KYEC — Annual Report 2021

Nov 8, 2021

KING YUAN ELECTRONICS CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 WITH INDEPENDENT AUDITOR'S REPORT TRANSLATED FROM CHINESE

Address: No. 81, Sec. 2, Gongdao 5th Rd., Hsinchu City 300, Taiwan (R.O.C.) Telephone: 886-3-5751888

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

KING YUAN ELECTRONICS CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

As of December 31, 2021 and 2020

(Amounts in thousands of New Taiwan Dollars)

ASSETS	Notes	December 31, 2021	%	December 31, 2020	%
Current assets
Cash and cash equivalents	4, 6(1)	\$6,420,308	10	\$5,110,784	10
Contract assets-current	4, 6(14), 6(15), 7	178,596	-	202,972	-
Notes receivable, net	4, 6(3), 6(15)	7,706	-	3,049	-
Accounts receivable, net	4, 6(4), 6(15)	3,904,721	6	3,127,686	6
Accounts receivable from related parties, net	4, 6(4), 6(15), 7	2,081,340	3	1,749,678	3
Other receivables	4, 6(15)	314,282	-	94,551	-
Other receivables from related parties	4, 7	430,541	1	111,918	-
Inventories, net	4, 6(5)	1,029,780	2	774,144	2
Prepayments	6(6)	53,284	-	125,241	-
Other current assets		66,878	-	51,843	-
Total current assets		14,487,436	22	11,351,866	21
Non-current assets
Financial assets at fair value through other comprehensive income-non-current	4, 6(2)	6,546,477	10	4,446,563	8
Investments accounted for using the equity method	4, 6(7)	8,489,770	13	6,148,166	11
Property, plant and equipment	4, 6(8), 7, 8	34,613,760	54	31,370,700	58
Right-of-use assets	4, 6(16)	553,546	1	1,191,431	2
Intangible assets	4, 6(9)	69,247	-	80,159	-
Deferred tax assets	4, 6(20)	261,675	-	227,623	-
Other financial assets-non-current	8	105,972	-	115,669	-
Other non-current assets		5,394	-	3,497	-
Total non-current assets		50,645,841	78	43,583,808	79
Total assets		\$65,133,277	100	\$54,935,674	100

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

(continued)

KING YUAN ELECTRONICS CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

As of December 31, 2021 and 2020

(Amounts in thousands of New Taiwan Dollars)

LIABILITIES AND EQUITY	Notes	December 31, 2021	%	December 31, 2020	%
Current liabilities
Contract liabilities-current	4, 6(14)	\$-	-	\$11,590	-
Notes payable		10,066	-	4,435	-
Accounts payable		777,667	1	790,394	1
Accounts payable to related parties	7	21,414	-	19,487	-
Other payables		3,324,753	5	2,623,108	4
Other payables to related parties	7	119,736	-	306,083	1
Payables on equipment		1,235,723	2	494,636	1
Current tax liabilities	4, 6(20)	574,809	1	394,417	1
Lease liabilities-current	4, 6(16)	86,364	-	304,358	1
Other current liabilities	4, 6(10)	882,244	2	578,740	1
Total current liabilities		7,032,776	11	5,527,248	10
Non-current liabilities
Long-term loans	4, 6(11), 8	21,275,331	33	18,318,298	34
Deferred tax liabilities	4, 6(20)	1,527,445	2	667,968	1
Lease liabilities-non-current	4, 6(16)	469,377	1	533,878	1
Net defined benefit liabilities	4, 6(12)	610,222	1	566,456	1
Guarantee deposits		33,851	-	2,755	-
Total non-current liabilities		23,916,226	37	20,089,355	37
Total liabilities		30,949,002	48	25,616,603	47
Equity
Share capital	4, 6(13)
Common stock		12,227,451	19	12,227,451	22
Capital surplus	4, 6(7), 6(13)	4,885,134	8	4,588,172	9
Retained earnings	4, 6(2), 6(13)
Legal reserve		3,019,879	5	2,656,958	5
Special reserve		201,416	-	402,406	1
Undistributed earnings		10,580,312	15	8,147,631	14
Total retained earnings		13,801,607	20	11,206,995	20
Other equity Total equity	4, 6(13)	3,270,083 34,184,275	5 52	1,296,453 29,319,071	2 53
Total liabilities and equity		\$65,133,277	100	\$54,935,674	100

KING YUAN ELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2021 and 2020

(Amounts in thousands of New Taiwan Dollars, except for earnings per share)

Description	Notes	2021	%	2020	%
Net sales	4, 6(14), 6(16), 7	\$25,820,727	100	\$23,344,758	100
Operating costs	4, 6(5), 6(8), 6(9), 6(12), 6(16), 6(17), 7	(18,476,736)	(72)	(17,280,780)	(74)
Gross profit		7,343,991	28	6,063,978	26
	4, 6(8), 6(9), 6(12), 6(16), 6(17), 7
Operating expenses
Selling expenses		(345,629)	(1)	(359,004)	(1)
Administrative expenses		(1,646,203)	(6)	(1,386,381)	(6)
Research and development expenses		(846,846)	(3)	(909,932)	(4)
Expected credit losses		-	-	(2,857)	-
Total operating expenses		(2,838,678)	(10)	(2,658,174)	(11)
Operating income		4,505,313	18	3,405,804	15
	4, 6(7), 6(8), 6(18), 7
Non-operating income and expenses Interest income		4,872	-	7,424	-
Other income		193,414	1	177,060	1
Other gains and losses		105,488	-	(164,770)	(1)
Finance costs		(200,484)	(1)	(217,585)	(1)
Share of profit of associates accounted for using		1,901,485	7	1,159,434	5
the equity method
Total non-operating income and expenses		2,004,775	7	961,563	4
Net income before income tax		6,510,088	25	4,367,367	19
Income tax expense	4, 6(20)	(1,335,042)	(5)	(730,714)	(3)
Net income		5,175,046	20	3,636,653	16
Other comprehensive income	4, 6(19)
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of the defined benefit plan		(53,368)	-	(45,906)	-
Unrealized gains from equity instrument		2,101,279	8	2,056,310	9
investments measured at fair value
through other comprehensive income
Income tax related to components of other		(419,982)	(2)	(403,570)	(2)
comprehensive income that will not be reclassified to profit or loss
Items that will be reclassified subsequently to
profit or loss:
Exchange differences resulting from translating		(42,240)	-	105,726	-
the financial statements of foreign operations
Income tax related to components of other		8,448	-	(21,145)	-
comprehensive income that will be reclassified to profit or loss
Other comprehensive income, net of tax		1,594,137	6	1,691,415	7
Total comprehensive income		\$6,769,183	26	\$5,328,068	23
Earnings per share(NT\$)	4, 6(21)
Basic Earnings Per Share		\$4.23		\$2.97
Diluted Earnings Per Share		\$4.18		\$2.94

KING YUAN ELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2021 and 2020

(Amounts in thousands of New Taiwan Dollars)

				Retained earnings			Other equity
Description	Common stock	Capital surplus	Legal reserve	Special reserve	Undistributed earnings	Exchange differences resulting from translating the financial statements of foreign operations	Unrealized gains (losses) from equity instrument investments measured at fair value through other comprehensive income	Total Equity
Balance as of January 1, 2020	\$12,227,451	\$4,832,721	\$2,359,299	\$803,172	\$6,371,702	\$(441,617)	\$39,211	\$26,191,939
Appropriation and distribution of 2019 earnings : Legal reserve Cash dividends Reversal of special reserve	- - -	- (244,549) -	297,659 - -	- - (400,766)	(297,659) (1,956,392) 400,766	- - -	- - -	- (2,200,941) -
Profit for the year ended December 31, 2020 Other comprehensive income for the year ended December 31, 2020 Total comprehensive income	- - -	- - -	- - -	- - -	3,636,653 (45,906) 3,590,747	- 84,581 84,581	- 1,652,740 1,652,740	3,636,653 1,691,415 5,328,068
Changes in ownership interests in subsidiaries Disposal of equity instrument investments measured at fair value through other comprehensive income	- -	- -	- -	- -	5 38,462	- -	- (38,462)	5 -
Balance as of December 31, 2020	\$12,227,451	\$4,588,172	\$2,656,958	\$402,406	\$8,147,631	\$(357,036)	\$1,653,489	\$29,319,071
Balance as of January 1, 2021	\$12,227,451	\$4,588,172	\$2,656,958	\$402,406	\$8,147,631	\$(357,036)	\$1,653,489	\$29,319,071
Appropriation and distribution of 2020 earnings : Legal reserve Cash dividends Reversal of special reserve	- - -	- (244,549) -	362,921 - -	- - (200,990)	(362,921) (2,200,941) 200,990	- - -	- - -	- (2,445,490) -
Profit for the year ended December 31, 2021 Other comprehensive income for the year ended December 31, 2021 Total comprehensive income	- - -	- - -	- - -	- - -	5,175,046 (53,368) 5,121,678	- (33,792) (33,792)	- 1,681,297 1,681,297	5,175,046 1,594,137 6,769,183
Changes in ownership interests in subsidiaries Disposal of equity instrument investments measured at fair value through other comprehensive income	- -	541,511 -	- -	- -	- (326,125)	- -	- 326,125	541,511 -
Balance as of December 31, 2021	\$12,227,451	\$4,885,134	\$3,019,879	\$201,416	\$10,580,312	\$(390,828)	\$3,660,911	\$34,184,275

English Translation of Financial Statements Originally Issued in Chinese KING YUAN ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended December 31, 2021 and 2020

(Amounts in thousands of New Taiwan Dollars)

Description	2021	2020	Description	2021	2020
Cash flows from operating activities :			Cash flows from investing activities :
Profit before tax from continuing operations	\$6,510,088	\$4,367,367	Proceeds from disposal of financial assets at fair value through other comprehensive income	\$1,365	\$65,027
Adjustments for:			Acquisition of property, plant and equipment	(10,199,072)	(8,182,159)
The profit or loss items which did not affect cash flows:			Proceeds from disposal of property, plant and equipment	786,587	840,968
Depreciation	7,102,275	6,809,397	Increase in refundable deposits	(1,897)	(10)
Amortization	47,250	49,887	Acquisition of intangible assets	(36,338)	(63,898)
Expected credit losses	-	2,857	Increase in other financial assets	-	(2,544)
Interest expenses	200,484	217,585	Decrease in other financial assets	9,697	-
Interest income	(4,872)	(7,424)	Dividends received	98,006	64,076
Dividend income	(85,016)	(50,966)	Net cash used in investing activities	(9,341,652)	(7,278,540)
Investment gain accounted for using the equity method	(1,901,485)	(1,159,434)
Gain on disposal of property, plant and equipment	(96,761)	(46,075)
Impairment of non-financial assets	59,461	153,955
Unrealized foreign exchange loss (gain)	8,687	(78,024)
Changes in operating assets and liabilities:			Cash flows from financing activities :
Contract assets	24,376	(76,790)	Borrowing in long-term loans	15,621,188	26,184,895
Notes receivable	(4,657)	1,219	Repayments of long-term loans	(12,688,419)	(24,750,701)
Accounts receivable	(777,035)	623,507	Increase in guarantee deposits	31,096	822
Accounts receivable from related parties	(331,662)	(863,506)	Cash payments for the principal portion of the lease liabilities	(304,763)	(505,826)
Other receivables	(221,695)	45,210	Cash dividends	(2,445,490)	(2,200,941)
Other receivables from related parties	92,839	261,002	Interest paid	(187,708)	(209,644)
Inventories	(255,636)	133,698	Net cash provided by (used in) financing activities	25,904	(1,481,395)
Prepayments	7,618	19,270
Other current assets	(15,035)	25,101
Contract liabilities	(11,590)	(40,896)
Notes payable	5,631	2,802
Accounts payable	(12,727)	14,894
Accounts payable to related parties	1,927	(11,850)
Other payables Other payables to related parties	702,439 22,525	(127,589) (28,361)
Other current liabilities	303,504	275,090
Accrued pension liabilities	(9,602)	(7,619)
Cash generated from operating activities	11,361,331	10,504,307
Interest received	4,700		7,397 Net increase in cash and cash equivalents	1,309,524	954,839
Income tax paid	(740,759)		(796,930) Cash and cash equivalents at the beginning of the year	5,110,784	4,155,945
Net cash provided by operating activities	10,625,272		9,714,774 Cash and cash equivalents at the end of the year	\$6,420,308	\$5,110,784

1. Organization and Operation

King Yuan Electronics Co., Ltd. ("the Company" or "KYEC") was incorporated under the Company Law of the Republic of China ("R.O.C) on May 28, 1987 and commenced operations on July 23, 1987. The Company primarily engages in the business of design, manufacturing, selling, testing and assembly service of integrated circuits, and also engages in manufacturing and selling of IC Monitoring Burn-In machinery and related components. On May 9, 2001, the shares of KYEC were listed on the Taiwan Stock Exchange. The Company's registered office and the main business location is at No. 81, Sec. 2, Gongdaowu Road, Hsinchu City 300, Republic of China (R.O.C.).

2. Date and Procedures of Authorization of Financial Statements for Issue

The parent company only financial statements of the Company were approved and authorized for issue by the Board of Directors on March 4, 2022.

3. Newly Issued or Revised Standards and Interpretations

(1) Change in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission ("FSC") and become effective for annual periods beginning on or after January 1, 2021. The application of these new standards and amendments had no material effect on the Company.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board ("IASB") which are endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below:

		Effective Date
Items	New, Revised or Amended Standards and Interpretations	Issued by IASB
A	Narrow-scope amendments of IFRS, including Amendments	January 1, 2022
	to IFRS 3, Amendments to IAS 16, Amendments to IAS 37
	and the Annual Improvements

• A. Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
• a. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential "day 2" gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.
• b. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
• c. Onerous Contracts Cost of Fulfilling a Contract (Amendments to IAS 37) The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.
• d. Annual Improvements to IFRS Standards 2018 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee's leasehold improvements.

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after January 1, 2022 and have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below:

		Effective Date
Items	New, Revised or Amended Standards and Interpretations	Issued by IASB
A	IFRS 10 "Consolidated Financial Statements" and IAS 28	To be determined
	"Investments in Associates and Joint Ventures" — Sale or	by IASB
	Contribution of Assets between an Investor and its Associate
	or Joint Ventures
B	IFRS 17 "Insurance Contracts"	January 1, 2023
C	Classification of Liabilities as Current or Non-current –	January 1, 2023
	Amendments to IAS 1
D	Disclosure Initiative - Accounting Policies – Amendments to	January 1, 2023
	IAS 1
E	Definition of Accounting Estimates – Amendments to IAS 8	January 1, 2023
F	Deferred Tax related to Assets and Liabilities arising from a	January 1, 2023
	Single Transaction – Amendments to IAS 12

A. IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or losses resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors' interests in the associate or joint venture.

B. IFRS 17 "Insurance Contracts"

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017 and it was amended in 2020. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after January 1, 2023 (from the original effective date of January 1, 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after January 1, 2023.

C. Classification of Liabilities as Current or Non-current – Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

D. Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

E. Definition of Accounting Estimates – Amendments to IAS 8

The amendments introduce the definition of accounting estimates and include other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

F. Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12

The amendments narrow the scope of the recognition exemption in paragraphs 15 and 24 of IAS 12 so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.

The abovementioned standards and interpretations issued by IASB have not yet been endorsed by FSC at the date when the Company's financial statements were authorized for issue, the local effective dates are to be determined by FSC. The new or amended standards and interpretations have no material impact on the Company.

4. Summary of Significant Accounting Policies

Statement of Compliance

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

Basis of Preparation

The Company prepares the parent company only financial statements in accordance with the Regulations. According to article 21 of the Regulations, the profit or loss and other comprehensive income presented in the parent company only financial statements will be the same as the allocations of profit or loss and of other comprehensive income attributable to owners of the parent presented in the financial statements prepared on a consolidated basis, and the owners' equity presented in the parent company only financial statements will be the same as the equity attributable to owners of the parent presented in the financial statements prepared on a consolidated basis. Therefore, the investments in subsidiaries will be disclosed under "Investments accounted for using the equity method" in the parent company only financial report and change in value will be adjusted.

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars ("NT\$") unless otherwise stated.

Foreign currency transactions

The parent company only financial statements are presented in NT\$, which is also the Company's functional currency.

Transactions in foreign currencies are initially recorded by the Company's functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

A. exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.

• B. foreign currency items within the scope of IFRS 9 "Financial Instruments" are accounted for based on the accounting policy for financial instruments.
• C. exchange differences arising on a monetary item that forms part of a reporting entity's net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

Translation of financial statements in foreign currency

Each foreign operation of the Company determines its function currency upon its primary economic environment and items included in the financial statements of each operation are measured using that functional currency. The assets and liabilities of foreign operations are translated into NT\$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following partial disposals are accounted for as disposals:

• A. when the partial disposal involves the loss of control of a subsidiary that includes a foreign operation; and
• B. when the retained interest after the partial disposal of an interest in a joint arrangement or a partial disposal of an interest in an associate that includes a foreign operation is a financial asset that includes a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is adjusted in "investments accounted for using the equity method". In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

Current and non-current distinction

An asset is classified as current when:

• A. the Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
• B. the Company holds the asset primarily for the purpose of trading;
• C. the Company expects to realize the asset within twelve months after the reporting period; or
• D. the asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

• A. the Company expects to settle the liability in its normal operating cycle;
• B. the Company holds the liability primarily for the purpose of trading;
• C. the liability is due to be settled within twelve months after the reporting period; or
• D. the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within twelve months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Financial instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 "Financial Instruments" are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

A. Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

• a. the Company's business model for managing the financial assets and
• b. the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables, financial assets measured at amortized cost and other receivables, etc., on balance sheet as at the reporting date:

• a. the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
• b. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• a. purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
• b. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial assets measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

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

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income is described as below:

• a. A gain or loss on a financial asset measured at fair value through other comprehensive income is recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
• b. When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

• c. Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• (a) purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

• (b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Company made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investments are recognized in profit or loss unless the dividends clearly represent a recovery of part of the cost of investment.

