LARGAN - Annual Report 2021 | FinancialReports.eu

Stock Code:3008

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: No.11, Jingke Rd., Nantun Dist., Taichung City 40852, Taiwan (R.O.C.) Telephone: 886-4-3600-2345

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

Contents
1. Cover Page
2. Table of Contents
3. Representation Letter
4. Independent Auditors’ Report
5. Consolidated Balance Sheets
6. Consolidated Statements of Comprehensive Income
7. Consolidated Statements of Changes in Equity
8. Consolidated Statements of Cash Flows
9. Notes to the Consolidated Financial Statements
(1)
Company history
(2)
Approval date and procedures of the consolidated financial statements
(3)
New standards, amendments and interpretations adopted
(4)
Summary of significant accounting policies
(5)
Significant accounting assumptions and judgments, and major sources
of estimation uncertainty
(6)
Explanation of significant accounts
(7)
Related-party transactions
(8)
Pledged assets
(9)
Commitments and contingencies
(10) Losses due to major disasters
(11) Subsequent events
(12) Other
(13) Other disclosures
(a) Information on significant transactions
(b) Information on investees
(c) Information on investment in mainland China
(d) Major shareholders
(14) Segment information Page

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Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’ Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses due to major disasters (11) Subsequent events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information	Page
	1 2 3 4 5 6 7 8 9 9 9`～`10 10`～`28 28`～`29 29`～`57 58`～`60 61 61 61 61 61 62`～`67 68 69 69 70`～`71

Representation Letter

The entities that are required to be included in the combined financial statements of Largan Precision Co., Ltd. as of and for the year ended December 31, 2021 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Largan Precision Co., Ltd. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: Largan Precision Co., Ltd. Chairman: En-Chou Lin Date: February 21, 2022

Independent Auditors’ Report

To the Board of Directors of Largan Precision Co., Ltd.:

Opinion

We have audited the consolidated financial statements of Largan Precision Co., Ltd. (the ”Company”) and its subsidiaries (the” Group”), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, the consolidated statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“ the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Inventory valuation

Please refer to Note 4(h), Note 5, and Note 6(f) for accounting policies, uncertainty of accounting estimates and assumptions, and related disclosures for inventory valuation.

4-1

Description of key audit matter:

Inventories are stated at the lower of cost or net realizable value. With the rapid development of technology, and significant changes in market demand, the severe volatility to sales may lead to risks, wherein the costs of inventories may exceed its net realizable values. Therefore, the valuation of inventories has been identified as one of the key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures include obtaining an inventory aging report, analyzing the movement of inventory aging and evaluating the reasonableness of the Group’ s accounting policies, such as allowance for inventory valuation and obsolescence; performing a retrospective test of the Group’s historical accuracy of judgments with reference to inventory valuation and comparing with the current period to evaluate the appropriateness of the estimation and assumptions used; examining whether the valuation of inventories is in compliance with the accounting policies of the Group; understanding the basis of the selling price the management used to ensure the reasonableness of net realizable value of inventories; reviewing sales in the subsequent period, as well as assessing the basis of the net realizable value the Group used to determine the sufficiency of allowance of inventories and whether the related disclosures are appropriate.

Other Matter

The Company has additionally prepared its parent company only financial statements as of and for the years ended December 31, 2021 and 2020, on which we have issued an unqualified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including the supervisors) are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

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

4-2

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

4-3

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

The engagement partners on the audit resulting in this independent auditors’ report are Shyh-Huar, Kuo and Chun-Yuan, Wu.

KPMG

Taipei, Taiwan (Republic of China) February 21, 2022

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2021 Assets Amount % Current assets: 1100 Cash and cash equivalents (Note 6(a) and (v)) $ 89,149,294 51 1110 Current financial assets at fair value through profit or loss(Note 6(b) and (v)) 14,369,966 8 1120 Current financial assets at fair value through other comprehensive income (Note 6(c) and (v)) 2,354,263 2 1150 Notes receivable, net (Note 6(d) and (v)) - - 1170 Accounts receivable, net (Note 6(d) and (v)) 9,870,974 6 1180 Accounts receivable from related parties, net (Note 6(d), (v) and 7) 67,449 - 1200 Other receivables (Note 6(e) and (v)) 315,421 - 1210 Other receivables from related parties (Note 6(e), (v) and 7) 17,713 - 1220 Current tax assets 6 - 1310 Inventories (Note 6(f)) 5,707,545 3 1470 Other current assets (Note 6 (k)) 225,673 - 1476 Other current financial assets(Note6(k), (v) and8) 2,258,576 1 124,336,880 71 Non-current assets: 1520 Non-current financial assets at fair value through other comprehensive income(Note 6(c) and (v)) 932,000 1 1550 Investments accounted for using equity method (Note 6(g)) 439,212 - 1600 Property, plant and equipment (Note 6(h) and 7) 34,914,941 20 1755 Right-of-use assets (Note 6(i)) 181,939 - 1780 Intangible assets (Note 6(j)) 69,799 - 1840 Deferred tax assets (Note 6(o)) 762,515 - 1900 Other non-current assets (Note 6(k), (v) and 8) 1,893,067 1 1980 Other non-current financial assets (Note 6(k), (v) and 8) 11,180,527 7 50,374,000 29 Total assets $ 174,710,880 100	December 31, 2020 Amount % 89,621,272 52 13,207,411 8 41,470 - 9,345 - 11,149,800 7 6,960 - 285,842 - 26,660 - - - 4,026,420 2 1,015,091 1 9,000 - 119,399,271 70 - - 272,601 - 33,790,608 20 180,185 - 112,794 - 509,269 - 1,840,940 1 15,170,562 9 51,876,959 30 171,276,230 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (Note 6(l) and (v)) 2150 Notes payable (Note 6(v)) 2170 Accounts payable (Note 6(v)) 2180 Accounts payable to related parties (Note 6(v) and 7) 2200 Other payables (Note 6(p) and (v)) 2216 Dividends payable (Note 6(q) and (v)) 2220 Other payables to related parties (Note 6 (v) and 7) 2230 Current tax liabilities 2280 Current lease liabilities (Note 6 (m) and (v)) 2300 Other current liabilities Non-Current liabilities: 2570 Deferred tax liabilities (Note 6(o)) 2580 Non-current lease liabilities (Note 6(m) and (v)) 2600 Other non-current liabilities (Note 6(v)) 2640 Net defined benefit liabilities (Note 6(n)) Total liabilities Equity: Equity attributable to owners of parent: (Note 6(q)) 3110 Share capital 3200 Capital surplus 3300 Retained earnings 3400 Other equity interest 3500 Treasury shares Total equity attributable to owners of parent Total liabilities and equity	December 31, 2021	December 31, 2021		December 31, 2020 Amount % 249,535 - 873 - 1,567,850 1 32,460 - 22,024,514 13 - - 9,331 - 6,156,182 4 43,401 - 145,035 - 30,229,181 18 8,692 - 123,164 - 3,766 - 109,269 - 244,891 - 30,474,072 18 1,341,402 1 1,560,586 1 139,645,983 81 (1,745,813) (1) - - 140,802,158 82 171,276,230 100
		Amount	%

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

4000 Operating revenues (Note 6(s) and 7) 5000 Operating costs (Note 6(f), (n), (t) and 7) 5920 Realized profit from sales 5900 Gross profit from operations 6000 Operating expenses (Note 6(n), (t) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses Total operating expenses 6900 Operating income 7000 Non-operating income and expenses: 7100 Interest income (Note 6(u)) 7010 Other income (Note 6(u) and 7) 7020 Other gains and losses (Note 6(u) and 7) 7050 Finance costs (Note 6(m) and (u)) 7060 Share of profit (losses) of associates accounted for using equity method, net (Note 6(g)) 7900 Profit before income tax 7950 Less: Income tax expenses (Note 6(o)) Profit for the period 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurements of defined benefit obligation 8316 Unrealized losses on investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Other comprehensive income for the period, net of tax 8500 Total comprehensive income for the period Earnings per share (NT Dollars) (Note 6(r)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021 Amount % $ 46,962,402 100 18,813,768 40 28,148,634 60 1,017 - 28,149,651 60 369,013 1 1,030,627 2 3,601,890 8 5,001,530 11 23,148,121 49 950,551 2 31,241 - (1,250,565) (2) (1,947) - 149,209 - (121,511) - 23,026,610 49 4,355,380 9 18,671,230 40 (7,378) - 344,093 1 - - 336,715 1 (239,550) (1) - - (239,550) (1) 97,165 - $ 18,768,395 40 $ 139.28 $ 137.49	2020 Amount % 55,944,489 100 18,476,853 33 37,467,636 67 4,598 - 37,472,234 67 399,738 1 1,246,022 2 3,794,356 7 5,440,116 10 32,032,118 57 1,304,977 3 27,394 - (1,708,987) (3) (2,323) - 40,588 - (338,351) - 31,693,767 57 7,159,636 13 24,534,131 44 (6,134) - 160,404 - - - 154,270 - 314,394 1 - - 314,394 1 468,664 1 25,002,795 45 182.90 180.94

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Consolidated Statements of Changes in Equity For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

Share Capital	Capital surplus		Retained earnings	Retained earnings	Retained earnings		Other equity interest	Other equity interest	Other equity interest	Other equity interest	Other equity interest	Treasury shares Total equity attributable to owners of parent - 126,393,911 - - - - - (10,597,076) - (10,597,076) - 2,528 - 24,534,131 - 468,664 - 25,002,795 - - - 140,802,158 - 140,802,158 - - - - - (16,432,174) - (16,432,174) - 2,328 - 18,671,230 - 97,165 - 18,768,395 (1,400,985) (1,400,985) (1,400,985) 141,739,722
							Exchange differences on translation of foreign financial statements		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income		Total
		Legal reserve	Special reserve	Unappropriated retained earnings		Total
$ 1,341,402 - - - - - - - - - $ 1,341,402 $ 1,341,402 - - - - - - - - - $ 1,341,402	1,558,058	16,019,773	1,802,464		107,813,790	125,636,027		(2,061,631) - - - - - - 314,394 314,394 - (1,747,237) (1,747,237) - - - - - - (239,550) (239,550) - (1,986,787)		(79,945) - - - - - - 160,404 160,404 (79,035) 1,424 1,424 - - - - - - 344,093 344,093 - 345,517	(2,141,576) - - - - - - 474,798 474,798 (79,035) (1,745,813) (1,745,813) - - - - - - 104,543 104,543 - (1,641,270)	- - - - - - - - - - - - - - - - - - - - (1,400,985) (1,400,985)
	- - -	2,826,308 - -	- 339,112 -
	-	2,826,308	339,112
	2,528	-	-
	- -	- -	- -
	-	-	-
	-	-	-
	1,560,586	18,846,081	2,141,576
	1,560,586	18,846,081	2,141,576
	- - -	3,288,222 - -
	-	3,288,222
	2,328	-
	- -	- -
	-	-
	-	-
	1,562,914	22,134,303

