 4,901 $ 46,541 2020 Addition of right-of-use assets $ 2,095 Depreciation expense of right-of-use assets Building $ 25,835 Office equipment 138 Transport equipment 4,843 $ 30,816 ease liabilities December 31,2020 Book value of lease liabilities Current $ 30,604 Non-current $ 34,481 The range of discount rate for lease liabilities is as follows: December 31,2020 Building 1.50%–1.69% Office equipment 1.50% Transport equipment 1.25%–1.69%	December 31,2019
		$ 83,102 550 7,649 $ 91,301 2019
	$ 24,095 $ 22,203 137 3,422 $ 25,762 December 31,2019
	$ 35,456 $ 70,831 December 31,2019
	1.50%–1.69% 1.50% 1.50%–1.69%

(II) Lease liabilities

(III) Material lease activities and terms

We rented buildings, office equipment, and transport equipment with a lease term from 2019 to 2023 for manufacturing, offices, and conducting business. When the lease term expires, we will not be entitled to renew the lease agreement of the rented properties and the bargain purchase option.

33 -

(IV) Other lease information

ther lease information
Short-term lease expense Expense on lease of low-value assets Total cash outflow from lease		2020 $ 1,970 $ 30 $ 10,328		2019
				$ 5,247 $ 30 $ 36,380

The Company and subsidiaries opted to apply the exemption of recognition to the lease of office equipment which met the short-term lease and lease of low-value assets and did not recognize right-of-use assets and lease liabilities with respect to such lease.

The lease commitments beginning after the balance sheet date during the lease term are as follows:

	term are as follows:
XVI.	Lease commitments Investment property Cost Balance on January 1, 2020 Addition Disposal Net exchange differences Balance on December 31, 2020 Accumulated depreciation and impairment Balance on January 1, 2020 Depreciation expense Disposal Recognized impairment loss Net exchange differences Balance on December 31, 2020 Balance on December 31, 2020 Cost Balance on January 1, 2019 Addition Disposal Net exchange differences Balance on December 31, 2019 Accumulated depreciation and impairment Balance on January 1, 2019 Depreciation expense Disposal Recognized impairment loss	December 31,2020 $ 147	December 31,2019
			$ 2,240 Investment property
			$ 398,597 2,843 ( 36,208 ) 6,039 $ 371,271 ( $ 29,454 ) ( 2,236 ) 357 ( 2,552 ) ( 287 ) ($ 34,172 ) $ 337,099 $ 1,345,265 148,749 ( 1,090,301 ) ( 5,116 ) $ 398,597 ( $ 89,335 ) ( 7,680 ) 88,045 ( 20,500 )

34 -

Net exchange differences Balance on December 31, 2019 ( Balance on December 31, 2019	16 $ 29,454 ) $ 369,143

Except for the part of our investment properties whose fair value on December 31, 2020 and 2019 was not evaluated by an independent evaluator but evaluated by our management using the evaluation model commonly used among market participants, the fair value of other investment properties was evaluated by an independent evaluation company using the comparative method and income method. Under the comparative method, the fair value was calculated and evaluated based on the closing price and determined sales price of the comparable properties. Under the income method, the fair value was calculated and evaluated based on the estimated net profit and capitalization rate of profit. The fair value of the investment properties on December 31, 2020 and 2019 was NTD178,899,000 and NTD179,016,000, respectively. The fair value of the investment properties evaluated by the Company and subsidiaries was NTD159,092,000 and NTD190,066,000, respectively. The evaluation was performed by reference to the market evidence related to the transaction price of similar properties.

Since the fair value of part of the investment properties was less than the book value, the Company and subsidiaries recognized impairment losses of NTD2,552,000 and NTD20,500,000 in 2020 and 2019, respectively.

The investment properties were depreciated on the straight-line basis over a 50-year useful life.

For the amount of investment property pledged by the Company and subsidiaries as collateral for loans, see Note 29.

XVII. Loan

Long-term loans

as collateral for loans, see Note 29. Loan Long-term loans
Loans with floating interest rate: China Trust Commercial Bank Pledged loans, due in February 2040 (Note 1) Pledged loans, due in August 2024 (Note 2) Total Less: Long-term loans maturing within 1 year	December 31,2020 $ 138,000 100,000 238,000 8,095 $ 229,905	December 31,2019
			$ - 100,000 100,000 - $ 100,000

Note 1: The interest rate on December 31, 2020 was 1.2%. The principal and interest will be amortized on a monthly basis from March 2022.

Note 2: The interest rates on December 31, 2020 and 2019 were 1.2% and 1.5% respectively. The principal and interest will be amortized on a monthly basis from August 2021.

For the amount of property and investment property pledged by the Company and subsidiaries as collateral for loans, see Note 29.

XVIII. Notes and accounts payable

Accounts payable did not include interest expenses. The Company and subsidiaries established the financial risk management policies to ensure that all payables could be paid back within the pre-agreed term of credit.

35 -

XIX. Other payables

Other payables
Salaries and bonuses payable Service fees payable Market promotion fees payable Royalties payable Others	December 31,2020 $ 37,326 10,324 6,967 4,277 38,605 $ 97,499	December 31,2019
			$ 43,308 7,965 4,485 6,292 56,996 $ 119,046

XX.Post-employment benefit plan (I) Defined contribution plan

The pension system specified in the “Labor Pension Act” adopted by the Company and domestic subsidiaries is the defined pension appropriation plan managed by the government. A pension equal to 6% of an employee’s monthly wage shall be appropriated to the individual labor pension account at the Bureau of Labor Insurance. The subsidiaries in Mainland China shall be subject to relevant local pension insurance system and shall annually appropriate a fixed percentage of the salary as the pension to the designated responsible institution.

(II) Defined benefit plan

The Company is subject to the retirement pension system specified in the “Labor Standards Act.” The system defines the payment of pension. Two bases are given for each full year of service rendered if an employee has seniority of less than 15 years. For the rest of the years over 15 years, one base is given for each full year of service rendered. The total number of bases shall be no more than 45. The years of service rendered and the average wage of six months (base) prior to the approved retirement date shall be the reference for calculation of the pension to be paid to the employee. The Company contributes 2% of the employee’s total wage as the pension fund on a monthly basis and remits it

to the special account at the Bank of Taiwan in the name of the Labor Pension Fund Supervisory Committee. Before the end of the year, if the assessed balance in the account is inadequate

to make a full payment of pensions to the employees who may meet the retirement conditions in the next year, we will make up the difference in one appropriation before the end of March the following year. The account is managed by the Bureau of Labor Funds, Ministry of Labor and we do not have the right to influence the investment management strategies.

Amounts related to the defined benefits plan and included in the consolidated balance sheet are listed as follows:

balance sheet are listed as follows:
December 31,2020 December 31,2019 Present value of defined benefit obligation $ 49,794 $ 48,629 Fair value of plan assets (18,140 ) (16,906 ) Contribution deficit 31,654 31,723 Net defined benefit liabilities $ 31,654 $ 31,723 Changes in net defined benefit liabilities (assets) are as follows: Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities (assets)	December 31,2019
		(	$ 48,629 16,906 ) 31,723 $ 31,723 Net defined benefit liabilities (assets)

36 -

Balance on January 1, 2019		$ 53,047		($	16,442	)	$	36,605
Current service cost		202			-			202
Previous service cost	(	7,687	)		-		(	7,687	)
Interest expenses (income)		597		(	189	)		408
Recognition in profit or loss	(	6,888	)	(	189	)	(	7,077	)
Remeasurement
Return on plan assets
(except for any amount
included in net interest)		-		(	592	)	(	592	)
Actuarial loss – changes
in demographic
assumption		20			-			20
Actuarial loss – changes
in financial assumption		2,341			-			2,341
Actuarial loss –
experience adjustment		1,009			-			1,009
Recognition in other
comprehensive income		3,370		(	592	)		2,778
Contribution by employer		-		(	583	)	(	583	)
Payment of benefits	(	900	)		900			-
Balance on December 31, 2019		48,629		(	16,906	)		31,723
Current service cost		208			-			208
Interest expenses (income)		365		(	129	)		236
Recognition in profit or loss		573		(	129	)		444
Remeasurement
Return on plan assets
(except for any amount
included in net interest)		-		(	571	)	(	571	)
Actuarial loss – changes
in financial assumption		1,255			-			1,255
Actuarial profit –
experience adjustment	(	663	)		-		(	663	)
Recognition in other
comprehensive income		592		(	571	)		21
Contribution by employer		-		(	534	)	(	534	)
Balance on December 31, 2020		$ 49,794		($	18,140	)	$	31,654

The amounts related to the defined benefit plan recognized as profit or loss are summarized by function as follows:

summarized by function as follows:
Marketing expenses Administrative expense R&D expense		2020 $ 118 311 15 $ 444	2019
			( $ 2,206 ) ( 4,367 ) ( 504 ) ($ 7,077 )

The Company was exposed to the following risks due to the pension system under the “Labor Standards Act”:

Investment risk: The Bureau of Labor Funds, Ministry of Labor has separately invested the labor pension fund in domestic (foreign) equity and debt securities, and bank deposits. The investment is conducted at the discretion of the Bureau
37 -

or under the mandated management. However, the profit generated from the Company’s plan assets shall be calculated with an interest rate not below the interest rate for a two-year time deposit with local banks.