Financial assets measured at fair value through profit or loss

Financial assets are classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets are measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and does not reduce the carrying amount in the statement of financial position.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

The Company measures expected credit losses of a financial instrument in a way that reflects:

• a. an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
• b. the time value of money; and
• c. reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measured as follows:

• a. at an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
• b. at an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
• c. for trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
• d. For lease receivables arising from transactions within the scope of IFRS 16, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

• C. Derecognition of financial assets
• A financial asset is derecognized when:

• a. the rights to receive cash flows from the asset have expired.

• b. the Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred.

• c. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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

D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Compound instruments

The Company evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Company assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled.

For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 "Financial Instruments".

Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.

On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

Financial liabilities

Financial liabilities within the scope of IFRS 9 "Financial Instruments" are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss. Gains or losses on the subsequent measurement of liabilities held for trading including interest paid are recognized in profit or loss.

A financial liability is classified as held for trading if:

a. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;

• b. on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
• c. it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

• a. it eliminates or significantly reduces a measurement or recognition inconsistency; or
• b. a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

Derivative financial instruments

The Company uses derivative instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as assets or liabilities at fair value through profit or loss except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

Derivative instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of hedges, which is recognized in either profit or loss or equity according to type of hedges used.

When the host contracts are either non-financial assets or labilities, derivative embedded in host contracts are accounted for as separate derivative and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not designed at fair value though profit or loss.

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• a. in the principal market for the asset or liability, or
• b. in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials – Purchase cost on weighted average method

Finished goods and work in progress – Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

Investments accounted for using the equity method

According to Article 21 of the Regulations, the investments in subsidiaries will be disclosed under "investments accounted for using the equity method" and changes in value will be adjusted accordingly. The profit or loss and other comprehensive income presented in parent company only financial statements will be the same as the allocations of profit or loss and other comprehensive income attributable to owners of the parent presented in the financial statements prepared on a consolidated basis, and the owners' equity presented in the parent company only financial statements will be the same as the equity attributable to owners of the parent presented in the financial statements prepared on a consolidated basis. The difference of the accounting treatment between the parent company only basis and the consolidated basis are adjusted under "investments accounted for using the equity method", "share of profit of subsidiaries and associates accounted for using the equity method" and "share of other comprehensive income of subsidiaries and associates accounted for using the equity method".

The Company's investment in its associates is accounted for using the equity method. An associate is an entity over which the Company has significant influence.

Under the equity method, the investment in the associate or investment is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company's share of net assets of the associate. After the interest in the associate is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. Unrealized gains and losses resulting from transactions between the Company and the associate are eliminated to the extent of the Company's related interest in the associate.

When changes in the net assets of an associate occur and not those that are recognized in profit or loss or other comprehensive income and do not affect the Company's percentage of ownership interests in the associate, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate on a pro rata basis.

When the associate issues new shares, and the Company's interest in an associate is reduced or increased as the Company fails to acquire shares newly issued in the associate proportionately to its original ownership interest, the increase or decrease in the interest in the associate is recognized in capital surplus and investments accounted for using the equity method. When the interest in the associate is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate.

The financial statements of the associate are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 "Investments in Associates and Joint Ventures". If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the 'share of profit or loss of an associate' in the statement of comprehensive income in accordance with IAS 36 "Impairment of Assets". In determining the value in use of the investment, the Company estimates:

• A. its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
• B. the present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for goodwill impairment testing in IAS 36 "Impairment of Assets".

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciation. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 "Property, Plant and Equipment". When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings and facilities	31 years
Plant equipment	5〜16 years
Machinery and equipment	2〜 8 years
Transportation equipment	3〜 6 years
Office equipment	3〜 5 years
Right-of-use assets	4〜28 years
Leased assets	3〜11 years
Leasehold improvements	10 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

Leases

The Company assesses whether the contract is, or contains, a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether the contract, throughout the period of use, has both of the following:

(a)the right to obtain substantially all of the economic benefits from use of the identified asset; and

(b)the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the nonlease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximizing the use of observable information.

A. The Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

• (a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• (b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
• (c) amounts expected to be payable by the lessee under residual value guarantees;
• (d) the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
• (e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortized cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

• (a) the amount of the initial measurement of the lease liability;
• (b) any lease payments made at or before the commencement date, less any lease incentives received;
• (c) any initial direct costs incurred by the lessee; and
• (d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use asset applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 "Impairment of Assets" to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of lowvalue assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statement of consolidated comprehensive income statement.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

B. The Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and presents them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

A. Research and development costs

Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Company can demonstrate:

• a. the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• b. its intention to complete and its ability to use or sell the asset;
• c. how the asset will generate future economic benefits;
• d. the availability of resources to complete the asset; and
• e. the ability to measure reliably the expenditure during development.

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. During the period of development, the asset is tested for impairment annually. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit.

B. Computer software

The cost of computer software is amortized on a straight-line basis over the estimated useful life (3~5 years).

Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 "Impairment of Assets" may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, The Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's ("CGU") fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, The Company estimates the asset's or cash-generating unit's recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

Treasury shares

Acquisitions of the shares of the Company (treasury shares) are recognized at cost and deducted from equity. Any difference between the carrying amount and the consideration, if reissues, is recognized in capital surplus under equity.

When the retirement of treasury shares, capital surplus – share premiums and share capital are debited proportionately, gains on retirement of treasury shares should be recognized under existing capital surplus arising from similar types of treasury shares; losses on retirement of treasury shares should be offset against existing capital surplus form similar types of treasury shares. If there are insufficient capital reserves to be offset against, then such losses should be accounted for under retained earnings.

Revenue recognition

The Company's revenues arising from contracts with customers are mainly rendering of processing services and rental of testing machinery. The accounting policies are explained as follows:

A. Rendering of services

The Company's primary activity is to conduct testing and assembly services based on customer's specification demand. According to the customer contract, the ownership of the work in process belongs to the customer. The customer controls the work in process when the Company provides services to create or enhance it. Accordingly, the Company's performance obligation is satisfied over time and the Company, based on the consideration stated in the customer contract (less estimated volume discount), recognizes service revenues over time. The Company estimates the volume discounts using the expected value method based on historical experiences. However, revenue is only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. During the period specified in the contract, refund liability is recognized for the expected volume discounts.

The credit period of the Company's service revenue is from 30 to 120 days. For most of the contracts, when the Company transfers those processed assets to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Company usually collects the payments shortly after transferring those processed assets to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Company transfers those processed assets to customers but does not have a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Company measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses.

B. Revenues from rental of machinery

The Company provides rental services for testing machineries based on customers' demand. According to the contract, the Company provides tailored machineries to customers for testing purposes for a certain period of time. During the contract period, those machineries are for the contracted customers' use only, and will not be mixed with other testing machineries. Meanwhile, during the contract period, those machineries are still under control of the Company, the customer does not have the right to control over or to direct the right of use of the rented machineries. Usually, the unit price is fixed and is stated in the contract. Accordingly, the Company's performance obligations is satisfied over time and the Company recognizes revenues from rental of the machinery by rental hours or testing volume multiplied by the fixed unit price, or over the rental period on a straight line basis.

The credit period of the Company's service revenues is from 30 to 120 days. For most of the contracts, the Company recognizes trade receivables upon the completion of rental period. These trade receivables usually have short period and no significant financing component is arisen.

For some machinery rental contracts, prepayments are received from customers upon signing the contract, the Company then has the obligation to provide the services subsequently. Accordingly, these amounts are recognized as contract liabilities.

C. Sales of machinery

The Company manufactures and sells professional testing machinery. Those machineries must be tested for specifications according to the contract signed by both parties before being delivered to customers. The Company performs the specification test in accordance with the contract and issues a machinery inspection report to the customer. After the customer's confirmation that the operating data and function of the machineries have met the specification stated in the inspection report, the machinery can be delivered to the customer's designated location stated in the contract and the control of the machinery can be transferred. At this time, the customer has the right to determine the sales channels and price of those testing machineries, and has the ability to prevent other companies from directing the use and obtaining the benefits of these products. Thus, the Company recognizes the revenue generated from the sales of machineries.

Considering the fact that assisting customers for the machinery installation and providing safety guidance are not significant, so the Company issues an invoice with total consideration to the customer and recognizes the amount as trade receivables upon the delivery of the machinery. In addition, the period between the sales of machinery and the actual receipt of the payment is within one year, therefore, there is no significant financing component. The Company provides its customer with a warranty for refund for defectives products. Such warranty is accounted for in accordance with IAS 17 as liability provision.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period when they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee's name in the specific bank account and hence not associated with the Company. Therefore, fund assets are not included in the Company's parent company only financial statements.

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Remeasurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

A. the date of the plan amendment or curtailment, and

B. the date that the Company recognizes restructuring-related costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

Share-based payment transactions

The cost of equity-settled transactions between the Company and its employees is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

The cost of restricted stocks issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Company recognizes unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

A. Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for unappropriated earnings is recognized as income tax expense in the subsequent year when distribution proposal is approved by the shareholders' meeting.

B. Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• a. where the deferred tax liability arises from the initial recognition of goodwill of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
• b. in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilized, except:

• a. where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
• b. in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

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

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

5. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the Company's parent company only financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

A. Fair value of Level 3 financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flows model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

B. Revenue recognition - sales returns and discounts

The Company estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the aforementioned sales returns and allowance, on the basis of highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6. (10) for more details.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

6. Contents of Significant Accounts

(1) Cash and cash equivalents

	December 31,	December 31,
	2021	2020
Checking and savings accounts	\$4,920,308	\$4,520,784
Time deposits	1,500,000	590,000
Total	\$6,420,308	\$5,110,784

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

	December 31,	December 31,
	2021	2020
Equity instrument investments measured at fair value
through other comprehensive income- non-current
Listed company's stocks	\$43,028	28,117
Unlisted company's stocks	6,503,449	4,418,446
Total	\$6,546,477	\$4,446,563

The Company has equity instrument investments measured at fair value through other comprehensive income. Details on dividends recognized for the years of 2021 and 2020 are as follows:

For the years ended December 31,
2021	2020
\$-	\$783
85,016	50,183
\$85,016	\$50,966

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

In consideration of disposition or liquidation of certain investments according to the Company's investment strategy, the Company derecognized certain equity instrument investments measured at fair value through other comprehensive income. Details on derecognition of the investments for the years ended December 31, 2021 and 2020 are as follows:

	December 31,	December 31,
	2021	2020
The fair value of the investments at the
date of derecognition	\$1,365	\$65,027
The cumulative (loss) gain on disposal	\$(326,125)	\$38,462

Financial assets at fair value through other comprehensive income were not pledged.

(3) Notes receivable

	December 31,	December 31,
	2021	2020
Notes receivable from operating activities	\$7,706	\$3,049
Less: loss allowance	-	-
Total	\$7,706	\$3,049

Notes receivable were not pledged.

The Company adopted IFRS 9 for impairment assessment. Please refer to Note 6.(15) for more details on accumulated impairment. Please refer to Note 12 for more details on credit risk.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(4) Trade receivables and trade receivables from related parties

	December 31,	December 31,
	2021	2020
Trade receivables	\$3,929,879	\$3,152,844
Less: loss allowance	(25,158)	(25,158)
Subtotal	3,904,721	3,127,686
Trade receivables from related parties	2,081,340	1,749,678
Less: loss allowance	-	-
Subtotal	2,081,340	1,749,678
Total	\$5,986,061	\$4,877,364

No trade receivables were pledged.

The receivables are generally on 30 to 120 days terms. Please refer to Note 6.(15) for more details on loss allowance of trade receivables for the years ended December 31, 2021 and 2020. Please refer to Note 12 for more details on credit risk.

(5) Inventories

	December 31,	December 31,
	2021	2020
Raw materials	\$751,224	\$595,414
Work in progress	278,556	178,730
Finished goods	-	-
Total	\$1,029,780	\$774,144

The cost of inventories recognized in operating costs for the year ended December 31, 2021 amounted to NT\$18,476,736 thousand, including the reversal gain of inventories of NT\$17,680 thousand, and scrap loss of NT\$42,674 thousand, respectively. The reversal is due to the fact that the previous write-down of inventories had been scrapped.

The cost of inventories recognized in operating costs for the year ended December 31, 2020 amounted to NT\$17,280,780 thousand, including the write-down of inventories of NT\$42,208 thousand, and scrap loss of NT\$3,931 thousand, respectively.

No inventories were pledged.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(6) Prepayments

	December 31,	December 31,
	2021	2020
Prepaid equipment	\$-	\$64,339
Prepaid expenses	10,533	9,486
Input tax	27,472	41,245
Others	15,279	10,171
Total	\$53,284	\$125,241

(7) Investments accounted for using the equity method

	December 31, 2021			December 31, 2020
		Percentage		Percentage
	Carrying	of	Carrying	of
Investees	amount	ownership	amount	ownership
Subsidiaries:
KYEC USA Corp.	\$11,367	100.00%	\$12,035	100.00%
KYEC Investment International Co.,	7,925,792	100.00%	5,691,034	100.00%
Ltd.
KYEC Technology Management	504,621	100.00%	362,498	100.00%
Co., Ltd.
KYEC Japan K.K.	53,553	89.83%	56,828	89.83%
KYEC SINGAPORE PTE. LTD.	6,313	100.00%	2,130	100.00%
King Ding Precision Incorporated	71,337	100.00%	69,962	100.00%
Company (King Ding)
Subtotal	8,572,983		6,194,487
Investments in associates:
Fixwell Technology Corp.	50,400	23.33%	46,981	23.33%
Wei Jiu Industrial Co., Ltd.	28,726	34.00%	22,875	34.00%
Subtotal	79,126		69,856
Less: deferred credits	(162,339)		(116,177)
Total	\$8,489,770		\$6,148,166

A. Investments in subsidiaries

Investments in subsidiaries are express as "Investments accounted for using the equity method" in the Company's parent company only financial statements with necessary valuation adjustments.

The Company indirectly invested in King Long Technology (Suzhou) Ltd. via KYEC Investment International Co., Ltd. and KYEC Technology Management Co., Ltd. During the year 2021, the Company's ownership in King Long Technology (Suzhou) Ltd. changed due to capital increase and the exercise of employee stock options. The change (NT\$541,511 thousand in the amount) was recorded as an increase in capital surplus. No such transaction occurred in 2020.

No investments were pledged.

B. Investments in associates

The Company's investments in Fixwell Technology Corp. and Wei Jiu Industrial Co., Ltd. are not individually material. The summarized financial information of the Company's ownership in those associates is as follows:

	For the years ended December 31,
	2021	2020
Net income	\$22,260	\$16,088
Other comprehensive income, net of tax	-	-
Total comprehensive income	\$22,260	\$16,088

The investments mentioned above were not pledged.