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Profit before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Interest expense Interest income Share of profit of associates accounted for using equity method (Profit) losses on disposal of property, plant and equipment Unrealized foreign exchange loss Realized profit from sales Other Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Increase in financial assets mandatorily measured at fair value through profit or loss Decrease in notes receivable Decrease in accounts receivable (including from related parties) Increase in inventories Decrease (increase) in other current assets Total changes in operating assets Changes in operating liabilities: Increase in notes payable Increase in accounts payable (including to related parties) Increase in other current liabilities Decrease in net defined benefit liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits (Increase) decrease in other non-current assets Acquisition of intangible assets Acquisition of right-of-use assets Decrease (increase) in other financial assets Net cash flows used in investing activities Cash flows from financing activities: (Decrease) increase in short-term borrowings Decrease in guarantee deposits received Payment of lease liabilities Cash dividend paid Payments to acquire treasury shares Overdue dividend transferred to capital surplus Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2021 $ 23,026,610 4,649,925 95,046 1,947 (950,551) (149,209) (3,992) 3,498 (1,017) (900) 3,644,747 (1,162,555) 9,345 1,218,337 (1,681,125) 762,674 (853,324) 684 76,985 391,773 (16,654) 452,788 (400,536) 26,270,821 958,044 (1,947) (6,349,124) 20,877,794 (2,916,273) - (17,600) (5,909,190) 59,015 616,436 (668,563) (47,030) (410) 1,740,459 (7,143,156) (252,007) (136) (45,400) (12,273,828) (1,400,985) 2,328 (13,970,028) (236,588) (471,978) 89,621,272 $ 89,149,294	2020 31,693,767 4,258,933 85,266 2,323 (1,304,977) (40,588) 6,792 10,099 (4,598) (1,460) 3,011,790 (6,139,558) 8,316 4,046,814 (395,318) (684,632) (3,164,378) 171 110,795 1,561,454 (2,714) 1,669,706 (1,494,672) 33,210,885 1,327,922 (2,323) (5,485,787) 29,050,697 - 223,673 - (5,770,667) 1,672 (1,841) 328,830 (91,871) - (8,747,667) (14,057,871) 23,619 (730) (40,734) (10,597,076) - 2,528 (10,612,393) 320,279 4,700,712 84,920,560 89,621,272

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Largan Precision Co., Ltd. (the “Company”) was incorporated in April 1987 as a company limited by shares under the Company Act of the Republic of china (R .O. C). The registered address is No.11, Jingke Rd., Nantun Dist., Taichung City 40852, Taiwan (R.O.C.). The major business activities of the Company and subsidiaries (together referred to as the "Group") are the design, manufacture and sale of lens for perspective mirror, camera, single and double binoculars, fax machine, microscope and scanner etc. Please refer to note 14.

The Company's common shares were listed on the Taiwan Stock Exchange (TWSE) in March 2002.

(2) Approval date and procedures of the consolidated financial statements:

These consolidated financial statements were authorized for issue by the Board of Directors on February 21, 2022.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”
Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”
(b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its consolidated financial statements:

－
●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contractst Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018–2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or
Interpretations
Amendments to IAS 1
“Classification of Liabilities
as Current or Non-current”
Amendments to IAS 12
“Deferred Tax related to
Assets and Liabilities arising
from a Single Transaction”

Content of amendment
Effective date per
IASB
The
amendments
aim
to
promote
consistency in applying the requirements
by helping companies determine whether,
in the statement of balance sheet, debt and
other
liabilities
with
an
uncertain
settlement date should be classified as
current (due or potentially due to be settled
within one year) or non-current. The
amendments
include
clarifying
the
classification requirements for debt a
company might settle by converting it into
equity.
January 1, 2023
The amendments narrowed the scope of the
recognition exemption so that it no longer
applies to transactions that, on initial
recognition, give rise to equal taxable and
deductible temporary differences.
January 1, 2023

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

(4) Summary of significant accounting policies

The accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language consolidated financial statements, the Chinese version shall prevail.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The significant accounting policies presented in the consolidated financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the consolidated financial statements.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations” ) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed by the Financial Supervisory Commission, R.O.C.

(b) Basis of preparation

(i) Basis of measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on the historical cost basis:

1) Financial instruments at fair value through profit or loss are measured at fair value;
2) Financial assets at fair value through other comprehensive income are measured at fair value.
(ii) Functional and presentation currency

The functional currency of each entity is determined based on the primary economic environment in which the entity operates. The Company’s financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Basis of consolidation

(i) Principle of preparation of the consolidated financial statements

The consolidated financial statements comprised of the Company and its subsidiaries. The Group accounted an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that the control ceases. Intra-group balances and transactions, and any unrealized income and expenses arising from intra- group transactions, are eliminated in preparing the consolidated financial statements. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Accounting policies of subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any differences between the Group’s share of net assets before and after the change, and any considerations received or paid, are adjusted to or against the Group reserves.

(ii) List of subsidiaries in the consolidated financial statements

Name of
investor
Name of subsidiary
Principal activity
The Company
Largan (Hong Kong) Limited.
(Largan Hong Kong)
Investment
The Company
Astro International Ltd. (Astro)
Investment
Astro
Amtai International Ltd. (Amtai) Sales of optical
components
Astro
Net International Trading Ltd.
(Net)
Investment
Net
Largan (Dongguan) Optronic
Ltd. (Largan Dongguan)
Manufacture of optical
components
The Company
Largan Industrial Optics Co.,
Ltd. (Largan Industrial Optics)
Manufacturing of optical
instruments
Largan Industrial
Optics
Fang Yuan Co., Ltd. (Fang Yuan) Investment

Percentage of
Ownership
December
31, 2021
December
31, 2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(Note)
100%
100%

Note : The subsidiary was originally named Ba Fang Co., Ltd., and changed its name to Largan Industrial Optics Co., Ltd. on June 23, 2021.

(iii) Subsidiaries excluded from consolidation:

Name of investor The Company The Company	Name of subsidiary Principal activity Largan Digital Co., Ltd. (Largan Digital) Manufacture of image capture device, image reader, camera and player Largan Health AI-Tech Co., Ltd. (Largan Health AI-Tech) Sales of medical equipment	Percentage of Ownership
		December 31, 2021 December 31, 2020 49.37% 49.37% 88.00% 88.00%

The Company has the ability to control over Largan Digital and Largan Health AI-Tech. However, based on material consideration the total assets and operating revenue of Largan Digital and Largan Health AI-Tech account for a small proportion of the total assets and operating revenue of the Group, Largan Digital and Largan Health AI-Tech respectively; therefore, they are excluded from the consolidation.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Foreign currency

(i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date.

Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for an investment in equity securities designated as at fair value through other comprehensive income, which are recognized in other comprehensive income.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company's disposes any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes only part of investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from, or payable to, a foreign operation is neither planned nor likely in the foreseeable future, Exchange differences arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

(e) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as noncurrent.

(i) It expected to be realized, or intended to be sold or consumed, in its normal operating cycle;
(ii) It holds primarily for the purpose of trading;
(iii) It expected to be realized within twelve months after the reporting period; or

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) The asset is cash or a 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.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

(i) It is expected to settle in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Group 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.

(f) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(g) Financial instruments

Accounts receivable are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is an accounts receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. An accounts receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at amortized cost; fair value through other comprehensive income (FVOCI); or FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL ：

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

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL ：

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

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment is established.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4) Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes ：

the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Group’ s management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Group’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers ：

contingent events that would change the amount or timing of cash flows ；
terms that may adjust the contractual coupon rate, including variable rate features ；
prepayment and extension features ； and
terms that limit the Group’s claim to cash flows from specified assets （ e.g. nonrecourse features ）
6) Impairment of financial assets

The Group recognizes its loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables, guarantee deposit paid and other financial assets) and debt investments measured at FVOCI.

The Group measures its loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL ：

debt securities that are determined to have low credit risk at the reporting date ； and
other debt securities and bank balances for which the credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivable and contract assets are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment, as well as forward-looking information.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 180 days past due.

The Group considers a financial asset to be in default when the financial asset is more than 360 days past due or the debtor is unlikely to fully pay its credit obligations to the Group.

The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘investment grade which is considered to be twA or higher per Taiwan Ratings’.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs resulting from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data ：

significant financial difficulty of the borrower or issuer ；
a breach of contract such as a default or being more than 360 days past due ；
the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider ；
it is probable that the borrower will enter bankruptcy or other financial reorganization ； or
the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

7) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instrument

1) Classification of debt or equity

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

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital surplus is not sufficient to be written down).

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

5) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average method and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(i) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent cost

Subsequent expenditure is capitalized only when it is probable that future economic benefits associated with the expenditure will flow to the Group.

(iii) Depreciation

Depreciation is calculated on the cost of an asset, less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

1) Buildings 35 ~55years 2) Machinery and equipment 2 ~ 10 years

Plant constitutes mainly building, electromechanical power engineering and cleanroom air conditioning project. Each such part is depreciated based on its useful life of 35~55 years, 8~ 10 years and 8~10 years, respectively.

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

(j) Leases

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

(i) As a lessee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method 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. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be paid under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Group’s estimate of the amount expected to be paid under a residual value guarantee; or
there is a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an extension or termination option; or
there are any lease modifications.

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss .

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets, photocopying equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a practical expedient, the Group elects not to assess whether all rent concessions that meets all the following conditions are lease modifications or not:

the rent concessions occurring as a direct consequence of the COVID-19 pandemic;
the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2022; and
there is no substantive change in other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

(iii) As a lessor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

The Group recognizes lease payments received under operating leases as income on a straightline basis over the lease term as part of ‘other income’.

(k) Intangible assets

(i) Recognition and measurement

Other intangible assets are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

Computer software cost 1~3 years

Amortization methods, useful lives and residual values are reviewed at each annual reporting date and adjusted if appropriate.

(l) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, deferred tax assets and employee benefits) to determine whether there is any indication of impairment. If any such indication exists, then the asset’ s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(m) Provisions

A provision is recognized if, as a result of a past event, the Group has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Revenue

(i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

1) Sale of goods

The Group manufactures and sells various multiples lens to mobile phone manufacturers. The Group recognizes revenue when control of the products has been transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

2) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(ii) Contract costs

1) Incremental costs of obtaining a contract

The Group recognizes as an asset the incremental costs of obtaining a contract with a customer if the Group expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

The Group applies the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Costs to fulfil a contract

If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets), the Group recognizes an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify;
the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and
the costs are expected to be recovered.

For general and administrative costs, costs of wasted materials, labor or other resources to fulfil the contract that were not reflected in the price of the contract, costs that relate to satisfied performance obligations (or partially satisfied performance obligations), and costs for which the Group cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations(or partially satisfied performance obligations), the Group recognizes these costs as expenses when incurred.

(o) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(p) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year, and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables is the best estimate of the tax amount expected to be paid or received that it is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intends to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(q) Earnings per share

The Group discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share are calculated as the profit attributable to ordinary shareholders of the Company, divided by the weighted-average number of ordinary shares outstanding. Diluted earnings per share are calculated as the profit attributable to ordinary shareholders of the Company, divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as employee bonus.

(r) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may incur revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty

In preparing these consolidated financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. It recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Please refer to note 6(f) for further description of the valuation of inventories.