Interest rate risk: A decrease in the interest rates of government bonds and corporate bonds would increase the present value of the defined benefit obligation, and the return on debt investment of the plan assets would be increased accordingly. The net defined benefit liabilities might be partially offset by both increases.
Salary risk: The present value of the defined benefit obligation was calculated by reference to the future salary of the plan participants. Therefore, the present value of the defined benefit obligation would be increased by an increase in the plan participants’ salary.

The Company’s present value of the defined benefit obligation was calculated actuarially by a qualified actuary. The major assumptions on the date of measurement are as follows:

measurement are as follows:
Discount rate Rate of expected salary increase	December 31,2020 0.500% 2.250%	December 31,2019
		0.750% 2.250%

If there were any reasonably possible changes to the major actuarial assumptions separately, the resulting increase (decrease) in the present value of the defined benefit obligation in the situation where all the other assumptions remained the same is as follows:

the same is as follows:
Discount rate Increase by 0.25% Decrease by 0.25% Rate of expected salary increase Increase by 0.25% Decrease by 0.25%	December 31,2020 ($ 1,255 ) $ 1,303 $ 1,258 ($ 1,218 )	December 31,2019
	( (	( (	$ 1,319 ) $ 1,369 $ 1,325 $ 1,284 )

Since the actuarial assumptions might be correlated to each other and it was unlikely that the changes were only in a single assumption, the aforesaid sensitivity analysis might not reflect the actual changes in the present value of the defined benefit obligation.

	benefit obligation.
XXI. (I)	Expected contribution within 1 year Average maturity of defined benefit obligations Equity Share capital Number of authorized shares (thousand shares) Authorized capital Number of issued shares with	December 31,2020 $ 539 10.2 years December 31,2020 390,000 $ 3,900,000 224,528	December 31,2019
			$ 552 11.0 years December 31,2019
				390,000 $ 3,900,000 234,538

38 -

adequate capital received (thousand shares) Issued capital Issuance in excess of par value	$ 2,245,285 198,950 $ 2,444,235	$ 2,345,385 301,635 $ 2,647,020

A share of issued common stock had a par value of NTD10 and was entitled to one voting right and dividends.

The number of shares of the authorized capital retained for issuance of the employee stock option warrants was 25,000,000 shares.

(II) Capital reserves

apital reserves
Stock issuance in excess of par value Treasury stock trading Long-term investment	December 31,2020 $ 198,950 160,257 23,691 $ 382,898	December 31,2019
			$ 301,635 130,039 24,532 $ 456,206

The excess from stock issuance in excess of par value (including common stock issuance in excess of par value, capital in excess of par from share issuance due to mergers, and treasury stock trading) and the reserve received from donations in capital reserves may be used to offset losses, or to distribute cash dividends or be transferred into the capital if the Company does not incur a loss. However, the amount of the transfer into the capital shall be limited to a certain percentage of the paid-in capital in every year.

The capital reserves deriving from investment under the equity method, employee stock option, and other stock options shall not be used for any purpose. (III) Retained earnings and dividend policy

According to the Company’s Articles of Incorporation, if the Company has a profit at the year’s final accounting, it shall first pay the income tax and make up any cumulative losses in accordance with laws, and then make a 10% contribution of the balance to the legal reserve, and also make provision/reversal of special reserves pursuant to the laws. The residual balance shall be added to undistributed earnings for allocation of shareholder dividends and bonuses. The shareholder dividends are allocated in the form of cash dividend or stock dividend. The cash dividend shall be no less than 10% of the total shareholder dividends, and the residual balance is paid in shares. However, all the shareholder dividends shall be distributed in stock dividends when the cash dividend per share is NTD0.1 or lower.

For the policy of distribution of employee and director/supervisor remuneration regulated in the Company’s Articles of Incorporation, please refer to (4) Remuneration to employees, directors and supervisors in Note 23.

The Company approved the amendments to the Articles of Incorporation through the resolution made at the shareholders’ meeting on June 21, 2019. The distribution of the Company’s profits and the compensation for its losses may be made after the end of each quarter.

Legal reserves shall be prepared to the amount at which the balance of the legal reserves reaches to the total paid-in capital. Legal reserves may be used to make up loss. Where the Company does not sustain loss, the part of the legal reserves that exceeds the total paid-in capital by 25% may be appropriated as capital or distributed by cash.

39 -

The Company provides and reverses special reserves according to the letters under Jin-Guan-Zheng-Fa-Zi No. 1010012865 and Jin-Guan-Zheng-Fa-Zi No. 1010047490 as well as “Q&A for Provision of Special Reserve Upon First-Time Adoption of IFRSs.” If there is any reversal of the decrease in shareholder’ equity, the earnings may be distributed based on the reversal proportion.

The Company held the general shareholders’ meetings respectively on June 18, 2020 and June 21, 2019. The proposal for loss compensation in 2019 and the proposal for profit distribution in 2018, respectively approved at the said meetings, are as follows:

are as follows:
Legal reserves Special reserves Legal reserves for covering losses Reversal of special reserves		2019 $ - $ - $ 24,924 ) $ 66,778 )		2018
	( (			$ 9,724 $ 382,473 $ - $ -

The shareholders decided at the general shareholders’ meetings of the Company on June 18, 2020 and June 21, 2019 to distribute the income derived from the issuance of common stocks at a premium as a capital reserve to the amount of NTD93,815,000 and NTD46,908,000 to the shareholders by cash pursuant to Article 241 of the Company Act.

The proposal for profit distribution in 2020 submitted by the Board meeting on March 25, 2021 is as follows:

March 25, 2021 is as follows:
Legal reserves Special reserves		2020
		$ 14,461 $ 130,154

The Board of Directors of the Company decided on March 25, 2021 to distribute the income derived from the issuance of common stocks at a premium as a capital reserve to the amount of NTD67,359,000 to the shareholders by cash pursuant to Article 241 of the Company Act.

The proposal for loss compensation in 2020 is expected to be resolved at the general shareholders’ meeting to be held on June 23, 2021.

(IV) Other equity
Exchange differences from the translation of foreign operations’ financial statements

statements
Balance – beginning of the year Amounts incurred in the year Exchange differences from foreign operations Share of associates under the equity method Balance – ending of the year	2020 ( $ 24,935 ) ( 12,624 ) 1,836 ($ 35,723 )	2019
		$ 207 ( 21,831 ) ( 3,311 ) ($ 24,935 )

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Unrealized profit/loss from the financial assets measured at fair value through other comprehensive income

other comprehensive income
		2020			2019
Balance – beginning of
the year	($ 404,382		)	($ 660,956		)
Amounts incurred in the
year
Unrealized
profit/loss –
equity instrument	(	204,967	)		19,290
Share of associates
under the equity
method	(	17,609	)	(	3,676	)
Other comprehensive
income in the year	(	222,576	)		15,614
Cumulative profit or loss
on disposal of equity
instruments transferred
to retained earnings		1,604			240,960
Balance – ending of the
year	($ 625,354		)	($ 404,382		)
reasury stocks
				Maintenance of the
				Company’s credit
					and
				shareholders’
				equity (1,000
Cause of repurchase					shares)
Number of shares on January 1, 2020					-
Increase in the year					10,010
Decrease in the year				(	10,010	)
Number of shares on December 31, 2020					-

(V) Treasury stocks

To protect the Company’s credit and shareholders’ equity, the Board of Directors resolved on March 18, 2020 and May 20, 2020 to buy back 10,000,000 and 5,000,000 shares of the Company respectively during the periods from March 19, 2020 to May 17, 2020 and from May 21 to July 17, 2020 pursuant to Article 28-2 of the Securities and Exchange Act, and define the price ranges of the shares to be repurchased respectively at NTD5–8 and NTD6–10 pursuant to Article 2 of the “Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies.” In 2020, the Company repurchased 10,010,000 as treasury stocks at a cost of NTD78,752,000.

The Board of Directors of the Company resolved on November 5, 2020 to cancel the 10,010,000 shares repurchased for protection of the Company’s credit and shareholders’ equity, and set the record date of cancellation to November 6, 2020.

According to the Securities and Exchange Act, the treasury stock held by the Company shall not be pledged and entitled to any dividends and voting rights. XXII. Revenue

2020 2019

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Revenue from contracts with customers Revenue from sale of goods Other operating revenues Other revenue	$ 1,643,434 9,835 $ 1,653,269	$ 1,598,927 6,552 $ 1,605,479

(I) Description of contracts with customers

The goods sold to customers were measured at the fair value of considerations received or receivable, and the amount recognized as revenue was determined by subtracting returns, rebates and other similar discounts expected from customers.