(8) Property, plant and equipment

	December 31,	December 31,
	2021	2020
Owner occupied property, plant and equipment	\$34,482,459	\$30,896,867
Property, plant and equipment leased out under	131,301	473,833
operating leases
Total	\$34,613,760	\$31,370,700

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

A. Owner occupied property, plant and equipment

									Construction in
									progress and
									equipment
		Buildings and	Plant	Machinery and	Office	Transportation	Miscellaneous	Leasehold	awaiting
	Land	facilities	equipment	equipment	equipment	equipment	equipment	improvements	examination	Total
Cost:
As of January 1, 2021	\$1,146,274	\$3,712,080	\$8,452,705	\$80,184,528	\$702,375	\$51,521	\$4,278,432	\$4,425	\$1,534,006	\$100,066,346
Additions	504,772	671,877	1,023,802	7,946,435	63,184	6,329	337,573	-	177,315	10,731,287
Disposals	-	-	(41,139)	(4,423,123)	(1,741)	(4,056)	(135,624)	-	-	(4,605,683)
Transfers	-	11,140	-	1,144,018	-	-	-	-	64,339	1,219,497
As of December 31, 2021	\$1,651,046	\$4,395,097	\$9,435,368	\$84,851,858	\$763,818	\$53,794	\$4,480,381	\$4,425	\$1,775,660	\$107,411,447
As of January 1, 2020	\$1,143,394	\$3,707,470	\$8,074,490	\$76,195,437	\$638,316	\$49,036	\$3,931,109	\$4,425	\$1,207,352	\$94,951,029
Additions	2,880	37,596	413,804	6,737,966	65,028	2,485	375,860	-	266,378	7,901,997
Disposals	-	-	(35,589)	(2,571,040)	(969)	-	(28,537)	-	-	(2,636,135)
Transfers	-	(32,986)	-	(177,835)	-	-	-	-	60,276	(150,545)
As of December 31, 2020	\$1,146,274	\$3,712,080	\$8,452,705	\$80,184,528	\$702,375	\$51,521	\$4,278,432	\$4,425	\$1,534,006	\$100,066,346

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

									Construction in progress and
									equipment
		Buildings and	Plant	Machinery and	Office	Transportation	Miscellaneous	Leasehold	awaiting
	Land	facilities	equipment	equipment	equipment	equipment	equipment	improvements	examination	Total
Accumulated
depreciations and impairment:
As of January 1, 2021	\$-	\$1,473,242	\$6,030,457	\$57,804,185	\$583,476	\$39,059	\$3,236,553	\$2,507	\$-	\$69,169,479
Depreciation	-	136,148	472,460	5,973,200	38,165	5,419	303,350	443	-	6,929,185
Disposals	-	-	(41,139)	(3,370,732)	(1,741)	(3,560)	(135,521)	-	-	(3,552,693)
Transfers	-	7,537	-	316,019	-	-	-	-	-	323,556
Impairment	-	-	-	59,461	-	-	-	-	-	59,461
As of December 31, 2021	\$-	\$1,616,927	\$6,461,778	\$60,782,133	\$619,900	\$40,918	\$3,404,382	\$2,950	\$-	\$72,928,988
As of January 1, 2020	\$-	\$1,374,762	\$5,644,417	\$54,110,172	\$552,640	\$32,918	\$2,989,691	\$2,064	\$-	\$64,706,664
Depreciation	-	120,057	421,629	5,738,076	31,805	6,141	275,399	443	-	6,593,550
Disposals	-	-	(35,589)	(2,217,001)	(969)	-	(28,537)	-	-	(2,282,096)
Transfers	-	(21,577)	-	18,983	-	-	-	-	-	(2,594)
Impairment	-	-	-	153,955	-	-	-	-	-	153,955
As of December 31, 2020	\$-	\$1,473,242	\$6,030,457	\$57,804,185	\$583,476	\$39,059	\$3,236,553	\$2,507	\$-	\$69,169,479
Net carrying amount as at:
December 31, 2021	\$1,651,046	\$2,778,170	\$2,973,590	\$24,069,725	\$143,918	\$12,876	\$1,075,999	\$1,475	\$1,775,660	\$34,482,459
December 31, 2020	\$1,146,274	\$2,238,838	\$2,422,248	\$22,380,343	\$118,899	\$12,462	\$1,041,879	\$1,918	\$1,534,006	\$30,896,867

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

B. Property, plant and equipment leased out under operating leases

	Buildings and	Machinery and
	facilities	equipment	Total
Cost:
As at January 1, 2021	\$170,692	\$678,102	\$848,794
Additions	-	-	-
Disposals	-	-	-
Transfers	(11,140)	(421,312)	(432,452)
As at December 31, 2021	\$159,552	\$256,790	\$416,342
As at January 1, 2020	\$137,706	\$270,170	\$407,876
Additions	-	193,187	193,187
Disposals	-	-	-
Transfers	32,986	214,745	247,731
As at December 31, 2020	\$170,692	\$678,102	\$848,794
Accumulated depreciation and impairment:
As at January 1, 2021	\$104,718	\$270,243	\$374,961
Depreciation	5,356	43,847	49,203
Disposals	-	-	-
Transfers	(7,537)	(131,586)	(139,123)
As at December 31, 2021	\$102,537	\$182,504	\$285,041
As at January 1, 2020	\$78,585	\$194,614	\$273,199
Depreciation	4,556	90,383	94,939
Disposals	-	-	-
Transfers	21,577	(14,754)	6,823
As at December 31, 2020	\$104,718	\$270,243	\$374,961
Net carrying amounts as at:
December 31, 2021	\$57,015	\$74,286	\$131,301
December 31, 2020	\$65,974	\$407,859	\$473,833

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

C. Capitalized borrowing costs of property, plant and equipment are as follows:

	For the years ended December 31,
	2021	2020
Construction in progress	\$43,685	\$45,074
Capitalization rate of borrowing costs	0.87%~1.02%	0.95%~1.93%

D. The investing activities partially influenced the cash flow are as follows:

	For the years ended December 31,
	2021	2020
Acquisition of property, plant and equipment	\$10,731,287	\$8,095,184
Net decrease (increase) in payables
to equipment suppliers	(741,087)	302,414
Net decrease (increase) in other payables - related
parties	208,872	(215,439)
Total	\$10,199,072	\$8,182,159
	For the years ended December 31,
	2021	2020
Disposal of property, plant and equipment	\$1,195,913	\$395,197
Net decrease (increase) in other receivables	2,136	(2,783)
Net decrease (increase) in other receivables -
related parties	(411,462)	448,554
Total	\$786,587	\$840,968

E. In order to meet the needs of future operation and development, the Company decided to purchase three lots of land and buildings located in Miaoli County for operational use. The total purchase price was NT \$850 million (including tax). As of December 31, 2020, the Company has paid off the total consideration. The ownership transfer registration has been completed in April 2021.

In order to meet the needs of future operation and development, the Company decided to acquire the additional floors of the abovementioned buildings for production efficiency improvement. The expected purchase price was NT \$350 million (including tax). As of December 31, 2021, the Company has paid off the total consideration. The ownership transfer registration has been completed in April 2021. No such transaction occurred in 2020.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

• F. As of December 31, 2021 and 2020, the Company recognized an impairment loss of NT\$59,461 thousand and \$153,955 thousand, respectively, for certain machinery and equipment which were either damaged or idle and could no longer be used.
• G. Please refer to Note 8 for property, plant and equipment under pledges as collateral.

(9) Intangible assets

	Software
Cost:
As of January 1, 2021	\$174,350
Additions from acquisitions	36,338
Disposals	(70,163)
As of December 31, 2021	\$140,525
As of January 1, 2020	\$182,739
Additions from acquisitions	63,898
Disposals	(72,287)
As of December 31, 2020	\$174,350
Amortization and impairment:
As of January 1, 2021	\$94,191
Amortization	47,250
Disposals	(70,163)
As of December 31, 2021	\$71,278
As of January 1, 2020	\$116,591
Amortization	49,887
Disposals	(72,287)
As of 2020 December 31,	\$94,191
Net carrying amount as of:
December 31, 2021	\$69,247
December 31, 2020	\$80,159

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Amortization expenses of intangible assets recognized are as follows:

	For the years ended December 31,
	2021	2020
Operating costs	\$19,775	\$28,938
Selling and administrative expenses	22,583	17,750
Research and development expenses	4,892	3,199
Total	\$47,250	\$49,887

(10) Other current liabilities

	December 31,	December 31,
	2021	2020
Refund liabilities	398,109	\$194,956
Receipts on behalf of others	482,747	380,535
Others	1,388	3,249
Total	882,244	\$578,740

(11) Long-term borrowings

As of December 31, 2021

		Maturity
Lenders	Nature	Date	Balance	Terms of repayment
Shanghai Commercial	Unsecured bank	2023.03.27	\$40,151	Revolving Credit
Bank	loans
Shanghai Commercial	Unsecured bank	2024.03.15	885,760	Revolving Credit
Bank	loans
Standard Chartered	Unsecured bank	2023.06.30	332,160	Revolving Credit
Bank	loans
Citibank	Unsecured bank	2023.11.22	138,400	Revolving Credit
	loans
Bank of China	Unsecured bank	2023.10.14	968,800	Revolving Credit
	loans

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

		Maturity
Lenders	Nature	Date	Balance	Terms of repayment
Cathay United Bank	Unsecured bank	2023.12.25	442,880	Revolving Credit
	loans
Mizuho Bank	Unsecured bank	2024.01.01	500,000	Revolving Credit
	loans
Shin Kong Commercial	Unsecured bank	2024.12.15	138,400	Revolving Credit
Bank	loans
Taiwan Business Bank	Unsecured bank	2023.04.07	276,800	Revolving Credit
	loans
Hua Nan Commercial	Unsecured bank	2023.04.09	138,400	Revolving Credit
Bank	loans
Mega Bank	Unsecured bank	2023.04.28	138,400	Revolving Credit
	loans
Taishin Bank	Unsecured bank	2025.06.03	1,106,636	Revolving Credit
	loans
HSBC Taiwan Bank	Unsecured bank	2024.09.28	110,720	Revolving Credit
	loans
HSBC Taiwan Bank	Unsecured bank	2024.12.20	58,967	50% of principal will be repaid
	loans			on December 21, 2023. The
				remaining principal will be
				repaid on maturity day.
HSBC Taiwan Bank	Unsecured bank	2024.12.02	7,920	Repay at maturity
	loans
First Bank	Unsecured bank	2026.07.01	830,400	25% of principal will be repaid
	loans			in 3 annual payments starting
				from January 1, 2024. The
				remaining principal will be
				repaid on maturity day.
Yuanta Commercial	Unsecured bank	2025.06.22	811,983	50% of principal will be repaid
Bank	loans			on December 22, 2024. The
				remaining principal will be
				repaid on maturity day.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

		Maturity
Lenders	Nature	Date	Balance	Terms of repayment
E. Sun Commercial	Unsecured bank	2025.12.26	34,649	Repayable semi-annually starting
Bank	loans			from December 27, 2023.
KGI Bank	Unsecured bank	2024.07.15	240,000	The principal will be repaid in 5
	loans			semi-annual payments starting
				from July 15, 2022.
O Bank	Unsecured bank	2025.02.07	171,429	The principal will be repaid in 7
	loans			semi-annual payments starting
				from February 7, 2022.
Mega Bank	Unsecured bank	2025.02.07	680,000	50% of principal will be repaid
	loans			on August 7, 2023. The
				remaining principal will be
				repaid on maturity day.
Chang Hwa	Unsecured bank	2025.01.20	556,000	The principal will be repaid in 5
Commercial Bank	loans			semi-annual payments starting
				from January 20, 2023.
Bank of Taiwan	Unsecured bank	2024.01.20	600,000	50% of principal will be repaid
	loans			on July 20, 2022. The remaining
				principal will be repaid on
				maturity day.
First Bank	Unsecured bank	2025.01.20	814,398	The principal will be repaid in 5
	loans			semi-annual payments starting
				from July 20, 2022.
Far Eastern Bank	Unsecured bank	2023.02.07	600,000	Repay at maturity
	loans
CTBC Bank	Unsecured bank	2024.02.07	300,000	50% of principal will be repaid
	loans			on August 7, 2023. The
				remaining principal will be

repaid on maturity day.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

		Maturity
Lenders	Nature	Date	Balance	Terms of repayment
JihSun Bank	Unsecured bank	2024.03.12	500,000	50% of principal will be repaid
	loans			on September 12, 2023. The
				remaining principal will be
				repaid on maturity day.
Mega Bank and 17	Commercial	2023.12.06	2,500,000	Revolving credit. Renewable
others	paper loans			every three months. Credit has
				not been fully utilized.
Mega Bank and 13	Commercial	2025.10.11	7,380,000	Revolving credit. Renewable
others	paper loans			every three months. Credit has
				not been fully utilized.
Subtotal			21,303,253
Less: current portion			-
Less: arrangement fee			(12,425)
Less: unamortized discount			(15,497)
Total			\$21,275,331
Interest Rates			0.50%~1.25%

As of December 31, 2020

		Maturity
Lenders	Nature	Date	Balance	Terms of repayment
Shanghai Commercial	Unsecured	2023.03.19	\$911,360	Revolving Credit
Bank	bank loans
Shanghai Commercial	Unsecured	2022.03.27	375,105	Revolving Credit
Bank	bank loans
Taishin Bank	Unsecured	2023.02.07	1,300,000	Revolving Credit
	bank loans
Mega Bank	Unsecured	2022.09.18	313,280	Revolving Credit
	bank loans
Land Bank	Unsecured	2022.03.03	170,880	Revolving Credit
	bank loans

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

		Maturity
Lenders	Nature	Date	Balance	Terms of repayment
First Commercial	Unsecured	2022.07.20	12,463	Revolving Credit
Bank	bank loans
MUFG Bank	Unsecured	2022.12.04	56,960	Revolving Credit
	bank loans
Bank of China	Unsecured	2022.10.14	712,000	Revolving Credit
	bank loans
Taiwan Business	Unsecured	2022.03.11	541,120	Revolving Credit
Bank	bank loans
Cathay United Bank	Unsecured	2022.12.25	227,840	Revolving Credit
	bank loans
HSBC Taiwan Bank	Unsecured	2022.10.27	703,485	Revolving Credit
	bank loans
Shin Kong	Unsecured	2022.12.11	284,800	Revolving Credit
Commercial Bank	bank loans
Mizuho Bank	Unsecured	2023.01.01	500,000	Revolving Credit
	bank loans
KGI Bank	Unsecured	2024.07.15	400,000	The principal will be repaid in 5
	bank loans			semi-annual payments starting
				from July 15, 2022.
O Bank	Unsecured	2025.02.07	300,000	The principal will be repaid in 7
	bank loans			semi-annual payments starting
				from February 7, 2022.
Mega Bank	Unsecured	2025.02.07	680,000	50% of principal will be repaid
	bank loans			on August 7, 2023. The
				remaining principal will be
				repaid on maturity day.
Chang Hwa	Unsecured	2025.01.20	695,000	The principal will be repaid in 5
Commercial Bank	bank loans			semi-annual payments starting
				from January 20, 2023.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

		Maturity
Lenders	Nature	Date	Balance	Terms of repayment
Fubon Bank	Unsecured	2023.02.07	800,000	50% of principal will be repaid
	bank loans			on August 7, 2022. The
				remaining principal will be
				repaid on maturity day.
Bank of Taiwan	Unsecured	2024.01.20	1,200,000	50% of principal will be repaid
	bank loans			on July 20, 2022. The remaining
				principal will be repaid on
				maturity day.
First Commercial	Unsecured	2025.01.20	895,497	The principal will be repaid in 5
Bank	bank loans			semi-annual payments starting
				from July 20, 2022.
Far Eastern Bank	Unsecured	2023.02.07	1,100,000	Repay at maturity
	bank loans
CTBC Bank	Unsecured	2024.02.07	300,000	50% of principal will be repaid
	bank loans			on August 7, 2023. The
				remaining principal will be
				repaid on maturity day.
Mega Bank and 17	Commercial	2023.12.06	5,680,000	Revolving credit. Renewable
others	paper loans			every three months. Credit has not
				been fully utilized.
Mega Bank and 13	Commercial	2025.10.11	200,000	Revolving credit. Renewable
others	paper loans			every three months. Credit has not
				been fully utilized.
Subtotal			18,359,790
Less: current portion			-
Less: arrangement fee			(30,725)
Less: unamortized discount			(10,767)
Total			\$18,318,298
Interest Rates			0.50%~1.26%

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

• a. Certain property, plant and equipment were pledged. Please refer to Note 8 for more details.
• b. Please refer to Note 9 for the financial covenants during the loan period.
• c. The Company's unused short-term lines of credits amounted to NT\$5,113,404 thousand and NT\$4,269,436 thousand as of December 31, 2021 and 2020, respectively.

(12) Post-employment benefits

Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. The Company has made monthly contribution of 6% of each individual employee's salaries or wages to employee's pension accounts.

Pension benefits for employees of overseas subsidiaries and branches are provided in accordance with the local regulations.

Pension expenses under the defined contribution plan for the years ended December 31, 2021 and 2020 were NT\$197,769 thousand and NT\$194,388 thousand, respectively.

Defined benefit plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contributes an amount equivalent to 2% of the employees' total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assesses the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company will make up the difference in one appropriation before the end of March the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandation, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statements shall not be less than the earnings attainable from the amounts accrued from twoyear time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT\$17,659 thousand to its defined benefit plan during the 12 months beginning December 31, 2021.

The maturities of the defined benefits plan as at December 31, 2021 and 2020 are both in 2025.

Pension costs recognized in profit or loss for the years ended December 31, 2021 and 2020:

	For the years ended	December 31,
	2021	2020
Current period service costs	\$5,791	\$5,655
Interest income or expense	2,266	4,226
Overestimate (underestimate)	19	(4)
Total	\$8,076	\$9,877

Changes in the defined benefit obligation and fair value of plan assets are as follows:

	For the years ended December 31,
	2021	2020
Defined benefit obligation at January 1,	\$902,431	\$849,561
Plan assets at fair value	(292,209)	(283,105)
Other non-current liabilities - accrued pension
liabilities recognized on the balance sheets	\$610,222	\$566,456

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Reconciliation of liability (asset) of the defined benefit plan is as follows:

	Defined benefit	Fair value of plan	Benefit liability
	obligation	assets	(asset)
As at January 1, 2020	\$802,898	\$(274,729)	\$528,169
Current period service costs	5,655	-	5,655
Net interest expense (income)	6,424	(2,198)	4,226
Subtotal	814,977	(276,927)	538,050
Remeasurements of the net
defined benefit liability (asset):
Actuarial gains and losses	-	-	-
arising from changes in
demographic assumptions
Actuarial gains and losses	56,665	-	56,665
arising from changes in
financial assumptions
Experience adjustments	(1,354)	-	(1,354)
Return on plan assets Subtotal	- 55,311	(9,405) (9,405)	(9,405) 45,906
Payments from the plan	(20,727)	20,727	-
Contributions by employer	-	(17,500)	(17,500)
As at December 31, 2020	\$849,561	\$(283,105)	\$566,456
Current period service costs	5,791	-	5,791
Net interest expense (income)	3,398	(1,132)	2,266
Subtotal	858,750	(284,237)	574,513
Remeasurements of the net
defined benefit liability (asset):
Actuarial gains and losses	(2,110)	-	(2,110)
arising from changes in
demographic assumptions
Actuarial gains and losses	31,335	-	31,335
arising from changes in financial assumptions
Experience adjustments	28,135	-	28,135
Return on plan assets	-	(3,992)	(3,992)

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Subtotal	57,360	(3,992)	53,368
Payments from the plan	(13,679)	13,679	-
Contributions by employer	-	(17,659)	(17,659)
As at December 31, 2021	\$902,431	\$(292,209)	\$610,222

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

	December 31,	December 31,
	2021	2020
Discount rate	0.68%	0.40%
Expected rate of salary increases	2.00%	1.50%

A sensitivity analysis for significant assumption as at December 31, 2021 and 2020 is shown as below:

	Effect on the defined benefit obligation
		2021	2020
	Increase in	Decrease in	Increase in	Decrease in
	defined	defined	defined	defined
	benefit	benefit	benefit	benefit
	obligation	obligation	obligation	obligation
Discount rate increase by 0.5%	\$-	\$(70,995)	\$-	\$(70,049)
Discount rate decrease by 0.5%	78,279	-	77,657	-
Future salary increase by 0.5%	76,821	-	76,376	-
Future salary decrease by 0.5%	-	(70,449)	-	(69,659)

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(13) Equity

A. Share capital

As of December 31, 2021 and 2020, the Company's authorized share capital was both NT\$15,000,000 thousand; issued share capital was both NT\$12,227,451 thousand (1,222,745 thousand shares), with par value of NT\$10 per share. Each share has one voting right and a right to receive dividends.

