Lien Hwa Industrial Holdings Corporation (Original name: Lien Hwa Industrial Corporation)

Parent Company Only Financial Statements and Independent Auditor's Report December 31, 2021 and 2020

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

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Independent Auditors’ Report

To the Board of Directors and Shareholders of Lien Hwa Industrial Holdings Corporation:

Opinion

We have audited the balance sheet of Lien Hwa Industrial Holdings Corporation (Original name: Lien Hwa Industrial Corporation) as at December 31, 2021 and 2020, and the comprehensive income statement, the statement of changes in equity and the cash flow statement, and the notes to parent company only financial statements (including the summary of significant accounting policies) for the year ended December 31, 2021 and 2020.

In our opinion, all material disclosures of the parent company only financial statements mentioned above were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Firms, and presented a fair view of the financial position of Lien Hwa Industrial Holdings Corporation as at December 31, 2021 and 2020, and the business performance and cash flow for the year ended December 31, 2021 and 2020.

Basis for opinion

We have conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing standards. Our responsibility to the standards will be explained in the paragraph of auditor’s responsibilities when auditing the parent company only financial statements. All relevant independent personnel subject to the CPA professional ethics within the firm remain independent from the Lien Hwa Industrial Holdings Corporation and implement responsibilities regulated in the ethics. We believe we have obtained sufficient appropriate audit evidence to serve as the basis for the audit opinion.

Key audit matters

Key audit matters are the most important matters that we audit in the 2021 parent company only financial statements of Lien Hwa Industrial Holdings Corporation based on our professional judgment. All relevant matters were audited during the audit of the parent company only financial statements and the formulation of the audit opinions. We will not express our opinions on those matters separately. The key audit matters that we determine shall be listed on the audit report include: Assessment of investment under equity method

Regarding the accounting policies for the investment assessment under equity method, please see note 4(7) and (8) to the Parent Company Only Financial Statements; for the shareholding in the profit of the affiliated companies and joint ventures under the equity method, please see see note 6(4) to the Parent Company Only Financial Statements.

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Description of the key audit matters:

Lien Hwa Industrial Holdings Corporation the main business became general investment. The recognized investment amount under equity method totaled NTD36,793,070 thousand, occupying 80% of Lien Hwa Industrial Holdings Corporation’s total assets. Therefore, the investment under equity method is listed as a matter we need to highly focus on when auditing. Corresponding audit process:

The audit process we perform for the above key audit matters includes: provide audit instructions to and communicate with the audit staff of other component entities; acquire the financial statements of the component entities, perform a check calculation for the correctness of the recognized investment amount under equity method and attributable period and assess whether the management has properly discoursed the investment under equity method.

The responsibility of the management and the governing body for the parent company only financial statements

The management is responsible for preparing the appropriate parent company only financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Firms. Additionally, it is responsible for maintaining the internal control mechanism that is related to and necessary for the preparation of the parent company only financial statements. As a result, it can ensure material misstatement due to fraud or error is not pertained in the parent company only financial statements.

Other than the situation that the management intends to liquidate Lien Hwa Industrial Holdings Corporation or stop the business, or no other approaches can be used except for these two measures, during the preparation of the parent company only financial statements, the responsibility of the management also includes evaluating the going concern capacity of the Lien Hwa Industrial Holdings Corporation, disclosure of relative matters, and adoption of the going concern accounting basis.

The governing body of the Lien Hwa Industrial Holdings Corporation (including the Audit Committee) has the responsibility to supervise the financial reporting procedures.

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Our responsibility for the audit of the parent company only financial statements

The purpose for us to audit the parent company only financial statements is to obtain reasonable assurance that there is no material misstatement due to fraud or error in the parent company only financial statements, and we issue the audit report afterwards. Reasonable assurance means high assurance. Only that the audit work implemented in accordance with the generally accepted auditing standards cannot give the promise that every material misstatement in the parent company only financial statements are found. Misstatement might result from fraud or error. If we can reasonably expect the individual amounts or the total amount in the misstatement would influence the financial decision made by the user of the parent company only financial statements, the misstatement is considered material.

When performing the audit according to the generally accepted auditing standards, we exercise professional judgment and remain skeptical professionally. We also perform the following work:

We identify the material misstatement resulting from fraud or error in the parent company only financial statement and assess its risk. We design and implement appropriate corresponding measures for the assessed risk. We acquire sufficient and appropriate audit evidence to serve as the basis for the audit opinion. Due to the fact that fraud might include collusion, forgery, intended omission, misstatement and violation of internal control, the risk of the misstatement resulting from fraud is higher than that resulting from error.
We acquire necessary understanding of the internal control mechanism that is related to the audit to design appropriate audit process for the situation at the time. The purpose of the knowledge is not expressing opinions to the effectiveness of the internal control mechanism of the Lien Hwa Industrial Holdings Corporation.
We evaluate whether the accounting policies adopted by the management are suitable and whether the accounting estimation as well as relative disclosures are appropriate.
Based on the acquired audit evidence, we decide whether the going concern accounting basis adopted by the management is suitable, whether events that might affect the going concern capacity of Lien Hwa Industrial Holdings Corporation exist, and whether there is major uncertainty. A conclusion will be made afterwards. We believe under the circumstances that there is major uncertainty, a reminder shall be included in the audit report to inform the parent company only financial statements user to pay attention to relative disclosures in the statements. We shall modify the audit opinion when the disclosure is considered improper. Our conclusion is based on the audit evidence acquired as of the date of the audit report. Future events or circumstances might still result in the fact that Lien Hwa Industrial Holdings Corporation no longer has the going concern capacity.
We evaluate the overall statements, structures and contents of the parent company only financial statements (including relative notes) and see whether the statements appropriately state relevant transactions and events.

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We examine the financial information of invested company under the equity method to acquire sufficient and appropriate audit evidence for expressing opinions in the parent company only financial statements. We are responsible to guide, supervise and implement the audit. In addition, we are responsible for the formulation of opinions for Lien Hwa Industrial Holdings Corporation. We communicate with the governing body on the scope and time of the audit as well as the

significant findings (including significant deficiencies of the internal control mechanism identified during the audit process).

We have issued a declaration of independence to the governing body, which assured that all relevant personnel within the CPA firm had complied with ethical rules of the CPA profession. Besides, we mention the relation or situation that may compromise the CPA's independence (including relevant preventive measures) to the governing body.

After communicating the above matters with the governing body, we decide the key audit matters in the 2021 parent company only financial report of Lien Hwa Industrial Holdings Corporation. We clearly state all above matters in the audit report, unless the law prohibits us to publicly disclose certain matters, or under rare circumstances we decide not to include certain matters in the audit report since we can reasonably expect the resulting negative impact is greater than the public interest they bring.

The engagement partners on the audit resulting in this independent auditors’report are Swimming Hsu and Linda Chiang

KPMG

Taipei, Taiwan (Republic of China) March 9, 2022

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The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China.

Accordingly, the accompanying parent company only financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

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Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Parent Company Only Balance Sheet

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalent (note 6(1)) 1206 Other receivables (note 6(3)) 1220 Current tax assets 1470 Other current assets Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (note 6(2)) 1550 Investments accounted for using equity method (note 6(4)) 1760 Investment property, net (note 6(5)) 1975 Net defined benefit asset, non-current (note 6(9)) 1990 Other non-current assets, others (note 6(10) and 8) Total assets	December 31, 2021 Amount % $ 136,631 - 387 - 5,331 - 297 - 142,646 - 9,203,017 20 36,793,070 80 3,395 - 4,941 - 2,674 - 46,007,097 100 $ 46,149,743 100	December 31, 2020 Amount % $ 138,569 - 617 - 4,887 - 579 - 144,652 - 6,577,693 18 31,093,720 82 3,395 - 5,136 - 2,671 - 37,682,615 100 - $ 37,827,267 100 Liabilities and equity Current liabilities: 2100 Current borrowings (note 6(6) and 7) 2110 Short-term notes and bills payable (note 6(7)) 2200 Other payables (note 7) 2230 Current tax liabilities Non-current liabilities: 2540 Non-current portion of non-current borrowings (note 6(8)) 2551 Provision for employee benefit liability – non-current 2600 Other non-current liabilities (note 7) Total liabilities Equity:(note 6(11)) 3110 Common shares 3200 Capital surplus 3300 Retained earnings 3400 Other equities 3500 Treasury stock Total equity Total liabilities and equity	December 31,	2021
			Amount $ 4,600,000 799,876 55,944 1,470	%
			5,457,290	12 4,652,541 12
			1,100,000 862 71,934	2 1,300,000 4 - 858 - - 71,935 -
			1,172,796	2 1,372,793 4
			6,630,086	14 6,025,334 16
			14,096,481 1,084,644 13,363,288 11,160,007 (184,763)	31 12,814,983 34 2 856,544 3 29 12,556,851 33 24 5,758,318 15 - (184,763) -
			39,519,657	86 31,801,933 84
			$ 46,149,743	100 $ 37,827,267 100

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

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Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation)

Parent Company Only 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)

2021	% 100	2020	% 100
Amount $ 1,662,452		Amount 1,055,797
53,400 -	3 -	45,308 (37)	4 -
53,400	3	45,271	4
1,609,052	97	1,010,526	96
145 329,550 5,675 (52,535) 2,169,592	- 20 - (3) 131	829 267,758 12,340 (53,663) 1,870,229	- 25 1 (5) 177
2,452,427	148	2,097,493	198
4,061,479 (27,664)	245 (2)	3,108,019 9,289	294 1
4,089,143	247	3,098,730	293
(40) 1,831,638 3,877,573 -	- 110 233 -	1,988 945,670 2,256,566 -	- 90 214 -
5,709,171	343	3,204,224	304
(40,361) (89,431) -	(2) (5) -	116,743 62,608 -	11 6 -
(129,792)	(7)	179,351	17
5,579,379	336	3,383,575	321
$ 9,668,522	583	6,482,305	614
$	2.92		2.21
$	2.92		2.21