(II) Contract balance

ontract balance
December 31, 2020 December 31, 2019 Notes and accounts receivable (Note 9) $ 123,573 $ 97,197 ub-items of revenue from customer contracts 2020 Computer Peripheral $ 1,015,318 Video Images 600,662 Consumer Electronics 10,782 Others 26,507 $ 1,653,269	December 31, 2019	January1,2019
			$ 200,250 2019
		$ 925,175 646,314 23,983 10,007 $ 1,605,479

(III) Sub-items of revenue from customer contracts

XXIII. Net profit in the year

(I) Other profits and losses

t profit in the year ther profits and losses
Other revenue Exchange loss – net Rent revenue Other losses Profit on the valuation of financial assets measured at fair value through profit or loss Loss or profit on disposal and obsolescence of property, plants, and equipment – net Profit on investment disposal – net Total epreciation and amortization Property, plant and equipment Investment property Other non-current assets Right-of-use assets	2020 $ 50,055 ( 32,161 ) 11,024 ( 2,046 ) 1,713 ( 590 ) 412 $ 28,407 2020 $ 28,672 2,236 10,086 30,816 $ 71,810	2019
		$ 45,111 ( 16,841 ) 20,861 ( 7,113 ) - 21,633 3,369 $ 67,020 2019
			$ 29,513 7,680 17,019 25,762 $ 79,974

(II) Depreciation and amortization

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Summary of depreciation expenses by function Operating costs Operating expenses Non-operating expenses Summary of amortization expenses by function Operating costs Operating expenses	$ 18,751 40,737 2,236 $ 61,724 $ 7,880 2,206 $ 10,086	$ 22,248 33,027 7,680 $ 62,955 $ 13,508 3,511 $ 17,019

(III) Employee benefit expense Post-employment benefits Defined contribution plan Defined benefit plan (Note 20) Separation benefits Other employee benefits Total of employee benefit expenses Summarized by function Operating costs Operating expenses		2020 $ 3,679 444 4,123 1,648 198,555 $ 204,326 $ 35,381 168,945 $ 204,326		2019
			$ 3,919 ( 7,077 ) ( 3,158 ) 9,111 217,712 $ 223,665 $ 43,678 179,987 $ 223,665

(IV) Remuneration for employees, directors and supervisors

After deducting the profit before tax of the current year prior to distribution of the remuneration to employees, directors and supervisors, the amount no less than 1% and no more than 15% was appropriated as the remuneration to employees and no more than 1% was appropriated as remuneration to directors and supervisors. The remuneration for employees, directors and supervisors in 2020 and 2019 was resolved by the Board of Directors on March 25, 2021 and March 26, 2020, respectively, as follows:

Estimated ratio

respectively, as follows: Estimated ratio
Remuneration to employees Remuneration to directors and supervisors Amount Remuneration to employees Remuneration to directors and supervisors	2020 3% 1% 2020 $ 5,663 $ 1,887	2019
		3% 1% 2019
		$ 5,370 $ 1,769

If there were any changes in the amount after the approval and release date of

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annual consolidated financial statements, the change was treated as a change in accounting estimate and accounted in the following year.

There was no discrepancy between the actual distribution of remuneration to employees, directors and supervisors in 2019 and 2018 and the amount recognized in the consolidated financial statements in 2019 and 2018.

The information about remuneration to employees, directors and supervisors resolved by the Board of Directors may be viewed at the “MOPS” of TWSE.

XXIV. Income tax

(I) Income tax recognized in profit or loss

Major components of income tax expenses are as follows:

V. Income tax (I) Income tax recognized in profit or loss Major components of income tax expenses are as follows:
2020 2019 Current income tax Tax incurred in the year $ 31,125 $ 11,046 Adjustments for the previous year ( 5,396 ) ( 585 ) 25,729 10,461 Deferred income tax Tax incurred in the year 12,683 10,183 Foreign exchange rate effect ( 645 ) ( 116 ) 12,038 10,067 Income tax expense recognized as profit or loss $ 37,767 $ 20,528 Adjustments to accounting income and income tax expenses are as follows: 2020 2019 Net profit before tax $ 184,672 $ 175,192 Income tax expense on net profit before tax calculated at the statutory tax rate $ 39,478 $ 43,520 Losses not deductible and tax-free income not included when determining taxable income 3,087 ( 26,323 ) Unrecognized deductible temporary difference 3,220 9,997 Unrecognized loss carryforwards ( 2,622 ) ( 6,081 ) Adjustment to income tax expenses of the previous year in the year ( 5,396 ) ( 585 ) Income tax expense recognized as profit or loss $ 37,767 $ 20,528 (II) Income tax recognized in other comprehensive income 2020 2019 Deferred income tax Amounts incurred in the year `－`Unrealized profit/loss from the financial assets ( $ 21,951 ) $ 26,281		2019
	$ 175,192 $ 43,520 ( 26,323 ) 9,997 ( 6,081 ) ( 585 ) $ 20,528 2019
		$ 26,281

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measured at fair value through other comprehensive income `－`Translation from foreign operations `－`Remeasurement of defined benefits plans Income tax recognized in other comprehensive income (	4,631 4 $ 17,316 )	4,297 556 $ 31,134

(III) Deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities are as follows:

2020

2020
Deferred income tax assets Temporary difference Inventory Defined retirement benefit plan Other non-current assets Others Financial assets measured at fair value through other comprehensive income Investment under the equity method Deferred loss on purchase commitment Deferred income tax liabilities Temporary difference Investment under the equity method Defined retirement benefit plan Financial assets measured at fair value through other comprehensive income Others	Balance – beginning of theyear $ 20,064 8,654 13,617 6,620 46,837 32,050 13,180 $ 141,022 $ 14,379 2,309 - - $ 16,688	Recognition in profit or loss ( $ 8,784 ) ( 18 ) ( 1,235 ) ( 3,611 ) - 2,819 ( 1,840 ) ($ 12,669 ) ( $ 95 ) - - 109 $ 14	Recognition in other comprehensiv e income $ - - - - ( 14,028 ) 4,564 - ($ 9,464 ) ( $ 67 ) ( 4 ) 7,923 - $ 7,852	Balance – ending of the year
					$ 11,280 8,636 12,382 3,009 32,809 39,433 11,340 $ 118,889 $ 14,217 2,305 7,923 109 $ 24,554

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2019

2019
Deferred income tax assets Temporary difference Inventory Defined retirement benefit plan Other non-current assets Others Financial assets measured at fair value through other comprehensive income Investment under the equity method Deferred loss on purchase commitment Deferred income tax liabilities Temporary difference Investment under the equity method Defined retirement benefit plan Financial assets measured at fair value through other comprehensive income	Balance – beginning of theyear $ 33,018 10,186 18,758 5,647 32,810 26,942 9,466 $ 136,827 $ 18,325 2,865 12,254 $ 33,444	Recognition in profit or loss ( $ 12,954 ) ( 1,532 ) ( 5,141 ) 973 - 2,995 3,714 ($ 11,945 ) ( $ 1,762 ) - - ($ 1,762 )	Recognition in other comprehensiv e income $ - - - - 14,027 2,113 - $ 16,140 ( $ 2,184 ) ( 556 ) ( 12,254 ) ($ 14,994 )	Balance – ending of the year
					$ 20,064 8,654 13,617 6,620 46,837 32,050 13,180 $ 141,022 $ 14,379 2,309 - $ 16,688

(IV) Authorization of income tax

The Company’s income tax returns up to 2018 were audited and approved by the tax authorities. The declared loss from sale of sluggish materials in 2012 was deducted pursuant to the approved adjustment and a tax amount of NTD5,257,000 was exempted as a result. The Company did not accept the said approval and filed an administrative action. On July 8, 2020, the Taipei High Administrative Court issued a final decision for settlement with an approved amount of refundable tax of NTD2,104,000.

The income tax returns of Chung-Chiang Investment Co., Ltd. and Hung-Cheng Investment Co., Ltd. up to 2018 and of the Digilife Technologies Co., Ltd. up to 2017 were audited and approved by the tax authorities.

XXV.

EPS

The earning and the weighted average number of common stocks used for calculating EPS are as follows:

Net profit in the year

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Earnings attributable to the owner of the Company Effect of potential diluted common stocks: Remuneration to employees Profit used for calculation of diluted EPS Number of shares Weighted average number of common stocks used for calculating basic EPS Effect of potential diluted common stocks: Remuneration to employees Weighted average number of common stocks used for calculating diluted EPS		2020 $ 146,236 - $ 146,236 2020 228,307 657 228,964		2019
			$ 151,480 - $ 151,480 Unit: 1,000 shares 2019
				234,538 783 235,321

When the Company and subsidiaries could select stocks or cash as the remuneration to employees, it was assumed that the employee’s remuneration was paid with stocks when the diluted EPS was calculated. The weighted average outstanding common stocks were added when the potential common stocks had diluting capability to calculate the diluted EPS. The diluting capability of the potential common stocks was referenced in the next year when the Board of Directors resolved to calculate the diluted EPS prior to payment of the employee’s remuneration with stocks.

XXVI. Capital risk management

The Company and subsidiaries conducted capital management to ensure the companies of the Group could keep operating while maximizing shareholders’ return by optimizing the liability and equity balances. The overall strategies of the Company and subsidiaries did not have substantial changes.

The capital structure of the Company and subsidiaries was comprised of the net liabilities (i.e. loans minus cash and cash equivalents) and shareholders’ equity attributable to the Company (i.e. capital stock, capital reserves, retained earnings, and other equities).

The Company and subsidiaries did not need to observe external capital requirements.

The management of the Company conducted annual review of the Group’s capital structure. Observing the suggestions of the management, the Company and subsidiaries balanced the overall capital structure by paying dividends, issuing new stocks, repurchasing stocks, and issuing new corporate bonds, or repaying existing liabilities.