B. Capital surplus

	December 31,	December 31,
	2021	2020
Additional paid-in capital	\$333,919	\$578,468
Arising from conversion of bonds	3,588,848	3,588,848
Treasury share transactions	390,101	390,101
Arising from the exercise of employee restricted
shares	30,755	30,755
Changes in ownership interests in subsidiaries	541,511	-
Total	\$4,885,134	\$4,588,172

According to the Company Act, the capital surplus shall not be used except for offset the deficit of the company. When a company incurs no loss, it may distribute the capital surplus generated from the excess of the issuance price over the par value of share capital and donations. The distribution could be made in cash to its shareholders in proportion to the number of shares being held by each of them.

C. Retained earnings and dividend policy

According to the Company's Articles of Incorporation, net profits for each fiscal year, if any, shall be distributed in following order:

• a. reserve for tax payments;
• b. offset prior year's losses;
• c. set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve;
• d. set aside or reverse special reserve in accordance with law and regulations; and
• e. the distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders' meeting.

The policy of dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets; as well as the interest of the shareholders, share bonus equilibrium and long-term financial planning, etc. The Board of Directors shall make the distribution proposal annually and present it at the shareholders' meeting. As the Company currently is still in the growth stage, funding may be required in the near future for expansion. Therefore, the current policy is to distribute cash dividends at no less than 20% of total dividends to be distributed.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to offset the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal reserve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Pursuant to existing regulations, the Company is required to set aside additional special reserve equivalent to the net debit balance of the other components of shareholders' equity. For any subsequent reversal of other net deductions from shareholders' equity, the amount reversed may be distributed.

Following the adoption of TIFRS, the FSC on April 6, 2012 issued Order No. Financial-Supervisory-Securities-Corporate-1010012865, which sets out the following provisions for compliance:

On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded in shareholders' equity that the Company elects to transfer to retained earnings by application of the exemption under IFRS 1, the Company shall set aside an equal amount of special reserve. Following a company's adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to "other net deductions from shareholders' equity" for the current fiscal year, provided that if the company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders' equity. For any subsequent reversal of other net deductions from shareholders' equity, the amount reversed may be distributed.

As of December 31, 2021 and 2020, special reserve set aside for the first-time adoption of TIFRS amounted to NT\$201,416 thousand.

The appropriations for earnings for 2020 and 2019 were resolved by the shareholders in its meeting on August 3, 2021 and June 10, 2020, respectively. The appropriations and dividends per share were as follows:

	Appropriation of earnings		Dividend per share (NT\$)
	2020	2019	2020	2019
Legal reserve	\$362,921	\$297,659
Special reserve	(200,990)	(400,766)
Cash dividends-common stock	2,200,941	1,956,392	\$1.80	\$1.60
Total	\$2,362,872	\$1,853,285

On August 3, 2021 and June 10, 2020, the shareholders' meeting resolved to debit capital surplus by NT\$244,549 thousand and NT\$244,549 thousand, respectively, and distribute the same amounts of cash to shareholders.

Please refer to Note 6(17) for information regarding the employees' compensation (bonuses) and remuneration to directors.

(14) Operating revenues

	For the years ended December 31,
	2021	2020
Assembly and testing processing revenues	\$22,081,412	\$19,666,024
Revenues from rental of machinery	2,452,506	1,869,046
Rental income from property	36,132	105,287
Other operating revenues	1,250,677	1,704,401
Total revenues	\$25,820,727	\$23,344,758

Relevant information of revenues from contracts with customers for the years ended December 31, 2021 and 2020 are as follows:

A. Disaggregation of revenues

	Timing of revenue	For the years ended December 31,
Nature of revenues	recognition	2021	2020
Rendering of services	Over time	\$22,081,412	\$19,666,024
Revenues from rental	Over time
of machinery		2,452,506	1,869,046
Rental income from property	On a straight-line basis or on a systematic basis (Note)	36,132	105,287
Other operating	At a point in time
revenues		1,250,677	1,704,401
Total		\$25,820,727	\$23,344,758

Note: Please refer to Note 6(16) for information regarding leases.

B. Contract balances

(a) Contract assets – current

Nature of revenues	2021.12.31	2020.12.31	2020.01.01
Rendering of services	\$178,596	\$202,972	\$126,182

Please refer to Note 6(15) for more details on effect of impairment. Relevant information of revenues from contracts with customers for the years ended December 31, 2021 and 2020 are as follows:

	For the years ended December 31,
	2021	2020
The opening balance transferred to trade
receivables	\$202,972	\$126,182
Degree of completion measurement	\$178,596	\$202,972

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(b) Contract liabilities - current

Nature of revenues	2021.12.31	2020.12.31	2020.01.01
Revenues from rental of
machinery	\$-	\$11,590	\$52,486

Note: The difference of the beginning and ending balances is the net effect of the completion of performance obligations for old contracts signed before the opening date and new contracts signed before the ending date.

(15) Expected credit losses

Operating expenses - expected credit losses

	For the years ended December 31,
	2021	2020
Contract assets	\$-	\$-
Notes receivable	-	-
Trade receivables	-	2,857
Total	\$-	\$2,857

Please refer to Note 12 for more details on credit risk.

The Company measures the loss allowance of its contract assets and receivables (including notes receivable and trade receivables) at an amount equal to lifetime expected credit losses. The assessment of the Company's loss allowance as at December 31, 2021 and 2020 are as follows:

A. The gross carrying amount of contract assets is NT\$178,596 thousand and NT\$202,972 thousand, respectively. Expected credit loss ratio is estimated to be 0%.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

B. The Company considers the grouping of trade receivables by counterparties' credit ratings, geographical regions and industry sectors. Loss allowance is measured by using a provision matrix. Details are as follows:

	Not yet due		Overdue
Group 1	(Note)	1-90 days	91-180 days	181-365 days	>366 days	Total
Gross carrying
amount	\$5,992,584	\$4,490	\$2,601	\$1,191	\$-	\$6,000,866
Loss ratio	-%	-%	1%	2%	5%
Lifetime expected credit losses	(7,049)	-	(26)	(24)	-	(7,099)
Subtotal	5,985,535	4,490	2,575	1,167	-	5,993,767
	Not yet due			Overdue
Group 2	(Note)	1-90 days	91-180 days	181-365 days	>366 days	Total
Gross carrying
amount	\$171	\$217	\$-	\$-	\$17,671	\$18,059
Loss ratio	100%	-%	100%	100%	100%
Lifetime expected credit losses	(171)	(217)	-	-	(17,671)	(18,059)
Subtotal	-	-	-	-	-	-
Total						\$5,993,767

As at December 31, 2021

As at December 31, 2020

	Not yet due
Group 1	(Note)	1-90 days	91-180 days	181-365 days	>366 days	Total
Gross carrying amount	\$4,804,486	\$69,166	\$10,818	\$-	\$-	\$4,884,470
Loss ratio	-%	-%	1%	2%	5%
Lifetime expected credit losses	(3,949)	-	(108)	-	-	(4,057)
Subtotal	4,800,537	69,166	10,710	-	-	4,880,413

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

	Not yet due		Overdue
Group 2	(Note)	1-90 days	91-180 days	181-365 days	>366 days	Total
Gross carrying amount	\$571	\$-	\$-	\$45	\$20,485	\$21,101
Loss ratio	100%	-%	100%	100%	100%
Lifetime expected credit losses	(571)	-	-	(45)	(20,485)	(21,101)
Subtotal	-	-	-	-	-	-
Total						\$4,880,413

Note: The Company's notes receivable are not overdue.

The movement in the provision for impairment of contract assets, notes receivable, and trade receivables for the years ended December 31, 2021 and 2020 is as follows:

Contract	Notes	Trade	Other
assets	receivable	receivables	receivables
\$-	\$-	\$25,158	\$23,149
-	-	-	-
-	-	-	-
\$-	\$-	\$25,158	\$23,149
\$-	\$-	\$46,648	\$-
-	-	2,857	-
-	-	(1,198)	-
-	-	(23,149)	23,149
\$-	\$-	\$25,158	\$23,149

Note: Although the Company wrote off the financial assets during 2020, collection activities are still underway.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(16) Leases

A. The Company as a lessee

The Company leases land and buildings with lease terms ranging from 4 to 28 years. At the end of the lease terms, the Company does not have the purchase option to acquire the leasehold land and buildings.

The Company leases machinery and equipment for operational use with lease terms of 2 years. The Company has purchase options to acquire leasehold machinery and equipment at the end of the lease terms.

The Company leases transportation equipment for operational use with lease terms of 3 years. The Company has purchase options to acquire leasehold transportation equipment at the end of the lease terms.

The effect that leases have on the financial position, financial performance and cash flows of the Company are as follows:

• a. Amounts recognized in the balance sheet
• (a) Right-of-use assets

The carrying amount of right-of-use assets

	December 31,	December 31,
	2021	2020
Land	\$457,989	\$476,801
Buildings	9,513	-
Machinery and equipment	72,922	714,630
Transportation equipment	13,122	-
Total	\$553,546	\$1,191,431

During the years ended December 31, 2021 and 2020, the Company's additions to right-of-use assets amounted to NT\$24,275 thousand and NT\$89,750 thousand, respectively.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

During the year ended December 31, 2021 and 2020, the Company exercised the purchase option and transferred the right-of-use assets to machinery and equipment in the amount of NT\$538,273 thousand and NT\$32,681 thousand, respectively.

(b) Lease liabilities

	December 31,	December 31,
	2021	2020
Lease liabilities- current	\$86,364	\$304,358
Lease liabilities- non-current	469,377	533,878
Total	\$555,741	\$838,236

Please refer to Note 6(18) C for the interest on lease liabilities recognized during the years ended December 31, 2021 and 2020, and refer to Note 12(3) section E Liquidity Risk Management for the maturity analysis for lease liabilities as at December 31, 2021 and 2020.

b. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

	For the years ended December 31,
	2021	2020
Land	\$18,812	\$18,853
Machinery and equipment	103,435	102,055
Transportation equipment	1,640	-
Total	\$123,887	\$120,908

c. Income and costs relating to leasing activities

	For the years ended December 31,
	2021	2020
The expenses relating to short-term leases	\$47,074	\$36,305
The expenses relating to leases of low-value
assets (not including the expenses relating
to short-term leases of low-value assets)	505	497
Total	\$47,579	\$36,802

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

d. Cash outflows relating to leasing activities

During the years ended December 31, 2021 and 2020, the Company's total cash outflows for leases amounted to NT\$363,642 thousand and NT\$561,801 thousand, respectively.

e. Other information relating to leasing activities

Extension and termination options

Some of the Company's property rental agreements contain extension and termination options. In determining the lease terms, the non-cancellable period for which the Company has the right to use an underlying asset, together with periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. These options are used to maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Company.

After the commencement date, the Company reassesses the lease term upon the occurrence of a significant event or a significant change in circumstances that is within the control of the lessee and affects whether the Company is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.

B. The Company as a lessor

The Company entered into commercial property leases with remaining terms between one to two years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions.

	For the years ended December 31,
	2021	2020
Lease income for operating leases
Income relating to fixed lease payments and
variable lease payments that depend on an
index or a rate	\$36,132	\$105,287

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Please refer to Note 6(8) for relevant disclosure of property, plant and equipment for operating leases under IFRS 16. For operating leases entered by the Company, the undiscounted lease payments to be received and a total of the amounts for the remaining years as at December 31, 2021 and 2020 are as follow:

	December 31,	December 31,
	2021	2020
Not later than one year	\$16,600	\$34,930
Later than one year and not later than five years	347	-
Total	\$16,947	\$34,930

(17) Summary statement of employee benefits, depreciation and amortization expenses by function for the years ended December 31, 2021 and 2020:

	For the years ended December 31,
		2021			2020
	Operating	Operating		Operating	Operating
	costs	expenses	Total amount	costs	expenses	Total amount
Employee benefits
expense
Salaries	\$4,606,762	\$1,084,787	\$5,691,549	\$4,208,403	\$1,038,578	\$5,246,981
Labor and health
insurance	443,611	73,448	517,059	403,170	72,965	476,135
Pension	166,075	39,770	205,845	161,096	43,169	204,265
Remuneration of
directors	-	56,934	56,934	-	38,212	38,212
Other employee
benefits expense	208,609	30,919	239,528	212,690	33,763	246,453
Total	\$5,425,057	\$1,285,858	\$6,710,915	\$4,985,359	\$1,226,687	\$6,212,046
Depreciation	\$6,520,003	\$582,272	\$7,102,275	\$6,311,631	\$497,766	\$6,809,397
Amortization	\$19,775	\$27,475	\$47,250	\$28,938	\$20,949	\$49,887

The average total number of employees was 7,453 and 7,606 as of December 31, 2021 and 2020, respectively. The total number of Board of Directors who has not served as employees was 7 and 7, respectively.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

• A. The average amount of employee benefits expense was NT\$894 thousand and NT\$812 thousand for the years ended December 31, 2021 and 2020, respectively.
• B. The average amount of salaries was NT\$764 thousand and NT\$690 thousand for the years ended December 31, 2021 and 2020, respectively.
• C. The change rate of average amount of salaries was 10.7% and 4.7% for the years ended December 31, 2021 and 2020, respectively.
• D. The remuneration to supervisors were estimated at 0 thousand and 0 thousand for the years ended December 31, 2021 and 2020, respectively.

In accordance with the Articles of Incorporation, no higher than 1% of the profit of the current year is distributable as remuneration to directors (including independent directors). However, the Company's accumulated losses shall have been covered (if any). The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders' meeting. In addition, according to the Company's Articles of incorporation, the remuneration paid to directors (including independent directors) is determined based on the Company's overall operating performance with consideration of the contribution of each director to the Company and reference to industry norm. The remuneration proposal shall be approved by more than half members of the Compensation Committee and submitted to the Board of Directors for further approval.

According to the Company's Articles of Incorporation and the Company Law, the remuneration of the Company's executives is determined based on the positions of the executives, contribution to the Company's operations, individual performance, and consideration of the Company's future risk and reference to the industry norm. The remuneration is to be reviewed by the Compensation Committee for its plausibility and submitted to the Board of Directors for resolution.

The employee's compensation policy of the Company takes into account various factors such as individual's salary, rank, and performance evaluation, the industry norm and the Company's operating results, etc.

In accordance with the Articles of Incorporation, 8% to 10% of profit of the current year is distributable as employees' compensation and no higher than 1% of profit of the current year is distributable as remuneration to directors. However, the Company's accumulated losses shall have been covered (if any). The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders' meeting. Information on the Board of Directors' resolution regarding the employees' compensation and remuneration to directors can be obtained from the "Market Observation Post System" on the website of the TWSE.

Based on profit of current period, the Company estimated the amounts of the employees' compensation and remuneration to directors for the year ended December 31, 2021 to be 8% of profit of current period (or NT\$569,336 thousand) and 0.8% of profit of current period (or NT\$56,934 thousand), respectively, which were recognized as salary expense. If the Board of Directors resolved to distribute employees' compensation in the form of stocks, then the number of stocks distributed is calculated based on the closing price one day prior to the date of resolution. If the estimated amounts differ from the actual distribution resolved by the Board of Directors, the difference will be recognized in the profit or loss in the subsequent year. A resolution was passed at a Board of Directors meeting held on March 4, 2022 to distribute NT\$569,336 thousand and NT\$56,934 thousand in cash as employees' compensation and remuneration to directors, respectively, which were consistent with the estimated amounts recognized for the year ended December 31, 2021.