(6) Explanation of significant accounts

(a) Cash and cash equivalents

h and cash equivalents
Petty cash and cash on hand Demand deposits Time deposits Cash and cash equivalents in the consolidated statement of cash flows	December 31, 2021 $ 758 4,817,150 84,331,386 $ 89,149,294	December 31, 2020
		555 4,726,551 84,894,166
		89,621,272

Please refer to note 6(v) for the exchange rate risk and sensitivity analysis of the financial assets and liabilities of the Group.

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

Mandatorily measured at fair value through profit or loss: Non-derivative financial assets Stocks unlisted in domestic markets Beneficiary Certificate-open-end funds Total	December 31, 2021 $ - 14,369,966 $ 14,369,966	December 31, 2020
		- 13,207,411
		13,207,411

For market risk, please refer to note 6(v).

Debt investments at fair value through other comprehensive income Current Corporate bonds	December 31, 2021 $ 772,541	December 31, 2020
		-

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Equity investments at fair value through other comprehensive income Current Domestic Company`－`AVISION INC Domestic Company`－`Fubon Financial Holding Co., Ltd. Preferred Shares C Non-Current Domestic Company Private Equity`－`ABILITY OPTO-ELECTRONICS TECHNOLOGY CO. LTD.	December 31, 2021 $ 67,202 1,514,520 $ 1,581,722 $ 932,000	December 31, 2020
		41,470 -
		41,470
		-

(i) Debt investments at fair value through other comprehensive income

The Group has assessed that the following securities were held within a business model whose objective was achieved by both collecting the contractual cash flows and by selling securities. Therefore, they have been classified as debt investments at fair value through other comprehensive income.

(ii) Equity investments at fair value through other comprehensive income

The Group designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Group intends to hold for long-term strategic purposes.

On March 9, 2021, the Group subscribed for 20,000 thousand private ordinary shares of ABILITY OPTO-ELECTRONICS TECHNOLOGY CO., LTD. with a resolution of the Board of Directors, and the transaction amount was $598,400 thousand.

On October 22, 2021, the Group obtained 25,200 thousand preferred shares issued by Fubon Financial Holding Co., Ltd., and the transaction amount was $1,512,000 thousand.

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of December 31, 2021.

On November 2020, the Group has sold all of its shares held in XIAOMI CORPCLASS B as a result of financial management. The shares sold had a fair value of $223,673 thousand, resulting in the Group to realize a gain of $79,035 thousand, which had been reclassified from other comprehensive income to retained earnings.

(iii) For market risk, please refer to note 6(v).

(iv) As of December 31, 2021 and 2020, the financial assets at fair value through other comprehensive income of the Group had not been pledged as collateral for long-term borrowing.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Notes and accounts receivable

Notes receivable from operating activities Notes receivable from non-operating activities Accounts receivable-measured as amortized cost Accounts receivable from related parties-measured as amortized cost Less: loss allowance	December 31, 2021 $ - - 9,874,480 67,449 (3,506) $ 9,938,423	December 31, 2020 8,755 590 11,153,342 6,960 (3,542) 11,166,105

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, accounts receivable have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowances provision were determined as follows:

December 31, 2021	December 31, 2021	December 31, 2021	Loss allowance
Gross carrying amount
			- 3,506 3,506 Loss allowance
	Gross carrying amount	Weighted- average loss rate - % 1.5668
$ 10,943,581 226,066 $ 11,169,647			- 3,542 3,542

The movements in the allowance for notes and accounts receivable were as follows:

Balance at January 1 Foreign exchange losses Balance at December 31	For the years ended	December 31,
	2021 $ 3,542 (36) $ 3,506	2020 3,610 (68) 3,542

The notes and accounts receivable of the Group had not been pledged as collateral as of December 31, 2021 and 2020.

For further credit risk information, please refer to note 6(v).

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Other receivables

Other receivables-Tax receivables Other receivables-Interest receivables Other receivables-Others Other receivables-Related parties	December 31, 2021 $ 131,129 148,763 35,529 17,713 $ 333,134	December 31, 2020
		106,662 155,182 23,998 26,660
		312,502

For further credit risk information, please refer to note 6(v).

(f) Inventories

ntories
Finished goods Work in progress Raw materials Supplies Merchandise inventory	December 31, 2021 $ 3,841,598 502,986 1,255,092 106,764 1,105 $ 5,707,545	December 31, 2020
		2,258,302 480,201 1,188,402 97,829 1,686
		4,026,420

For the years ended December 31, 2021 and 2020, the amounts of inventories that were charged to cost of sales, and the net of provisions that were charged to cost of sales in the consolidated statement of comprehensive income for inventories written down to net realizable value, were $192,064 thousand and $292,625 thousand, respectively.

As of December 31, 2021 and 2020, the Group did not provide any inventories as collateral for its loans.

(g) Investments accounted for using equity method

A summary of the Group’ s financial information about investments accounted for using equity method at the reporting date is as follows:

Subsidiaries	December 31, 2021 $ 439,212	December 31, 2020 272,601

The Group’s investments accounted for its subsidiaries were unquoted.

In 2021 and 2020, the Group’s shares on the net income of its subsidiaries was as follows:

The Group's shares on the net income of its subsidiaries	2021 $ 149,209	2020
		40,588

As of December 31, 2021 and 2020, the Group did not provide any investment accounted for using equity method as collaterals for its loans.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group in 2021 and 2020, were as follows:

Cost or deemed cost: Balance on January 1, 2021 Additions Disposal Reclassification Effect of movements in exchange rates Balance on December 31, 2021 Balance on January 1,2020 Additions Disposal Reclassification Effect of movements in exchange rates Balance on December 31, 2020 Depreciation and impairment loss: Balance on January 1,2021 Depreciation for the year Disposal Reclassification Effect of movements in exchange rates Balance on December 31, 2021 Balance on January 1, 2020 Depreciation for the year Disposal Reclassification Effect of movements in exchange rates Balance on December 31, 2020 Carrying amounts: Balance on December 31, 2021 Balance on January 1, 2020 Balance on December 31,2020	Land		Building and construction	Machinery and equipment		Transportation equipment		Office equipment and other facilities		Rental assets		Construction in progress and testing equip 1,418,814 1,542,000 - (616,011) - 2,344,803 1,220,914 783,942 - (586,042) - 1,418,814 - - - - - - - - - - - - 2,344,803 1,220,914 1,418,814	Total 56,172,293 5,788,384 (184,011) (5,021) (5,114) 61,766,531 52,696,775 5,441,374 (1,976,513) (8,043) 18,700 56,172,293 22,381,685 4,602,382 (128,988) - (3,489) 26,851,590 20,123,545 4,215,405 (1,968,049) (3,595) 14,379 22,381,685 34,914,941 32,573,230 33,790,608
	$ 8,220,803 - - - - $ 8,220,803 $ 8,170,433 50,370 - - - $ 8,220,803 $ - - - - - $ - $ - - - - - $ - $ 8,220,803 $ 8,170,433 $ 8,220,803									54,898 - - - -
										54,898
										54,898 - - - -
										54,898
										21,649 406 - - -
										22,055
										21,243 406 - - -
										21,649
										32,843
										33,655
										33,249

In 2013, the Company acquired a piece of land, for the expansion of its factory, amounting to $120,086 thousand, which was recognized under property, plant and equipment. The title of the said land cannot be transferred to the Company due to its classification. Therefore, it was registered under the name of a different person. To ensure the right of both parties (including that of the Company’s shareholders), the two parties entered into an agreement, with the notarization of the court. In the future, the Company will file an application to the relevant authorities, and go through proper procedures, for the land to be reclassified in order to make it possible for the deed to be transferred to the Company.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Right-of-use assets

The Group leases many assets including land, buildings and constructions. Information about leases for which the Group has been a lessee is presented below:

Cost: Balance at January 1, 2021 Additions Disposal Effect of movement in exchange rate Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposal Effect of movement in exchange rate Balance at December 31, 2020 Accumulated depreciation: Balance at January 1, 2021 Depreciation for the year Disposal Effect of movement in exchange rate Balance at December 31, 2021 Balance at January 1, 2020 Depreciation for the year Effect of movement in exchange rate Balance at December 31, 2020 Carrying amount: Balance at December 31, 2021 Balance at January 1, 2020 Balance at December 31, 2020	Land $ 13,369 - - (97) $ 13,272 $ 13,148 - - 221 $ 13,369 $ 950 471 - (7) $ 1,414 $ 467 465 18 $ 950 $ 11,858 $ 12,681 $ 12,419	Building and construction 251,630 66,689 (34,948) - 283,371 245,878 19,328 (13,576) - 251,630 83,864 47,072 (17,646) - 113,290 40,801 43,063 - 83,864 170,081 205,077 167,766	Total 264,999 66,689 (34,948) (97) 296,643 259,026 19,328 (13,576) 221 264,999 84,814 47,543 (17,646) (7) 114,704 41,268 43,528 18 84,814 181,939 217,758 180,185

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Intangible assets

The costs and amortization of the intangible assets of Group in 2021 and 2020, were as follows:

Costs:
Balance at January 1, 2021
Additions
Disposal
Reclassification
Effect of movement in exchange rates
Balance at December 31,2021
Balance at January 1, 2020
Additions
Disposal
Reclassification
Effect of movement in exchange rates
Balance at December 31,2020
Amortization:
Balance at January 1, 2021
Amortization for the year
Disposal
Effect of movement in exchange rates
Balance at December 31, 2021
Balance at January 1, 2020
Amortization for the year
Disposal
Effect of movement in exchange rates
Balance at December 31, 2020
Carrying value:
Balance at December 31,2021
Balance at January 1, 2020
Balance at December 31,2020 Computer
Software
$ 401,408
47,030
(15,128)
5,021
(5)
$
438,326
$ 344,218
91,871
(39,064)
4,448
(65)
$
401,408
$ 288,614
95,046
(15,128)
(5)
$
368,527
$ 242,477
85,266
(39,064)
(65)
$
288,614
$
69,799
$
101,741
$
112,794

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The following amortizations of intangible assets are included in the statement of comprehensive income:

Operating cost Operating expense	2021 $ 4,504 90,542 $ 95,046	2020
		17,924 67,342 85,266

(k) Other current assets, other current financial assets, other non-current financial assets and other non-current assets

The other current assets, other current financial assets, other non-current financial assets and other non-current assets of the Group were as follows:

Other current financial assets Other current assets Other non-current financial assets Refundable deposits Prepayment for equipment	December 31, 2021	December 31, 2020
	$ 2,258,576 225,673 11,180,527 23,414 1,869,653 $ 15,557,843	9,000 1,015,091 15,170,562 639,850 1,201,090
		18,035,593

(i) Other current (non-current) financial assets were restricted deposits and bank account for repatriation of offshore fund, which were pledged as collateral; please refer to note 8.
(ii) Other current assets were prepayment for purchases payments.
(iii) Refundable deposits had been pledged as collateral; please refer to note 8.

(iv) For further credit risk information, please refers to note 6 (v).

(l) Short-term borrowings

The short-term borrowings were summarized as follows:

Letters of credit Unused credit Lines Range of interest rates	December 31, 2021 $ - $ 2,600,000 0.45%~1.10%	December 31, 2020
		249,535
		2,350,465
		0.95%~1.10%

(m) Lease liabilities

The carrying amounts of the Group's lease liabilities were as follows:

Current Non-current	December 31, 2021 $ 50,492 $ 119,058	December 31, 2020
		43,401
		~~123,164~~

For the maturity analysis, please refer to note 6(v).