XXVII. Financial instruments

(I) Fair value information – financial instruments not measured at fair value

Since the book value of the Company and subsidiaries’ financial instruments not measured at fair value, including cash and cash equivalents, notes and accounts receivable, finance leases receivable, other receivables, guarantee deposits paid, notes and accounts payable, other payables, long-term liabilities maturing within 1 year, long-term loans and guarantee deposits received, was a reasonable

47 -

approximation of fair value, we did not disclose the fair value.

(II) Fair value information – financial instruments measured at fair value on a repetitive basis
Fair value hierarchy December 31, 2020

Fair value hierarchy December 31, 2020
Financial assets measured at fair value through profit or loss Investment in equity instruments `－`Domestic non-listed (OTC) stocks Financial assets measured at fair value through other comprehensive income Investment in equity instruments `－`Domestic listed (OTC) stocks `－`Domestic non-listed (non-OTC) stocks `－`Overseas non-listed (non-OTC) stocks Total December 31, 2019 Financial assets measured at fair value through other comprehensive income Investment in equity instruments `－`Domestic listed (OTC) stocks `－`Domestic non-listed (non-OTC) stocks `－`Overseas non-listed (non-OTC) stocks Total	Level 1 $ - $ 43,724 - - $ 43,724 Level 1 $ 71,056 - - $ 71,056	Level 2 $ - $ - - - $ - Level 2 $ - - - $ -	Level 3 $ 1,713 $ 10,950 72,791 115,501 $ 199,242 Level 3 $ 101,532 59,083 214,905 $ 375,520	Total
				$ 1,713 $ 54,674 72,791 115,501 $ 242,966 Total
				$ 172,588 59,083 214,905 $ 446,576

There was no transfer of fair value measurements between Level 1 and Level 2 in 2020 and 2019.

Adjustments to the fair value of financial instruments based on Level 3 measurement
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2020

2020
Balance – beginning of the year Recognition in profit or loss (other profits and losses) Recognition in other comprehensive income Purchase Disposal Exchange differences from foreign operations Balance – ending of the year 2019	Financial assets measured at fair value through profit or loss $ - 2,125 - 55,315 ( 55,574 ) ( 153 ) $ 1,713	Financial assets measured at fair value through other comprehensive income $ 375,520 - ( 164,346 ) - ( 1,355 ) ( 10,577 ) $ 199,242		Total
	( (	( ( (	( ( (	$ 375,520 2,125 164,346 ) 55,315 56,929 ) 10,730 ) $ 200,955

2019
Balance – beginning of the year Recognition in profit or loss (other profits and losses) Recognition in other comprehensive income Purchase Disposal Exchange differences from foreign operations Balance – ending of the year	Financial assets measured at fair value through profit or loss $ 18,242 3,369 - 59,540 ( 77,914 ) ( 3,237 ) $ -	Financial assets measured at fair value through other comprehensive income $ 632,506 - ( 11,288 ) 44,460 ( 288,184 ) ( 1,974 ) $ 375,520		Total
	( (	( ( (	( ( (	$ 650,748 3,369 11,288 ) 104,000 366,098 ) 5,211 ) $ 375,520

Evaluation technology and inputs of Level 3 fair value measurement

For the domestic and overseas non-listed (non-OTC) stocks held by the Company and subsidiaries and measured at fair value, such fair value was determined with reference to the price supported with the observable market price or estimated using the comparable multiple method.

For the investment products for which no market price could be used as a reference, the cash flow discounting method was used to estimate the cash flow in the future based on the observable interest rate at the end of the period. The fair value for the stock private placement for domestic listed companies was determined using the option pricing model based on the observable market price.

(III) Type of financial instruments

December 31, 2020 December 31, 2019 Financial assets

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Financial assets measured at
amortized cost (Note 1)	$ 1,563,805	$ 1,622,269
Measurement at fair value
through profit or loss
Mandatory measurement
at fair value through
profit or loss	1,713	-
Financial assets measured at
fair value through other
comprehensive income
Investment in equity
instruments	242,966	446,576
Financial liabilities
Measurement at amortized cost
(Note 2)	482,838	359,550

Note 1: The balance included the financial assets measured at amortized cost, such as cash and cash equivalents, notes and accounts receivable, finance leases receivable, other receivables and guarantee deposits paid.

Note 2: The balance included the financial liabilities measured at amortized cost, such as notes and accounts payable, other payables, long-term loans maturing within 1 year, long-term loans and guarantee deposits received.

(IV) Financial risk management purpose and policy

The Company and subsidiaries’ main financial instruments included investments in equity, accounts receivable, accounts payable, loans and lease liabilities. Our financial management department was responsible for provision of services for business units, planning and coordination of investments in domestic and international financial markets, analysis of internal risk exposure based on the risk level and scope, and reporting, supervision and management of the financial risks related to the Company’s and subsidiaries’ operations. The said risks included the market risk (such as exchange rate risk, interest rate risk, and other price risks), credit risk, and liquidity risk.

We used derivative financial instruments to avoid risk exposure and mitigate the impact of such risks. Derivative financial instruments were used subject to the policies adopted at the meeting of the Board of Directors or shareholders of the Company and subsidiaries. These policies included the exchange rate risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments, and the written current funds investment principle. Internal reviewers reviewed the compliance of the policies and the exposure limits on an ongoing basis. The Company and subsidiaries did not conduct transactions of financial instruments (including derivative financial instruments) for speculation purposes.

The finance management department reported to the Board of Directors of the Company and subsidiaries every quarter.

Market risk

The major financial risk that the operating activities imposed on the Company and subsidiaries was the foreign exchange rate risk. (Refer to (1) below.) The Company and subsidiaries were engaged in various derivative financial instruments to manage the imposed foreign exchange rate risk.

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The Company and subsidiaries did not change the risk exposure on the financial instrument market or the methods for management and measurement of such exposure.

(1) Exchange rate risk

The Company and subsidiaries were engaged in sales and purchase transactions in foreign currency. These transactions exposed the Company and subsidiaries to the exchange rate fluctuation risk. More than 99% of the sales amount of the Company and subsidiaries were not valuated with the functional currency of the Company; about 99% of the purchase amount were not valuated with the functional currency of the Company. The Company and subsidiaries used currency options to manage the exchange rate risk within the policies.

For the book value of the monetary assets and liabilities of the Company and subsidiaries valued with non-functional currency on the balance sheet date, see Note 32.

Sensitivity analysis

The Company and subsidiaries were affected primarily by fluctuations in the exchange rate of USD.

Our sensitivity analysis for the exchange rate of NTD (functional currency) to USD increasing or decreasing by 1% is described in the following table: The sensitivity analysis only included the outstanding foreign currency items. The translation thereof at the end of the period was adjusted by an increase or decrease of 1% in the exchange rate. The positive number in the following table means the reduced amount of the pre-tax net profit when NTD appreciates by 1% against USD; when NTD depreciates by 1% against USD, the effect on the pre-tax net profit is represented with a negative number of the same amount.

==> picture [354 x 25] intentionally omitted <==

Note: The profit or loss was mainly generated from the Company and subsidiaries’ accounts receivable and payable denominated in USD which were outstanding on the balance sheet date and were not hedged against the cash-flow risk.

The management found that the sensitivity analysis could not represent the inherent risk of exchange rate. Since the sales changed in seasons, the foreign currency risk exposure on the balance sheet date could not reflect the exposure in the midyear.

(2)

Interest rate risk

The interest rate risk exposure occurred because the Company and subsidiaries’ entities borrowed funds and deposits with the undertaking bank at fixed and floating rates at the same time.

The book value of the financial assets and liabilities of the Company and subsidiaries exposed to the interest rate risk on the balance sheet date are as follows:

December 31, 2020 December 31, 2019

With fair value interest rate risk － Financial assets $ 499,271 $ 594,390 － Financial 65,085 106,287

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liabilities
With cash flow interest
rate risk
`－`Financial assets	830,173	880,089
`－`Financial
liabilities	238,000	100,000

Sensitivity analysis

The following sensitivity analysis is based on the interest rate risk exposure of the non-derivative instruments on the balance sheet date. The analysis mainly focuses on the assets and liabilities with floating interest rate and assumes that the amount of outstanding assets and liabilities on the balance sheet date is completely in circulating during the reporting period.

If the interest rate increased/decreased by 25 basis points, with all other variables held constant, the Company and subsidiaries’ net profit before tax in 2020 and 2019 was increased/decreased by NTD1,715,000 and NTD1,346,000, respectively.

(3) Other price risks

The Company and subsidiaries sustained equity price risk exposure due to investment in equity securities. This investment was not held for trading but a strategic investment. The management of the Company and subsidiaries managed risk by holding different risk investment portfolios. The equity price risk of the Company and subsidiaries was mainly in the equity instruments for the electronic industry. The Company designated responsible teams to monitor the price risk. Sensitivity analysis

The following sensitivity analysis is based on the equity price risk exposure on the balance sheet date.

If the equity price increased/decreased by 1%, the profit or loss before tax in 2020 was increased/decreased by NTD17,000, respectively, due to increases/decreases of the fair value of the financial assets measured at fair value through profit or loss. Other comprehensive income before tax in 2020 and 2019 was increased/decreased by NTD2,430,000 and NTD4,466,000, respectively, due to increases/decreases of the fair value of the financial assets measured at fair value through other comprehensive income.

2.