Actual distribution of employees' compensation and remuneration to directors of 2020 amounted to NT\$382,118 thousand and NT\$38,212 thousand, respectively. No material differences exist between the estimated amount and the actual distribution of the employee compensation and remuneration to directors for the year ended December 31, 2020.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(18) Non-operating income and expenses

A. Other income

2021	2020
\$85,016	\$50,966
12,868	15,638
95,530	110,456
\$193,414	\$177,060
	For the years ended December 31,

B. Other gains and losses

	For the years ended December 31,
	2021	2020
Gains on disposal of property, plant and equipment	\$96,761	\$46,075
Foreign exchange gains, net	70,474	39,870
Impairment losses –Property, plant and equipment	(59,461)	(153,955)
Others	(2,286)	(96,760)
Total	\$105,488	\$(164,770)

C. Finance costs

	For the years ended December 31,
	2021	2020
Interest expenses on borrowings from bank	\$189,184	\$198,412
Interest expenses on lease liabilities	11,300	19,173
Total	\$200,484	\$217,585

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(19) Components of other comprehensive income

For the year ended December 31, 2021

					Other
	Arising	Reclassification	Other		comprehensive
	during the	adjustments	comprehensive	Income tax	income, net of
	period	during the period	income	expenses	tax
Not to be reclassified to profit or
loss in subsequent periods:
Remeasurements of defined
benefit plans	\$(53,368)	\$-	\$(53,368)	\$-	\$(53,368)
Unrealized gains (losses) from
equity instrument
investments measured at fair
value through other
comprehensive income	2,101,279	-	2,101,279	(419,982)	1,681,297
To be reclassified to profit or loss
in subsequent periods:
Exchange differences resulting
from translating the financial
statements of foreign
operations	(42,240)	-	(42,240)	8,448	(33,792)
Total other comprehensive income	\$2,005,671	\$-	\$2,005,671	\$(411,534)	\$1,594,137

For the year ended December 31, 2020

					Other
	Arising	Reclassification	Other		comprehensive
	during the	adjustments	comprehensive	Income tax	income, net of
	period	during the period	income	expenses	tax
Not to be reclassified to profit or
loss in subsequent periods:
Remeasurements of defined
benefit plans	\$(45,906)	\$-	\$(45,906)	\$-	\$(45,906)

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Unrealized gains (losses) from
equity instrument investments
measured at fair value
through other comprehensive
income	2,094,772	(38,462)	2,056,310	(403,570)	1,652,740
To be reclassified to profit or loss
in subsequent periods:
Exchange differences resulting
from translating the financial
statements of foreign
operations	105,726	-	105,726	(21,145)	84,581
Total other comprehensive income	\$2,154,592	\$(38,462)	\$2,116,130	\$(424,715)	\$1,691,415

(20) Income tax

The major components of income tax expense are as follows:

Income tax expense recognized in profit or loss

	For the years ended December 31,
	2021	2020
Current income tax expense:
Current income tax charge	\$938,244	\$723,367
Adjustments in respect of current income tax of
prior periods	(17,093)	(198,244)
Deferred tax expense (income):
Deferred tax expense (income) relating to
origination and reversal of temporary differences	413,891	205,591
Income tax expense recognized in profit or loss	\$1,335,042	\$730,714

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Income tax relating to components of other comprehensive income

	For the years ended December 31,
	2021	2020
Deferred tax expense (income):
Unrealized gains (losses) from equity instrument
investments measured at fair value through other
comprehensive income	\$419,982	\$403,570
Exchange differences resulting from translating the
financial statements of foreign operations	(8,448)	21,145
Income tax relating to components of other
comprehensive income	\$411,534	\$424,715

Reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows:

	For the years ended December 31,
	2021	2020
Accounting profit before tax from continuing
operations	\$6,510,088	\$4,367,367
Tax at the domestic rates applicable to profits in the
country concerned	\$1,302,018	\$873,473
Tax effect of expenses not deductible for tax
purposes	(363,774)	(150,106)
Tax effect of deferred tax assets/liabilities	413,891	205,591
Adjustments in respect of current income tax of prior
periods	(17,093)	(198,244)
Total income tax expense recognized in profit or loss	\$1,335,042	\$730,714

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2021

			Recognized
		Recognized	in other	Charged
	Beginning	in profit or	comprehensive	directly to	Exchange	Ending
	balance	loss	income	equity	differences	balance
Temporary differences
Unrealized exchange gains and
losses	\$(29,772)	\$1,251	\$-	\$-	\$-	\$(28,521)
Impairment loss of goodwill	12,650	-	-	-	-	12,650
Other impairment loss	35,393	(20,580)	-	-	-	14,813
Depreciation difference for tax
purpose	23,235	9,232	-	-	-	32,467
Unrealized sales discount	38,991	40,631	-	-	-	79,622
Investments accounted for using
the equity method	(200,006)	(375,570)	-	-	-	(575,576)
Exchange differences resulting
from translating the financial
statements of foreign
operations	89,259	-	8,448	-	-	97,707
Unrealized investment gains
and losses	(438,190)	(65,175)	(419,982)	-	-	(923,347)
Others	28,095	(3,680)	-	-	-	24,415
Deferred tax income/ (expense)		\$(413,891)	\$(411,534)	\$-	\$-
Net deferred tax assets/(liabilities)	\$(440,345)					\$(1,265,770)
Reflected in balance sheet as
follows:
Deferred tax assets	\$227,623					\$261,675
Deferred tax liabilities	\$667,968					\$1,527,445

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

For the year ended December 31, 2020

			Recognized
		Recognized	in other	Charged
	Beginning	in profit or	comprehensive	directly to	Exchange	Ending
	balance	loss	income	equity	differences	balance
Temporary differences
Unrealized exchange gains and
losses	\$(5,624)	\$(24,148)	\$-	\$-	\$-	\$(29,772)
Impairment loss of goodwill	12,650	-	-	-	-	12,650
Other impairment loss	11,054	24,339	-	-	-	35,393
Depreciation difference for tax
purpose	24,219	(984)	-	-	-	23,235
Unrealized sales discount	7,816	31,175	-	-	-	38,991
Investments accounted for using
the equity method	29,151	(229,157)	-	-	-	(200,006)
Exchange differences resulting
from translating the financial
statements of foreign
operations	110,404	-	(21,145)	-	-	89,259
Unrealized investment gains
and losses	(34,297)	(323)	(403,570)	-	-	(438,190)
Others	11,540	16,555	-	-	-	28,095
Unused tax losses	23,048	(23,048)	-	-	-	-
Deferred tax income/ (expense)		\$(205,591)	\$(424,715)	\$-	\$-
Net deferred tax assets/(liabilities)	\$189,961					\$(440,345)
Reflected in balance sheet as
follows:
Deferred tax assets	\$229,882					\$227,623
Deferred tax liabilities	\$39,921					\$667,968

The assessment of income tax returns

As of December 31, 2021, the assessment of the income tax returns of the Company is as follows:

Entities	The assessment of income tax returns
The Company	Assessed and approved up to 2019

(21) Earnings per share

Basic earnings per share is calculated by dividing net profit for the year attributable to ordinary equity owners of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity owners of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

	For the years ended December 31,
	2021	2020
A. Basic earnings per share
Profit attributable to ordinary equity owners of
the parent	\$5,175,046	\$3,636,653
Weighted average number of ordinary shares outstanding for basic earnings per share
(thousand share)	1,222,745	1,222,745
Basic earnings per share (NT\$)	\$4.23	\$2.97
B. Diluted earnings per share
Profit attributable to ordinary equity owners of
the parent	\$5,175,046	\$3,636,653

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Weighted average number of ordinary shares
outstanding for basic earnings per share (in
thousands)	1,222,745	1,222,745
Effect of dilution:
Employee compensation-stock (in thousands)	14,512	13,079
Weighted average number of ordinary shares
outstanding after dilution (in thousands)	1,237,257	1,235,824
Diluted earnings per share (NT\$)	\$4.18	\$2.94

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date the financial statements were issued.

7. Related Party Transactions

Information of the related parties that had transactions with the Company during the financial reporting period is as follows:

A. Name and nature of relationship of the related parties

Name of the related parties	Nature of relationship of the related parties
MediaTek Inc.	The chairman of the Company and the chairman of
	MediaTek Inc. are close relatives
Mediatek Singapore Pte. Ltd.	Subsidiary of MediaTek Inc.
Airoha Technology Corp.	Subsidiary of MediaTek Inc.
Airoha Technology (Suzhou) Limited	Subsidiary of MediaTek Inc.
Other related parties (Note)	Subsidiary of MediaTek Inc.
Fixwell Technology Corp.	Associates
Wei Jiu Industrial Co., Ltd.	Associates
KYEC USA Corp.	Subsidiaries
KYEC SINGAPORE PTE. LTD.	Subsidiaries
KYEC Japan K.K.	Subsidiaries
King Long Technology (Suzhou) Ltd.	Subsidiaries
Suzhou Zhengkuan Technology Ltd.	Subsidiaries
King Ding Precision Inc.	Subsidiaries

Note : The Company's transactions with these companies are not material.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

B. Significant transactions with related parties

(a) Operating income

	For the years ended December 31,
	2021	2020
MediaTek Inc.	\$4,654,610	\$2,820,870
Mediatek Singapore Pte. Ltd.	2,947,566	2,177,299
Other related parties	712,729	391,058
Subsidiaries	34,771	151,836
Associates	5,626	5,585
Total	\$8,355,302	\$5,546,648

Trading prices with related parties were determined through mutual agreement based on the market demands. The trade credit terms with related parties were 45 to 180 days, while the terms with non-related parties were 30 to 120 days. The outstanding balance due from related parties as of December 31, 2021 and 2020 was unsecured, non-interest bearing and must be settled in cash. The receivables from the related parties were not guaranteed.

• (b) The Company purchased inventories from associates and subsidiaries. For the year ended December 31, 2021, the purchase amounts were NT\$164,287 thousand and NT\$106 thousand, respectively. The Company purchased inventories from associates and subsidiaries, for the year ended December 31, 2020, the purchase amount were NT\$77,608 thousand and NT\$537 thousand, respectively. The purchase price was based on the market demands. The payment terms with related parties were 30 days, while the terms with nonrelated parties were 30 to 120 days.
• (c) The Company engaged an associate to perform machinery maintenance services. For the years ended December 31, 2021 and 2020, related operating cost recognized amounted to NT\$313,388 thousand and NT\$300,730 thousand, respectively. The Company appointed a subsidiary to perform machinery repairs. For the years ended December 31, 2021 and 2020, the operating cost recognized amounted to NT\$1,182 thousand and NT\$3,680 thousand, respectively.
• (d) The Company paid rental expenses for renting machines from associates. For the years ended December 2021 and 2020, the rental expenses amounted to NT\$11,079 thousand and NT\$6,605 thousand, respectively. The rental price was based on the similar machine's rental price in the market. The payment terms with related parties were 30 to 90 days, while terms with non-related parties were 0 to 30 days.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

• (e) Significant property transactions with related parties:
• i. Disposal of property, plant and equipment

	For the year ended		For the year ended
	December 31,	2021	December 31,	2020
Related party	Sales price	Disposal gain	Sales price	Disposal gain
King Long Technology (Suzhou) Ltd.	\$1,140,684	\$131,123	\$287,847	\$37,863
Subsidiaries	32,195	3,601	27,847	12,873
Associates	14,969	4,613	14,869	5,678
Subtotal	1,187,848	139,337	330,563	56,414
Unrealize gain on disposal in current year	-	(46,162)	-	4,917
(Note)
Net Amount	\$1,187,848	\$93,175	\$330,563	\$61,331

Note: The Company deferred the disposal gain derived from sales of property, plant and equipment to related parties, and then recognized such gain over depreciable lives of the disposed assets.

ii. Acquisition of property, plant and equipment

	For the year	For the year
	ended December	ended December
	31, 2021	31, 2020
Related party	Purchase price	Purchase price
Subsidiaries	\$21,231	\$243,360
Associates	190,112	123,070
Total	\$211,343	\$366,430

The purchase price was determined through mutual agreement based on the market demand.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(f) Contract assets

Contract assets – current

	December 31,	December 31,
	2021	2020
Other related parties	\$2,249	\$-
Less: loss allowance	-	-
Net	\$2,249	\$-

(g) Trade receivables from related parties

December 31,
2020
\$1,056,080
523,417
100,036
69,684
461
-
\$1,749,678

(h) Other receivables from related parties

	December 31,	December 31,
	2021	2020
King Long Technology (Suzhou) Ltd.	\$425,716	\$71,659
MediaTek Inc.	4,361	25,708
Other related parties	464	598
Associates	-	6,951
Subsidiaries	-	7,002
Total	\$430,541	\$111,918

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

(i) Account payables to related parties

	December 31,	December 31,
	2021	2020
Wei Jiu Industrial Co., Ltd.	\$19,961	\$16,512
Associates	1,453	2,975
Total	\$21,414	\$19,487

(j) Other payables to related parties

	December 31,	December 31,
	2021	2020
Fixwell Technology Corp.	\$75,127	\$46,612
Wei Jiu Industrial Co., Ltd.	22,365	18,013
Subsidiaries	10,638	7,039
King Long Technology (Suzhou) Ltd.	10,168	233,588
Other related parties	1,438	831
Total	\$119,736	\$306,083

(k) The Company paid NT\$96,669 thousand and NT\$99,387 thousand as commission expenses to the subsidiaries for the years ended December 31, 2021 and 2020, respectively.

(l) Other income

	For the years ended December 31,
	2021	2020
Associates	\$141	\$681
Subsidiaries	-	926
Total	\$141	\$1,607

C. Endorsements and guarantees:

As of December 31, 2021, the Company guaranteed Suzhou Zhengkuan Technology Ltd. 's lines of credit which were provided by The Shanghai Commercial & Savings Bank. Please refer to Note 9 for more details.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

D. Key management personnel compensation

	For the years ended December 31,
	2021	2020
Short-term employee benefits	\$179,374	\$120,917
Post-employment benefits	1,008	1,004
Total	\$180,382	\$121,921

8. Assets Pledged as Security

The following table lists assets of the Company pledged as security:

	Carrying amount
	December 31,	December 31,
Items	2021	2020	Purpose of pledge
Other non-current financial assets	\$105,972	\$115,669	Customs clearance
Land	914,594	914,594	Long-term borrowings
Building and facility	1,196,213	1,273,901	Long-term borrowings
Machinery and equipment	5,766,116	6,898,747	Long-term borrowings
Total	\$7,982,895	\$9,202,911

9. Significant Contingent Liabilities and Unrecognized Commitments

As of December 31, 2021, the following contingencies and material commitments were not included in the Company's financial statements:

• A. The Company's issued and outstanding letters of credit totaled approximately NT\$497,089 thousand.
• B. To construct the plant and factory premises, the Company had entered into several construction contracts in an aggregate amount of NT\$1,533,954 thousand with NT\$924,513 thousand already paid and NT\$609,441 thousand remaining unpaid (promissory notes have been issued).
• C. The promissory notes issued for secured bank loans amounted to NT\$41,917,725 thousand.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

• D. The Company also provided guarantees to Suzhou Zhengkuan Technology Ltd.'s lines of credit. The lines of credit were provided by The Shanghai Commercial & Savings Bank in the amount of US\$5,000 thousand.
• E. The Company entered into loan agreements with Mega International Commercial Bank and First Commercial Bank , the following financial covenants shall be maintained on an annual basis during the period from 2020 to 2025:
• (a) Current ratio not less than 100%;
• (b) Debt ratio not more than 150%;
• (c) Interest coverage ratio no less than 300%.

The Company entered into a loan agreement with Far Eastern Int'l Bank , the following financial covenants shall be maintained on a semi-annual and annual basis during the period from 2020 to 2023:

• (a) Current ratio not less than 100%;
• (b) Debt ratio not more than 150%;
• (c) Interest coverage ratio no less than 300%.

The Company entered into a loan agreement with JihSun International Commercial Bank , the following financial covenants shall be maintained on a semi-annual and annual basis during the period from 2021 to 2024:

• (a) Current ratio not less than 100%;
• (b) Debt ratio not more than 150%;
• (c) Interest coverage ratio no less than 300%.

The Company entered into a loan agreement with Yuanta Commercial Bank , the following financial covenants shall be maintained on a semi-annual and annual basis during the period from 2021 to 2025:

• (a) Current ratio not less than 100%;
• (b) Debt ratio not more than 150%;
• (c) Interest coverage ratio no less than 300%.

The Company entered into a syndicated loan agreement with 17 banks, led by Mega International Commercial Bank of Taiwan, and the Company shall maintain the following financial covenants on a semi-annual and annual basis during the period from 2018 to 2023:

• (a) Current ratio not less than 100%;
• (b) Debt ratio not more than 150%;
• (c) Interest coverage ratio not less than 300%.

In the case of failure to adhere to the aforementioned financial covenants during the period from 2018 to 2023, Mega International Commercial Bank of Taiwan may assemble a meeting among the banks to govern the matter to decide on a course of action or request for each bank's written approval for such course of action, when necessary.

The Company entered into a syndicated loan agreement with 13 banks, led by Mega International Commercial Bank of Taiwan, and the Company shall maintain the following financial covenants on a semi-annual and annual basis during the period from 2020 to 2025:

• (a) Current ratio not less than 100%;
• (b) Debt ratio not more than 150%;
• (c) Interest coverage ratio not less than 300%.

In the case of failure to adhere to the aforementioned financial covenants during the period from 2020 to 2025, Mega International Commercial Bank of Taiwan may assemble a meeting among the banks to govern the matter to decide on a course of action or request for each bank's written approval for such course of action, when necessary.

As of December 31, 2021, the Company did not violate any financial covenants.

10. Losses due to Major Disasters

None.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

11. Significant Subsequent Events

None.

12. Others

(1) Categories of financial instruments

A. Categories of financial instruments

	December 31,	December 31,
Financial assets	2021	2020
Financial assets at fair value through other comprehensive income	\$6,546,477	\$4,446,563
Financial assets measured at amortized cost
(Note)	13,270,264	10,316,832
Total	\$19,816,741	\$14,763,395
Financial liabilities Financial liabilities at amortized cost:
Payables (including related parties)	\$809,147	\$814,316
Other payables (including related parties)	4,680,212	3,423,827
Long-term loans(including current portion)	21,275,331	18,318,298
Lease liabilities	555,741	838,236
Guarantee deposits	33,851	2,755
Total	\$27,354,282	\$23,397,432

Note: Includes cash and cash equivalents, notes receivable, trade receivables (including related parties), other receivables (including related parties), other financial assets and refundable deposits.