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

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Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Parent Company Only Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Share capital Common stock share capital Additional paid-in capital $ 11,047,399 765,121 - - - -	Legal reserve	Retained earnings
	3,059,406 - -
- -	-	- 3,091,989 179,351 3,210,965 - 6,482,305
- - - - 1,767,584 - - 80,984 - 9,516 - 923	411,656 - - - - -	- (411,656) - - - - - (1,767,584) - - - (1,767,584) - (1,767,584) - - - - - 126,272 - (126,675) - 80,581 - - - - - 9,516 - (2,196) - - - (1,273)
12,814,983 856,544 - - - -	3,471,062 - -	141,843 8,943,946 (205,582) 5,963,900 (184,763) 31,801,933 - 4,089,143 - - - 4,089,143 - (3,857) (129,792) 5,713,028 - 5,579,379
- -	-	- 4,085,286 (129,792) 5,713,028 - 9,668,522
- - - - 1,281,498 - - (35,818) 247 - 11,728 - (24) 251,967 - -	321,606 - - - - - -	- (321,606) - - - - - (2,178,547) - - - (2,178,547) - (1,281,498) - - - - - 181,327 - (181,568) - (36,059) - 247 - - - - - 11,728 - - - - - (24) (110) 251,857 - (21) - 21 - -
$ 14,096,481 1,084,644	3,792,668	141,843 9,428,777 (335,374) 11,495,381 (184,763) 39,519,657

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

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Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Parent Company Only Statement of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flow from operating activities: Net income before tax Adjustments: Income/expenses Reversal gain from estimate credit loss Interest expense Interest income Dividend income Shareholding in the profit of the subsidiaries, affiliated companies and joint ventures under the equity method Income/expenses Changes in operating activities related assets and liabilities: Net changes in assets relating to operating activities: Accounts receivable Other receivable Other current assets Net defined benefit assets Net changes in assets relating to operating activities Net changes in liabilities relating to operating activities: Accounts payable Other payable Reserve for liabilities Other current liabilities Net changes in liabilities relating to operating activities Changes in operating activities related assets and liabilities Adjustments Cash inflow (outflow) from operating activities Interest received Dividend received Interest paid Returned income tax (paid) Net cash inflow from operating activities	2021 $ 4,061,479 - 52,535 (145) (329,550) (3,832,044)	2020 3,108,019 (37) 53,663 (829) (267,758) (2,926,026)
	(4,109,204)	(3,140,987)
	- 230 282 155	8,561 116,375 6,094 130
	667	131,160
	- 3,074 4 -	(8,558) (8,158) 94 (56)
	3,078	(16,678)
	3,745	114,482
	(4,105,459)	(3,026,505)
	(43,980) 145 2,186,512 (52,343) 28,687	81,514 829 2,617,433 (54,401) (27,224)
	2,119,021	2,618,151

(Continued)

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Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Parent Company Only Statement of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flow from investing activities: Acquisition of financial assets measured at fair values through other comprehensive profit or loss Refunds from decapitalization of financial assets measured at fair values through other comprehensive profit or loss Acquisition of investments under the equity method Proceeds from disposal of investments accounted for using equity method Proceeds from capital reduction of investments under the equity method Decrease in other receivable Net cash outflow from investing activities Cash flow from financing activities: Increase (decrease)in short-term loans Increase in short-term notes payable Borrowing of long-term loan Retirement of long-term loans Decrease in other payable-related parties Cash dividend distribution Demerger decrease Net cash outflow from financing activities Current cash and cash equivalents increase (decrease) Opening balance of cash and cash equivalents Closing balance of cash and cash equivalents	2021 $ (818,619) 24,933 - 14 251,000 -	2020 - 6,600 (901,398) - 416,208 1,500
	(542,672)	(477,090)
	800,000 13 1,700,000 (1,900,000) - (2,178,547) 247	(450,000) 199,921 800,000 (400,000) (500,000) (1,767,584) (3,395)
	(1,578,287)	(2,121,058)
	(1,938) 138,569	20,003 118,566
	$ 136,631	138,569

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

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

For the years ended December 31, 2021 and 2020

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

I. Company profile

Lien Hwa Industrial Holdings Corporation (Original name: Lien Hwa Industrial Corporation Hereinafter referred to as “the Company”.) was approved by the Ministry of Economic Affairs and founded in July, 1955. The Company merged with China Chemical Corporation on December 1, 2002. To become more competitive and improve the business performance, the Company performed organizational reconstructing and established a professional breakdown system. In the shareholder’s meeting on June 25, 2019, it was resolved that September 1, 2019 was the base date of company demerger. The flour business and the rental business were split in the form of surviving spin-off and transferred to the subsidiaries, Lien Hwa Milling Corporation and Lien Hwa Property Development Corporation, respectively. After the demerger and transformation, the main business became general investment. And was registered at 6F., No. 44, Sec. 1, Chengde Rd., Datong Dist., Taipei City.

II. Financial report approval date and procedures

The parent company only financial statements were approved and published by the Board of Directors on March 9, 2022.

III. Application of new standards, amendments and interpretations

(1) We have adopted the new standards, amendments and interpretations approved by the Financial Supervisory Commission.

The company has applied the following amended IFRS since January 1, 2021, and its application of such amended IFRS shall have little chance leading to material impacts in the parent company only financial statements.

“
‧ Amendments to IFRS No. 4 Extension of the Temporary Exemption From Applying IFRS 9 ”
“
‧ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, Interest Rate Benchmark Reform - Stage 2 ”

The company has applied the following amended IFRS since April 1, 2021, and its application of such amended IFRS shall have little chance leading to material impacts in the parent company only financial statements.

“
‧ Amendments to IFRS 16, Covid-19-Related Rent Concessions beyond June 30, 2021 ”
(2) Effect when the Company has yet to adopt the IFRSs approved by the FSC.

The company evaluated that the application of the following amended IFRS since

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

January 1, 2022 shall have little chance leading to material impacts in the parent company only financial statements.

‧ Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use”
‧ Amendments to IAS 37, “Onerous Contracts - Cost of Fulfilling a Contract”
‧ IFRS 2018-2020 Annual Improvement
‧ Amendments to IFRS 3 “Reference to the Conceptual Framework”
(3) New and amended standards and interpretations not yet recognized by FSC.

IFRSs that have been released and amended by the International Accounting Standards Board (hereinafter referred to as the “IASB”) but have not yet been approved by the FSC as critical to the company are listed as follows:

New or amended standard Amendments to IFRS 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”	Contents of the amendments The amended provisions are intended to improve the consistency in the application of the standards to help an enterprise identify the debt for which the date of repayment is uncertain or whether other liabilities should be stated as current (the current portion, or might be the current portion) or noncurrent. The amended provisions also clarify the classification requirements about the debts which an enterprise is likely to settle through conversion of the debts to equity. The amended provisions are intended to narrow the scope of recognition exemption. When the initial recognition of a transaction generates the equal taxable and deductible temporary difference, the recognition exemption shall not apply any longer.	Effective date of IASB's announcement
		January 1, 2023 January 1, 2023

The company was currently evaluating how the above standards and interpretations would affect its financial position and business performance. Further impacts will be disclosed once the evaluation is completed.

The company expected that the following other new and amended IFRSs that have not yet been approved shall have little chance leading to material impacts in the financial statements.

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

‧ Amendment to IFRS 10 and IAS 28, “The Assets Sales or Purchase between Investors and Their Affiliates or Joint Ventures”
‧ IFRS 17, “Insurance Contract, and amendments to IFRS 17
‧ Amendments to IAS 1, “Disclosure of Accounting Policies”
‧ Amendments to IAS 8, “Definition of Accounting Estimates”

IV. Summary of Significant Accounting Policies

The summary of the significant accounting policies adopted by the parent company only financial statements is described as follows. The following accounting policies have been applied during the presentation period of the parent company only financial statements.

(I) Statement of compliance

The parent company only financial statements were prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

(II) Basis for preparation
Basis for measurement

In addition to the following important items in the balance sheet, the parent

company only financial statements were prepared based on the historical cost:

(1) Financial assets measured at fair value through other comprehensive profit or loss;
(2) Net defined benefit liabilities measured at the fair value of pension fund assets with the deduction of the present value of a defined benefit obligation and the ceiling effect described in note 4(11).
Functional currency and presentation currency

Each vehicle of the Company used the currency of the primary economic environment as its functional currency. The parent company only financial statements were prepared in the Company’s functional currency, NT Dollar. All of the financial information presented in NTD should be held presented in NTD 1,000 as the currency unit.

(III) Foreign currency
Transactions in foreign currencies

Foreign currency transactions are converted into the functional currency using exchange rates on the date of transaction. Monetary foreign currency accounts as of the end of the reporting period (referred to as the reporting date) are converted into the functional currency using exchange rates on the reporting date.

The foreign currency non-monetary item measured at fair value is converted into functional currency in accordance with the exchange rate on the valuation date. The foreign currency non-monetary item valued at historical cost is converted in

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

accordance with the exchange rates on the transaction date.

The foreign currency exchange difference generated from conversion shall be recognized in profit and loss. But under the circumstances below, it shall be recognized in other comprehensive income.

(1) Equity instrument designated to be measured at fair value through other comprehensive income;
(2) Financial liabilities designated as hedges of foreign institution’s net investment are within the effective hedge scope; or
(3) Qualified cash flow hedge is within the effective hedge scope.
Foreign operating agency

Assets and liabilities of foreign operations, including the goodwill and fair value adjustment generated at the time of acquisition, shall be converted into the presentation currency of the parent company only financial statements on the reporting date. Income and expenses are converted into presentation currency of the parent company only financial statements at the average exchange rate in the current period, and the exchange different generated therefor shall be stated as other comprehensive profit or loss.

When the disposal of a foreign operation causing a loss of control, loss of joint control, or significant influence, the cumulative exchange difference related to the foreign operation is entirely reclassified as profit or loss. If the disposal involves any subsidiary of the foreign operations, the relevant accumulated exchange difference shall be reclassified into the non-controlling interests on a pro rata basis. If the disposal involves any affiliate or joint venture of the foreign operations, the relevant accumulated exchange difference shall be reclassified into income or loss on a pro rata basis.

If no repayment program is defined with respect to monetary item receivable or payable of the foreign operations and it is impossible to settle in the foreseeable future, the foreign currency exchange gain or loss generated therefor shall be held as a part of the net investment of the foreign operations and recognized as other comprehensive profit or loss.

(IV) Classification of assets and liabilities as current and non-current

Assets that meet any of the following criteria are classified as current assets; assets other than the current assets are classified as non-current assets:

Assets expected to be realized, intent to be sold or consumed over the normal operating cycles;
Assets held primarily for the trading purpose;
Assets expected to be realized within 12 months after the reporting period; or

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Assets in cash or cash equivalents, except for those that are used for an exchange or to settle a liability, or otherwise remain restricted in more than 12 months after the reporting period.

Liabilities that meet any of the following criteria are classified as current liabilities;

liabilities other than current liabilities are classified as non-current liabilities:

Liabilities expected to be settled over the normal operating cycles;
Liabilities held primarily for the trading purpose;
Liabilities expected to be settled within 12 months after the reporting period; or
Liabilities whose settlement period may not be unconditionally extended for at least 12 months after the reporting period. Liabilities under the terms that give counterparties the option to repay in the form of equity instruments and without the effect on their classification due to such terms
(V) Cash and cash equivalent

Cash includes cash reserves and current deposit balance. Cash equivalent includes short-term and highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of changes in value. The time deposits that fall into the above definition and are intended to satisfy the short-term cash commitment instead of investment or other purposes shall be stated as cash or cash equivalents.