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Variable lease payments not included in the measurement of lease liabilities Expenses relating to leases of low-value assets COVID-19-related rent concessions (recognized as other income)	For the year ended December 31, 2021	For the year ended December 31, 2020
	$ 1,947 $ 61 $ 303 $ 735	2,323 91 287 1,460

The amounts recognized in the statement of cash flows by the Group were as follows:

Total cash outflow for leases	For the year ended December 31, 2021	For the year ended December 31, 2020
	$ 47,711	43,435

(i) Real estate leases

The Group leases land and buildings for its factory space. The leases of factory space typically run for 3 to 5 years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

(ii) Other leases

The Group leases photocopying equipment, these leases are leases of low-value items. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases.

(n) Employee benefits

(i) Defined benefit plans

Reconciliation of the defined benefit obligations at present value and plan asset at fair value is as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liability	December 31, 2021 $ 175,751 (75,758) $ 99,993	December 31, 2020 167,568 (58,299) 109,269

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of the Labor Funds, Ministry of Labor. With regards to the utilization of the funds, minimum earnings in the annual distribution on the final financial statements shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $75,758 thousand at the end of the reporting period. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in present value of the defined benefit obligations

The movements in present value of the defined benefit obligations of the Company were as follows:

Defined benefit obligations at January 1 Benefit paid by the plan Current service costs and interest cost (income) Remeasurements loss (gain): -Financial assumptions Defined benefit obligations at December 31	2021 $ 167,568 (1,738) 1,797 8,124 $ 175,751	2020 164,467 (7,311) 2,416 7,996 167,568

3) Movements of the fair value of defined benefit plan assets

The movements in the fair value of the defined benefit plan assets of the Company were as follows:

Fair value of plan assets at January 1 Contributions paid by the employer Benefits paid from plan assets Interest income Remeasurements loss (gain): `－`Return on plan assets excluding interest income Fair value of plan assets at December 31	2021 $ 58,299 18,096 (1,738) 355 746 $ 75,758	2020 58,618 4,595 (7,311) 535 1,862 58,299

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Expenses recognized in profit or loss

The expenses recognized in profits or losses for the years ended December 31, 2021 and 2020 were as follows:

Current service costs Net interest of net liabilities for the defined benefit obligations Plan assets interest income Operating Costs Selling expenses Administrative expenses Research and development expenses Return on plan assets	2021 $ 634 1,163 (355) $ 1,442 $ 1,076 12 60 294 $ 1,442 $ 1,102	2020 708 1,708 (535) 1,881 1,432 14 81 354 1,881 2,397

5) Remeasurement in net defined benefit liability recognized in other comprehensive income

The Company’s remeasurement in the net defined benefit liability recognized in other comprehensive income for the years ended December 31, 2021 and 2020 were as follows:

Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	2021 $ 77,718 7,378 $ 85,096	2020 71,584 6,134
		77,718

6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Increase in future salary rate	December 31, 2021 December 31, 2020 % 0.750 % 0.750 % 2 % 2

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $3,169 thousand.

The weighted average lifetime of the defined benefit plans is 16.89 years.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) Sensitivity analysis

On December 31, 2021 and 2020, if the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2021 Discount rate Future salary increases rate December 31, 2020 Discount rate Future salary increases rate	Influences of defined benefit obligations Increase0.25% Decrease0.25% $ (4,490) 4,674 4,420 (4,265) (4,470) 4,659 4,434 (4,275)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There were no changes in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020.

(ii) Defined contribution plans

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $206,427 thousand and $190,203 thousand for the years ended December 31, 2021 and 2020, respectively.

Except for the Company, other subsidiaries adopted the defined contribution method under their local law, wherein the pension costs amounted to $14,243 thousand and $1,200 thousand for the years ended December 31, 2021 and 2020, respectively.

(iii) Short-term employee benefit

The Company’s employee benefit liabilities were as follows:

December 31, 2021 Compensated absences liability $ 118,988	December 31, 2020
	111,949

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(o) Income taxes

(i) Income tax expense

The components of income tax for 2021 and 2020 were as follows:

Current tax expense: Current period Adjustment for prior periods Deferred tax expense`：` Origination and reversal of temporary differences	2021 $ 4,683,846 (81,659) (246,807) $ 4,355,380	2020 7,191,599 (7,233) (24,730) 7,159,636

Reconciliation of income tax and profit before tax for 2021 and 2020 is as follows:

2021
Profit before income tax
$ 23,026,610
Income tax using the Company's domestic tax rate
4,605,322
Effect of tax rates in foreign jurisdiction (not applicable
for separate financial statements)
132,413
Investment tax credits
(438,589)
Changes in unrecognized temporary differences
(215,975)
Gains on disposal of investment
(3,720)
Income tax for repatriation of overseas earnings
-
Other income tax adjustments
567
Current-year losses for which no deferred tax asset was
recognized
1,464
Changes in provision in prior periods
(81,660)
Surtax on unappropriated earnings
355,558
Total
$
4,355,380

2020
31,693,767
6,338,753
178,863
(371,218)
(320,072)
(2,396)
648,710
138,808
525
(7,233)
554,896
7,159,636

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax liabilities

The consolidated entity is able to control the timing of the reversal of the temporary differences associated with the investments in subsidiaries as of December 31, 2021 and 2020. Also, the management considers it probable that the temporary differences will not reverse in the foreseeable future. Hence, such temporary differences are not recognized under deferred tax liabilities. Details are as follows:

Aggregated amount of temporary differences related to investments in subsidiaries	December 31, 2021 $ 14,438,449	December 31, 2020
		13,614,355

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

The carryforward of unused tax losses	December 31, 2021 $ 940	December 31, 2020
		-

The R.O.C. Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes.

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom.

As of December 31, 2021, the Group’s unused tax losses for which no deferred tax assets were recognized were as follows:

Year of loss 2021	Unused tax loss Expiry year $ 4,700 2031

3) Recognized deferred tax assets and liabilities

Changes in the amounts of deferred tax assets and liabilities for 2021 and 2020 were as follows:

Deferred Tax Assets:

Unrealized profit from associates Balance at January 1, 2021 $ 164,011 Recognized profit 92,738 Balance at December 31, 2021 $ 256,749 Balance at January 1, 2020 $ 214,692 Recognized profit or loss (50,681) Balance at December 31, 2020 $ 164,011 Deferred Tax Liabilities: Others Balance at January 1, 2021 $ 8,692 Recognized loss 6,439 Balance at December 31, 2021 $ 15,131 Balance at January 1, 2020 $ 2,626 Recognized loss 6,066 Balance at December 31, 2020 $ 8,692	Others 345,258 160,508 505,766 263,781 81,477 345,258	Total
		509,269 253,246
		762,515
		478,473 30,796
		509,269

4) Assessment of tax

The Company’ s tax returns for the years through 2019 were assessed by the Taipei National Tax Administration.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(p) Other payables

The other payables were summarized as follows:

Payables on remuneration to employees, directors and supervisors Payables for plant and equipment Others	December 31, 2021 $ 18,667,760 1,565,598 2,088,557 $ 22,321,915	December 31, 2020
		18,526,199 1,696,954 1,801,361
		22,024,514

(q) Capital and other equity

(i) Ordinary Shares

As of December 31, 2021 and 2020, the Company's authorized ordinary shares each amounted to $2,000,000 thousand (including the amount of $100,000 thousand allocated for the exercise of employee stock options), and the outstanding ordinary shares each amounted to $1,341,402 thousand, with a par value of $10 per share.

Reconciliation of shares outstanding during 2021 and 2020 was as follows:

(in thousands of shares) Balance on January 1 Purchase of treasury shares Balance on December 31		Ordinary	Shares
		2021 134,140 (672) 133,468	2020 134,140 -

			134,140

(ii) Capital Surplus

The balance of capital surplus as of December 31, 2021 and 2020 were as follows:

Additional paid-in capital Capital surplus-premium from merger Dividend timeout not received by shareholder	December 31, 2021 $ 817,574 738,155 7,185 $ 1,562,914	December 31, 2020 817,574 738,155 4,857
		1,560,586

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(iii) Retained earnings

The Company's general meeting of shareholders held on August 25, 2021, and passed a resolution to amend the Company's Article of Incorporation, stipulating expressly that the Company's earnings distribution or loss appropriation may be made on a semiannually basis after the close of each semiannual.

The Company's Articles of Incorporation stipulate that Company's net earnings semiannually should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, until the accumulated legal reserve equals the Company's paid-in capital. In addition, a special reserve in accordance with applicable laws and regulations shall also be set aside.

Then, any remaining profit, together with any undistributed retained earnings, shall be distributed according to the distribution plan proposed by the Board of Directors.

When it is distributed by issuing new shares, it should be submitted to the shareholders' meeting for approval. When it is distributed in cash, it should be authorized by the Board of Directors and reported to the shareholders meeting only.

Before the distribution of dividends, the Company shall first take into consideration its operating environment, industry developments, and the long-term interests of its stockholders, as well as its programs to maintain its operating efficiency and meet its capital expenditure budget and financial goals in determining the stock or cash dividends to be paid. After the above appropriations, dividend to be distributed shall be no less than 10% of the current-year retained earnings available for distribution. The cash dividends shall not be less than 30% of the total dividends.

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Special reserve

In accordance with the regulation set by the Financial Supervisory Commission, a portion of current period earnings and undistributed prior period earnings shall be reclassified as a special earnings reserve during earnings distribution. When the undistributed retained earnings of 2019 are distributed in 2020, the special earnings reserve will be recognized from the profit and loss of the current period and the undistributed retained earnings of the previous period. When the undistributed retained earnings of 2020 are distributed in 2021, the special earnings reserve will be recognized from the profit after income tax of the current period plus other current earnings and the undistributed retained earnings of the previous period. The net reduction of other shareholders’ equity accumulated in the previous period shall be recognized from the undistributed retained earnings and shall not be distributed. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. The special reserve for the years ended December 31, 2021 and 2020, was $1,521,382 thousand and $2,141,576 thousand, respectively.

3) Earnings distribution

The amounts of cash dividends on the appropriations of earnings for 2020 and 2019 had been approved during the board meeting held on February 22, 2021 and April 22, 2020, respectively.

The relevant dividend distributions to shareholders were as follows:

Dividends distributed to common shareholders: Cash	2020 Amount per share Total amount $ 91.5 12,273,828	2019	2019
	Amount per share $ 91.5	Amount per share 79	Total amount
			10,597,076

The amounts of cash dividends on the appropriations of earnings for the first half of 2021 and the second half of 2021 had been approved during the Board meeting on February 21, 2022 and October 25, 2021, respectively.

The relevant dividend distributions to shareholders were as follows:

Dividends distributed to ordinary shareholders Cash	The second half of 2021 Amount per share Total amount $ 39 5,205,260	The first half of 2021	The first half of 2021
	Amount per share $ 39	Amount per share 31	Total amount
			4,158,346

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Treasury shares

In accordance with the requirements under section 28(2) of the Securities and Exchange Act, the Company expected to repurchase 1,342 thousand shares as treasury shares in order to protect the Company’s integrity and shareholders’ equity during October 26, 2021 to December 24, 2021, and the range of the repurchase price is $2,025 to $3,300 a share. As of December 31, 2021, a total of 672 thousand shares have been repurchased, and the repurchase cost is $1,400,985 thousand, all of which were not yet cancelled .