(2) Financial risk management objectives

The objective of the Company's financial risk management is mainly to manage the market risk, credit risk and liquidity risk derived from its operating activities. The Company identified, measured and managed the aforementioned risks based on the Company's policy and risk tendency.

The Company has established appropriate policies, procedures and internal controls for financial risk management. The plans for material treasury activities are reviewed by Board of Directors and Audit committee in accordance with relevant regulations and internal controls. The Company complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise foreign currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk variable will change independently from other risk variables, there are usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

A. Foreign currency risk

The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenues or expenses are denominated in a different currency from the Company's functional currency) and the Company's net investments in foreign operations.

Some receivables and payables are denominated in the same foreign currency, and it will result in economic hedging effect. Further, net investments in foreign operations are primary for strategic purposes, and they are not hedged by the Company.

The Company's sensitivity analysis to foreign currency risk mainly focuses on foreign currency monetary items at the end of the reporting period. The Company's foreign currency risk is mainly from the volatility in the exchange rates of US\$. The sensitivity analysis is as follows:

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

When NT\$ appreciates or depreciates against US\$ by 1%, the profit for the years ended December 31, 2021 and 2020 would have increased / decreased by NT\$520 thousand and NT\$2,406 thousand, respectively.

B. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's loans and receivables at variable interest rates.

The Company manages its risk by having a balanced portfolio of financial instruments with fixed and floating interest rates. The Company did not apply hedging accounting since such hedging activities did not qualify for criteria of hedge accounting.

The Company's sensitivity analysis to interest rate risk mainly focuses on items exposed to interest rate risk at the end of the reporting period, including investments with floating interest rates and bank borrowings with floating rates. Assuming investments and bank borrowings had been outstanding for the entire period and all other variables were constant, a hypothetical increase/decrease of 10 basis points of interest rate in a reporting period would have resulted in a decrease/increase in profit by NT\$21,303 thousand and NT\$18,360 thousand for the years ended December 31, 2021 and 2020, respectively.

C. Equity price risk

The Company's equity investments, including listed and unlisted equity securities, are exposed to market price risk arising from uncertainties of future values of equity securities. The Company's investments in listed and unlisted equity securities are classified under financial assets at fair value through other comprehensive income. The Company manages the equity price risk through diversification and placing limits on individual and total equity investments. Reports on the equity portfolio are submitted to the Company's senior management on a regular basis. The Company's Board of Directors reviews and approves certain significant equity investments according to level of authority.

At the reporting date ended December 31, 2021 and 2020, a change of 20% in the price of the listed equity securities classified under equity instrument investments measured at fair value through other comprehensive income would have impact of NT\$8,606 thousand and NT\$5,623 thousand on the equity attributable to the Company.

Please refer to Note 12(3) section H for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

D. Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for contract assets, trade receivables and notes receivable) and from its financing activities (including bank deposits and other financial instruments).

Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and controls relating to customer credit risk management. Credit limits are established for all customers based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company's internal rating criteria, etc. Certain customer's credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment and insurance.

As of December 31, 2021 and 2020, receivables from top ten customers represented 52% and 49% of the total trade receivables of the Company, respectively. The credit concentration risk of other accounts receivable was insignificant.

The Company manages its exposure to credit risk arising from bank deposits, fixed income securities and other financial instruments in accordance with established group policies. Since the counter-parties are selected reputable financial institutions and companies, the Company believes its exposure to credit risk is not significant.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

E. Liquidity risk management

The Company maintained financial flexibility through the holding of cash and cash equivalents, investments in securities with high liquidity, and facilities of bank borrowings. The table below summarizes the maturity profile of the Company's financial liabilities based on the contractual undiscounted payments and contractual maturity, and the payment amount also includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

	Less than 1				Longer than 4
	year	1 to 2 years	2 to 3 years	3 to 4 years	years	Total
December 31, 2021
Payables	\$5,489,359	\$-	\$-	\$-	\$-	\$5,489,359
Borrowings	189,280	7,044,228	3,923,542	10,347,594	418,026	21,922,670
Lease liabilities	86,364	22,643	23,136	16,715	406,883	555,741
(Note)
December 31, 2020
Payables	\$4,238,143	\$-	\$-	\$-	\$-	\$4,238,143
Borrowings	160,053	6,468,700	9,632,289	1,655,063	909,521	18,825,626
Lease liabilities	304,358	79,436	15,642	15,917	422,883	838,236
(Note)

Non-derivative financial instruments

Note: Information about the maturities of lease liabilities is provided in the table below:

	Maturity Period
Lease liabilities	Less than 1 year	1 to 5 years	6 to 10 years	> 10 years	Total
December 31, 2021	\$86,364	\$78,797	\$85,444	\$305,136	\$555,741
December 31, 2020	\$304,358	\$126,995	\$101,747	\$305,136	\$838,236

F. Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for year ended December 31, 2021:

			Total liabilities
			from financing
	Long-term loans	Lease liabilities	activities
As of January 1, 2021	\$18,318,298	\$838,236	\$19,156,534
Cash flows	2,932,769	(304,763)	2,628,006
Non-cash changes
Syndicated loan issuance costs	18,300	-	18,300
Amortization on bonds payable	(4,730)	-	(4,730)
Addition to right-of-use assets	-	24,275	24,275
Foreign exchange movement	10,694	(2,007)	8,687
As of December 31, 2021	\$21,275,331	\$555,741	\$21,831,072

Reconciliation of liabilities for year ended December 31, 2020:

			Total liabilities
			from financing
	Long-term loans	Lease liabilities	activities
As of January 1, 2020	\$16,944,660	\$1,232,514	\$18,177,174
Cash flows	1,434,194	(505,826)	928,368
Non-cash changes
Syndicated loan issuance costs	16,380	-	16,380
Amortization on bonds payable	(3,765)	-	(3,765)
Addition to right-of-use assets	-	89,750	89,750
Remeasurement of lease
liabilities	-	26,651	26,651
Foreign exchange movement	(73,171)	(4,853)	(78,024)
As of December 31, 2020	\$18,318,298	\$838,236	\$19,156,534

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

G. Fair values of financial instruments

a. The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

• (a) The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and other payables approximate their fair value due to their short maturities.
• (b) For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price at the reporting date.
• (c) Fair value of equity instruments without market quotations (including private placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).
• (d) Fair value of debt instruments without market quotations, bank loans and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instruments.
• b. Fair value of financial instruments measured at amortized cost

The carrying amounts of the Company's financial assets and financial liabilities measured at amortized cost approximate their fair value.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

c. Fair value measurement hierarchy for financial instruments

Please refer to Note 12(3) section H for fair value measurement hierarchy for financial instruments of the Company.

H. Fair value measurement hierarchy

a. Fair value measurement hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

• Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.
• Level 3: Unobservable inputs for the assets or liabilities.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

b. Fair value measurement hierarchy of the Company's assets and liabilities

The Company does not have assets measured at fair value on a non-recurring basis; the following table presents the fair value measurement hierarchy of the Company's assets and liabilities on a recurring basis:

December 31, 2021 Level 1 Level 2 Level 3 Total Financial assets at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income \$43,028 \$- \$6,503,449 \$6,546,477

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

December 31, 2020
	Level 1	Level 2	Level 3	Total
Financial assets at fair value through
other comprehensive income
Equity instruments measured at
fair value through other
comprehensive income	\$28,117	\$-	\$4,418,446	\$4,446,563

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

For the year ended December 31, 2021:

	Assets
	At fair value through other comprehensive income
	Stocks
Beginning balance as at January 1, 2021	\$4,418,446
The fair value of the investments of derecognition	(1,365)
Total gains and losses recognized for the year ended
December 31, 2021:
Amount recognized in OCI (presented in "unrealized
gains (losses) from equity instrument investments
measured at fair value through other comprehensive
income")	2,086,368
Ending balance as at December 31, 2021	\$6,503,449

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

For the year ended December 31, 2020:

	Assets
	At fair value through other
	comprehensive income
	Stocks
Beginning balance as at January 1, 2020	\$2,400,157
Total gains and losses recognized for the year ended
December 31, 2020:
Amount recognized in OCI (presented in "unrealized
gains (losses) from equity instrument investments
measured at fair value through other comprehensive
income")	2,018,289
Ending balance as at December 31, 2020	\$4,418,446

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As at December 31, 2021

		Significant		Relationship
	Valuation	unobservable	Quantitative	between inputs	Sensitivity of the input to fair
Financial assets:	techniques	inputs	information	and fair value	value
Financial assets at
fair value
through other
comprehensive
income
Stocks	Assets	Discount for	10%	The higher the	10% increase/decrease in the
	approach	lack of		discount for lack	discount for lack of marketability
		marketability		of marketability,	would result in decrease/increase
				the lower the fair	in the Company's equity by

value of the stocks

NT\$714,919 thousand.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

Stocks	Markets	P/E, P/B,	30%	The higher the	10% increase/decrease in the
	approach	EV/EBITDA,		proportion of	discount for lack of marketability
		EV/EBIT		similar quantified	would result in decrease/increase
		and EV/Sales		information, the	in the Company's equity by
				higher the fair	NT\$9,883 thousand.
				value of the stocks

As at December 31, 2020

	Valuation	Significant unobservable	Quantitative	Relationship between inputs	Sensitivity of the input to fair
Financial assets:	techniques	inputs	information	and fair value	value
Financial assets at
fair value
through other
comprehensive
income
Stocks	Assets	Discount for	10%	The higher the	10% increase/decrease in the
	approach	lack of		discount for lack	discount for lack of marketability
		marketability		of marketability,	would result in decrease/increase
				the lower the fair	in the Company's equity by
				value of the stocks	NT\$489,775 thousand.
Stocks	Markets	P/E, P/B,	30%	The higher the	10% increase/decrease in the
	approach	EV/EBITDA,		proportion of	discount for lack of marketability
		EV/EBIT		similar quantified	would result in decrease/increase
		and EV/Sales		information, the	in the Company's equity by
				higher the fair	NT\$1,495 thousand.
				value of the stocks

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Company's Finance Department is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The Department analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company's accounting policies at each reporting date.

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

I. Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

		December 31, 2021
	Foreign Currency		NT\$
	(thousand)	Exchange rate	(thousand)
Monetary financial assets
US\$	\$244,913	27.68	\$6,779,191
JPY	628,595	0.2405	151,177
CNY	579	4.344	2,517
Monetary financial liabilities
US\$	243,034	27.68	6,727,176
JPY	653,018	0.2405	157,051
		December 31, 2020
	Foreign Currency		NT\$
	(thousand)	Exchange rate	(thousand)
Monetary financial assets
US\$	\$173,133	28.48	\$4,930,838
JPY	209,229	0.2763	57,810
CNY	577	4.377	2,527
Monetary financial liabilities
US\$	181,580	28.48	5,171,411
JPY	254,698	0.2763	70,373

Functional currencies of entities of the Company are varied. Accordingly, the Company is not able to disclose the information of exchange gains and losses of monetary financial assets and liabilities by each significant asset and liability denominated in foreign currencies. The foreign exchange gains were NT\$70,474 thousand and NT\$39,870 thousand for the years ended December 31, 2021 and 2020, respectively.

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

J. Capital management

The primary objective of the Company's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

K. The impact of the COVID-19 pandemic on the Company

Since the outbreak of COVID -19, the pandemic has been controlled appropriately in the countries where the Company's main operations and production are located. Therefore, no significant impact was incurred on the Company due to the pandemic.

Near the end of May 2021, a foreign migrant worker cluster infection occurred at the Company's premises. The Company, following the guidance from the Central Epidemic Command Center, decisively adopted series of measures to contain the infection. The measures included quarantine of infected workers, 48 hours production suspension and load reduction, etc. It is estimated that this cluster infection reduced approximately 30% of the Company's monthly sales in June 2021. Other than this one-time impact, COVID-19 does not have any significant impact on the Company's going concern basis, funding ability and operations.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

13. Additional Disclosures

• (1) The following are additional disclosures for the Company and its affiliates as required by the R.O.C. Securities and Futures Bureau for the year ended December 31, 2021:
• A. Financing provided to others: None.
• B. Endorsement/Guarantee provided to others: Please refer to Attachment 1.
• C. Securities held as of December 31, 2021: Please refer to Attachment 2.
• D. Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT\$300 million or 20 percent of the capital stock: None.
• E. Acquisition of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock: Please refer to Attachment 3.
• F. Disposal of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock: None.
• G. Related party transactions for purchases and sales amounts exceeding the lower of NT\$100 million or 20 percent of the capital stock: Please refer to Attachment 4.
• H. Receivables from related parties with amounts exceeding the lower of NT\$100 million or 20 percent of capital stock: Please refer to Attachment 5.
• I. Financial instruments and derivative transactions: None.
• J. Parent-subsidiary relationship between business dealings and important circumstance: Please refer to Attachment 6.
• (2) Information on investees
• A. Information regarding investee companies over which the Company can exercise significant influence or control: Please refer to Attachment 7.
• B. The following are additional disclosures for investee companies KYEC has significant influence or control:
  • a. Financing provided to others: None.
  • b. Endorsement/Guarantee provided to others: None.
  • c. Securities held as of December 31, 2021: None.
  • d. Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT\$300 million or 20 percent of the capital stock: None.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

(Amounts are expressed in thousands of New Taiwan dollars unless otherwise stated)

• e. Acquisition of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock: None.
• f. Disposal of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock: None.
• g. Related party transactions for purchases and sales amounts exceeding the lower of NT\$100 million or 20 percent of the capital stock: Please refer to Attachment 4.
• h. Receivables from related parties with amounts exceeding the lower of NT\$100 million or 20 percent of capital stock as of December 31, 2021: Please refer to Attachment 5.
• i. Financial instruments and derivative transactions: None.
• (2) Investment in Mainland China: Please refer to Attachment 8.
• (3) Major shareholders information: There is no shareholder who owns above 5% securities of the Company as at December 31, 2021.

ENDORSEMENTS/GUARANTEES PROVIDED

For the year ended December 31, 2021

(Amounts in New Taiwan Thousand Dollars, Unless Specified otherwise)

		Guaranteed Party		Limits on Endorsement/				Amount of	Ratio of Accumulated	Maximum	Guarantee		Guarantee
NO.	Endorsement/ Guarantee			Guarantee Amount Provided	Maximum Balance	Ending	Amount	Endorsement/ Guarantee	Endorsement/ Guarantee to Net	Endorsement/ Guarantee Amount	Provided by	Guarantee Provided by	Provided to Subsidiaries
	Provider	Name	Nature of Relationship	to Each Guaranteed Party (Note 2)	for the Period	Balance	Actually Drawn	Collateralized by Properties	Equity per Latest Financial Statements	Allowable (Note 3)	Parent Company	A Subsidiary	in Mainland China
1	The Company	Suzhou Zhengkuan Technology Ltd.	(Note 1)	\$6,836,855	\$993,260	\$138,400	\$69,200	-	0.40%	\$13,673,710	Y	N	Y

Note1: A subsidiary in which endorser/guarantor holds directly over 50% of equity interest.

Note2: The amount of guarantees/endorsements for any single entity shall not exceed 20% of net worth of endorser/guarantor.

Note3: The maximum endorsement/guarantee amount allowable shall not exceed 40% of the Company's net worth as of December 31, 2021.

MARKTEABLE SECURITIES HELD

As of December 31, 2021

(Amounts in New Taiwan Thousand Dollars, Unless Specified otherwise)

Held			Relationship			Balances as of December 31, 2021
Company Name	Securities Type	Securities Name	with the Company	Financial Statement Account	Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value	Note
	Stock	Shieh Yong Investment Co., Ltd.	-	Non-current financial assets at fair value through other comprehensive income	121,840,431	1,669,533	7.58%	1,669,533
	Stock	APM Communication, Inc.	-	Non-current financial assets at fair value through other comprehensive income	10,456	-	0.11%	-
	Stock	Greenliant Systems, Ltd.	-	Non-current financial assets at fair value through other comprehensive income	2,333,333	-	3.10%	-
The	Stock	YANN YUAN Investment Co., Ltd.	-	Non-current financial assets at fair value through other comprehensive income	25,000,000	4,764,734	15.34%	4,764,734
Company	Stock	Movella Inc. (Note)	-	Non-current financial assets at fair value through other comprehensive income	528,745	-	0.81%	-
	Stock	IROC Co., Ltd.	-	Non-current financial assets at fair value through other comprehensive income	315,999	12,877	1.23%	12,877
	Stock	Subtron Technology Co., Ltd.	-	Non-current financial assets at fair value through other comprehensive income	927,147	30,151	0.32%	30,151
	Stock	CAL-COMP INDÚSTRIA DE SEMICONDUTORES S.A.	-	Non-current financial assets at fair value through other comprehensive income	11,965,500	69,182	17.16%	69,182

Note: The security was renamed from Mcube Inc.