For the time deposits with an initial maturity date that is within a year intended to satisfy the short-term cash commitment instead of investment or other purposes, they are readily convertible into fixed amounts of cash at any time and subject to an insignificant risk of changes in value. Therefore, they shall be stated as cash or cash equivalents.

(VI) Financial instruments

Accounts receivable and debt securities issued are recognized at time of generation. All other financial assets and financial liabilities are recognized when the Company becomes a contracting party of the terms and conditions of the financial instruments concerned. For the financial assets that are not measured at fair value through profit or loss (excluding accounts receivable that comprises material financial parts) or financial liabilities shall be initially evaluated based on the fair value, plus the directly attributable acquired or issued transaction cost. Accounts receivable that comprises material financial parts shall be initially measured based on the transaction price.

Financial assets

For the financial assets that are purchased or sold in accordance with the general trade practice, and the financial assets that are classified in the same way, the Company processes the purchase and sale in accordance with the trade date accounting.

The financial assets can be classified into the following categories during the

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

initial recognition: financial assets measured at amortized cost and the equity instrument investment measured at fair value through other comprehensive income. When, and only when, the Company changes its business model for managing financial assets, it must reclassify all affected financial assets from the first day of the reporting period.

(1) Financial assets measured at amortized cost

The financial asset that meets the following criteria and is not designated to be measured at fair value through profit and loss shall be measured at amortized cost:

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

The above assets are measured at initial recognition value plus or minus, and the accumulated amortization is calculated with the effective interest method. And the amortized cost of the loss allowance is adjusted before the measurement. The interest revenue, foreign currency exchange gain or loss and impairment are recognized in profit or loss. During derecognition, the profit or loss is recognized in profit or loss.

(2) Financial assets measured at fair values through other comprehensive profit or loss

The debt instrument investment that meets the following criteria and is not designated to be measured at fair value through profit and loss shall be measured at fair value through other comprehensive profit or loss:

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

The Company may, at initial recognition, irrevocably make a choice to recognize the later fair value change of the equity instrument investment held not for transaction in other comprehensive profit or loss. The above choice is made on the basis of the instrument-by-instrument approach.

The debt instrument investment shall be measured at fair value. The interest revenue, foreign currency exchange gain or loss and impairment calculated using the effective interest method are recognized in profit or loss.

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Other net profit or loss is recognized in other comprehensive profit or loss. When derecognizing, the accumulated amount of other comprehensive profit or loss will be reclassified as profit or loss.

The equity instrument investment shall be measured at fair value. Dividend income (excluding obvious recovery of partial investment cost) is recognized in profit or loss. Other net profit or loss is recognized in other comprehensive profit or loss and will not be reclassified as profit or loss.

Dividend income of the equity investment will be recognized on the day when the Company has the right to collect the dividend income (usually the ex-dividend date).

(3) Impairment of financial assets

The Company recognizes the expected credit losses of the financial assets measured at amortized cost (including cash and cash equivalents, financial assets measured at amortized cost, notes and accounts receivable, other receivables, guaranteed deposits paid and other financial assets) in loss allowance.

The loss allowance of the following financial asset is measured at 12-month expected credit losses. The other is measured at expected credit losses of the duration:

・ The determined credit risk of the debt security on the reporting date is low; and
・ The credit risk of other debt securities and bank deposits (i.e. the default risk happened throughout the expected duration of the financial instrument) does not increase significantly after the initial recognition.

The loss allowance of accounts receivable is measured at the expected credit losses throughout the duration.

When determining whether the credit risk has increased significantly after the initial recognition, the Company shall take reasonable and supporting materials into consideration (acquired through not too much cost and effort), including qualitative and quantitative data. Besides, the experience of the Company, credit assessment and forward-looking information shall be used for the analysis.

The expected credit loss is the weighted credit loss rate estimation of the financial instrument throughout the expected duration. The credit loss is measured at present value of the all cash shortfalls. The cash shortfall is the difference between the contractual cash flow that the Company can collect and the cash flow the Company expects to collect. The expected credit loss uses the

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

effective rate of the financial asset for discount.

The Company assesses whether credit impairment has occurred on every reporting date based on financial assets measured at amortized cost and debt securities measured at fair value through other comprehensive profit or loss. When one or several matters that will negatively affect the estimated future cash flow of financial assets happen, the credit impairment occurs. The evidence that proves the credit impairment of financial assets includes the following observable information:

・ The borrower or issuer has major financial difficulty;
・ Contract default. Such as overdue or non-performance of payment for over 180 days.
・ Due to economic or contractual reason with respect to the borrower’s
financial difficulty, the Company compromises on things it would not give in.
・ The borrower is likely to file for bankruptcy or proceed with other financial reorganizations; or
・ The active market of financial assets might extinguish due to financial difficulty.

The loss allowance of financial assets measured at amortized cost is deducted from the book value of assets.

When the Company cannot reasonably expect all or parts of the recovered financial assets, it will reduce the total book value of its financial assets directly. For company customers, the Company analyzes the write-off time and amount respectively based on whether it can reasonably expect the recovery. The Company expects the written-off amount will not result in significant reversal. However, the enforcement of the written-off financial assets can still be performed to be in conformity with the procedure for the Company to recover the overdue amount.

(4) Derecognition of financial assets

The Company derecognizes financial assets only when the contractual rights on the cash flow of the assets are terminated, or financial assets are transferred and almost full risk and return of the asset ownership are transferred to other business, or almost full risk and return of the ownership is not transferred or retained and the control of financial assets is not retained.

For the transaction of financial assets transfer signed by the Company, when reserving almost full risk and return of the transferred asset ownership, it is still recognized in the balance sheet.

Financial liabilities and equity instruments

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(1) Classification of liabilities or equity

The obligation and equity instruments issued by the Company are classified into financial liabilities or equities according to definitions of the financial liabilities and equity instruments referred to in an agreement.

(2) Equity transaction

Equity instruments are the contracts that evidence a residual interest in the assets of the Company after deducting all of its liabilities. The equity instruments issued by the Company shall be recognized based on the payment of acquisition less the direct issuing cost.

(3) Treasury stocks

When repurchasing the equity instrument that has been recognized by the Company, the consideration paid for the repurchase (including directly attributable costs) is recognized as equity loss. The share that is repurchased is classified as treasury stock. The collected amount of the sale or repurchase of treasury stocks will be recognized as equity increase. The surplus or deficit result from the transaction will be recognized as additional paid-in capital or retained earnings (if the additional paid-in capital is insufficient for write-off).

(4) Financial liabilities

Financial liabilities can be classified as the liabilities measured at amortized cost or the liabilities measured at fair value through profit or loss. If the financial liabilities are held for trading, are derivatives or designated during initial recognition, the financial liabilities will be measured at fair value through profit or loss. The financial liabilities that are measured at fair value through profit or loss measured at fair value will be recognized in profit or loss. This applies to relative net profit and loss, including any interest payment.

Other financial liabilities are measured at amortized cost using the effective interest method. The interest payment and exchange gain or loss are recognized in profit or loss. Any profit or loss is recognized in profit or loss when derecognizing.

(5) Derecognition of financial liabilities

The Company will have the financial liabilities derecognized when the contractual obligation is performed, discharged, or expired. When the financial liabilities clauses are modified and the cash flow of the modified liabilities has significant difference, the original financial liabilities will be derecognized and the new financial liabilities will be recognized at fair value based on the modified clauses.

When removing financial liabilities from the balance sheet, any differences

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

between the book value and the amount paid or payable (including any non-cash assets transferred and any liabilities assumed as part of the arrangement) are recognized through profit and loss.

(6) Offset of financial assets and liabilities

Financial assets and liabilities may be offset against each other and reported in the balance sheet in net amount only when the Company is entitled to such offset exercisable under laws and intends to settle in net amount, or assets are realized and liabilities are repaid at the same time.

(VII) Investment in Affiliated enterprise

Affiliated enterprise is the one that the Company has significant influence on and no control of joint control over its financial and operating policies.

The equities of the Company in the affiliated enterprise are disposed under equity method. Under the equity method, the original acquisition is recognized at cost and the investment cost includes the transaction cost. The book value of investments in an affiliated enterprise includes the goodwill identified in original investment net of any accumulated impairment loss.

The parent company only financial statements shall include the profit and loss from the invested affiliates recognized subject to the equity ratio and other comprehensive income upon adjustment made in line with the Company’s accounting policy, from the date when the Company has major influence till the date when the Company loses the major influence. When changes to equity irrespective of profit and loss or comprehensive income occur to an affiliated enterprise with no impact on the shareholding ratio of the Company, the Company’s share of such changes in equity will be recognized as additional paid-in capital based on the shareholding ratio.

The unrealized gain and loss deriving from the transactions between the Company and the affiliated enterprise are recognized in the financial statement of the enterprise within the scope of equity of the non-related investor in the affiliated enterprise.

Recognition of the loss stops when the loss of the affiliated enterprise recognized proportionally by the Company equals or exceeds its equity in the affiliated enterprise; also, only recognizes additional loss and related liabilities are recognized only upon occurrence of a legal obligation, constructive obligations, or prepayment made on behalf of the invested company.

The investment is no longer recognized under equity method from the date on which the Company stops the investment in the affiliated enterprise. The preserved equity is measured at fair value. The difference between the fair value and the disposal amount of the preserved equity and the book value of investment on the date on which the equity method is not adopted is recognized as current profit and loss. Where the accounting

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

treatment for the values related to the investment as recognized into other comprehensive income previously is identical with the basis for the affiliated enterprise's direct disposition of related assets or liabilities, namely, when the related assets or liabilities are disposed, the gain or loss recognized in other comprehensive profit or loss previously is to be reclassified as retained earnings. If the ownership interest of the company in the affiliated enterprise decreases but remains under the equity method, the company will follow the method stated above to reclassify and adjust the gain or loss recognized in other comprehensive profit or loss previously relating to such ownership interest decrease based on the decline ratio.

(VIII) Investment in subsidiaries

In compiling the parent company only financial statements, the Company shall evaluate the investee of which the company has dominant control under the equity method. Under the equity method, income of current period and other comprehensive incomes as presented in the parent company only financial statements shall be identical with the income of current period and other comprehensive incomes attributable to the proportion allocated to the parent shareholder as presented in the financial statement prepared on the basis of consolidation. The shareholders’ equity as presented in the parent company only financial statements shall be identical with the parent shareholders’ equity as presented in the financial statement prepared on the basis of consolidation.