In accordance with the requirements of Securities and Exchange Act, treasury shares held by the Company should not be pledged, and do not hold any shareholder rights before their transfer.

5) Other equity interests (net-of-taxes)

Exchange differences
on translation of
foreign financial
statements
Balance at January 1, 2021
$ (1,747,237)
Exchange differences on foreign operations:
The Group
(239,072)
Subsidiaries
(478)
Unrealized gains (losses) from financial
assets measured at fair value through
other comprehensive income:
The Group
-
Subsidiaries
-
Balance at December 31, 2021
$
(1,986,787)
Balance at January 1, 2020
$ (2,061,631)
Exchange differences on foreign operations:
The Group
315,510
Subsidiaries
(1,116)
Unrealized gains (losses) from financial
assets measured at fair value through other
comprehensive income:
The Group
-
Subsidiaries
-
Disposal of investments in equity instruments
designated at fair value through other
comprehensive income
-
Balance at December 31, 2020
$
(1,747,237)

Unrealized gains (losses)
on financial assets
measured at fair value
through other
comprehensive income
1,424
-
-
344,061
32
345,517
(79,945)
-
-
160,170
234
(79,035)
1,424

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(r) Earnings per share

The calculation of basic earnings per share and diluted earnings per share for 2021 and 2020 were as follows:

Basic earnings per share Profit of the Company for the year Weighted-average number of outstanding ordinary shares (in thousands) Issued ordinary shares at January 1 Effect of treasury shares held Weighted average number of ordinary shares at December 31 Diluted earnings per share Profit of the Company for the year Weighted-average number of outstanding ordinary shares (in thousands) Effect of dilutive potential common shares (thousand shares) Effect of employee share bonus Weighted-average number of ordinary shares (in thousands) (after adjustment of potential diluted ordinary shares) (s) Revenue from contracts with customers Disaggregation of revenue Sale of goods Other	2021 $ 18,671,230 134,140 (84) 134,056 $ 139.28 $ 18,671,230 134,056 1,742 135,798 $ 137.49 2021 $ 45,820,230 1,142,172 $ 46,962,402		2020 24,534,131 134,140 - 134,140 182.90 24,534,131 134,140 1,456 135,596 180.94 2020









			55,769,861 174,628
			55,944,489

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(t) Employee compensation and directors’ and supervisors’ remuneration

According to the Company’ s Articles of Incorporation, the Company should distribute its remuneration of not less than 1%~30% and not more than 5% of annual profits to its employees and directors respectively, after offsetting accumulated deficits, if any. Employees, including employees of affiliate companies that meet certain conditions, are subject to the abovementioned remuneration, which is to be distributed in stock or cash.

For the year ended December 31, 2021 and 2020, the Company estimated its employee remuneration at $3,363,086 thousand and $4,416,600 thousand, and directors' and supervisors' remuneration at $252,052 thousand and $331,245 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration of employees, directors and supervisors as specified in the Company's Articles. These remunerations were expensed under operating costs or operating expenses during 2021 and 2020. The amounts, as stated in the consolidated financial statements, are identical to those of the actual distributions for 2021 and 2020.

(u) Non-operating income and expenses

(i) Interest income

The details of interest income for 2021 and 2020 were as follows:

Interest income from bank deposits Interest income from financial assets measured at fair value through other comprehensive income	2021 $ 947,774 2,777 $ 950,551	2020
		1,304,977 -
		1,304,977

(ii) Other income

The details of other income for 2021 and 2020 were as follows:

Rent income Gains on technical services	2021 $ 15,546 15,695 $ 31,241	2020
		11,633 15,761
		27,394

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Other gains and losses

The details of other gains and losses for 2021 and 2020 were as follows:

Foreign exchange losses Gains (losses) on disposals of property, plant and equipment Gains on financial assets at fair value through profit or loss Others	2021 $ (1,473,507) 3,992 34,143 184,807 $ (1,250,565)	2020 (1,818,783) (6,792) 39,591 76,997 (1,708,987)

(iv) Finance costs

The details of finance costs for 2021 and 2020 were as follows:

Interest expenses	2021 $ 1,947	2020
		2,323

(v) Financial Instruments

(i) Credit risk

1) Credit risk exposure

The carrying amount of financial assets represents the maximum amount exposed to credit risk.

2) Concentration of credit risk

To minimize credit risk, the Group periodically evaluates the Company’ s financial positions and the possibility of collecting accounts receivable. Besides, the Group monitors and reviews the recoverable amount of its accounts receivable to ensure the uncollectible amount are recognized appropriately as impairment loss. As of December 31, 2021 and 2020, 61% and 65%, respectively, of accounts receivable were derived from several major customers. Thus, the credit risk is significantly centralized.

3) Receivables and debt securities

For credit risk exposure of notes and accounts receivable, please refer to note 6 (d). Other financial assets at amortized cost includes other receivables, refundable deposits and other financial assets. Debt investments at fair value through other comprehensive income include corporate bonds. All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. Regarding how the financial instruments are considered to have low credit risk, please refer to note 4 (g). Other financial assets at amortized cost and debt investments at fair value through other comprehensive income did not have impairment provision for the years ended December 31, 2021 and 2020.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, without the impact of netting agreements.

Carrying amount December 31, 2021 Non-derivative financial liabilities Accounts and notes payable (including related parties) $ 1,678,852 Other payables (including related parties) 26,487,391 Lease liabilities-current and non-current 169,550 Guarantee deposits received 3,630 $ 28,339,423 December 31, 2020 Non-derivative financial liabilities Short-term borrowings $ 249,535 Accounts and notes payable (including related parties) 1,601,183 Other payables (including related parties) 22,033,845 Lease liabilities-current and non-current 166,565 Guarantee deposits received 3,766 $ 24,054,894	Contractual cash flows 1,678,852 26,487,391 173,008 3,630 28,342,881 249,535 1,601,183 22,033,845 170,450 3,766 24,058,779	Within a year 1,678,852 26,487,391 52,106 - 28,218,349 249,535 1,601,183 22,033,845 45,148 - 23,929,711	Over 1 year
			- - 120,902 3,630
			124,532
			- - - 125,302 3,766
			129,068

The Group does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Currency risk

1) Exposure to foreign currency risk

The Group’s significant exposure to foreign currency risk was as follows:

F inancial Assets Monetary items USD JPY CNY F inancial Liabilities M onetary items USD JPY	December 31, 2021 Foreign Currency Exchange Rates New Taiwan Dollars $ 1,891,388 27.6800 52,353,624 2,130,661 0.2405 512,424 4,041,264 4.3440 17,555,253 82,467 27.6800 2,282,685 1,841,254 0.2405 442,822	December 31, 2021 Foreign Currency Exchange Rates New Taiwan Dollars $ 1,891,388 27.6800 52,353,624 2,130,661 0.2405 512,424 4,041,264 4.3440 17,555,253 82,467 27.6800 2,282,685 1,841,254 0.2405 442,822	December 31, 2020	December 31, 2020
	Foreign Currency $ 1,891,388 2,130,661 4,041,264 82,467 1,841,254	Exchange Rates 27.6800 0.2405 4.3440 27.6800 0.2405	Foreign Currency 1,554,358 2,199,342 6,229,338 64,252 3,057,562	Exchange Rates New Taiwan Dollars 28.480 44,268,119 0.2763 607,678 4.3770 27,265,813 28.4800 1,829,885 0.2763 844,804

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, financial assets at fair value through other comprehensive income accounts and other receivables, and accounts and other payables that are denominated in foreign currency. A strengthening (weakening) 1% of the TWD against the USD, JPY, and CNY as of December 31, 2021 and 2020 would have increased (decreased) the net profit after tax by $541,566 thousand and $555,735 thousand, respectively. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for both periods.

3) Foreign exchange gain and loss on monetary items

Since the Group has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years 2021 and 2020, the foreign exchange gain (loss) (including realized and unrealized portions) amounted to $(1,473,507) thousand and $(1,818,783) thousand, respectively.

(iv) Interest rate analysis

Please refer to the note on liquidity risk management and the interest rate exposure of the Group’s financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate which increases or decreases by 1% when reporting to the internal management, which also represents the Group management's assessment of the reasonably possible interest rate change.

If the interest rate increases/decreases by 1%, with all other variable factors remaining constant, the Group’s net income would have decreased/increased by $0 and $1,996 thousand for the years ended December 31, 2021 and 2020, respectively. This is mainly due to the Group’s borrowings in variable rates.

(v) Other market price risk

For the years ended December 31, 2021 and 2020, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the profit and loss with all other variable factors remaining constant as illustrated below:

Prices of securities at the reporting date 1% increase 1% decrease	For theyears ended December 31, 2021 2020 Other comprehensive income after tax Net income Other comprehensive income after tax Net income $ 25,137 143,700 415 132,074 $ (25,137) (143,700) (415) (132,074)

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vi) Fair value of financial instruments
1) Categories and fair value of financial instruments

The fair value of financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income is measured on a recurring basis. The carrying amount and fair value of the Group’s financial assets and liabilities, including the information on fair value hierarchy, were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities disclosure of fair value information is not required :

The Group uses observable market data to evaluate its assets and liabilities when it is possible. The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs).

	December 31, 2021	December 31, 2021	December 31, 2021
BookValue		Fair Value
	Level 1 14,369,966 1,581,722 - 772,541 2,354,263 - - - - - 16,724,229	Level 2 - - 932,000 - 932,000 - - - - - 932,000	Level 3 - - - - - - - - - - -	Total
				14,369,966
				1,581,722 932,000 772,541
				3,286,263
				- - - -
				-
				17,656,229

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

	December 31, 2021	December 31, 2021	December 31, 2021	Total - - - - -
		Fair Value
	Leve 1 Leve 2 Leve 3 - - - - - - - - - - - - - - - December 31, 2020



BookValue		Fair Value
	Level 1 13,207,411 41,470 - - - - - 13,248,881 - - - - - -	Level 2 - - - - - - - - - - - - - -	Level 3	Total
			-	13,207,411
			-	41,470
			- - - -	- - - -
			-	-
			-	13,248,881
			- - - - -	- - - - -
			-	-

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Valuation techniques of financial instruments not measured at fair value

The Group estimates its financial instruments, that are not measured at fair value, by methods and assumption as follows:

If there is quoted price generated by transactions for financial liabilities at amortized cost, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values. In addition, if the expiration date is approaching, or the future payable or receivable price is similar to the carrying amount, the fair value shall be assumed in the carrying amount in the balance sheets.

3) Valuation techniques for financial instruments measured at fair value.

Non-derivative financial instruments

Financial instruments traded in active markets are based on quoted market prices. The quoted price of a financial instrument obtained from main exchanges and on-the-run bonds from Taipei Exchange can be used as a basis to determine the fair value of the listed companies’ equity instrument and debt instrument of the quoted price in an active market.