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT\$300 MILLION OR 20% OF THE PAID-IN CAPITAL

As of December 31, 2021

(Amounts in New Taiwan Thousand Dollars, Unless Specified otherwise)

Held									Prior Transaction of Related Counter-party
Company Name	Type of Properties	Transaction Date	Transaction Amount	Payment Status	Counter-party	Relationship	Owner	Relationship with the Issuer	Transfer Date	Amount	Price Reference	Purpose and Usage of Acquisition	Other Commitments
The Company	Land and building	2020.10.30 (Note)	\$350,000	According to the trading term of purchase order, the Company has paid off the total consideration as of December 31, 2021.	Henghou Xingye Co., Ltd.	None			Not applicable		Reference to valuation report	Purpose: to meet the needs of future operation and development usage status: ownership has been transferred	None
The Company	Land and building	2020.12.25 (Note)	\$639,000	According to the trading term of purchase order, the Company has paid \$447,300 as of December 31, 2021.	Weishun architecture Co., Ltd.	None			Not applicable		Price comparison and bargaining Purpose:	to meet the needs of future operation and development usage status: ownership not transferred	None

Note: Board of Directors approval date.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT\$100 MILLION OR 20% OF THE PAID-IN CAPITAL

As of December 31, 2021

(Amounts in New Taiwan Thousand Dollars, Unless Specified otherwise)

			Transaction Details					Abnormal Transaction	Notes/Accounts Payable or Receivable (Including Contract Assets)
Company Name	Related Party	Nature of Relationships	Purchase/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
	MediaTek Inc.	The chairman of the Company and the chairman of Mediatek Inc. are close relatives	Sales	\$4,654,610	18.03%	Month-end 75 days	-	-	\$1,069,273	17.32 %
The Company	Mediatek Singapore Pte. Ltd.	Subsidiary of MediaTek Inc.	Sales	\$2,947,566	11.42%	Month-end 60 days	-	-	\$787,233	12.75 %
	Airoha Technology Corp.	Subsidiary of MediaTek Inc.	Sales	\$504,002	1.95%	Month-end 60 days	-	-	\$155,744	2.52 %
	Airoha Technology (Suzhou) Limited.	Subsidiary of MediaTek Inc.	Sales	\$114,130	0.44%	Month-end 75 days	-	-	\$32,178	0.52 %
King Long	MediaTek Inc.	The chairman of the Company and the chairman of Mediatek Inc. are close relatives	Sales	\$390,022	5.82%	Month-end 75 days	-	-	\$58,388	3.45 %
Technology	Mediatek Singapore Pte. Ltd.	Subsidiary of MediaTek Inc.	Sales	\$151,158	2.26%	Month-end 75 days	-	-	\$22,357	1.32 %
(Suzhou) Ltd.	Suzhou Zhengkuan Technology Ltd.	Subsidiary	Sales	\$158,619	2.37%	Month-end 180 days	-	-	\$96,486	5.71 %

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT\$100 MILLION OR 20% OF THE PAID-IN CAPITAL

As of December 31, 2021

(Amounts in New Taiwan Thousand Dollars, Unless Specified otherwise)

Company Name			Ending Balance		Overdue		Amounts Received	Allowance for
	Related Party	Nature of Relationships		Turnover Rates	Amount	Action Taken	in Subsequent Period	Bad Debts
	MediaTek Inc.	The chairman of the Company and the chairman of Mediatek Inc. are close relatives	\$1,073,634 (Note 1)	4.38	\$-	-	\$732,225	-
The Company	Mediatek Singapore Pte. Ltd.	Subsidiary of MediaTek Inc.	\$787,565 (Note 2)	4.50	\$29	-	\$505,191	-
	Airoha Technology Corp.	Subsidiary of MediaTek Inc.	\$155,744	4.87	\$-	-	\$98,266	-
	King Long Technology (Suzhou) Ltd.	Subsidiary	\$436,705 (Note 3)	0.83	\$-	-	\$20,822	-
King Long Technology (Suzhou) Ltd.	Suzhou Zhengkuan Technology Ltd.	Subsidiary	\$156,880 (Note 4)	1.89	\$-	-	\$28,164	-

Note 1: Includes other receivables - related party amounting to NT\$4,361 thousand arising from handling charges, freights and tax fees.

Note 2: Includes other receivables - related party amounting to NT\$332 thousand arising from customs clearance charges and freights.

Note 3: Includes other receivables - related party amounting to NT\$425,716 thousand arising from disposal of equipments and accessories.

Note 4: Includes other receivables - related party amounting to NT\$60,394 thousand arising from utility fees.

INTERCOMPANY RELATIONSHIP AND SIGNIFICANT INTERCOMPANY TRANSACTIONS DURING THE REPORTING PERIOD

For the year ended December 31, 2021

(Amounts in New Taiwan Thousand Dollars, Unless Specified otherwise)

Number	Company name	Counterparty	Relationship	Finacial Statement Account	Amount (Foreign Currency in Thousands)	Transaction Terms	% of Net Revenues or total Assets
		KYEC USA Corp.		Commission expense	\$46,330		0.14%
				Accrued expenses	2,076		-
				Disposal of equipment	1,140,684		1.58%
				Purchase equipment	20,018		0.03%
			Accounts receivable	10,989	0.02%
		King Long Technology		Other receivables	425,716		0.59%
		(Suzhou) Ltd.		Accrued expenses	10,168		0.01%
				Sales revenue	32,399		0.10%
				Equipment repair	1,182		-
				Deferred credits	148,074		0.21%
0	KYEC	KYEC Japan. K.K.	1	Accrued expenses	6,585		0.01%
				Commission expense	26,442	according to contract	0.08%
		KYEC Singapore PTE. LTD.		Commission expense	23,897		0.07%
				Endorsement guarantee	138,400		-
					(US\$5,000)		-
		Suzhou Zhengkuan		Disposal of equipment	32,195		0.04%
				Purchase equipment	1,213		-
		Technology Ltd.		Accrued expenses	1,977		-
				Sales revenue	2,350		0.01%
				Deferred credits	14,265		0.02%
	King Long			Sales revenue	158,619		0.47%
1	Technology	Suzhou Zhengkuan	3	Accounts receivable	96,486		0.13%
	(Suzhou) Ltd.	Technology Ltd.		Other receivables	60,394		0.08%

Note 1: The information of transactions between the Company and the conlidated subsidiaries should be noted in "Number" column.

(1) Number 0 represents the Company.

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

Note 2: The transaction relationships with the counterparties are as follows:

(1) The Company to the consolidated subsidiary.

(2) The consolidated subsidiary to the Company.

(3) The consolidated subsidiary to another consolidated subsidiary.

Note 3: In calculating the ratio, the transaction amount is divided by consolidated total assets for balance sheet accounts and is divided by consolidated total revenues for income statement accounts.

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA)

For the year ended December 31, 2021

(Amounts in New Taiwan Thousand Dollars and United States Thousand Dollars, Unless Specified otherwise)

					Original Investment Amount		Balance as of December 31, 2021		Net Income	Investment income (loss)
Investor Company	Investee Company	Location	Main Businesses and Products	December 31, 2021	December 31, 2020	Shares	Percentage of Ownership	CarryingValue	(Loss) of the Investee	recognised by the Company Note for the year ended December 31, 2021.
	KYEC USA Corp.	Note 1	Sales agent and business communication in USA	\$4,973	\$4,973	160,000	100.00 %	\$11,367	\$(200)	\$(200)
	KYEC Investment International Co., Ltd.		Note 2 Investing activities	5,292,315	5,292,315	164,923,636	100.00 %	7,925,792	1,757,293	1,757,293
	KYEC Technology Management Co., Ltd.		Note 3 Investing activities	251,579	251,579	7,500,000	100.00 %	504,621	111,770	111,770
	KYEC Japan. K.K.	Note 4	Manufacturing and sales of electronic parts and components, sales agent and business communication in Japan	102,735	102,735	1,899	89.83 %	53,553	4,863	4,368
The Company	KYEC SINGAPORE PTE. LTD.	Note 5	Sales agent and business communication in South East Asia and Europe	1,830	1,830	78,000	100.00 %	6,313	4,619	4,619
	Fixwell Technology Corp.	Note 6	Manufacturing, selling and wholesale of electronics parts and components and repairing of electronics related products	28,000	28,000	2,800,000	23.33 %	50,400	50,698	11,819
	Wei Jiu Industrial Co., Ltd.	Note 7	CNC center processing machine, lathe machining processing design and various precision mechanical components manufacturing	10,200	10,200	1,020,000	34.00 %	28,726	30,711	10,441
	King Ding Precision Incorporated Company	Note 8	Manufacturing, selling and wholesale of electronics parts and components and repairing of electronics related products	72,600	72,600	6,600,000	100.00 %	71,337	1,375	1,375
KYEC Investment	International Co., Ltd. KYEC Microelectronics Co., Ltd.		Note 9 Investing activities	USD 116,155	USD 116,155	118,000,000	94.02 %	USD 286,336	USD 66,791	-
KYEC Technology	Management Co., Ltd. KYEC Microelectronics Co., Ltd.		Note 9 Investing activities	USD 7,500	USD 7,500	7,500,000	5.98 %	USD 18,231	USD 66,791	-

Note 1: 101 Meto Drive., #540 San Jose, CA 95110 USA.

Note 2: Wickhams Cay II Road Town, Tortola, VG1110, British Virgin Islands.

Note 3: Portcullis TrustNet Chambers, P.O. Box 1225, Apia, Samoa.

Note 4: 5F 2-3-8 Momochihama, Sawara-ku, Fukuoka 814-0001 Japan.

Note 5: 750A Chai Chee Road Unit 07-22 Technopark @Chai Chee, Singapore 469001.

Note 6: No. 380, Huashan Rd., Dadu Dist., Taichung City 432, Taiwan (R.O.C.)

Note 7: No. 8, Aly. 8, Ln. 48, Sec. 2, Nan'ai Rd., Xiangshan Dist., Hsinchu City 300, Taiwan (R.O.C.)

Note 8: No. 118, Zhonghua Rd., Zhunan Township, Miaoli County 350, Taiwan (R.O.C.)

Note 9: P.O. Box 2804, George Town, Grand Cayman, Cayman Islands.

INFORMATION ON INVESTMENT IN MAINLAND CHINA

For the year ended December 31, 2021

(Amounts in New Taiwan Thousand Dollars, CNY thousand, and United States Thousand Dollars, Unless Specified otherwise)

Investee Company		Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January		Investment Flows	Accumulated Outflow of Investment from Taiwan as of December	Net Income (Loss) of the Investee	Percentage of	Share of Profits/Losses	Carrying Amount as of December 31,	Accumulated Inward Remittance of Earnings as of December 31,
					1, 2021	Outflow	Inflow	31, 2021	Company	Ownership	(Note 5)	2021	2021
	King Long Technology	Note 1	\$2,370,525	Indirectly investment in Mainland China through	\$3,422,770	\$-	\$-	\$3,422,770	\$1,927,763	92.46%	\$1,869,063	\$8,430,414
	(Suzhou) Ltd.		(CNY 546,176)	companies registered in a third region (Note 2)	(USD 123,655)			(USD 123,655)	(USD 68,902)		(USD 66,791)	(USD 304,567)	\$-
	Suzhou Zhengkuan	Note 3	\$2,314,850	Indirectly investment in Mainland China through	\$1,349,916	\$-	\$-	\$1,349,916	\$187,296	92.46%	\$181,024	\$690,448	\$-
Technology Ltd.		(CNY 533,348)	companies registered in a third region (Note 4)	(USD 48,769)			(USD 48,769)	(USD 6,698)		(USD 6,473)	(USD 24,944)

Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
\$4,772,686	\$4,772,686
(USD 172,424)	(USD 172,424)	\$20,510,565

Note 1: Research and development, design, manufacture, packaging, testing, processing and maintenance of semiconductor integrated circuits, transistors, electronic components, electronic materials, analog or hybrid automatic data processors, solid-state memory systems, heating ovens and related products and components. Integrated circuit related technology transfer, technical consultation, technical services, sales of self-produced products and provision of related after-sales services.

Note 2: The Company obtained the approval from the Investment Commission, MOEA, to invest indirectly in King Long Technology (Suzhou) via KYEC Microelectronics Co., Ltd. which is registered in Cayman Island. KYEC Microelectronics Co., Ltd. is invested by KYEC Investment International Co., Ltd. which is registered in BVI.

Note 3: R&D, production (assembly and testing), processing of large-scale integrated circuits for electronic components, electronic materials, analog or hybrid automatic data processors, solid-state memory systems, heating oven controllers, etc., sales of self-produced products, and provision of relevant after-sales service; integrated circuit related technology transfer, technical consultation, technical service.

Note 4: Investment was through King Long Technology (Suzhou) Ltd.

Note 5: Recognition of investment gains (losses) was calculated based on the investee's audited financial statements.

KING YUAN ELECTRONICS CO., LTD. 1.STATEMENT OF CASH AND CASH EQUIVALENTS December 31, 2021

Item	Description	Amount	Note
Cash and cash equivalents	Including US\$40,425 thousand	\$ 4,920,308	Exchange rate of
	and JPY628,595 thousand		Dec.31, 2021:
Time deposits		1,500,000	NT\$ 27.68 = US\$ 1
Total		\$ 6,420,308	NT\$ 0.2405 = JPY 1

KING YUAN ELECTRONICS CO., LTD. 2.STATEMENT OF NOTES RECEIVABLE, NET December 31, 2021

Client Name	Description	Amount		Note
GSI Technology Taiwan, Inc.		\$	7,706

KING YUAN ELECTRONICS CO., LTD. 3.STATEMENT OF TRADE RECEIVABLES, NET December 31, 2021

Client Name	Description	Amount	Note
Omnvision Technologies Singapore Pte. Ltd.		\$ 325,884
Phison Electronics Corporation		254,953
Silicon Motion, Inc.		245,055
Nvidia Corporation		218,006
Others	The amount of each item in "Others" does not exceed 5% of the account balance.	2,885,981
Total		3,929,879
Less: loss allowance		(25,158)
Net		\$ 3,904,721

KING YUAN ELECTRONICS CO., LTD. 4.STATEMENT OF TRADE RECEIVABLES FROM RELATED PARTIES December 31, 2021

Client Name	Description	Amount	Note
MediaTek Inc.		\$ 1,069,273
Mediatek Singapore Pte. Ltd.		787,233
Airoha Technology Corp.		155,744
Airoha Technology (Suzhou) Limited		32,178
Richtek Technology Corp.		14,456
King Long Technology (Suzhou) Ltd.		10,989
Airoha Technology (HK) Limited		10,958
Others	The amount of each item in "Others" does not exceed NT\$1,000 thousand.	509
Total		\$ 2,081,340

KING YUAN ELECTRONICS CO., LTD. 5.STATEMENT OF OTHER RECEIVABLES December 31, 2021

Client Name	Description	Amount	Note
Other receivables		\$ 336,586
Tax refund		602
Interest receivable		243
Total		337,431
Less: loss allowance		(23,149)
Net		\$ 314,282

KING YUAN ELECTRONICS CO., LTD. 6.STATEMENT OF OTHER RECEIVABLES FROM RELATED PARTIES

December 31, 2021

Client Name	Description	Amount	Note
King Long Technology (Suzhou) Ltd.		\$ 425,716
MediaTek Inc.		4,361
Others	The amount of each item in "Others" does not exceed NT\$1,000 thousand.	464
Total		\$ 430,541

KING YUAN ELECTRONICS CO., LTD. 7.STATEMENT OF INVENTORIES, NET December 31, 2021

			Amount
Item	Description	Cost	market price	Note
Raw materials		\$ 823,881	\$ 909,458	Inventory are valued at
Work in process		278,556	278,967	lower of cost and net
Total		1,102,437	\$ 1,188,425	realized value.
Less: allowance for inventory valuation and obsolescence losses		(72,657)
Net		\$ 1,029,780

KING YUAN ELECTRONICS CO., LTD. 8.STATEMENT OF OTHER CURRENT ASSETS December 31, 2021

Item	Description	Amount	Note
Payments on behalf of others		\$ 62,328
Temporary payments		4,550
Total		\$ 66,878

KING YUAN ELECTRONICS CO., LTD. 9.STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHESIVE INCOME-NON-CURRENT For the year ended December 31, 2021

			Balance, January 1, 2021			Increase in 2021		Unrealized gain or Decrease in 2021 loss on financial assets at fair value		Balance, December 31, 2021		Assets
Securities Name	Shares	Cost of an investment	Unrealized gain or loss	Fair Value	Shares	Amount	Shares	Amount	through other comprehensive income	Shares	Fair value	pledged as collateral	Note
ADL Engineering INC.	210,614 \$	327,490 \$	(327,490) \$	-		- \$	- \$ (210,614) \$	(1,365) \$	1,365		- \$ -	N/A
Shieh Yong Investment Co., Ltd.	57,810,000	500,000	703,620	1,203,620	64,030,431 Note2	-	Note1 -	-		465,913 121,840,431	1,669,533	N/A
APM Communication, Inc.	10,456	23,427	(23,427)	-	-	-	-	-	-	10,456	-	N/A
Greenliant Systems, Ltd.	2,333,333	30,300	(30,300)	-	-	-	-	-	-	2,333,333	-	N/A
YANN YUAN Investment Co., Ltd.	25,000,000	1,275,000	1,929,360	3,204,360	-	-	-	-	1,560,374	25,000,000	4,764,734	N/A
Movella Inc.	528,745	44,880	(44,880)	-	-	-	-	-	-	528,745	-	N/A
IROC Co., Ltd.	436,046	15,275	(101)	15,174	-	-	(120,047)	-	(2,297)	315,999	12,877	N/A
Subtron Technology Co., Ltd.	927,147	7,983	4,960	12,943	-	-	Note3 -	-	17,208	927,147	30,151	N/A
CAL-COMP INDÚSTRIA DE SEMICONDUTORES S.A.	11,965,500	45,711	(35,245)	10,466	-	-	-	-	58,716	11,965,500	69,182	N/A
Total		\$ 2,270,066 \$		2,176,497 \$ 4,446,563		\$ -		(1,365) \$ \$	2,101,279		\$ 6,546,477

(In Thousands of New Taiwan Dollars)

Note 1: Disposed of all shares of ADL Engineering INC.