If the Company’s equity ownership change in a subsidiary does not result in the loss of control of the subsidiary, it is treated as equity transaction with the shareholders.

(IX) Investment property

Investment property is held for earning rent income or for capital appreciation, or both, rather than for normal business operation, for sale, used in production, for supply of goods or services, or for administrative purposes. Investment property is initially measured at cast and then subsequently measured at cost subtracting by accumulated depreciation and Impairment. The depreciation methods, life duration and residual values of investment property are same as the practice of the property, plant, and equipment.

The gain or loss on disposal of investment property (calculated based on the difference between the net disposal proceeds and the book value of such item) is recognized in profit and loss.

The rent income arising from investment property is recognized as rent income in accordance with the straight-line method over the lease period. Also, the given lease incentives is recognized as part of the overall rent income over the lease period.

(X) Impairment of non-financial assets

The Company shall assess whether the book value of the non-financial assets (except the inventories and deferred tax assets) has any possible sign of impairment. In case of

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

any possible sign of impairment, the company shall estimate the recoverable amount of such asset. Goodwill is tested regularly for impairment every year.

For the purpose of impairment testing, inflow the cash to one of the asset groups that has most cash inflow independent from other individual assets or asset groups as the minimum identifiable asset group. The goodwill acquired in a business consolidation shall be allocated to the consolidated company’s cash-generating units or cash-generating group that is expected to benefit from the synergies of the consolidation effort.

The collectible amount shall be the higher of the fair value of individual asset or cash generation unit less the disposal cost and the value in use. When assessing the value in use, the estimated future cash flow is discounted to current value by pre-tax discount rate. The pre-tax discount rate shall reflect the specific risk assessment of the current market toward the time value of money and the asset or cash generation unit.

If the collectible amount of individual asset or cash generation unit is less than the book value, the amount shall be recognized as impairment loss.

The impairment loss is immediately recognized as income and the book value of each amortized cash-generating unit shall be reduced first, then the book values of other assets shall be reduced based on each book value ratio of each asset in the unit.

The impairment loss on goodwill shall not be reversed. The non-financial assets other than goodwill can only be reversed within the book value of the asset (less depreciation or amortization) without impairment loss recognized in the previous year.

(XI) Employee benefits
Defined contribution plan

The obligation of defined contribution plan is recognized as expense during the service period of the employee. The prepaid contribution may be recognized as assets, insofar as it may result in the refunding of cash or the reduction of future payment.

Defined benefit plan

The net obligation of the defined benefit plan by the Company is converted to the present value based on the future benefit earned from the services provided by the employees in the current period or in the past subtracting the fair value of the plan assets.

A qualified actuary using the Projected Unit Credit Method estimates defined benefit obligations each year. When the calculation result may be favorable to the Company, the assets recognized shall be no more than the refund under the plan or the present value of economic benefit to be earned by decrease in the contribution under the plan. The calculation of present value of economic benefit shall take into consideration the minimum funding contribution needed.

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

The re-measurement of net defined benefit liability, including the actuarial income, return on remuneration of planned assets (excluding interest) and any change in the asset cap effect (excluding interest), is immediately recognized in other comprehensive income and accumulated in the retained earnings. The Company determines the net interest expense (income) of the net defined benefit liability (assets) by the net defined benefit liability (assets) and discount rate determined during the start of the reporting period. The net interest expense of the net defined benefit liability and other expenses are recognized as income.

When the plan is modified or reduced, the benefit variance generated in relation to the previous service cost or impaired gain or loss is immediately recognized as income. In the event of settlement of the Company, recognize the profits and loss of settlement of the welfare plan.

Other long-term employee benefits

The net obligation of other long-term employee benefits by the Company is converted to the present value based on the future benefit earned from the services provided by the employees in the current period or in the past. The re-measurement is recognized as income upon occurrence.

Short-term employee benefits

Short-term employee benefit obligation shall be recognized as expense when the service is provided by the employee. If the Company has a present statutory or presumed benefit obligation due to the past service provided by employee and such obligation may be estimated reliably, the amount shall be recognized as liabilities.

(XII) Income tax

The income tax consists of current income tax and deferred income tax. The current income tax and deferred income tax shall be recognized in profit or loss, other than the income tax related to combined entities, and items stated into other comprehensive income or stated into equity directly.

The current income tax includes the projected income tax payable or tax refund receivable based on the current taxable income (loss), and the adjustment on income tax payable or tax refund receivable in the previous years. The amount refers to the best estimates of the expected payables or receivables measured on the basis of the statutory tax rate or tax rate substantially enacted on the reporting date.

The deferred income tax is recognized based on the book value of assets and liabilities for the purpose of financial reporting and temporary difference generated from the taxation basis for assets and liabilities. No deferred income tax will be recognized in the case of the temporary difference generated under the following circumstances:

Assets or liabilities recognized initially in the transactions other than combined business, and the accounting profit and taxable income (loss) remain unaffected at

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

the time of transaction.

Taxable temporary difference generated from investment in subsidiaries, affiliates and joint ventures, of which the time of reverse is controllable by the Company and which is not likely to be reversed in the foreseeable future;
Taxable temporary difference generate from the initial recognition of goodwill. The unused taxation loss and unused income tax credit carry-forward and deductible temporary difference shall be stated as deferred income tax assets when the temporary difference is very likely to credit against the future taxable income. Meanwhile, revaluation shall be conducted on each reporting date, so that the related income tax gains may be adjusted or decreased when they are not likely to be realized; or when it is very likely that there will be sufficient taxable income afford to reverse the decreased amount.

The deferred income tax is measured at the tax rate prevailing when the temporary difference is reversed, and based on the statutory tax rate or tax rate substantially enacted on the reporting date.

The company will offset deferred income tax assets and deferred income tax liabilities only when the following conditions are satisfied:

When the company is entitled to the right to offset the current income tax assets against the current income tax liabilities; and
The deferred income tax assets and deferred income tax liabilities are related to the subjects on whom the same tax collection authority imposed the income tax;
(1) The same tax collection subject; or
(2) Different subjects, but each subject desires to repay the assets and liabilities on a net basis or concurrently realize and repay the assets and liabilities in each of the following periods in which the major deferred income tax assets are expected to recovered and deferred income tax liabilities are expected to be repaid.

(XIII) EPS

The company lists the basic and diluted earnings per share of the common stock shareholders of the Company. The Company’s basic earnings per share is based on the profit or loss of the Company’s common stock shareholder divided by the weighted average number of outstanding common stock shares of the period. The diluted EPS is calculated upon adjustment of the effect of all potential diluted common stocks based on the income vested in the common stock holders and the number of shares of the weighted average outstanding common stock.

(XIV) Department information

The Company had department information disclosed in the consolidated financial statements; therefore, the department information was not disclosed in the parent company only financial statements.

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

V. Significant accounting judgments, estimations and major sources of assumption uncertainty

When the management has the parent company only financial statements prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, it is necessary to make judgments, estimations, and assumptions that are influential to the accounting policies adopted and the assets, liabilities, and income and expenses amount reported. Actual results may differ from those estimations.

The management continues to review estimations and assumptions. Changes in accounting estimates will be recognized in the period of change and future periods affected.

For the significant judgments involved in accounting policies and the influential information to the amount recognized in the parent company only financial report, please refer to the following notes:

(1) Determining the company's substantial control over an investee. Please refer to the 2021 consolidated financial report.

VI. Description of significant accounting items

(1) Cash and cash equivalent

Demand deposit Time deposit Cash and cash equivalents listed in the Statement of Cash Flows:	December 31, 2021 $ 133,907 2,724	December 31, 2020 105,199 33,370
	$ 136,631	138,569

For the interest rate risk and sensitivity analysis disclosure of the Company’s financial assets and liabilities, please refer to note 6(16).

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

Equity instruments at fair value through other comprehensive income: TWSE(GTSM) domestic listed stocks TWSE(GTSM) domestic unlisted stocks Total	December 31, 2021 $ 8,735,131 467,886	December 31, 2020 6,168,359 409,334
	$ 9,203,017	6,577,693

The dividend income from the aforementioned equity instrument investment measured at fair value through other comprehensive profit or loss were NT$ 329,550 thousand and NT$ 267,758 thousand for the years 2021 and 2020.

The Company has not transferred any accumulated gain and loss of the equity from the undisposed strategic investments in 2021 and 2020.

For the credit risk and market risk information, please refer to note 6(16).

The financial assets stated above has not been used as collaterals.

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(3) Other receivables

Others

December 31, 2021 $ 387	December 31, 2020 617

According to the historical experience, other receivables stated above is estimated to have no expected credit losses generated since there are no defaults throughout the duration, therefore the rate of its expected credit losses is estimated to be zero.

(4) Investment under equity method

The company’s investment under equity method on the reporting date is as follows:

Subsidiary Affiliates	December 31, 2021 $ 20,694,258 16,098,812	December 31, 2020 17,376,999 13,716,721
	$ 36,793,070	31,093,720

1. Subsidiaries

Please refer to the 2021 consolidated financial report.