Credit risk

The credit risk refers to the risk in the financial loss of the Group because the counterparty delays in the fulfillment of the contractual obligations. Up to the balance sheet date, the potential highest credit risk exposure of the Company and subsidiaries due to failure of the counterparty to fulfill the obligations was mainly derived from the book value of the financial assets recognized in the consolidated balance sheet.

In order to mitigate the credit risk, the management of the Company and subsidiaries designated responsible teams to set the line of credit, approve credit, and carry out other control procedures to ensure that appropriate actions were adopted for the recovery of overdue accounts receivable. In addition, the Company and subsidiaries reviewed the recoverable amount of accounts receivable separately on the balance sheet date to make sure that the

52 -

appropriate impairment loss of the accounts receivable that could not be recovered was recognized. As such, our management considered that the Company and subsidiaries’ credit risk was reduced.

Since the counterparty of the current funds and derivative financial instruments was a financial institution having good credit rating, no significant credit risk was expected.

Receivables were to be collected from a lot of customers. They belonged to different industries and were located in different geographic areas. The Company and subsidiaries continuously assessed the financial status of the customers from which receivables should be recovered and, if necessary, entered into credit insurance contracts.

Up to December 31, 2020 and 2019, the balance of receivables of the top 10 customers accounted for 49% and 63% of that of the Company and subsidiaries, respectively. The credit concentration risk of other receivables was insignificant.

3. Liquidity risk

The Company and subsidiaries managed liquidity risk for the purpose to maintain the cash and cash equivalents needed for the operation, securities of high liquidity, and full banking facility to ensure that the Company and subsidiaries had adequate financial flexibility.

Liquidity and interest rate risks

The following table describes the remaining contractual maturity analysis of the non-derivative financial liabilities within the agreed repayment period of the Company and subsidiaries. The table is compiled based on the earliest repayment date required to the Company and subsidiaries and the non-discounted cash flow of the financial liabilities, excluding the cash flow of the interest.

December 31, 2020

the interest. December 31, 2020
Less than 1 year Non-derivative financial liability Non-interest-bear ing liabilities $ 244,838 Lease liabilities 31,368 Floating interest rate instruments 8,095 $ 284,301 December 31, 2019 Less than 1 year Non-derivative financial liability Non-interest-bear ing liabilities $ 259,550 Lease liabilities 36,810 Floating interest rate instruments - $ 296,360	1 to 2years $ - 28,717 24,688 $ 53,405 1 to 2years $ - 33,987 8,043 $ 42,030	2 to 5years $ - 6,093 79,071 $ 85,164 2 to 5years $ - 38,059 59,463 $ 97,522	Over 5years
			$ - - 126,146 $ 126,146 Over 5years
Non-derivative financial liability Non-interest-bear ing liabilities Lease liabilities Floating interest rate instruments
				$ - - 32,494 $ 32,494

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XXVIII. Related party transactions

Since all the transactions, account balances, profits and expenses/losses between the Company and the subsidiaries (namely, the Company’s related parties) were removed after the merger, they were not disclosed in the Note. Transactions between the Company and subsidiaries and other related parties are as follows:

(I) Names of related parties and their relationship with the Company and subsidiaries

Relationship with the Company and Name of Related Party Subsidiaries STAR REACH LIMITED Associate DigiLife (Thailand) Co., Ltd. Associate KAI CHIEH LIMITED The Company’s de facto related party before January 23, 2019 Shih-Kun Tso The Company’s Chairman Yung-Far Wei De facto related party

(II) Operating transaction

perating transaction
Revenue on processing De facto related party		2020 $ -		2019
				$ 510

The Company and subsidiaries’ revenue on processing from KAI CHIEH LIMITED is credited on a monthly basis every 30 days. The sales price of the Company and subsidiaries offered to the aforesaid related parties was approximately same as the price for other individual customers.

Purchase Associate De facto related party		2020 $ 285 - $ 285		2019
				$ 8,890 7,497 $ 16,387

The purchase transactions of the Company and subsidiaries with STAR REACH LIMITED and KAI CHIEH LIMITED were conducted under O/A 30 days. Except for the aforesaid transactions, all the transactions of the Company and subsidiaries with related parties were conducted under the conditions same as those for the transactions with non-related parties.

Disposal	2020	$ Profit on		2019	2019
	$ - proceeds 2019 $ 1,495		$	23,215 disposal
2020		2020 $ -			2019
$ -					$ 663

Balance of accounts payable to related parties on the balance sheet date is as follows:

follows:
Associate	December 31,2020 $ -	December 31,2019
			$ 831

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The outstanding balance of the accounts payable to related parties was not guaranteed and to be paid by cash.

(III) Lease agreement

guaranteed and to be paid by cash. ease agreement
Lease liabilities Shih-Kun Tso Interest expenses Shih-Kun Tso	December 31,2020 $ - 2020 $ 108	December 31,2019
			$ 9,807 2019
			$ 174

The Company and subsidiaries rented offices from Shih-Kun Tso with the lease terms and conditions equivalent to non-related parties.

(IV) Remuneration to key management

emuneration to key management
Short-term employee benefits Post-employment benefits		2020 $ 41,811 438 $ 42,249		2019
				$ 42,952 541 $ 43,493

The remuneration to the directors and key management was decided by the Remuneration Committee subject to personal performance and market trend. XXIX. Pledged and mortgaged assets

The following assets were pledged or mortgaged to the bank as collateral for issuance of letters of credit and for short-term and long-term loans:

Property – net Investment property – net	December 31,2020 $ 516,047 178,007 $ 694,054	December 31,2019	December 31,2019
			$ 346,318 179,077 $ 525,395

XXX. Significant contingent liability and unrecognized contractual commitment In addition to those described in other notes, the Company and subsidiaries’ significant commitments and contingencies on the balance sheet date are as follows: (I) Significant commitments

The Company and subsidiaries’ total prices of additional property and pre-sold house purchase contracts and paid payment are as follows:

Total contract price Paid payment (Note)	December 31,2020 $ 168,000 $ 58,000	December 31,2019 $ 346,770 $ 53,731	December 31,2019 $ 346,770 $ 53,731
			$ 346,770 $ 53,731

Note: The paid payment was recognized in prepayment for equipment.

In May 2020, the Company canceled its purchase of the pre-sold house in Zhonghe District, New Taipei City, and recovered the deposit paid. In March 2020, the prepayment for equipment made by the Company and subsidiaries for purchase of the pre-sold house in Shilin District, Taipei City was reclassified as property, plant and equipment. See Note 14.

(II) Contingencies

The SFIPC claimed that the Company is a corporate director of Unity Opto Technology, Ltd. (hereinafter referred to as “Unity Opto”), and that the financial statements of Unity Opto used circular transactions to inflate the operating revenue and exaggerated the amount of work-in-progress goods to inflate profits, causing a

55 -

total of NTD569,202,000 in damage to investors. As a result, a claim for damages was filed against Unity Opto and its directors and supervisors (including the Company). The case is being adjudicated in the Taiwan New Taipei District Court, and its result is currently unknown to us. Therefore, no losses related to the case were recognized.

XXXI. Other matters

The Company and subsidiaries have been affected by the spread of the COVID-19 pandemic worldwide. The Dongguan Plant and most of the supply chain suppliers of the subsidiary in China had their Chinese New Year holidays extended to the end of February or the beginning of March when work was resumed. Warehousing and transportation services also delayed the resumption of their work, affecting the progress of consolidation and shipment of goods. As a result, the Company and subsidiaries’ operating revenue in February 2020 dropped by 49% from the same period of 2019. Shipments have gradually returned to normal since March. Despite the easing of the pandemic in Taiwan, the Company and subsidiaries’ sales customers in Eastern and Western Europe, Latin America and Asia Pacific were still under closed management. As the global economy continues to recede, consumers are spending their money on web shopping rather than in physical stores, and social life is instead conducted through remote interaction. Nevertheless, since the Company and subsidiaries and their customers have promptly made adjustments, the net operating revenue in 2020 increased by NTD47,790,000 (with an annual growth of approximately 3%) from the same period of 2019, and the operating profit of NTD161,795,000 was an increase of approximately 204% from the same period of 2019. The COVID-19 pandemic has not caused significant impact to the going concern ability, working capital liquidity turnover rate, asset impairment and financing risk of the Company and subsidiaries.

Due to the possibility that the pandemic will last for some time and continue to affect the global economy and the lifestyle of consumers, the Company and subsidiaries plan to take the following measures:

Adjustment to the operational strategy

(I) The Company will engage in the promotion of non-physical web and online marketing jointly with its customers.
(II) The Company will introduce more products relating to the economic and lifestyles that have emerged in the post-pandemic era including stay-at-home economy, remote working and distance education.