Note 2: Stock dividend of Shieh Yong Investment Co., Ltd.

Note 3: IROC Co., Ltd. reduced capital to offset the deficit.

KING YUAN ELECTRONICS CO., LTD. 10.STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD For the year ended December 31, 2021

														(In Thousands of New Taiwan Dollars)
Investees	Balance, January 1, 2021		Increase in 2021		Decrease in 2021		Investment	Cumulative translation	Capital surplus		Balance, December 31, 2021			Market value or net assets value	Assets pledged as	Note
	Shares	Amount	Shares	Amount	Shares	Amount	income (loss)	adjustment	adjustment	Shares	%	Amount		Unit price Total amount	collateral
KYEC USA Corp.	160,000 \$	12,035		- \$ -		- \$	- \$ (200) \$	(468) \$	-	160,000	100.00% \$	11,367 \$	71.04 \$	11,367	N/A
KYEC Investment International Co., Ltd.	164,923,636	5,691,034	-	-	-	-	1,757,293	(31,664)	509,129	164,923,636	100.00%	7,925,792	48.06	7,925,792	N/A
KYEC Technology Management Co., Ltd.	7,500,000	362,498	-	-	-	-	111,770	(2,029)	32,382	7,500,000	100.00%	504,621	67.28	504,621	N/A
KYEC Japan K.K.	1,899	56,828	-	-	-	-	4,368	(7,643)	-	1,899	89.83%	53,553	28,200.54	53,553	N/A
KYEC SINGAPORE PTE. LTD.	78,000	2,130	-	-	-	-	4,619	(436)	-	78,000	100.00%	6,313	80.94	6,313	N/A
Fixwell Technology Corp.	2,800,000	46,981	-	-	-	(8,400)	11,819	-	-	2,800,000	23.33%	50,400	18.01	50,400	N/A	Note
Wei Jiu Industrial Co.,	1,020,000	22,875	-	-	-	(4,590)	10,441	-	-	1,020,000	34.00%	28,726	31.37	28,726	N/A	Note
Ltd. King Ding Precision Incorporated Company	6,600,000	69,962	-	-	-	-	1,375	-	-	6,600,000	100.00%	71,337	10.90	71,337	N/A
Subtotal		6,264,343		-		(12,990)	1,901,485	(42,240)	541,511			8,652,109
Less:deferred credits		(116,177)		(99,859)		53,697	-	-	-			(162,339)
Total		\$ 6,148,166		\$ (99,859)		\$ 40,707 \$	1,901,485 \$		(42,240) \$ 541,511			\$ 8,489,770

Note : The decrease amount is due to the cash dividends received.

KING YUAN ELECTRONICS CO., LTD. 11.STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT AND For the year ended December 31, 2021 ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT

(In Thousands of New Taiwan Dollars)

A. Please refer to Note 6.(8) for more details of the changes in property, plant and equipment and accumulated depreciation of property, plant and equipment.

B. Please refer to Note 8 for property, plant and equipment under pledges.

C. Details of transfer are as following:

Transferred from prepayments	\$ 64,339
Transferred from right-of-use assets	\$ 538,273
Transferred to intangible assets	\$ -

D.Depreciation expense details are as following:

Operating costs	\$ 6,520,003
Selling expenses	2,916
Administration expenses	458,521
Research and development expenses	120,835
Total	\$ 7,102,275

KING YUAN ELECTRONICS CO., LTD. 12.STATEMENT OF RIGHT-OF-USE ASSETS For the year ended December 31, 2021

Item	Balance, January 1, 2021	Increase in 2021	Decrease in 2021	Transfer in 2021	Balance, December 31, 2021
Acquisition costs
Land	\$ 512,896	\$ -	\$ -	\$ -	\$ 512,896
Buildings and facilities	-	9,513	-	-	9,513
Machinery and equipment	812,456	-	-	(722,706)	89,750
Transportation equipment	-	14,762	-	-	14,762
Total costs	1,325,352	24,275	-	(722,706)	626,921
Accumulated depreciation
Land	\$ 36,095	\$ 18,812	\$ -	\$ -	\$ 54,907
Buildings and facilities	-	-	-	-	-
Machinery and equipment	97,826	103,435	-	(184,433)	16,828
Transportation equipment	-	1,640	-	-	1,640
Total accumulated depreciation	133,921	123,887	-	(184,433)	73,375
Book value	\$ 1,191,431	\$ (99,612)	\$ -	\$ (538,273)	\$ 553,546

KING YUAN ELECTRONICS CO., LTD. 13.STATEMENT OF INTANGIBLE ASSETS AND OTHER ASSETS-NON-CURRENT

December 31, 2021

				Amount
Item	Description	Subtotal		Total	Note
Intangible assets				\$ 69,247	Please refer to Note 6.(9) for more details on intangible assets.
Refundable deposits	Golf club membership deposit	\$	3,000
	Car rental deposit		2,000
	Others		394	\$ 5,394
Other financial assets-non-current	Customs deposit			\$ 105,972	Please refer to Note 8 for more details.

KING YUAN ELECTRONICS CO., LTD. 14.STATEMENT OF NOTES PAYABLE

December 31, 2021

Vendor name	Description	Amount	Note
Acer E-enabling Service Business Inc.		\$ 8,181
Others	The amount of each item in "Others" does not exceed 5% of the account balance.	1,885
Total		\$ 10,066

KING YUAN ELECTRONICS CO., LTD. 15.STATEMENT OF ACCOUNTS PAYABLE December 31, 2021

Vendor name Description Amount Note Avnet Asia Pte Ltd. \$ 59,354 Answer Technology Co., Ltd. 58,784 PIN-JET MICROTECH., CO., LTD. 44,517 MAKOTO Technology Co., Ltd. 42,712 Others 572,300 Total \$ 777,667 (In Thousands of New Taiwan Dollars) The amount of each item in "Others" does not exceed 5% of the account balance.

- 130 -

KING YUAN ELECTRONICS CO., LTD. 16.STATEMENTS OF PAYABLES TO RELATED PARTIES

December 31, 2021

Vendor name	Description	Amount	Note
Wei Jiu Industrial Co., Ltd.		\$ 19,961
Fixwell Technology Corp.		1,453
Total		\$ 21,414

KING YUAN ELECTRONICS CO., LTD. 17.STATEMENT OF OTHER PAYABLES December 31, 2021

Item	Description	Amount	Note
Accrued payroll		\$ 377,545
Accrued bonuses		475,818
Accrued employees' compensation		638,299
and remuneration to directors
Accrued accessories expense		806,067
Accrued utilities expense		109,735
Accrued labor and health insurance expense		98,621
Accrued pension expense		34,536
Accrued interest		6,579
Others		777,553	Note
Total		\$ 3,324,753

(In Thousands of New Taiwan Dollars)

Note:Mainly indirect supplies.

KING YUAN ELECTRONICS CO., LTD. 18.STATEMENT OF OTHER PAYABLES TO RELATED PARTIES December 31, 2021

Related parties	Description	Amount	Note
Fixwell Technology Corp.		\$ 75,127
Wei Jiu Industrial Co., Ltd.		22,365
King Long Technology (Suzhou) Ltd.		10,168
KYEC Japan K.K.		6,585
KYEC USA Corp.		2,076
Suzhou Zhengkuan Technology Ltd.		1,977
Airoha Technology Corp.		1,438
Total		\$ 119,736

KING YUAN ELECTRONICS CO., LTD. 19.STATEMENT OF PAYABLES TO EQUIPMENT SUPPLIERS

December 31, 2021

			(In Thousands of New Taiwan Dollars)
Vendor name	Description	Amount	Note
Advantest Taiwan Inc.		\$ 391,870
Jiu Han Engineering Co., Ltd.		265,788
Wei-Shun Construction Co., Ltd.		168,437
Accretech Taiwan Co., Ltd.		84,200
Teradyne (Asia) Pte. Ltd.		78,920
Others	The amount of each item in "Others" does not exceed 5% of the account balance.	246,508
Total		\$ 1,235,723

KING YUAN ELECTRONICS CO., LTD. 20.STATEMENT OF LEASE LIABILITIES December 31, 2021

(In Thousands of New Taiwan Dollars)

Item	Description	Period	Discount rate	Balance, December 31, 2021	Note
Land		6 to 28 years	1.88%	\$ 469,771
Buildings and facilities		4 years	0.85%~1.01%	9,513
Machinery and equipment		2 years	0.89%	64,107	Note
Transportation equipment		3 years	1.17%	12,350	Note
				555,741
Less: current portion				(86,364)
Lease liabilities-non-current				\$ 469,377

Note:The Company considers the possibility to exercise the purchase option at the end of the lease term.

KING YUAN ELECTRONICS CO., LTD. 21.STATEMENT OF OTHER CURRENT LIABILITIES December 31, 2021

Item Description Amount Note Receipts on behalf of others \$ 482,747 Allowance for sales returns and discounts 398,109 Unearned receipts 1,341 Temporary receipts 47 Total \$ 882,244

KING YUAN ELECTRONICS CO., LTD. 22.STATEMENT OF LONG-TERM LOANS December 31, 2021

					(In Thousands of New Taiwan Dollars)
Creditor	Description	Loan amount	Contract period	Range of interest rates	Terms of repayment	Note
Shanghai Commercial Bank	Unsecured loans	\$ 40,151	2021.03.27~2023.03.27	0.85%	Please refer to Note	Please refer to
Shanghai Commercial Bank	Unsecured loans	885,760	2021.03.15~2024.03.15	0.85%	6.(11) for more details.	Note 8 for more
Standard Chartered Bank	Unsecured loans	332,160	2021.06.30~2023.06.30	0.72%		details on
Citibank	Unsecured loans	138,400	2021.11.22~2023.11.22	0.83~0.85%		collateral.
Bank of China	Unsecured loans	968,800	2021.10.15~2023.10.14	0.50~0.57%
Cathay United Bank	Unsecured loans	442,880	2021.12.25~2023.12.25	0.61~0.65%
Mizuho Bank	Unsecured loans	500,000	2022.01.01~2024.01.01	0.73%
Shin Kong Commercial Bank	Unsecured loans	138,400	2021.12.15~2024.12.15	0.60%
Taiwan Business Bank	Unsecured loans	276,800	2021.04.07~2023.04.07	0.50~0.55%
Hua Nan Commercial Bank	Unsecured loans	138,400	2021.04.09~2023.04.09	0.70%
Mega Bank	Unsecured loans	138,400	2021.04.29~2023.04.28	0.65%
Taishin Bank	Unsecured loans	1,106,636	2021.06.03~2025.06.03	0.82~1.05%
HSBC Taiwan Bank	Unsecured loans	110,720	2021.11.30~2024.09.28	0.81%
HSBC Taiwan Bank	Unsecured loans	58,967	2021.12.21~2024.12.20	0.87%
HSBC Taiwan Bank	Unsecured loans	7,920	2021.12.01~2024.12.02	0.82%
First Bank	Unsecured loans	830,400	2021.07.01~2026.07.01	0.80%
Yuanta Commercial Bank	Unsecured loans	811,983	2021.06.22~2025.06.22	0.86%
E. Sun Commercial Bank	Unsecured loans	34,649	2021.12.27~2025.12.26	0.91%
KGI Bank	Unsecured loans	240,000	2020.07.15~2024.07.15	0.99%
O Bank	Unsecured loans	171,429	2020.02.07~2025.02.07	1.09%
Mega Bank	Unsecured loans	680,000	2020.02.07~2025.02.07	1.08%
Chang Hwa Commercial Bank	Unsecured loans	556,000	2020.01.20~2025.01.20	1.11%
Bank of Taiwan	Unsecured loans	600,000	2020.01.20~2024.01.20	1.12%
First Bank	Unsecured loans	814,398	2020.01.20~2025.01.20	1.16%
Far Eastern Bank	Unsecured loans	600,000	2020.02.07~2023.02.07	1.02%
CTBC Bank	Unsecured loans	300,000	2020.02.07~2024.02.07	1.20%
JihSun Bank	Unsecured loans	500,000	2021.03.12~2024.03.12	1.00%
Mega Bank and 17 others (Note 1)	Commercial Paper	2,500,000	2018.12.07~2023.12.06	1.25%
Mega Bank and 13 others (Note 2)	Commercial Paper	7,380,000	2020.10.12~2025.10.11	1.15%
Total		21,303,253
Less: current portion		-
Less: arrangement fee		(12,425)
Less: Long-term coupon discount and amortization		(15,497)
Long-term loans		\$ 21,275,331

Note1: The Company entered into a syndicated loan agreement in the amount of 14.2 billion with 17 banks including Mega International Commercial Bank (lead bank), Taipei Fubon Commercial Bank, CTBC Commercial Bank, Bank of Taiwan, Land Bank of Taiwan, O Bank, E. Sun Commercial Bank, Taishin Commercial Bank, SinoPac Bank, First Commercial Bank, Cathay United Commercial Bank, Hua Nan Commercial Bank, Shin Kong Commercial Bank, Chang Hwa Commercial Bank, Taiwan Business Bank, KGI Commercial Bank, and Bank of Panhsin.

SinoPac Bank, Far Eastern Bank, Taiwan Business Bank, Shin Kong Commercial Bank, Agricultural Bank of Taiwan. Note2: The Company entered into a syndicated loan agreement in the amount of 12 billion with 13 banks including Mega International Commercial Bank (lead bank), Taipei Fubon Commercial Bank, Bank of Taiwan, First Commercial Bank, Hua Nan Commercial Bank, Shanghai Commercial Bank, E. Sun Commercial Bank, Taishin Commercial Bank,

KING YUAN ELECTRONICS CO., LTD. 23.STATEMENT OF REVENUES For the year ended December 31, 2021

Item	Description	Amount	Note
Assembly and testing processing revenues		\$ 22,081,412
Revenues from rental of machinery		2,452,506
Rental income from property		36,132
Other operating revenues		1,250,677
Total revenues		\$ 25,820,727

KING YUAN ELECTRONICS CO., LTD. 24.STATEMENT OF COSTS OF GOODS SOLD For the year ended December 31, 2021

Item	Description	Amount	Note
Costs of goods sold
Raw materials used
Balance, beginning of the year		\$ 685,751
Add﹕purchase		3,129,546
Less﹕indirect consumables		(72,489)
Less﹕transfer to other expenses		(615,429)
Less﹕loss of inventory scrap		(42,674)
Less﹕sale of raw materials		(51,387)
Less﹕ending balance of the year		(823,881)
Current consumption		2,209,437
Direct labor		2,267,410
Manufacturing overhead		15,013,386
Manufacturing costs		19,490,233
Add﹕work in process, beginning of the year		178,730
Add﹕purchase for production consumables		102,218
Less﹕transfer to other repair expenses		(199,986)
Less﹕transfer to unfinished working orders		(93,007)
Less﹕sale of semi-finished products		(1)
Less﹕work in process, end of the year		(278,556)
Cost of finished goods		19,199,631
Add﹕finished goods, beginning of the year		-
Less﹕finished goods, end of the year		-
Less﹕transfer to processing costs		(16,429,786)
Less﹕transfer to property, plant and equipment		(800,456)
Less﹕transfer to others		(817)
Costs of goods sold		1,968,572
Processing costs		16,429,786
Sale of raw materials Sale of semi-finished products		51,387 1
Other operating costs		1,996
Loss of inventory scrap		42,674
Inventory valuation and obsolescence reversal gain		(17,680)
Operating costs		\$ 18,476,736

KING YUAN ELECTRONICS CO., LTD. 25.STATEMENT OF MANUFACTURING OVERHEAD For the year ended December 31, 2021

	(In Thousands of New Taiwan Dollars)
Item	Description	Amount	Note
Depreciation		\$ 6,520,003
Indirect labor		2,949,686
Repairs and maintenance		1,712,830
Consumable materials		1,499,878
Utilities expense		1,277,230
Others	The amount of each item in "Others" does not exceed 5% of the account balance.	1,053,759
Total		\$ 15,013,386

KING YUAN ELECTRONICS CO., LTD. 26.STATEMENT OF SELLING EXPENSES For the year ended December 31, 2021

Item	Description	Amount		Note
Payroll expense		\$	179,748
Commission expense			96,669
Others	The amount of each item in "Others" does not exceed 5% of the account balance.		69,212
Total		\$	345,629

KING YUAN ELECTRONICS CO., LTD. 27.STATEMENT OF ADMINISTRATIVE EXPENSES For the year ended December 31, 2021

Item	Description		Amount	Note
Payroll expense		\$	590,084
Depreciation			458,521
Repairs and maintenance			83,791
Utilities expense			72,172
Others	The amount of each item in "Others" does not exceed 5% of the account balance.		441,635
Total		\$	1,646,203

KING YUAN ELECTRONICS CO., LTD. 28.STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES For the year ended December 31, 2021

		(In Thousands of New Taiwan Dollars)
Item	Description	Amount	Note
Payroll expense		\$ 411,660
Indirect consumables		204,418
Depreciation		120,835
Others	The amount of each item in "Others" does not exceed 5% of the account balance.	109,933
Total		\$ 846,846

1. Please refer to note 6.(17) for more details on employee benefit, accumulated depreciation, and amortization.