2. Affiliates

The information about affiliates important to the Company is stated as follows:

Name of Affiliate	Nature of relationship with the Company	Principal business place/country where the company is registered	Proportion of ownership and voting right	Proportion of ownership and voting right
			December 31, 2021 32.47% 50.00%	December 31, 2020
UPC Technology Corp. Linde Lienhwa Industrial Gases Co., Ltd.	The affiliate of the Company which primarily engaged in producing and selling organic acid, acid anhydride and its derivatives, plastic toughener. The affiliate of the Company which primarily engaged in manufacturing liquid and industrial gases such as helium, hydrogen and ethyne.	Taiwan Taiwan		32.88% 50.00%

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

For listed affiliates important to the Company,	its	fair value is stated as follows:	fair value is stated as follows:
	December 31,		December 31,
		2021	2020
UPC Technology Corporation and its subsidiaries	$	9,177,429	8,157,715

The summarized financial information of affiliates important to the Company are shown below. The financial information has adjusted the amounts included in each affiliated enterprise’s consolidated financial statements adopting the IFRSs to reflect the fair value adjustment made by the Company upon the acquisition of the affiliate stock and adjustment made according to the accounting policy differences:

(1) Summarized financial information of the UPC Technology Corporation and its subsidiaries

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net assets attributable to investee Operating revenue Net profit (loss) of continuing department Other consolidated income/loss Total comprehensive income Total comprehensive income attributable to investee The Company’s shares of the affiliated enterprise's net assets at the beginning Total comprehensive income attributable to the Company in current period Dividend acquired from affiliates in current period Book value concerning the Company’s equity in affiliates at the ending	December 31, 2021 $ 22,296,269 31,465,917 (8,647,823) (15,217,626)	December 31, 2020 16,739,193 27,461,444 (5,920,830) (13,325,106)
	$ 29,896,737	24,954,701
	$ 29,896,737	24,954,701
	2021 $ 81,942,428	2020 51,866,839
	$ 2,147,462 3,890,422	2,134,320 2,935,003
	$ 6,037,884	5,069,323
	$ 6,037,884	5,069,323
	$ 8,112,569 1,928,400 (424,881)	6,470,570 1,726,975 (84,976)
	$ 9,616,088	8,112,569

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(2) Summarized financial information of the Linde Lienhwa Industrial Gases Co., Ltd. and its subsidiaries

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net assets attributable to non-controlling equity Net assets attributable to investee Operating revenue Net profit from continuing operations Other consolidated income/loss Total comprehensive income Total comprehensive income attributable to non-controlling equity Total comprehensive income attributable to investee The Company’s shares of the affiliated enterprise's net assets at the beginning Total comprehensive income attributable to the Company in current period Dividend acquired from affiliates in current period Book value concerning the Company’s equity in affiliates at the ending	December 31, 2021 $ 10,846,784 35,499,049 (21,471,154) (5,343,781)	December 31, 2021 $ 10,846,784 35,499,049 (21,471,154) (5,343,781)	December 31, 2020 11,570,239 33,940,701 (23,086,485) (5,861,465)
	$ 19,530,898		16,562,990
	$ 3,518,740		3,443,980
	$ 16,012,158		13,119,010
	2021 $ 29,271,200		2020 25,614,444 4,067,424 176,383
	$ 5,573,453 (24,752)
	$ 5,548,701		4,243,807
	$ 830,653		705,767
	$ 4,718,048		3,538,040
	$ 6,786,172 2,412,930 (885,684)		5,998,488 1,897,955 (1,110,271)
	$ 8,313,418		6,786,172

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

The financial information about the individually unimportant affiliates of the Company under equity method is summarized as follows. The financial information refers to the amounts included into the parent parent company only financial statements of the Company:

Summarized book value of equity in individually unimportant affiliate at the ending Shares attributed to the Company: Net profit from continuing operations Other consolidated income/loss Total comprehensive income	December 31, 2021	December 31, 2020 81,462
	$ 82,061
	2021	2020 7,551 -
	$ 6,283 -
	$ 6,283	7,551

3. Collateral

As of December 31 2021 and 2020, the affiliated enterprise investment of the

Company under the equity method had not been pledged as collateral or were restricted.

(5) Investment property

The changes in the cost and depreciation of the Company’s investment property in 2021 and 2020 are as follows:

Cost or identified cost: Balance, January 1, 2021 Balance, December 31, 2021 Balance, January 1, 2020 Transferred in Balance, December 31, 2020 Depreciation: Balance, January 1, 2021 Balance, December 31, 2021 Balance, January 1, 2020 Balance, December 31, 2020	Self-owned assets
	Land and improvements $ 3,395
	$ 3,395
	$ - 3,395
	$ 3,395
	$- $ -
	$- $ -

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Book value: December 31, 2021 December 31, 2020 Fair value: December 31, 2021 December 31, 2020	$ 3,395 $ 3,395 $ 41,840 $ 39,740

The fair value of investment property is based on the evaluation of the company personnel (with relevant experience and has relevant experience recently in the location and type of the investment property) in compliance with the property evaluation method of the Company. The evaluation technology of the fair value uses Class III for input. The evaluation performs the market value assessment based on the comparison approach of the Regulations on Real Estate Appraisal.

As of December 31 2021 and 2020, the investment property of the Company had not been pledged as collateral or were restricted.

(6) Short-term loan

been pledged as collateral or were restricted. Short-term loan
Unguaranteed bank loans Guaranteed bank loans Total Outstanding quota Interest rate interval	December 31, 2021 $ 2,750,000 1,850,000		December 31, 2020 2,700,000 1,100,000
	$ 4,600,000		3,800,000
	$ 4,415,200		4,577,200
		0.80%~0.81%	0.80%~0.85%

As of December 31 2021 and 2020, the subsidiary-Lien Hwa Property Development Corporation provided property, plant, and equipment and investment property as guarantee for bank loans. Please refer to Note 7 for details.

(7) Short-term notes payable

December 31, 2021 $ 800,000 (124)	December 31, 2021 $ 800,000 (124)	December 31, 2020 800,000 (137)
$ 799,876		799,863
$ 530,000		530,000
	0.30%~0.58%	0.25%~0.60%

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

For loan term within a year, please refer to note 6(15) for relevant interest expense.
(8) Long-term loan

For loan term within a year, please refer to note 6(15) for relevant interest expense. Long-term loan	For loan term within a year, please refer to note 6(15) for relevant interest expense. Long-term loan	For loan term within a year, please refer to note 6(15) for relevant interest expense. Long-term loan	For loan term within a year, please refer to note 6(15) for relevant interest expense. Long-term loan
The details, conditions and terms of the Company’s long-term loan are as follows: December 31, 2021 December 31, 2020 Unguaranteed bank loans $ 1,100,000 1,300,000 Outstanding quota $ 1,900,000 1,600,000 Interest rate interval 0.89%~1.10% 0.98%~1.00% Expiry date 2023.06.28~2023.11.30 2021.11.21~2022.11.30
	$ 1,900,000		1,600,000
		0.89%~1.10% 2023.06.28~2023.11.30	0.98%~1.00% 2021.11.21~2022.11.30

(9) Employee benefits

1. Defined benefit plan

For the present value of the Company’s defined benefit obligations and the fair value of the plan assets, the adjustments are as follows:

Present value of defined benefit obligation The fair value of plan assets Net defined benefit assets	December 31, 2021 $ 1,323 (6,264)	December 31, 2020 1,024 (6,160)
	$ (4,941)	(5,136)

Contributions for defined benefit plans of the Company are appropriated to a dedicated pension fund account opened with Bank of Taiwan. The pension payment to each employee that is subject to the Labor Standards Act is based on the pension point received for the years of service and the average salary six months prior to the retirement.

(1) Composition of plan assets

The pension fund appropriated by the Company in accordance with the Labor Standards Act is managed by the Bureau of Labor Funds, Ministry of Labor (referred to as the “Bureau of Labor Funds” hereinafter). According to the “Guidelines for Labor Pension Fund Safekeeping and Implementation,” the annual minimum yield generated from the use of fund may not be less than the interest income generated from a local bank’s two-year time deposit.

The Company’s labor pension fund account at the Bank of Taiwan is with a balance of NT$6,264 thousand as of the reporting date. For information of the Labor Pension Fund Asset Management, including the fund yield rate and pension asset allocation, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(2) Changes in the present value of defined benefit obligation:

The details of changes in the present value of the Company’s defined

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

benefit obligation in 2021 and 2020 are as follows:

2021 Present value of defined benefit obligation, January 1 $ 1,024 Current service cost and interest 194 Re-measurement of net defined benefit liabilities (assets) `－`Actuarial gains/losses due to change of demography assumption 65 `－`Actuarial gains/losses due to change of financial assumption - `－`Actuarial gains/losses due to empirical adjustment 40 Present value of defined benefit obligation, December 31 $ 1,323	2021 Present value of defined benefit obligation, January 1 $ 1,024 Current service cost and interest 194 Re-measurement of net defined benefit liabilities (assets) `－`Actuarial gains/losses due to change of demography assumption 65 `－`Actuarial gains/losses due to change of financial assumption - `－`Actuarial gains/losses due to empirical adjustment 40 Present value of defined benefit obligation, December 31 $ 1,323	2020 726 170 - 111 17 1,024
	$ 1,323

(3) Changes in the fair value of plan assets

The details of changes in the fair value of the Company’s defined benefit plan assets in 2021 and 2020 are as follows:

Fair value of plan assets, January 1 Interest income Re-measurement of net defined benefit liabilities `－`Return on remuneration of planned assets (excluding current interest) Fair value of plan assets, December 31	2021 $ 6,160 39 65	2020 4,004 40 2,116
	$ 6,264	6,160

(4) Expenses recognized in profit or loss

The details of expenses recognized in profit or loss by the Company in 2021 and 2020 are as follows:

2021 and 2020 are as follows:
Current service cost Net interest of net defined benefit liabilities (assets) Management expense	2021 $ 187 (32)	2020 163 (33)
	$ 155	130
	$ 155	130

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(5) Actuarial assumptions

The Company’s principal actuarial assumptions are as follows:

Discount rate Future raise rate	December 31, 2021 0.63% 2.25%	December 31, 2020
		0.63% 2.25%

The Company does not expect to contribute to the defined benefit plan within one year from the 2021 reporting date.

The weighted average duration of the defined benefit plan is 29.9 years.

(6) Analysis of sensitivity

The influence of changes in the adopted principal actuarial assumptions on the present value of defined benefit obligations in December 31, 2021 and 2020 are as follows:

12.31.2021 Discount rate Future raise rate 12.31.2020 Discount rate Future raise rate		Effect on defined benefit obligation	Effect on defined benefit obligation
	Increase 0.25% $ (95) 100 $ (75) 80		Decrease 0.25%
			102 (93) 82 (74)

Said analysis of sensitivity refers to the analysis of the effect produced by any change of single hypothesis under the circumstance that the other hypotheses remain unchanged. In practice, a lot of changes in hypotheses might be linked with each other. The analysis of sensitivity adopted the same method used for calculation of net benefit liabilities on the balance sheet.

The methods and hypotheses used by the analysis of sensitivity prepared in the current period are identical with those used in the previous period.

2. Defined contribution plan

The Company’s defined contribution plan is based on the Labor Pension Act. An amount equivalent to 6% of the monthly wages is appropriated to the personal labor pension accounts of the Bureau of Labor Insurance. In this plan, after appropriating a fixed amount to the Bureau of Labor Insurance, the Company has no legal or constructive obligation to make additional contribution.

The Company’s pension expense as of 2021 and 2020 under the defined contribution plan amounted to NT$337 thousand and NT$328 thousand, respectively,

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Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

and it has been appropriated to the Bureau of Labor Insurance already.