XXXII. Information on foreign currency financial assets and liabilities with significant effect The following information was summarized and stated based on the foreign currencies other than the Company and subsidiaries’ functional currency. The disclosed exchange rate represents the exchange rate of such foreign currencies to the functional currency. Foreign currency financial assets and liabilities with significant effect are as follows:

December 31, 2020

follows: December 31, 2020
Financial assets Monetary items USD RMB AUD Investment under the equity method	Foreign currency $ 31,579 28,931 3,238	Exchange Rate 28.480 4.377 21.950	Book value
			$ 899,357 126,632 71,065

56 -

USD RMB THB Financial assets measured at fair value through other comprehensive income RMB THB Financial liabilities Monetary items RMB USD December 31, 2019 Financial assets Monetary items USD RMB AUD EUR Investment under the equity method USD RMB THB Financial assets measured at fair value through other comprehensive income RMB THB Financial liabilities Monetary items RMB USD HKD	1,813 2,571 737 25,658 3,800 35,919 972 Foreign currency $ 31,557 25,239 1,937 271 $ 1,441 2,681 737 49,191 3,800 18,511 1,938 9,503	28.480 4.377 0.956 4.377 0.923 4.377 28.480 Exchange Rate 29.980 4.305 21.005 33.590 29.980 4.305 1.010 4.305 0.923 4.305 29.980 3.849	51,623 11,253 704 111,994 3,507 157,219 27,674 Book value
			$ 946,071 108,655 40,694 9,203 $ 43,209 11,543 744 211,398 3,507 79,688 58,111 36,578

The realized and unrealized foreign currency exchange losses of the Company and subsidiaries in 2020 and 2019 were NTD32,161,000 and NTD16,841,000, respectively. However, it is infeasible to disclose the exchange loss and gain of each significant foreign currencies because of numerous foreign currency transactions and functional currencies of the Group.

XXXIII. Disclosures of notes

(I) Information on major transactions:
Loans to others: None.
Endorsements/guarantees for others: None.

57 -

 3. Securities – ending (excluding those controlled by invested subsidiaries, associates and joint ventures): Table 1.

 4. Aggregate purchases or sales of the same securities reaching NTD300 million or more than 20% of the paid-up capital: None.

 5. Acquisition of property reaching NTD300 million or more than 20% of the paid-up capital: None.

 6. Disposal of property reaching NTD300 million or more than 20% of the paid-in capital: None.

 7. Purchases or sales of goods from and to related parties reaching NTD100 million or more than 20% of the paid-up capital: Table 2.

 8. Accounts receivable from related parties reaching NTD100 million or more than 20% of the paid-up capital: Table 3.

 9. Trading in derivative instruments: None.

 10. Others: The business relationship and important transactions between the parent company and its subsidiaries, and between subsidiaries: Table 4.

(II) Information on investees: Table 5.

(III) Information on investments in Mainland China:

 1. Information about investees in Mainland China, such as the name, main business operations, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, profit or loss from investments, investment book value at the end of the period, profit or loss received from investments, and limit on the amount of investment in Mainland China: Table 6.

 2. Any of the following significant transactions with investees in Mainland China, either directly or indirectly through a third-party area, and their prices, payment conditions, and unrealized profits or losses: Table 6.

    - (1) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.

    - (2) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.

    - (3) The amount of property transactions and the amount of resulting profits or losses.

    - (4) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.

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

    - (6) Other transactions that have a material effect on the profit or loss of the period or on the financial position, such as the rendering or receiving of services.

(IV) Information on major shareholders: The names and the numbers and percentages of shares held by shareholders who hold at least 5% of the total shares. (Table 7)
XXXIV.Segment information
- The information was provided for the chief operating decision maker to distribute
- resources and evaluate the performance of each department. It focused on the type of each batch of products or services delivered or provided. The reportable segments of the Company and subsidiaries were the electronic and other segments.
(I) Segment revenue and operating result Analysis of the Company and subsidiaries’ revenues and operating results from
continuing operations by reportable segment is as follows:
58 -

Domestic and overseas operatingsegments Revenues from clients other than the parent company and merged subsidiaries Segment profits (losses) Loss on disposal of investment property Other profits and losses Impairment loss Share of profit/loss of associates under equity method Interest income Interest expenses Net profit (loss) before tax Domestic and overseas operatingsegments Revenues from clients other than the parent company and merged subsidiaries Segment profits (losses) Profit on disposal of investment property Other profits and losses Impairment loss Share of profit/loss of associates under equity method Interest income Interest expenses Net profit (loss) before tax				2020
						Total
					$ 1,653,269 $ 161,795 ( 9,000 ) 28,407 ( 2,552 ) 1,224 8,954 ( 4,156 ) $ 184,672
						Total
					$ 1,605,479 $ 53,281 148,639 67,020 ( 58,702 ) ( 38,050 ) 15,743 ( 12,739 ) $ 175,192

The segment profit was the earnings of each segment excluding the administration costs of the head office to be shared and the compensation of the directors and supervisors, the portion of the affiliate accounted for under the equity method, loss and gain from disposal of any affiliate, rent income, interest income, loss and gain from disposal of property, plants, and equipment, loss and gain from disposal of investments, net foreign currency exchange gain (loss), financial tool valuation gain (loss), financial costs and income tax. These estimated amounts were provided for the chief operating decision maker to distribute resources to departments and evaluate their performance.

(II) Total segment assets and liabilities

December 31, 2020 December 31, 2019

Segment asset

59 -

Electronic segment Others Total consolidated assets Segment liability Electronic segment Others Total consolidated liabilities	$ 3,332,615 364,927 $ 3,697,542 $ 694,079 1,288 $ 695,367	$ 3,427,964 399,722 $ 3,827,686 $ 532,253 30,744 $ 562,997

(III) Revenue from main products and services

Analysis of the Company’s revenue from main products and services is as follows:

follows:
Electronic products Investment		2020 $ 1,650,825 2,444 $ 1,653,269		2019
				$ 1,602,809 2,670 $ 1,605,479

(IV) Information by territory

The Company primarily operates in four regions: Asia, America, Europe, and Taiwan.

The Company’s revenue of continuing operations from external clients and non-current assets was classified respectively by territory and the location where the assets were located. The relevant information is listed as follows:

Income from external clients 2020 2019 $ 558,586 $ 813,399 555,171 423,671 436,675 337,954 61,379 8,229 41,458 22,226 $ 1,653,269 $ 1,605,479	Non-current assets	Non-current assets
	2020 December 31 $ 80,910 43 43 1,043,797 - $ 1,124,793	2019 December 31
2020 $ 558,586 555,171 436,675 61,379 41,458 $ 1,653,269
		$ 104,409 10,003 41 917,483 - $ 1,031,936

The non-current assets did not include financial instruments and deferred income tax assets.

(V) Information about major clients

The income of the electronic segment in 2020 and 2019 was NTD1,650,825,000 and NTD1,602,809,000, respectively, and of which NTD256,672,000 and NTD435,643,000 came from the largest customer of the Group. Except for the above-mentioned largest customer, no income earned from any single customer reached more than 10% of the Group’s total income in 2020 and 2019.

60 -

KYE Systems Corp. and Subsidiaries Securities Held at the End of the Period December 31, 2020

Table 1

Unit: NTD and foreign currency (thousand)

Holding Company	Type and Name of Securities	Relationship with the Issuer of Securities	Account Title		At the End of the Period	At the End of the Period
				Number of shares/Number of units (1,000 shares/1,000 units)	Book value	Shareholding ratio	Fair value (Note 1)
KYE Systems Corp. Globalink Holding Co., Ltd. Hung-Cheng Investment Co., Ltd. Digilife Technologies Co., Ltd.	Stock Powerchip Semiconductor Manufacturing Corp. CORETEK OPTO CORPORATION Monterey International Corp. Ta Shee Resort Co., Ltd. (preferred stock) Unity Opto Technology Co., Ltd. AIPTEK (private placement) Unity Opto Technology Co., Ltd. (private placement) Stock Shenzhen CMK Technology Co., Ltd. Stock Solteam Incorporation FLYTECH Dynamic Medical Technologies, Inc. CORETEK OPTO CORPORATION Stock Cheng-Shih International Co., Ltd. MOTOMOTO Ltd.	None The Company’s director is the chairman of the company. None None The Company’s director is the chairman of the company. None The Company’s director is the chairman of the company. None None None None The chairman of the company is a director of KYE Systems Corp. None None	Financial assets measured at fair value through profit or loss – current Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – current Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – current Financial assets measured at fair value through other comprehensive income – current Financial assets measured at fair value through other comprehensive income – current Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – non-current	34 6,583 2,631 - 1,913 3,000 15,789 - 156 486 11 10 50 38	$ 1,713 48,467 22,820 30 - (Note 3) 10,950 - (Note 3) USD 3,932 9,363 30,405 540 74 500 3,507	- 9.96% 7.71% - - 2.36% 3.42% 8.61% - - - - 2.55% 19.00%	$ 1,713 48,467 22,820 30 - (Note 3) 10,950 - (Note 3) USD 3,932 9,363 30,405 540 74 500 3,507

(Continued to next page)

61 -

(Continued from previous page)

Holding Company	Type and Name of Securities	Relationship with the Issuer of Securities	Account Title		At the End of the Period	At the End of the Period
				Number of shares/Number of units (1,000 shares/1,000 units)	Book value	Shareholding ratio	Fair value (Note 1)
	LIAN, JU Biotechnology Co., Ltd Unity Opto Technology Co., Ltd. Shin Kong Financial Holding Co., Ltd. China Petrochemical Development Corporation	The directors of the company are also directors of Digilife Technologies Co., Ltd. The chairman of the company is a director of KYE Systems Corp. None None	Financial assets measured at fair value through other comprehensive income – non-current Financial assets measured at fair value through other comprehensive income – current Financial assets measured at fair value through other comprehensive income – current Financial assets measured at fair value through other comprehensive income – current	90 597 176 160	$ 900 - (Note 3) 1,547 1,869	18.00% - - -	$ 900 - (Note 3) 1,547 1,869

Note 1: The market price was determined as follows: The price of the listed and OTC stocks was calculated based on the closing price of Taiwan Stock Exchange and Taipei Exchange at the end of December 2020; the price of the stock private placement the trade of which was restricted was estimated using the valuation method; the price of the non-listed and non-OTC stocks was calculated using the valuation method. Note 2: The securities held at the end of the period were not provided as guarantees or pledged as collateral for loans.