If a quoted price of a financial instrument can be obtained in time and often from exchanges, brokers, underwriters, industrial union, pricing institute, or authorities, and such price can reflect those actual trading and frequently happen in the market, then the financial instrument is considered to have a quoted price in an active market. If a financial instrument is not in accord with the definition mentioned above, then it is considered to be without a quoted price in an active market. In general, market with low trading volume or high bid-ask spreads is an indication of a non-active market.

The fair value of the listed common shares, funds and bonds held by the Group are determined by reference to the market quotation.

Except for the above-mentioned financial instruments with active market, measurements of fair value of financial instruments without an active market are based on a valuation technique. Privately equity of domestic companies that the Group hold was measured by the Black-Scholes put evaluation model to calculate its liquidity discount and fair value.

4) Transfer between Level 1 and Level 2

There were no transfers from one level to another level in 2021 and 2020.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(w) Financial risk management

(i) Overview

The Group has exposure to the following risks from its financial instruments:

1) Credit risk
2) Liquidity risk
3) Market risk

In this note expressed the information on risk exposure and objectives, policies and procedures of risk measurement and management. For detailed information, please refer to the related notes of each risk.

(ii) Structure of risk management

The Group’ s finance management department provides business services for the overall internal department. It sets the objectives, policies and processes for managing the risk and the methods used to measure the risk arising from both the domestic and international financial market operations. The Group minimizes the risk exposure through derivative financial instruments. The Board of Directors regulates the use of derivative financial instruments in accordance with the Group’ s policy on risks arising from financial instruments such as currency risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investments of excess liquidity. The internal auditors of the Group continue to review the amount of the risk exposure in accordance with the Group’s policies and the risk management's policies and procedures. The Group has no transactions in financial instruments (including derivative financial instruments) for the purpose of speculation.

(iii) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and investment securities.

1) Accounts receivable and other receivables

The Group's customers are significantly concentrated in a few customers. In order to reduce credit risk, the Group continuously evaluates the financial status of its major customers and their condition, and also regularly assesses the possibility of receivables recovery.

The Group did not have any collateral or other credit enhancement to avoid credit risk of the financial assets.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group has losses allowance for bad debts to reflect the estimated losses of its accounts receivable, other receivables and investments. The main components of the allowance account contain specific losses associated with individual major risks. The component, and the component of the combined loss established for the loss of a similar group of assets, has occurred but not yet identified. The loss allowance account is based on the occurring risk of a default and the rate of expected credit loss.

2) Investments

The exposure to credit risk for bank deposits, fixed income investments, and other financial instruments, is measured and monitored by the Group’ s finance department. The Group only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Group does not expect any of the counterparties above to fail in meeting their obligations; hence, there is no significant credit risk arising from these counterparties.

3) Guarantees

At December 31, 2021 and 2020, no other guarantees were outstanding.

(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’ s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, that will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan Dollars (NTD). The currencies used in these transactions are the NTD, USD, CNY and JPY.

2) Interest rate risk

Please refer to note on the liquidity risk for interest rate risk of financial assets and financial liabilities.

3) Other market price risk

Please refer to note 6(v) for the sensitivity analysis of equity price risk.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(x) Capital management

The Group must maintain sufficient capital to establish and expand production capacity and equipment. Because the optical lens industry is highly subject to fluctuations in the booming cycle; the capital management of the Group is to ensure that it has sufficient and necessary financial resources to support its working capital requirements, capital expenditures, research and development activities, dividends and other business needs in the next 12 months.

(y) Investing and financing activities not affecting current cash flow

The Group’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2021 and 2020 were as follows:

Acquisition of right-of-use assets through lease, please refer to note 6(m).

Reconciliation of liabilities arising from financing activities was as follows:

Non-cash changes Foreign exchange movement Acquisition Changes in lease payments 2,472 - - - 49,285 (900) - - - 2,472 49,285 (900) Non-cash changes Foreign exchange movement Acquisition Changes in lease payments 7,048 - - - 4,399 (1,460) - - - 7,048 4,399 (1,460)	Non-cash changes Foreign exchange movement Acquisition Changes in lease payments 2,472 - - - 49,285 (900) - - - 2,472 49,285 (900) Non-cash changes Foreign exchange movement Acquisition Changes in lease payments 7,048 - - - 4,399 (1,460) - - - 7,048 4,399 (1,460)	December 31,2021
		- 169,550 3,630 173,180 December 31,2020
Foreign exchange movement 7,048 - - 7,048	Acquisition - 4,399 - 4,399
		249,535 166,565 3,766 419,866

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(7) Related-party transactions

(a) Names and relationship with the Group

The followings are related parties that have had transactions with the Group during the periods covered in the consolidated financial statements.

ed in the consolidated financial statements.
Name of related party	Relationship with the Group
Largan Digital Co., Ltd. (Largan Digital)	Subsidiaries
Largan Medical Co., Ltd. (Largan Medical)	Subsidiaries
Largan Health AI-Tech Co., Ltd.	Subsidiaries
(Largan HealthAI-Tech)
NEO (Shanghai) Medical Technology Co.,Ltd (Note)	Joint venture

Note : The liquidation process of NEO (Shanghai) Medical Technology Co., Ltd. had been completed in December 31, 2021.

(b) Significant related-party transactions
(i) Sale of goods to related parties

The amounts of significant sales and receivables by the Group to its related parties were as follows:

Subsidiaries	Sale	Sale		Receivables from related parties	Receivables from related parties
	2021 $ 189,161	2020		December 31, 2021 67,449	December 31, 2020
		56,174			6,960

The sales price of the Group to its related parties is not comparable to other sales due to the differences in the sales of the goods. During 2021 and 2020, the collection terms for sales to related parties were month-end 30 to 60 days, which were not materially different from those of the third parties.

(ii) Purchases from related parties

The amounts of significant purchases and payables by the Group from its related parties were as follows:

Subsidiaries	Purchases	Purchases	Purchases	Payables to related parties	Payables to related parties
	2021		2020	December 31, 2021 December 31, 2020 205,220 32,460
	$ 1,043,284		194,848		32,460

The purchases price of the Group to its related parties is not comparable to other purchases due to the differences in the purchases of the goods. During 2021 and 2020, the payment terms for purchases to related parties were month-end 30 to 60 days, which were not materially different from those of the third parties.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Provides and purchase technical services to related parties

During 2021 and 2020, the Group's income from providing technical services to its related parties were as follows (classified under the other gains):

Subsidiaries`-`Largan Medical	2021	2020
	$ 15,695	15,761

During 2021 and 2020, the Group's expense from technical services from its related parties were as follows (classified under the other expense):

- Subsidiaries Largan Digital

2021	2020
$ 3,501	2,527

(iv) Purchases and disposals of property, plant and equipment
1) During 2021 and 2020, the Group's disposals of its equipment to its related parties are summarized as follows:

	2021	2021			Carrying amount	2020 Disposal price Gain from disposal 1,007 11 41 3 1,048 14
Carrying amount	Disposal price		Gain from disposal
$ 1,712 58 $ 1,770		1,818 73		106 15	996 38	11 3
		1,891		121	1,034	14

2) During 2021 and 2020, the Group's purchase of its equipment from its related parties are summarized as follows:

Subsidiaries	2021	2020
	$ 48,836	86,080

3) During 2021 and 2020, the Group assisted its related parties to purchase other facilities as follows:

as follows:
Subsidiaries`-`Largan Digital Subsidiaries`-`Largan Medical	2021	2020
	$ 99,653 11,667 $ 111,320	13,794 3,539 17,333

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Rental income

During 2021 and 2020, the Group's rental income on offices to the subsidiaries are summarized as follows:

Subsidiaries`-`Largan Digital Subsidiaries`-`Largan Medical	2021		2020
	$ 7,646 4,797 $ 12,443		3,473 4,617 8,090

(vi) Other

For the years ended December 31, 2021 and 2020, the amounts of receivables and payables 、 from property transactions rental income, technical service and other transactions, which were classified under other receivables from related parties, and other payables to related parties, are summarized as follows:

Subsidiaries`:` Largan Digital Largan Medical Largan Health AI-Tech	December 31, 2021 December 31, 2020 other receivables from related parties other payables to related parties other receivables from related parties other payables to related parties	December 31, 2021 December 31, 2020 other receivables from related parties other payables to related parties other receivables from related parties other payables to related parties	December 31, 2021 December 31, 2020 other receivables from related parties other payables to related parties other receivables from related parties other payables to related parties	December 31, 2021 December 31, 2020 other receivables from related parties other payables to related parties other receivables from related parties other payables to related parties
	other receivables from related parties
	$ 7,165 10,543 5 $ 17,713	6,891 239 - 7,130	17,606 9,054 - 26,660	9,161 170 - 9,331

(c) Key management personnel compensation

Key management personnel compensation comprised the following:

Short-term employee benefits Post-employment benefits Other long-term benefits Termination benefits Share-based payments	2021 $ 225,549 278 - - - $ 225,827	2020
		206,995 275 - - -
		207,270

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(8) Pledged assets:

The carrying values of pledged assets were as follow:

Pledged assets Time deposit (classified under other current financial assets) Time deposit (classified under other non-current assets) Time deposit (classified under other non-current financial assets)	Pledged to secure Customs office deposit Litigation deposit Completion deposit	December 31, 2021 $ 10,000 4,733 310,001 $ 324,734	December 31, 2020
			9,000 625,733 320,145
			954,878

(9) Commitments and contingencies

As of December 31, 2021 and 2020, the Group’ s outstanding purchase commitments for construction in progress, property and plant were $23,708,638 thousand and $12,204,700 thousand, respectively ； The amount of construction that has not yet occurred were $20,240,049 thousand and $9,908,276 thousand, respectively.

(10) Losses due to major disasters: None

(11) Subsequent events: None

(12) Other:

The followings are the summary statement of employee benefits, depreciation, depletion, and amortization expenses by function in the current period:

By function By item	2021	2021	2021	2020	2020	2020
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefits
Salary	5,078,391	3,105,543	8,183,934	5,491,330	3,639,723	9,131,053
Labor and health insurance	416,072	147,132	563,204	380,869	124,945	505,814
Pension	161,731	60,381	222,112	139,291	53,993	193,284
Others	161,160	39,305	200,465	162,763	36,974	199,737
Depreciation	4,281,067	368,858	4,649,925	3,931,282	327,651	4,258,933
Amortization	4,504	90,542	95,046	17,924	67,342	85,266

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on the Group's significant transactions, required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”:

(i) Loans to other parties:None
(ii) Guarantees and endorsements for other parties: None
(iii) Securities held as of December 31, 2021 (excluding those investments in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Highest balance during the year
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Percentage of ownership
The Company	Stock -Micro Win Tech Inc.	-	Financial assets designated as at fair value through profit or loss	1.25	-	% 20.66	-	% 20.66
The Company	Stock -Kintech Technology Co., Ltd.	-	Financial assets designated as at fair value through profit or loss	570	-	% 0.33	-	% 0.33
The Company	Stock-AETAS TECHNOLOGY INCORPORATED	-	Financial assets designated as at fair value through profit or loss	125	-	% 0.25	-	% 0.25
The Company	Open-end fund- Franklin Templeton Sinoam Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	124,342	1,299,829	-	1,299,829	-
The Company	Open-end fund- Capital Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	50,858	828,845	-	828,845	-
The Company.	Open-end fund- Jih Sun Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	145,835	2,185,644	-	2,185,644	-
The Company	Open-end fund- CTBC Hwa-win Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	16,092	179,061	-	179,061	-
The Company	Open-end fund- FSITC Taiwan Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	74,470	1,152,153	-	1,152,153	-
The Company	Open-end fund-FSITC Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	2,812	506,856	-	506,856	-
The Company	Open-end fund- Eastspring Investments Well Pool Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	31,830	437,343	-	437,343	-
The Company	Open-end fund- Prudential Financial Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	33,226	531,329	-	531,329	-
The Company	Open-end fund-Union Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	48,118	641,712	-	641,712	-
The Company	Open-end fund- Taishin 1699 Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	192,838	2,637,750	-	2,637,750	-
The Company	Open-end fund-Hua Nan Phoenix Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	31,601	518,882	-	518,882	-
The Company	Open-end fund-Mega Diamond Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	168,362	2,134,430	-	2,134,430	-
The Company	Open-end fund- UPAMC James Bond Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	11,858	200,072	-	200,072	-
The Company	Open-end fund- Taishin Ta-Chong Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	38,227	548,568	-	548,568	-

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Highest balance during the year	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Percentage of ownership
The Company	Open-end fund- Cathay Taiwan Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	42,002	527,492	-	527,492	-
The Company	Stock`－`Fubon Financial Holding Co., Ltd. Preferred Shares C	-	Financial assets at fair value through other comprehensive income	25,200	1,514,520	% 7.56	1,514,520	% 7.56	Note 1
The Company	Stock`－`AVISION INC.	-	Financial assets at fair value through other comprehensive income	4,253	67,202	% 2.25	67,202	% 2.37
The Company	Private equity`－` ABILITY OPTO- ELECTRONICS TECHNOLOGY CO., LTD.	-	Financial assets at fair value through other comprehensive income	20,000	932,000	% 15.2	932,000	% 15.2
The Company	Bond`－`BANK OF AMERICA CORP	-	Financial assets at fair value through other comprehensive income	-	109,993	-	109,993	-
The Company	Bond`－`JPMORGAN CHASE & CO	-	Financial assets at fair value through other comprehensive income	-	109,574	-	109,574	-
The Company	Bond`－`IBM CORP	-	Financial assets at fair value through other comprehensive income	-	118,591	-	118,591	-
The Company	Bond`－`JOHNSON & JOHNSON	-	Financial assets at fair value through other comprehensive income	-	108,524	-	108,524	-
The Company	Bond`－`MIZUHO FINANCIAL GROUP	-	Financial assets at fair value through other comprehensive income	-	108,902	-	108,902	-
The Company	Bond`－`TSMC GLOBAL LTD	-	Financial assets at fair value through other comprehensive income	-	108,669	-	108,669	-
The Company	Bond`－`APPLE INC	-	Financial assets at fair value through other comprehensive income	-	108,288	-	108,288	-
Largan Industrial Optics Co., Ltd.	Open-end fund- Taishin 1699 Money Market Fund	-	Financial assets mandatorily measured fair value through profit or loss	2,924	40,000	-	40,000	-

Note 1 ： Shareholding ratio of Fubon Financial Holding Co., Ltd. Preferred Shares C.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Individual securities acquired, or disposed, with an accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

Name of company	Category and name of security	Account name	Name of counter- party	Relationship with the company	Beginningbalance	Beginningbalance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares (thousands)	Amount	Shares (thousands)	Amount	Shares (thousands)	Price	Cost	Gain (loss) on disposal	Shares (thousands)	Amount
The Company	Open-end fund- Franklin Templeton Sinoam Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	96,281	1,004,061	28,061	293,000	-	-	-	-	124,342	1,299,829
The Company	Open-end fund- Capital Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	113,926	1,853,047	31,753	517,000	94,821	1,544,367	1,540,000	4,367	50,858	828,845
The Company	Open-end fund- Yuanta De-Li Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	3,049	50,118	35,609	586,000	38,658	636,344	636,000	344	-	-
The Company	Open-end fund- Jih Sun Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	96,682	1,445,395	49,153	736,000	-	-	-	-	145,835	2,185,644
The Company	Open-end fund- CTBC Hwa-win Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	86,634	962,287	126,254	1,404,000	196,796	2,188,751	2,186,947	1,804	16,092	179,061
The Company	Open-end fund- FSITC Taiwan Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	55,972	863,851	18,498	286,000	-	-	-	-	74,470	1,152,153
The Company	Open-end fund- FSITC Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	3,100	557,590	1,606	289,000	1,894	341,049	340,000	1,049	2,812	506,856
The Company	Open-end fund- Eastspring Investments Well Pool Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	52,271	716,778	-	-	20,441	280,687	280,000	687	31,830	437,343
The Company	Open-end fund- TCB Taiwan Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	88,914	910,268	55,824	572,000	144,738	1,483,489	1,482,000	1,489	-	-
The Company	Open-end fund- UPAMC James Bond Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	-	-	60,194	1,015,000	48,336	815,245	815,000	245	11,858	200,072
The Company	Open-end fund- Taishin 1699 Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	153,386	2,093,093	39,452	539,000	-	-	-	-	192,838	2,637,750
The Company	Open-end fund- Fubon Chi-Hsiang Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	18,733	296,052	42,242	668,000	60,975	964,718	964,000	718	-	-
The Company	Open-end fund- Mega Diamond Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	12,649	160,011	155,713	1,972,000	-	-	-	-	168,362	2,134,430

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of company	Category and name of security	Account name	Name of counter- party	Relationship with the company	Beginningbalance	Beginningbalance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares (thousands)	Amount	Shares (thousands)	Amount	Shares (thousands)	Price	Cost	Gain (loss) on disposal	Shares (thousands)	Amount
The Company	Open-end fund- Hua Nan Phoenix Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	3,784	62,000	40,022	656,000	12,205	200,273	200,044	229	31,601	518,882
The Company	Open-end fund- Taishin Ta-Chong Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	-	-	53,580	768,000	15,353	220,175	220,000	175	38,227	548,568
The Company	Open-end fund- Cathay Taiwan Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	-	-	120,506	1,512,000	78,504	985,348	985,000	348	42,002	527,492
The Company	Open-end fund- Union Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	56,586	753,138	76,589	1,021,000	85,057	1,133,776	1,130,000	3,776	48,118	641,712
The Company	Open-end fund- Shin Kong Chi-Shin Money Market Fund	Financial assets mandatorily measured fair value through profit or loss	-	-	46,243	721,705	28,616	447,000	74,859	1,169,912	1,168,000	1,912	-	-
The Company	Private equity - ABILITY OPTO- ELECTRONICS TECHNOLOGY CO., LTD.	Financial assets at fair value through other comprehensive income	-	-	-	-	20,000	598,400	-	-	-	-	20,000	932,000
The Company	Stock - Fubon Financial Holding Co., Ltd. Preferred Shares C	Financial assets at fair value through other comprehensive income	-	-	-	-	25,200	1,512,000	-	-	-	-	25,200	1,514,520

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter-party	Relationship with the Company	If the counterparty is a related party, disclose the previous transfer information	If the counterparty is a related party, disclose the previous transfer information	If the counterparty is a related party, disclose the previous transfer information	If the counterparty is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
The Company	Buildings Expansion	2021.10	2,782,500	Not paid as of December 31, 2021	YANKEY ENGINEERING CO., LTD.	None				-	Public Bidding	Extend the buildings	None
The Company	Buildings Expansion	2021.10	4,567,500	Not paid as of December 31, 2021	CHUNG YUANG ELECTRICAL CONSULTING CO., LTD.	None				-	Public Bidding	Extend the buildings	None
The Company	Buildings Expansion	2021.10	1,228,500	Not paid as of December 31, 2021	YANKEY ENGINEERING CO., LTD.	None				-	Public Bidding	Extend the buildings	None
The Company	Buildings Expansion	2021.10	2,940,000	Not paid as of December 31, 2021	ACTER GROUP CORPORATION LIMITED	None				-	Public Bidding	Extend the buildings	None

(vi) Disposal of individual real estate with an amount exceeding the lower of NT$300 million or 20% of the capital stock: None

(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/accounts receivable (payable)	Notes/accounts receivable (payable)
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company	Amtai International Ltd.	The Company's subsidiary	Purchases	2,525,823	% 27	120Days	-	-	(1,059,145)	(41)%
The Company	Amtai International Ltd.	The Company's subsidiary	Sales	(12,340,237)	% (26)	60Days	-	-	3,046,613	33%
The Company	Largan Medical Co. Ltd.	The Company's subsidiary	Purchases	205,930	% 2	30Days	-	-	(4,472)	-%
The Company	Largan (Dongguan) Optronic Ltd.	The Company's subsidiary	Sales	(11,971,036)	% (25)	120Days	-	-	911,070	10%
The Company	Largan Digital Co., Ltd.	The Company's subsidiary	Purchases	873,710	% 9	30Days	-	-	(198,288)	(8)%
The Company	Largan Digital Co., Ltd.	The Company's subsidiary	Sales	(180,459)	% -	30Days	-	-	58,625	1%
Amtai International Ltd.	The Company	The Company's subsidiary	Purchases	12,349,528	% 74	60Days	-	-	(3,046,636)	(88)%
Amtai International Ltd.	The Company	The Company's subsidiary	Sales	(2,519,007)	% (16)	120Days	-	-	1,059,049	34%
Amtai International Ltd.	Largan (Dongguan) Optronic Ltd.	The Company's subsidiary	Purchases	3,819,762	% 23	30Days	-	-	(358,412)	(10)%
Amtai International Ltd.	Largan (Dongguan) Optronic Ltd.	The Company's subsidiary	Sales	(2,871,623)	% (18)	90Days	-	-	76,905	2%
Largan (Dongguan) Optronic Ltd.	Amtai International Ltd.	The Company's subsidiary	Purchases	2,886,855	% 19	90Days	-	-	(76,965)	(7)%
Largan (Dongguan) Optronic Ltd.	Amtai International Ltd.	The Company's subsidiary	Sales	(3,820,447)	% (24)	30Days	-	-	358,765	11%
Largan (Dongguan) Optronic Ltd.	The Company	The Company's subsidiary	Purchases	12,040,209	% 78	120Days	-	-	(890,148)	(80)%

Note ： The nature and the amounts of the purchases and sales transaction of the two parties are different due to their different categories of accounts. Therefore, the above transaction has been adjusted.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Related-party	Nature of relationship	Ending balance (Note2)	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Loss allowance
					Amount	Action taken
The Company	Amtai International Ltd.	The Company's subsidiary	3,084,411	3.87	-	None	1,602,965 (Note1)	-
The Company	Largan (Dongguan) Optronic Ltd.	The Company's subsidiary	911,070	6.35	-	None	837,847 (Note1)	-
Amtai International Ltd.	The Company	The Company's subsidiary	1,059,049	2.90	-	None	260,476 (Note1)	-
Largan (Dongguan) Optronic Ltd.	Amtai International Ltd.	The Company's subsidiary	358,765	11.08	-	None	358,453 (Note1)	-

Note1: Until February 7, 2022.

Note2: Including other receivables.