(10) Income tax
Income tax expenses

The details of income tax expenses of the Company in 2021 and 2020 are as follows:

Income tax expenses in current period Generated in current period Adjustment to previous year's income tax expense Deferred income tax expenses Occurrence and reversal of temporary difference Income tax expenses	2021 $ 2,532 (30,193)	2020 10,989 (1,772) 9,217
	(27,661)
	(3)	72
	$ (27,664)	9,289

The relationship between the Company’s income tax expenses and net income before tax in 2021 and 2020 is adjusted as follows: 2021 2020 Net income before tax $ 4,061,479 3,108,019 Income tax calculated based on the income tax rate of the country the Company operates $ 812,295 621,604 Nontaxable income (622,461) (524,722) Adjustment not attributable to temporary difference (188,775) (94,307) Overestimation in previous period (30,193) (1,772) Imposition on undistributed earnings 1,470 8,486 Total $ (27,664) 9,289	The relationship between the Company’s income tax expenses and net income before tax in 2021 and 2020 is adjusted as follows: 2021 2020 Net income before tax $ 4,061,479 3,108,019 Income tax calculated based on the income tax rate of the country the Company operates $ 812,295 621,604 Nontaxable income (622,461) (524,722) Adjustment not attributable to temporary difference (188,775) (94,307) Overestimation in previous period (30,193) (1,772) Imposition on undistributed earnings 1,470 8,486 Total $ (27,664) 9,289	The relationship between the Company’s income tax expenses and net income before tax in 2021 and 2020 is adjusted as follows: 2021 2020 Net income before tax $ 4,061,479 3,108,019 Income tax calculated based on the income tax rate of the country the Company operates $ 812,295 621,604 Nontaxable income (622,461) (524,722) Adjustment not attributable to temporary difference (188,775) (94,307) Overestimation in previous period (30,193) (1,772) Imposition on undistributed earnings 1,470 8,486 Total $ (27,664) 9,289
	$ 812,295 (622,461) (188,775) (30,193) 1,470	621,604 (524,722) (94,307) (1,772) 8,486
	$ (27,664)	9,289

~34~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

2. Deferred income tax assets and liabilities

(1) Recognized deferred income tax assets and liabilities

The changes in the deferred income tax assets and liabilities in 2021 and 2020 are as follows:

Deferred income tax assets: Balance, January 1, 2021 (Debit) credit profit and loss Balance, December 31, 2021 Balance, January 1, 2020 (Debit) credit profit and loss Balance, December 31, 2020	Others $ - 3 $ 3 $ 72 (72) $ -

3. Authorization of income tax

The income tax returns of the Company’s profit-seeking business have been audited by the tax authorities up to 2019.

(11) Capital and other equity

1. Issuing of common shares

The total authorized capital of the Company were NT$20,000,000 thousand and NT$15,000,000 thousand respectively at NT$10 par value per share, divided into 2,000,000 thousand and 1,500,000 thousand shares respectively, as of December 31, 2021 and 2020. The total authorized capital stated above were common shares and the shares issued were 1,409,648 thousand and 1,281,498 thousand shares, respectively.

The outstanding stock of the Company in 2021 and 2020 is adjusted as follows: (Stated in thousand shares)

Beginning balance, January 1 Capitalization of retained earnings Ending balance, December 31		Common shares 2021 2020 1,281,498 1,104,740 128,150 176,758	Common shares 2021 2020 1,281,498 1,104,740 128,150 176,758
		2021
		1,281,498 128,150
		1,409,648	1,281,498

On July 29, 2021 and June 23, 2020,the company distributed the stock dividends to shareholders from undistributed earnings, NT$1,281,498 thousand and NT$1,767,584 thousand, respectively, per the resolution of the shareholders’ meeting. The capital increase project took effective on September 7, 2021 and July 22, 2020 upon approval of the Financial Supervisory Commission (FSC). The record dates for said capital increase are October 2, 2021 and August 18, 2020, respectively. The related statutory procedures were already completed.

~35~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

2. Capital surplus

The balance of the Company’s capital surplus is as follows:

. Capital surplus The balance of the Company’s capital surplus is as follows:	. Capital surplus The balance of the Company’s capital surplus is as follows:
December 31, 2021 Stock premium $ 289,318 Treasury stock trading 42,169 Difference between consideration and carrying amount of subsidiaries acquired or disposed 899 Changes in the net equity of the affiliated company and joint venture are recognized in accordance with the equity method. 500,044 Changes in ownership interests in subsidiaries 251,967 Others 247 $ 1.084,644		December 31, 2020 289,318 30,441 923 535,862 - - 856,544
	$ 1.084,644

Pursuant to the Company Act, the capital surplus shall be first used to offset losses, then new shares or cash may be allocated based on realized capital surplus subject to shareholding ratio. The term realized capital surplus mentioned above includes the shares issued at premium excessing the par value and the gains in the form of gifts. According to the Regulations Governing the Offering and Issuance of Securities by the Issuer, the capital surplus that can be capitalized annually shall not exceed 10% of the total paid-in capital.

3. Retained earnings

Pursuant to the Company's Articles of Incorporation, if the Company has annual earnings, it shall first pay taxes, make up any losses from past years and then appropriate 10% as legal reserves, unless the legal reserve reaches the amount of the Company’s paid-in capital; if necessary, make provision of special reserves according to the laws and the needs of company operation. The residual earnings shall be added to undistributed earnings at the beginning. The Board of Directors shall draft a motion for the distribution of the residual earnings and submit to the shareholders' meeting for distribution.

The Company is now at the stable growth stage and most of the earnings are from the investees recognized under the equity method. For the sustainable operation and long-term development of the company, the Company shall appropriate 10% of the earnings concluded at year-end as legal reserve and appropriate or reverse the special reserve according to the laws and regulations besides offsetting the accumulated losses and paying all taxes. When distributing the remaining earnings

~36~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

with the accumulated earnings undistributed in the previous year in the form of new shares, the Board of Directors shall propose a motion and submit it to the shareholders’ meeting for approval before distribution. In accordance with Article 240 Paragraph 5 of the Company Act, if the aforementioned earnings are distributed in the form of cash, approval for such distribution should be passed by at least half of the Directors in attendance in a Board meeting attended by no less than two-thirds of all Board members. The results should then be reported during a shareholders' meeting.

The directors' meeting shall consider the financial structure of the Company, future funding demand and profit-seeking conditions to plan the ratio of the earning distribution and shareholder’s cash dividends and the cash dividends shall not be less than 10% of the total dividends.

(1) Legal reserve

When the Company suffers no loss, new shares or cash may be allocated from the legal reserve upon resolution of the shareholders’ meeting, provided that the new shares or cash allocated shall be no more than 25% of the paid-in capital

(2) Special reserve

When first applying the IFRS approved by the FSC, the Company chose to adopt the exemption in IFRS 1 “First-time Adoption of International Financial Reporting Standards”. The unrealized revaluation increment under the shareholder’s equity was stated following the rule of using the fair value on the conversion date as the recognized cost to increase retained earnings. Pursuant to the FSC’s requirements, a same amount of special reserves should be stated. When relative assets were used, disposed or reclassified, the original rate to state the special reserves could be used to reverse the allocation of earnings. The special reserves balances on December 31 in 2021 and 2020 were both NT$141,843 thousand.

According to the FSC’s requirements, when the Company distributes the distributable earnings, for the deduction net amount of other shareholders’ equity stated in the current year and the difference of special reserves balance stated above, the special reserves shall be stated from current profit or loss and the undistributed earnings in the previous period. For the deduction amount of other shareholders’ equity in the previous period, special reserves shall be stated from undistributed earnings in the previous period and shall not be distributed. If the deduction amount of other shareholders’ equity reverses, the earnings of the reversing part can be distributed.

~37~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(3) Distribution of earnings

The Company distributed the cash dividend from 2020 earnings per the resolution of the Board meeting on March 30, 2021. Meanwhile, the other distributions from earnings in 2020 were resolved by the general annual meeting on July 29, 2021, and the distribution of earnings 2019 was also resolved by the general annual meeting on June 23, 2020 as follows:

Dividend distributed to common stock shareholders: Cash Stock Total	2020 Share distribution rate (NT$) Amount $ 1.70 $ 2,178,547 1.00 1,281,498 $ 3,460,045	2020 Share distribution rate (NT$) Amount $ 1.70 $ 2,178,547 1.00 1,281,498 $ 3,460,045	2019 Share distribution rate (NT$) Amount 1.60 1,767,584 1.60 1,767,584 3,535,168	2019 Share distribution rate (NT$) Amount 1.60 1,767,584 1.60 1,767,584 3,535,168
			Share distribution rate (NT$) 1.60 1.60
		$ 3,460,045

The proposal for the distribution in 2021 was drafted in the meeting of the board of directors on March 9, 2022. The dividend amount distributed to the shareholders is as follows. Other than the cash dividend, other items on the earning distribution form need to be recognized by the shareholders:

Dividend distributed to common stock shareholders: Cash Stock Total	2021 Share distribution rate (NT$) Amount $ 1.80 2,537,366 0.50 704,824 $ 3,242,190

4. Treasury stocks

The list of stocks of the Company held by the subsidiaries on December 31, 2021 and 2020 is as follows:

Ledger account Financial assets measured at fair values through other comprehensive profit or loss- current Financial assets measured at fair values through other comprehensive profit or loss- non-current	December 31, 2021 Number of shares (thousand shares) Cost market price 1,907 $ 47,895 118,041 5,682 136,868 351,700	December 31, 2021 Number of shares (thousand shares) Cost market price 1,907 $ 47,895 118,041 5,682 136,868 351,700	December 31, 2021 Number of shares (thousand shares) Cost market price 1,907 $ 47,895 118,041 5,682 136,868 351,700	December 31, Number of shares (thousa nd shares) Cost 1,734 47,895 5,165 136,868	December 31,	December 31,	2020 market price 73,851 220,039
	Number of shares (thousand shares)	Cost				Cost 47,895 136,868
	1,907 5,682	$ 47,895 136,868	118,041 351,700

~38~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Pursuant to the Securities and Exchange Act, the treasury stocks held by the subsidiaries cannot be pledged. And before the transfer, the shareholder’s right is not permitted.