Note 3: Unity Opto ceased trading on April 7, 2020, so there were no open market price and verifiable financial figures that could serve as the basis of valuation. The Company assessed that the fair value of Unity Opto’s equity was 0 and recognized unrealized valuation losses on investment in equity instruments measured at fair value through other comprehensive income in 2020.
62 -

Unit: NTD thousand

KYE Systems Corp. and Subsidiaries

Purchases or sales of goods from and to related parties reaching NTD100 million or more than 20% of the paid-up capital 2020

Table 2

Purchaser/Seller	Counterparty	Relationship		Transaction	Transaction		Trading conditions distinct from those of general transactions and reasons thereof	Trading conditions distinct from those of general transactions and reasons thereof	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Remarks
			Purchase (sale)	Amount	Percentage in total purchases (sales)	Loan period	Unit price	Loan period	Balance	Percentage in total notes/accounts receivable (payable)
KYE Systems Corp. KYE Trade (HK) Co., Ltd.	KYE Trade (HK) Co., Ltd. Dong-Guan Kunying Computer Products Co.,Ltd.	The Company’s sub-subsidiary With the same parent company	Purchase (Note 1) Purchase	$ 484,510 (Note 2) 483,655 (Note 2)	43% 43%	Irregularly offset by accounts receivable Irregularly offset by accounts receivable	- -	`－` `－`	$ - -	- -

Note 1: As for the purchase trading with KYE Trade (HK) Co., Ltd., the Company purchased raw materials as entrusted and had them transported to the subsidiary in China for processing to finished products, which then resold to the Company.

Note 2: The amount was entirely written off during preparation of the consolidated financial statements.

63 -

Unit: NTD thousand

KYE Systems Corp. and Subsidiaries Accounts receivable from related parties reaching NTD100 million or more than 20% of the paid-up capital December 31, 2020

Table 3

Company Booking Accounts Receivable	Counterparty	Relationship	Balance of Accounts Receivable from Related Parties	Turnover Rate	Overdue Accounts Receivable from Related Parties	Overdue Accounts Receivable from Related Parties	Subsequent Recovered Amount of Accounts Receivable from Related Parties	Appropriated loss allowance
					Amount	Treatment
KYE Trade (HK) Co., Ltd.	Dong-Guan Kunying Computer Products Co., Ltd.	With the same parent company	$ 534,294 (Note 2)	(Note 1)	(Note 1)	(Note 1)	(Note 1)	$ -

Note 1: They were mainly the receivables from the entrusted purchase of raw materials and machine/equipment and intermittently offset by accounts payable. Note 2: The amount was entirely written off during preparation of the consolidated financial statements.

64 -

Unit: NTD thousand

KYE Systems Corp. and Subsidiaries

The business relationship and important transactions between the parent company and its subsidiaries, and between subsidiaries 2020

Table 4

No.	Name of Trader	Counterparty	Relationship with Traders (Note 1)		Transaction	Transaction
				Title	Amount	Trading conditions	Percentage of consolidated total operating revenue or total assets
0 1	The Company Dong-Guan Kunying	KYE Trade KYE Trade KYE Trade KYE Trade	1 1 3 3	Purchase Other receivables Operating revenue Other current liabilities	$ 484,510 534,294 483,655 534,294	Note 2 Note 2 Note 2 Note 2	29% 14% 29% 14%

Note 1: Relationships with traders can be classified into the following three types:

1: Parent company to subsidiary; 2: Subsidiary to parent company; 3: Subsidiary to subsidiary

Note 2: As for the purchase trading with KYE Trade, the Company purchased raw materials as entrusted and had them transported to the subsidiary in China for processing to finished products, which then resold to the Company. The payables deriving from the purchase trading were offset against the receivables deriving from the entrusted purchase of raw materials on an irregular basis.

65 -

KYE Systems Corp. and Subsidiaries Name and Territory of Investees and Other Relevant Information

2020

Table 5

Unit: NTD and foreign currency (thousand)

Name of Investor	Name of Investee	Territory	Main Business Operation	Original Investment Amount	Original Investment Amount	Held at the End of the Period	Held at the End of the Period	Held at the End of the Period	Current Profit (Loss) of Investee	Profit (loss) from Investments Recognized in the Current Period	Remarks
				End of the current period	End of the previous year	Number of shares (thousand shares)	Ratio (%)	Book value
KYE Systems Corp. KYE Systems (Hong Kong) Corp. Genius Holding Co., Ltd. Digilife Technologies Co., Ltd. Life Technologies Co., Ltd.	Genius Holding Co., Ltd. Chung-Chiang Investment Co., Ltd. Hung-Cheng Investment Co., Ltd. KYE International Corporation KYE Systems Europe GmbH KYE Systems (Hong Kong) Corp. DIGILIFE TECHNOLOGIES CO., LTD. DIGILIFE PTY LTD SHINYOPTICS CORP. STAR REACH LIMITED TIMING PHARMACEUTICAL CO., LTD. Genius Labuan Inc. Globalink Holding Co., Ltd. KYE Systems America Corporation Moustek Investment Co., Ltd. KYE Trade (HK) Co., Ltd. KYE Inc. Maxfar Limited Life Technologies Co., Ltd. DIGILIFE PTY LTD SHINYOPTICS CORP. DigiLife (Thailand) Co., Ltd. LIFE TECHNOLOGIES (HONG KONG) CO., LIMITED	British Cayman Islands New Taipei City Taipei City United States of America Germany Hong Kong Taipei City Australia Tainan City Samoan Islands New Taipei City Malaysia British Virgin Islands United States of America British Virgin Islands Hong Kong British Virgin Islands Samoan Islands Samoan Islands Australia Tainan City Thailand Hong Kong	Investment holdings Investment business Investment business Sales of computer peripherals and consumer electronic products Sales of computer peripherals and consumer electronic products Sales of computer peripherals and consumer electronic products Digital video/audio products Tourism and real estate development R&D, design, manufacturing, and sale of optical engines Investment holdings Manufacturing of Chinese medicine Sales of computer peripherals and consumer electronic products Investment holdings Sales of computer peripherals and consumer electronic products Investment holdings Sales of computer peripherals and consumer electronic products Investment holdings Investment business Investment holdings Tourism and real estate development R&D, design, manufacturing, and sale of optical engines Sale of digital video/audio products Design, processing, and sale of digital video/audio products	USD 28,467 85,000 85,000 USD 2,610 EUR 2,270 HKD 500 652,962 AUD - 61,200 USD 417 288,184 USD 10 USD 8,289 USD - USD 2,806 HKD 10 USD 16,065 USD 1,575 USD 300 AUD 12,500 3,600 THB 1,500 USD 455	USD 28,467 85,000 85,000 USD 2,760 EUR 2,270 HKD 500 447,367 AUD 4,900 61,200 USD 417 288,184 USD 10 USD 8,289 USD 14,992 USD 2,806 HKD 10 USD 16,065 USD 1,575 USD 300 AUD 7,600 3,600 THB 1,500 USD 455	21,467 6,452 9,578 235 - 500 51,563 - 3,400 - 19,446 10 5,250 - 1 10 3 1,575 455 12,500 200 15 455	100.00 100.00 100.00 100.00 100.00 100.00 94.61 - 22.97 25.00 22.64 100.00 100.00 - 100.00 100.00 100.00 44.37 100.00 100.00 1.35 30.00 100.00	$ 301,777 (Note 1) 63,693 (Note 1) 44,116 (Note 1) 4,138 (Note 1) 630 (Note 1) 8,864 (Note 1) 581,062 (Note 1) - 9,181 11,254 211,917 - USD 4,335 (Note 1) USD - (Note 1) USD 441 (Note 1) ( USD 186 ) (Note 1) ( USD 11,162 ) (Note 1) USD 1,813 11,915 (Note 1) 255,830 (Note 1) 1,757 704 USD 418 (Note 1)	USD 359 21 2,347 USD 4 - - 6,056 ( AUD 668 ) ( 6,753 ) ( RMB 441 ) ( 29,037 ) USD - ( USD 1 ) USD 259 ( USD 217 ) ( 253 ) ( USD 27 ) 22,344 USD 45 ( AUD 777 ) ( 6,753 ) THB - HKD 349	$ 4,218 21 2,347 132 - - 5,474 ( 5,302 ) ( 1,552 ) ( 472 ) ( 6,575 ) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary; Note 2 Subsidiary Subsidiary Subsidiary; Note 3 Investment under the equity method Investment under the equity method Investment under the equity method Indirect subsidiary Indirect subsidiary Sub-subsidiary, Note 4 Indirect subsidiary Indirect subsidiary Indirect subsidiary Investment under the equity method Indirect subsidiary Indirect subsidiary; Note 3 Investment under the equity method Investment under the equity method Indirect subsidiary

Note 1: The amount was entirely written off during preparation of the consolidated financial statements.