(ix) Trading in derivative instruments: None

(x) Business relationships and significant intercompany transactions:

No.	Name of company	Name of counter-party	Nature of relationship (Note2)	Intercompany transactions 2021	Intercompany transactions 2021	Intercompany transactions 2021	Intercompany transactions 2021
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0	The Company	Amtai International Ltd.	1	Purchases	2,525,823	The sales prices and payment terms were same as those of sales to third parties.	5%
0	The Company	Amtai International Ltd.	1	Sales	12,340,237	The sales prices and payment terms were same as those of sales to third parties.	26%
0	The Company	Largan (Dongguan) Optronic Ltd.	1	Sales	11,971,036	The sales prices and payment terms were same as those of sales to third parties.	25%
1	Amtai International Ltd.	The Company	2	Purchases	12,349,528	The sales prices and payment terms were same as those of sales to third parties.	26%
1	Amtai International Ltd.	The Company	2	Sales	2,519,007	The sales prices and payment terms were same as those of sales to third parties.	5%
1	Amtai International Ltd.	Largan (Dongguan) Optronic Ltd.	3	Purchases	3,819,762	The sales prices and payment terms were same as those of sales to third parties.	8%
1	Amtai International Ltd.	Largan (Dongguan) Optronic Ltd.	3	Sales	2,871,623	The sales prices and payment terms were same as those of sales to third parties.	6%
2	Largan (Dongguan) Optronic Ltd.	Amtai International Ltd.	3	Purchases	2,886,855	The sales prices and payment terms were same as those of sales to third parties.	6%
2	Largan (Dongguan) Optronic Ltd.	Amtai International Ltd.	3	Sales	3,820,447	The sales prices and payment terms were same as those of sales to third parties.	8%
2	Largan (Dongguan) Optronic Ltd.	The Company	2	Purchases	12,040,209	The sales prices and payment terms were same as those of sales to third parties.	26%

Note1 ： The number filled in as follows:

1) 0 represents the company.

2) Subsidiaries are sorted in a numerical order starting from 1. Note2 ： Transactions labeled as follows:

1) 1 represents the transactions form parent company to subsidiaries.
2) 2 represents the transactions from subsidiaries to parent company.
3) 3 represents the transactions between subsidiaries.

Note3 ： The nature and the amounts of the purchase and sales transaction of the two parties are different due to their different categories of accounts. Therefore, the above transaction has been adjusted and offset in the consolidated financial statements.

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees:

The following is the information on investees (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	High balance during the year	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value	Percentage of ownership
The Company	Largan Digital Co., Ltd.	Taichung, Taiwan	Manufacturing of image capture device`、`image reader`、`camera and player etc.	411,359	411,359	26,636	% 49.37	397,619	% 49.37	204,792	156,719	The Company's subsidiary
The Company	Largan (Hong Kong) Ltd.	Hong Kong	Investment	658,555	658,555	31,100	% 100	319,701	% 100	665	665	The Company's subsidiary
The Company	Astro International Ltd.	Samoa	Investment	247,104	247,104	7,600	% 100	13,437,799	% 100	1,062,501	937,260	The Company's subsidiary
The Company	Largan Industrial Optics Co., Ltd.	Taichung, Taiwan	Manufacturing of Optical Instruments	300,000	43,000	30,000	% 100	283,560	% 100	(7,318)	(7,318)	The Company's subsidiary
The Company	Largan Health AI-Tech Co., Ltd.	Taipei, Taiwan	Sales of medical equipment	26,400	8,800	2,640	% 88	14,743	% 88	(8,466)	(7,450)	The Company's subsidiary
Largan Digital Co., Ltd.	Largan Medical Co. Ltd.	Taichung, Taiwan	Manufacturing of Optical Instruments`、` Medical and Photo instruments sale etc.	428,252	428,252	40,497	% 40.5	436,019	% 40.5	199,144	80,653	The Company's subsidiary
Largan Digital Co., Ltd.	Alpha Holding Inc.	Samoa	Investment	118,415	118,415	3,700	% 100	29,466	% 100	(87)	(87)	The Company's subsidiary
Astro International Ltd.	Net International Trading Ltd.	British Virgin Islands	Investment	756,599	756,599	24,300	% 100	8,165,086	% 100	592,534	592,534	The Company's subsidiary
Astro International Ltd.	Amtai International Ltd.	Samoa	Sales of Optical part etc.	50,600	50,600	1,500	% 100	5,989,553	% 100	463,934	470,917	The Company's subsidiary
Astro International Ltd.	Largan Health Technology Inc.	Samoa	Investment	110,898	110,898	1,476	% 12	26,850	% 12	(500)	(60)	The Company's subsidiary
Largan Industrial Optics Co., Ltd.	Fang Yuan Co., Ltd.	Taichung, Taiwan	Investment	29,800	29,800	2,980	% 100	18,174	% 100	(2,619)	(2,619)	The Company's subsidiary
Largan Medical Co. Ltd.	Beta International Ltd.	Samoa	investment	120,334	120,334	3,700	% 100	64,916	% 100	(187)	(187)	The Company's subsidiary
Alpha Holding Inc.	Largan Health Technology Inc.	Samoa	investment	110,898	110,898	1,476	% 12	26,850	% 12	(500)	(60)	The Company's subsidiary
Beta International Ltd.	Largan Health Technology Inc.	Samoa	investment	110,898	110,898	3,936	% 32	62,300	% 32	(500)	(160)	The Company's subsidiary
Largan Health Technology Inc.	Dynadx Corporation	U.S.A	Development of the software	12,150	12,010	11,081	% 100	4,205	% 100	(349)	(349)	The Company's subsidiary
Largan Health Technology Inc.	Largan Health Technology Co., Ltd.	Taichung, Taiwan	Sales of medical equipment	45,797	45,797	801	% 100	2,218	% 100	(591)	(591)	The Company's subsidiary
Largan Health AI-Tech Co., Ltd.	Charis Health Co., Ltd.	New Taipei City, Taiwan	Sales of medical equipment	4,900	-	490	% 98	4,146	% 98	(770)	(754)	The Company's subsidiary

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Information on investment in mainland China:

(i) The names of investees in Mainland China, their main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of capital surplus	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2021	Net income (losses) of the investee	Percentage of ownership	High balance during the year	Investment income (losses)	Book value	Accumulated remittance of earnings in currentperiod
					Outflow	Inflow				Percentage of ownership
Largan (Dongguan) Optronic Ltd.	Production and sales of camera lenses, scanner lens optoelectroni c devices, viewing windows, digital electronic cameras	HK$ 178,076	Note 1(a)	HK$ 85,986 US$ 7,474	-	-	HK$ 85,986 US$ 7,474	RMB$ 115,406	100%	100%	NT$ 500,658	NT$ 4,655,536	-
NEO (Shanghai) Medical Technology Co., Ltd.	Technical development and technical services in the field of medical device technology	RMB$ -	Note 1(b)	-	-	-	-	RMB$ (782)	-%	9.80%	NT$ (331)	NT$ -	-

(ii) Limitation on investment in Mainland China:

td. the field of medical device technology itation on investment in Mainland China:
Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
NT$650,445 (HK$85,986 and US$12,474)	NT$795,654 (HK$85,986 and US$17,720)	NT$85,043,833

Note 1(a): Indirectly investment in Mainland China through an existing company registered in the third region.

Note 1(b): Directly investment in Mainland China through investment company which uses the equity method.

Note 2: Since Suzhou Largan had been liquidated, the cumulative investment amount remitted from Taiwan, including the Company’s indirect investment in Suzhou Largan of US$5,000 thousand through Net International Trading Ltd., has yet to be repatriated before the year end of 2021.
Note 3: The liquidation process of NEO (Shanghai) Medical Technology Co., Ltd. had been completed on December 31, 2021.
(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in the “ Information on significant transactions” and “ Business relationships and significant intercompany transactions”.

(d) Major shareholders:

Major shareholders:
Shareholder’s Name	Shares	Percentage
Mao Yu Commemorate Co., Ltd.	18,910,616	% 14.09
Shih-ching, Chen	6,756,831	% 5.03

(Continued)

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information

(a) General information

The Group has only one reportable segment which is optical lens segment. The optical lens segment engages mainly in the designing, manufacturing and selling of lens for perspective mirror, camera, single binoculars, microscope and scanner.

The profit or loss of the reportable segment of the Group includes depreciation, income tax expense, any extraordinary activity and other material non-cash items.

Accounting policies for the operating segments correspond to those stated in note 4. The profit after tax of the operating segment of the Group is measured by earnings after taxes and as the basis for performance measurement.

(b) The Group's operating segment information:

The information on the divisional profit and loss, divisional assets and divisional liabilities of the Group is consistent with the financial statements. Please refer to the consolidated balance sheet and consolidated statements of comprehensive income for details.

(c) Production information

Since the main industrial department of Group is the optical lens department, and its operating income, operating interests and the identifiable assets account for more than 90% of operating income and total assets, therefore, the Group is classified as a single product.

(d) Geographical information

In presenting information on the basis of geography, segment revenue is based on the geographic location of customers and segment assets are based on the geographical location of the assets.

Revenue from the external customers:

Geographical information China Vietnam Korea Japan Other countries	2021 $ 20,494,791 9,626,103 9,581,816 4,888,473 2,371,219 $ 46,962,402	2020
		32,405,079 6,301,395 7,158,829 8,327,699 1,751,487
		55,944,489

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Non-current assets:

Geographical information Taiwan China Samoa	December 31, 2021 $ 37,239,898 208,796 26,850 $ 37,475,544	December 31, 2020
		35,290,296 245,421 27,678
		35,563,395

Non-current assets include property, plant and equipment, right-of-use assets, intangible assets, and other assets, excluding financial instruments and deferred tax assets.

(e) Major customers’ information

Customer 653021 643006 Total Customer 653003 623045 623020 Total	2021	2021
	Amount % $ 7,852,296 17 5,796,143 12 $ 13,648,439 29 2020 Amount % $ 8,147,679 15 8,145,645 15 6,940,779 12 $ 23,234,103 42	%
		17 12
		29
		%
		15 15 12
		42

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LARGAN — Annual Report 2021

52244_rns_2021-10-28_02f14949-556b-43b3-97d2-6d942476384c.pdf

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

Table of contents

Representation Letter

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Inventory valuation

Description of key audit matter:

Other Matter

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

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

KPMG

Notes to Readers

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Consolidated Statements of Changes in Equity For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) LARGAN PRECISION CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(1) Company history

(2) Approval date and procedures of the consolidated financial statements:

(3) New standards, amendments and interpretations adopted:

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(a) Statement of compliance

(b) Basis of preparation

(c) Basis of consolidation

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Foreign currency

(i) Foreign currency transaction

(ii) Foreign operations

(e) Classification of current and non-current assets and liabilities

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(f) Cash and cash equivalents

(g) Financial instruments

(i) Financial assets

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Business model assessment

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

7) Derecognition of financial assets

1) Classification of debt or equity

2) Equity instrument

3) Treasury shares

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Financial liabilities

5) Derecognition of financial liabilities

6) Offsetting of financial assets and liabilities

(h) Inventories

(i) Property, plant and equipment

(i) Recognition and measurement

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Leases

(i) As a lessee

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(k) Intangible assets

(ii) Subsequent expenditure

LARGAN PRECISION CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Amortization

(l) Impairment of non-financial assets

(m) Provisions

LARGAN Annual Report 2021