Other equity (net amount after tax)

Balance, January 1, 2021 Exchange difference gathered for the calculation of net assets of foreign operations Share of the exchange difference of subsidiaries and affiliated companies under the equity method Unrealized profit or loss of the financial assets measured at fair values through other comprehensive profit or loss Disposal of equity instrument measured at fair value through other comprehensive income Shareholding in unrealized profit or loss of the financial assets measured at fair values through other comprehensive profit or loss of the subsidiaries, affiliated companies under the equity method Affiliated companies disposal of equity instrument measured at fair value through other comprehensive income Balance, December 31, 2021	Exchange difference in the financial statements of foreign operations $ (205,582) (40,361) (89,431) - - - -	Unrealized profit or loss of the financial assets measured at fair values through other comprehensive profit or loss		Total 5,758,318 (40,361) (89,431) 4,225,971 21 1,487,057 (181,568)
		5,963,900 - - 4,225,971 21 1,487,057 (181,568)
	$ (335,374)	11,495,381		11,160,007

~39~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Balance, January 1, 2020 Exchange difference gathered for the calculation of net assets of foreign operations Share of the exchange difference of subsidiaries and affiliated companies under the equity method Unrealized profit or loss of the financial assets measured at fair values through other comprehensive profit or loss Disposal of equity instrument measured at fair value through other comprehensive income Shareholding in unrealized profit or loss of the financial assets measured at fair values through other comprehensive profit or loss of the subsidiaries, affiliated companies under the equity method Balance, December 31, 2020	Exchange difference in the financial statements of foreign operations $ (384,933) 116,743 62,608 - - -	Unrealized profit or loss of the financial assets measured at fair values through other comprehensive profit or loss		Total 2,494,677 116,743 62,608 945,670 (126,675) 2,265,295
		2,879,610 - - 945,670 (126,675) 2,265,295
	$ (205,582)	5,963,900		5,758,318

(12) EPS

1. Basic earnings per share

Basic earnings per share of the Company in 2021 and 2020 was calculated based on the net profit attributed to common stock shareholders of the Company and weighted average outstanding shares of common stocks. The calculation is as follows:

(1) Net profit attributed to common stock shareholders of the Company

2021 2020 Net income attributable to the Company’s common stock shareholders: $ 4,089,143 3,098,730 Weighted average outstanding shares of common stocks (thousand shares) 2021 2020 Common stocks issued on January 1 1,281,498 1,281,498 Effect of the treasury stock (7,589) (7,589) Effect of the stock dividend 128,150 128,150 Weighted average outstanding shares of common stocks on December 31 1,402,059 1,402,059 Basic earnings per share (NTD) $ 2.92 2.21	2021 $ 4,089,143	2021 $ 4,089,143	2020 3,098,730
		1,402,059	1,402,059
	$ 2.92		2.21

(2) Weighted average outstanding shares of common stocks (thousand shares)

~40~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

2. Diluted earnings per share

Diluted earnings per share in 2021 and 2020 was calculated based on the net profit attributed to common stock shareholders of the Company and weighted average outstanding shares of common stocks with adjusted diluted effect of all potential common stocks. The calculation is as follows:

(1) Net profit attributed to common stock shareholders of the Company (diluted)

2021 2020 Net profit attributed to common stock shareholders of the Company (diluted) $ 4,089,143 3,098,730 2) Weighted average outstanding shares of common stocks (diluted) (thousand shares) 2021 2020 Weighted average outstanding shares of common stocks (basic) 1,402,059 1,402,059 Effect of employee stock compensation 82 94 Balance of weighted average outstanding common shares on December 31 (diluted) 1,402,141 1,402,153 Diluted earnings per share (NTD) $ 2.92 2.21 venue from contracts with customers . Income details 2021 Other departments Main area and market: Taiwan $ 718,362 Others 944,090 $ 1,662,452 Main product: Investment revenue $ 1,662,452 2020 Other departments Main area and market: Taiwan $ 582,955 Others 472,842 $ 1,055,797 Main product: Investment revenue $ 1,055,797	2021 2020 Net profit attributed to common stock shareholders of the Company (diluted) $ 4,089,143 3,098,730 2) Weighted average outstanding shares of common stocks (diluted) (thousand shares) 2021 2020 Weighted average outstanding shares of common stocks (basic) 1,402,059 1,402,059 Effect of employee stock compensation 82 94 Balance of weighted average outstanding common shares on December 31 (diluted) 1,402,141 1,402,153 Diluted earnings per share (NTD) $ 2.92 2.21 venue from contracts with customers . Income details 2021 Other departments Main area and market: Taiwan $ 718,362 Others 944,090 $ 1,662,452 Main product: Investment revenue $ 1,662,452 2020 Other departments Main area and market: Taiwan $ 582,955 Others 472,842 $ 1,055,797 Main product: Investment revenue $ 1,055,797	2021 2020 Net profit attributed to common stock shareholders of the Company (diluted) $ 4,089,143 3,098,730 2) Weighted average outstanding shares of common stocks (diluted) (thousand shares) 2021 2020 Weighted average outstanding shares of common stocks (basic) 1,402,059 1,402,059 Effect of employee stock compensation 82 94 Balance of weighted average outstanding common shares on December 31 (diluted) 1,402,141 1,402,153 Diluted earnings per share (NTD) $ 2.92 2.21 venue from contracts with customers . Income details 2021 Other departments Main area and market: Taiwan $ 718,362 Others 944,090 $ 1,662,452 Main product: Investment revenue $ 1,662,452 2020 Other departments Main area and market: Taiwan $ 582,955 Others 472,842 $ 1,055,797 Main product: Investment revenue $ 1,055,797
	1,402,059 82
	1,402,141
$ 2.92

		$ 718,362 944,090 $ 1,662,452 $ 1,662,452 2020
		Other departments
		$ 582,955 472,842
		$ 1,055,797 $ 1,055,797

(2) Weighted average outstanding shares of common stocks (diluted) (thousand shares)
(13) Revenue from contracts with customers
Income details

~41~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(14) Remunerations to Directors and employees

According to the Articles of Incorporation, annual profits concluded by the Company shall be subject to employee remuneration of no less than 0.1%. In addition, directors’ remuneration may be provided up to 1% of the annual profit. However, profits must first be taken to offset against cumulative losses if any. Employees’ remuneration, as mentioned above, can be paid in shares or cash to employees of affiliated companies that satisfy certain criteria.

The amounts of employee remuneration in 2021 and 2020 were estimated at NT$4,075 thousand and NT$3,120 thousand, respectively. The amounts of director’s remuneration were NTD$9,000 thousand and NT$9,100 thousand, respectively in 2021 and 2020. These estimates were made by applying the Company's before-tax profits with the deduction of the remunerations to employees and directors. Besides, the appropriate percentages for the remuneration to employees and directors were referenced and past experience was referred for the estimation. The operating cost and expense in 2021 and 2020 were stated. All relevant information is available on the Market Observation Post System.

The above amounts of remuneration to employees and Directors were consistent with the amounts reported in the Company’s 2021 and 2020 standalone financial report.

(15) Non-operating revenue and expense

1. Interest income

The Company’s interest income as of 2021 and 2020 is as follows:

Interest income from bank deposits Other interest income	2021 $ 145 -	2020 700 129
	$ 145	829

2. Other revenue

The Company’s other revenues as of 2021 and 2020 were as follow:

Dividend income	2021 $ 329,550	2020 267,758

3. Other profit and loss

The Company’s other profit and loss in 2021 and 2020 were as follow:

Gain on foreign exchange Other revenue Other expense	2021 $ (15) 6,558 (868)	2020 4,457 9,079 (1,196)
	$ 5,675	12,340

~42~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

4. Financial cost

The Company’s financial cost in 2021 and 2020 were as follow:

Interest expense	2021 $ 52,535	2020 53,663

(16) Financial instruments

1. Credit risk

(1) Credit risk exposure

As of December 31, 2021 and 2020, the maximum credit risk exposure amount due to the financial loss caused by undelivered obligation of the counterparty or financial guarantees provided by the Company was mainly from:

‧ The book value of financial assets recognized in the balance sheet; and
‧ The financial guarantee provided by the Company was USD18,500 thousand and NT$4,050,000 thousand, as of December 31, 2021; USD23,500 thousand and NT$3,650,000 thousand as of December 31, 2020.
(2) Concentration of credit risk

The Company’s major potential credit risk was from cash and cash equivalents. The Company’s cash is deposited in different financial institutions, and thus there is no significant concentration of credit risk of cash and cash equivalents.

2. Liquidity risk

The contract maturities of financial liabilities are illustrated in the table below, including the estimated interest but not the impact of net amount agreed.

~43~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Book value	Contractual cash flows	Within 6 months 3,312 16,587 8,788 55,944	6-12 months	1-2years	2-5years	Over 5 years
$ 799,876 3,850,000 1,850,000 55,944	806,632 3,894,362 1,868,038 55,944 6,624,976 806,480 4,047,470 1,110,725 52,678 6,017,353		803,320 2,766,775 1,859,250 -	- 1,111,000 - -	- - - -	- - - -
$ 6,555,820		84,631	5,429,345	1,111,000	-	-
$ 799,863 4,000,000 1,100,000 52,678		3,240 17,335 5,225 52,678	803,240 2,717,335 1,105,500 -	- 1,312,800 - -	- - - -	- - - -
$ 5,952,541		78,478	4,626,075	1,312,800	-	-

The company does not expect the maturity analysis of cash flows will be significantly pre-matured or the actual amount will be significantly different.

Exchange rate risk
(1) Exchange rate risk exposure

The company’s financial assets and liabilities exposed to significant foreign exchange rate risk is as follows:

~44~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Financial assets Monetary items RMB Financial assets Monetary items RMB		December 31, 2021	NTD 2,941 NTD 3,370
	Foreign currency (thousand) $ 677	Exchange rate RMB: NTD = 4.3440 December 31, 2020
	Foreign currency (thousand) $ 770	Exchange rate RMB: NTD = 4.3770

(2) Sensitivity analysis

The exchange rate risk of the monetary account of the Company is mainly from foreign currency denominated cash and cash equivalent as well as accounts receivable. Foreign exchange gain and loss arise from the translation. If the main accounting currency used for preparing the reports on December 31, 2021 and 2020 appreciated or depreciated 1%, under the condition that all other factors stayed unchanged, the net profit after tax would increase NT$24 thousand in 2021 and decreased NT$27 thousand in 2020.

(3) Exchange gain or loss of monetary items

In consideration of multiple functional currency types used in the Company, the information about exchange gain or loss for currency is disclosed by summarization. The foreign currency exchange gain (including the realized and unrealized) was NT$(15) thousand and NT$4,457 thousand in 2021 and 2020.

4. Interest rate analysis

Please refer to the note regarding liquidity risk management for the interest rate risk exposure of the Company’s financial assets and financial liabilities.

The following sensitivity analyzes are based on the interest rate risk exposure of the derivative and non-derivative instruments on the reporting date. The analysis of floating rate liabilities is by assuming the outstanding liability amount on the reporting date stays outstanding the entire year. The rate of change used in the Company’s internal report to the management was the interest rate with an increase or decrease of 0.5%. In addition, the interest rate is assessed within the reasonable and possible range of change by the management.

If interest rate is increased or decreased by 0.5%, with all other variables stayed

~45~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

unchanged, the Company’s net profit would decrease by NT$1,200 thousand in 2021 and increase by NT$2,400 thousand in 2020 due to the change in interest rate made by the Company.