Note 2: KYE Systems Europe GmbH terminated its business operations in December 2017 and is currently under liquidation.

Note 3: In November 2020, the Company sold all the shares of DIGILIFE PTY LTD held by it to Digilife Technologies Co., Ltd. The transaction was deemed by the Company to be an equity transaction since it did not change the Company’s control of DIGILIFE PTY LTD. Note 4: KYE America Corporation was completely liquidated in February 2020.

66 -

Unit: NTD and foreign currency (thousand)

KYE Systems Corp. and Subsidiaries Information on Investments in Mainland China 2020

Table 6

KYE Systems Corp.	KYE Systems Corp.
Name of Chinese Investees	Main Business Operation	Paid-in Capital		Method of Investment	Accumulated Amount of Investments from Taiwan at the Beginning of the Current Period		Amount of Investments Remitted or Recovered in the Current Period		Accumulated Amount of Investments from Taiwan at the End of the Current Period	Current Profit (Loss) of Investee	The Company’s Shareholdin g Ratio of Direct or Indirect Investment	Profit or Loss from Investments Recognized in the Current Period (Note 4)	Investment Book Value – Ending	Profits Received from Investments as of the End of the Current Period
							Remittance	Return
Dong-Guan Kunying Computer Products Co., Ltd. Dongguan Gaoying Electronic Technology Co., Ltd. Dongguan Chiaying Electronics Co., Ltd.	Manufacturing and sales of computer mice and computer game consoles R&D and sale of computers and computer peripherals Manufacturing and sale of computer accessories, appliances and molds.	USD USD RMB	15,965 2,706 3,722	Indirectly invested in KYE Inc. through Genius Holding Co., Ltd. to have a 100% shareholding Indirectly invested in Moustek Investment Co., Ltd. through Genius Holding Co., Ltd. and invested operating funds through the same company Indirectly invested in Chia Ying Plastics (HK) Co., Limited through STAR REACH LIMITED and invested 25% operating funds through the same company	USD 15,965 USD 2,706 USD 417		$ - - -	$ - - -	USD 15,965 USD 2,706 USD 417	( $ 772 ) ( RMB 1,486 ) ( RMB 441 )	100% 100% 25%	( $ 772 ) (Note 5) ( RMB 1,486 ) (Note 5) ( 472 )	( USD 11,209 ) (Note 5) USD 380 (Note 5) 11,253	$ - - -

Accumulated Amount of Investments from Taiwan to Mainland China at the End of the Current Period			Investment Amount Approved by the Investment Commission, MOEA			Limit on the Amount of Investments in Mainland China Specified by the Investment Commission, MOEA
USD 35,431(Note 2 and 3)			USD 40,520(Note 2 and 3)			$1,781,461(Note 1)

Note 1: It was calculated based on 60% of the net value.

Note 2: The amounts of USD 150,000 from Beijing Kunying Technology Ltd. whose registration was canceled on February 28, 2005, USD 6,900,000 from Changying Electronic Factory (Houjie, Dongguan) whose registration was canceled on April 2, 2009, and USD 248,000 from Su-Te Technology (Shanghai) Co., Ltd. whose registration was canceled on November 30, 2009 were included in it.
Note 3: The Company indirectly invested in Shanghai Global Lighting Technologies Inc., Suzhou Global Lighting Technologies Inc, and Suzhou Opto Technologies Inc. through Global Lighting Technologies Inc. Since Global Lighting Technologies Inc. has been traded publicly at Taiwan Stock Exchange since July 28, 2011, please refer to the open financial statements of the company for this information.

Note 4: As for the field of the Profit or Loss from Investments Recognized in the Current Period, the invested companies in China were reviewed and certified by the same CPA’s firm in Taiwan.

Note 5: The amount was entirely written off during preparation of the consolidated financial statements.

67 -

Digilife Technologies Co., Ltd.

Name of Chinese Investees	Main Business Operation	Paid-in Capital	Paid-in Capital	Method of Investment	Accumulated Amount of Investments from Taiwan at the Beginning of the Current Period	Accumulated Amount of Investments from Taiwan at the Beginning of the Current Period	Amount of Investments Remitted or Recovered in the Current Period	Amount of Investments Remitted or Recovered in the Current Period	Accumulated Amount of Investments from Taiwan at the End of the Current Period	Name of Investee Profit (Loss) of the year	The Company’s Shareholdin g Ratio of Direct or Indirect Investment	Profit or Loss from Investments Recognized in the Current Period (Note 3)	Investment Book value – Ending	Profits Received from Investments as of the End of the Current Period
							Remittance	Return
ZISER TECHNOLOG IES (SHENZHEN) CO.,LTD.	Sale of digital video/audio products	USD	200	Investment through LIFE TECHNOLOGIES (HONG KONG) CO., LIMITED to have a 100% shareholding	USD 200		$ -	$ -	USD 200	RMB 1,251	100%	HKD 1,407 (Note 4)	HKD 2,273 (Note 4)	$ -

Accumulated Amount of Investments from Taiwan to Mainland China at the End of the Current Period			Investment Amount Approved by the Investment Commission, MOEA			Limit on the Amount of Investments in Mainland China Specified by the Investment Commission, MOEA
USD 334(Note 2)			USD 500(Note 2)			$368,482(Note 1)

Note 1: It was calculated based on 60% of the net value.

Note 2: KYE Trade (Shenzhen) Co., Ltd. canceled the registered USD29,000 on January 4, 2013 and withdrew the investment amount of USD351,000 on December 25, 2014, which had been approved by the Investment Commission of the Ministry of Economic Affairs. Note 3: The profit or loss from investments was recognized based on the CPA-audited financial statements in the same period.

Note 4: The amount was entirely written off during preparation of the consolidated financial statements.

68 -

KYE Systems Corp. Information on major shareholders December 31, 2020

Table 7

Names of Major Shareholders	Shares	Shares
	Number of Shares Held	Shareholding percentage
Ching-Hsin Cho	11,959,488	5.32%

Note: The information on major shareholders in this table is based on the data where the total of the common and preferred shares held by a shareholder which have been registered and delivered on a non-physical basis by the Company (including treasury stocks) on the last business day at the end of the quarter, as calculated by the TDCC, is at least 5%. The capital stock recorded in the Company’s consolidated financial statements may differ from the actual number of shares registered and delivered on a non-physical basis due to different bases of preparation and calculation.

69 -

AI assistant

KYE — Annual Report 2020

52033_rns_2020-11-11_935bff41-b946-424c-bea6-2737ef1d7e22.pdf

KYE Systems Corp. and Subsidiaries

Consolidated Financial Statements and Independent Auditors’ Report 2020 and 2019

§TABLE OF CONTENTS§

Independent Auditors’ Report

Audit Opinions

Basis of Audit Opinions

Key Audit Matters

Occurrence of recognition of sales revenue

Other Matters

CPA’s responsibility for the audit of the consolidated financial statements

KYE Systems Corp. and Subsidiaries Consolidated Balance Sheet December 31, 2020 and 2019

KYE Systems Corp. and Subsidiaries Consolidated Statement of Comprehensive Income January 1 to December 31, 2020 and 2019

(Continued from previous page)

(Continued from previous page)

KYE Systems Corp. and Subsidiaries Consolidated Statement of Changes in Equity January 1 to December 31, 2020 and 2019

KYE Systems Corp. and Subsidiaries Consolidated Statement of Cash Flow January 1 to December 31, 2020 and 2019

I. Company Milestones

II. Approval date and procedures of the financial statements

(V) Foreign currency

(VI) Inventory

(VII) Investment in associates

3. Removal of financial assets

Financial liabilities

1. Subsequent measurement

2. Removal of financial liabilities

(XII) Liability reserve

(XIV) Lease

(XV) Employee benefits

1. Post-employment benefits

2.

3.

VI. Cash and cash equivalents

IX. Notes and accounts receivable

December 31, 2020

X. Finance leases receivable

XII. Subsidiary

(Continued from previous page)

XIV. Property, plant and equipment

(II) Lease liabilities

(III) Material lease activities and terms

XVII. Loan

XVIII. Notes and accounts payable

XIX. Other payables

XX.Post-employment benefit plan (I) Defined contribution plan

(II) Defined benefit plan

(I) Description of contracts with customers

(III) Sub-items of revenue from customer contracts

XXIII. Net profit in the year

(I) Other profits and losses

(IV) Remuneration for employees, directors and supervisors

XXIV. Income tax

(III) Deferred income tax assets and liabilities

2019

(IV) Authorization of income tax

XXV.

XXVII. Financial instruments

(III) Type of financial instruments

(IV) Financial risk management purpose and policy

Sensitivity analysis

Sensitivity analysis

2.

3. Liquidity risk

December 31, 2020

XXVIII. Related party transactions

(II) Operating transaction

XXXI. Other matters

XXXIII. Disclosures of notes

(III) Revenue from main products and services

(IV) Information by territory

(V) Information about major clients

KYE Systems Corp. and Subsidiaries Securities Held at the End of the Period December 31, 2020

Table 1

(Continued from previous page)

KYE Systems Corp. and Subsidiaries

Table 2

KYE Systems Corp. and Subsidiaries Accounts receivable from related parties reaching NTD100 million or more than 20% of the paid-up capital December 31, 2020

Table 3

KYE Annual Report 2020