5. Other pricing risk

The impact of the changes in equity price on the reporting date (the analysis of two terms is completed by using the same basis, and assuming all other variables held constant) on the comprehensive profit and loss is as follows:

		2021					2020
		Other				Other
comprehensive			Profit or		comprehensive			Profit or
Stock price on the	profit or loss		loss	after	profit or loss			loss after
reporting date	after tax		tax		after		tax	tax
Increased by 3% $		262,054		-		185,051		-
Decreased by 3%		(262,054)		-	(185,051)			-
. Information about fair value
1. Type and fair value	of	the financial instrument
Financial assets measured at fair				values through other comprehensive
profit or loss by	the	Company is based on repetition and measured at						fair value.
The book value and fair value			of different		financial assets and			liabilities
(including fair value rating information,				but financial instruments not				measured
at fair value but	with a book value close			to the	reasonable amount of			fair value
and leasing liabilities are not required for the disclosure of							fair value	according
to the regulations) are listed down below:
				December 31,		2021
					Fairvalue
		Book value	Class I		Class II		Class III	Total
Financial assets at fair value
through other
comprehensive income
Domestic listed (OTC) stock		$ 8,735,131	8,735,131		-		-	8,735,131
Domestic unlisted (OTC)		467,886	-		-		467,886	467,886
stock
Subtotal		9,203,017	8,735,131		-		467,886	9,203,017
Financial assets measured	at
amortized cost
Cash and cash equivalent		136,631	-		-		-	-
Other receivable		387	-		-		-	-
Guarantee deposits paid		2,671	-		-		-	-
Subtotal		139,689	-		-		-	-
Total		$ 9,342,706	8,735,131		-		467,886	9,203,017

Information about fair value

~46~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

	December 31, 2021	December 31, 2021	December 31, 2021
Book value		Fairvalue		Total - - - -
	Class I - - - -	Class II - - - -	Class III - - - -
$ 6,555,820	-	-	-	-
	December 31, 2020
Book value $ 6,168,359 404,802		Fair value		Total 6,168,359 409,334
	Class I 6,168,359 -	Class II - -	Class III - 404,334
6,577,693	6,168,359	-	409,334	6,577,693
138,569 617 2,671	- - -	- - -	- - -	- - -
141,857	-	-	-	-
$ 6,719,550	6,168,359	-	409,334	6,577,693
	- - - -	- - - -	- - - -	- - - -
$ 5,952,541	-	-	-	-

(2) Evaluation technology of the fair value for the financial instrument measured at fair

value

Non-derivative instruments

If a financial instrument has a quoted price in the active market, the quoted price will be the fair value. The market price announced by the Taiwan Stock Exchange Corporation is the basis for the fair value of the listed (OTC) equity instrument.

If the open quotation of the financial instrument can be timely and frequently acquired from the exchanges, brokers, underwriters, industrial unions, pricing service institutions or competent authorities and the price represents the actual and fair market transaction which occurs frequently, then the financial instrument has a open quotation of the active market. If the conditions mentioned above are not fulfilled, the market is not viewed as a active one.

~47~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Generally, great bid-ask spread, significant increase in bid-ask spread or less trading volume are indexes of inactive market.

If the financial instrument possessed by the Company is in the active market, its fair value is listed by category and attribute below:

The fair value of financial assets and liabilities and listed company (OCT) stocks with standard terms/conditions and traded in the active market shall be decided subject to the market quotation.

Except for the financial instrument in the active market stated above, the fair value of other financial instruments is determined in accordance with the generally accepted pricing models based on the cash flow discount analysis.

If the financial instrument possessed by the Company is in the inactive market, its fair value is listed by category and attribute below:

Equity instrument with no open quotation: the fair value is measured using the cash flow discount model. The main assumption is to apply the expected cash flow estimated by the investee to reflect the time value of money and the risk and rate of return on investment and measure with the discount. When adopting the market approach to measure the fair value, the main assumption uses the quotation of the listed (OCT) company to calculate the P/S ratio (sales multiple) and applies it on the measurement. The discount effect resulting from the lack of market liquidity of the equity security is considered and the estimated number has been adjusted.

(3) Transfer between Class I and Class II

There was no transfer of financial assets from Class II to Class I in 2021 and 2020.

(4) Details of change in Class III

January 1, 2021 Total profit or loss Recognized in other comprehensive income Purchase Refunds from decapitalization December 31, 2021	Measuring at fair values through other comprehensive profit or loss Equity instrument with no open quotation $ 409,334 45,985 37,500 (24,933) $ 467,886

~48~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

January 1, 2020 Total profit or loss Recognized in other comprehensive income Refunds from decapitalization December 1, 2020	Measuring at fair values through other comprehensive profit or loss Equity instrument with no open quotation $ 404,802 11,132 (6,600) $ 409,334

The above total profits or losses are stated in “unrealized valuation gain (loss) of financial assets measured at fair value through other comprehensive profit or loss”. Items related to the assets possessed as of December 31, 2021 and 2020 were as follow:

Total profit or loss Recognized in other comprehensive profit and loss (stated in “unrealized valuation gain (loss) of financial assets measured at fair value through other comprehensive profit or loss”)	2021 $ 45,985	2020 11,132

(5) Quantitative data used on measuring the fair value of the unobservable major input (Class III)

The Company’s item that is measured at fair value and classified as Class III includes financial assets measured at fair value through other comprehensive profit or loss.

Most of the fair value of the Company has only one unobservable major input. Only the equity instrument investment that is not in an active market has multiple unobservable major inputs. The unobservable major inputs of the equity instrument investment that is not in an active market are separated from one another. They are not relevant to each other.

The quantitative data of the unobservable major input are as follow:

~49~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Item Financial assets measured at fair values through other comprehensive profit or loss- equity instrument investment that is not in an active market `〃`	Evaluation technology Discounted cash flow method Net asset value method	Unobservable major input Relationship between the unobservable major input and the fairvalue ‧ Long-term operating revenue growth rate (1.88% on December 31, 2020) ‧ Weighted average cost of capital (4.35% on December 31, 2020) ‧ Discount for lack of marketability (21.48% on December 31, 2020) ‧ Discount for minority interest (28.21% on December 31, 2020) ‧ The higher the weighted average cost of capital, discount for minority interest and discount for lack of marketability are, the lower the fair value is. ‧ The higher the long-term revenue growth rate is, the higher the fair value is. ‧ Non-controlling discount (28.26% on December 31, 2021) ‧ The higher the non-controlling discount is, the lower the fair value is.	Relationship between the unobservable major input and the fairvalue

(6) Fair value measurement of Class III. Fair value is used for the sensitivity analysis of reasonably possible alternative.

The fair value measurement of the Company’s financial instrument is reasonable. If different valuation model or valuation parameter is used, it might result in different valuation results. For the financial instrument classified as Class III, if the valuation parameter has changed, its effect on the current profit and loss or other comprehensive profit or loss is listed as follows:

~50~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Increase or decrease	Change in fair value reflected on other comprehensive profit or loss Advantageo us change Disadvanta geous change $ 900 (900)	Change in fair value reflected on other comprehensive profit or loss Advantageo us change Disadvanta geous change $ 900 (900)
0.5% 0.5% 0.5%
	$ 27,006 567	(18,710) (567)
	$ 27,573	(19,277)

The advantageous and disadvantageous change of the Company is the change in fair value. The fair value is based on unobservable input parameters of different levels and calculated using the evaluation technology. The fair value of the financial instrument might be affected by more than 1 input value. The above table only reflects the effect resulting from a single input value change. The relevance between and variability in the input values are not taken into account.

(17) Financial risk management

1. Overview

The Company is exposed to the following risks due to the use of the financial instruments:

(1) Credit risk

(2) Liquidity risk

(3) Market risk

The Company’s risk exposure information and the Company’s measurement and risk management objectives, policies, and procedures are expressed in this Note. Please refer to the notes to the standalone financial statements for further quantitative disclosure.

~51~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

2. Risk management structure

The board of directors is fully responsible for the establishment and supervision of the Company’s risk management structure. The board of directors has authorized a responsible department as appropriate. The department is responsible for developing and controlling the risk management policies of the Company. Besides, it is required to report its operation to the board of directors regularly.

Internal audit staff will assist the Company’s board of directors to play the supervisory role. These personnel conduct regular and extraordinary review for the risk management control mechanism and procedure. The review result will be reported to the board of directors.

3. Credit risk

Credit risk is the risk of financial losses faced by the company when the counterparty of financial instruments trade is unable to meet its contractual obligations. It is mainly from the Company’s securities investments.

(1) Investment

The credit risk of bank deposits and other financial instruments is measured and monitored by the Finance Department of the Company. The Company’s trading counterparty and performing party are reputable banks, investing financial institutions and corporate organizations with no significant performance concerns. Therefore, there is no significant credit risk.

(2) Guarantee

Pursuant to the Company’s regulations, the subject to whom the Company provides financial guarantees to shall be meet the criteria in the “Guidelines for Endorsements and Guarantees”. The subsidiaries receiving the Company’s endorsement and guarantee as of December 31, 2021 are detailed in note 13.

4. Liquidity risk

Liquidity risk is the risk that the company unable to pay cash or financial asset to settle the financial liability and unable to perform its obligations. The Company managed the liquidity in a manner ensuring that the Company has sufficient working fund to repay matured liabilities under the general and critical circumstances, so as to avoid unacceptable loss or impairment on the Company's goodwill.

The Company ensures that it has sufficient cash to meet the need for expected operating expenditure for 60 days, including performance of financial obligation, but excluding the potential effect which it is impossible to expect reasonably under extreme circumstances such as natural disaster. Besides, the unused loan amounts of the Company as of December 31, 2021 and 2020 were NT$6,845,200 thousand and

~52~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

NT$6,707,200 thousand respectively.

5. Market risk

Market risk is the risk that the market price change, such as exchange rate, interest rate and equity instrument price change, will affect the profit or value of the financial instrument possessed by the Company. The objective of market risk management is to control the market risk exposure within the affordable range and to optimize return on investment.

(1) Exchange rate risk

The Company is exposed to exchange rate risk resulting from the sale, procurement and load transactions measured with a currency other than the functional currency of the Company. The Company uses New Taiwan Dollar as the main functional currency. These transactions are denominated in major currencies of New Taiwan Dollar, Hong Kong Dollar and US Dollar.

(2) Interest rate risk

The rate risk of the Company comes from the floating-rate of the long-term and short-term loans. The change of rate will result in changes in the effective rate of long-term and short-term loans. Therefore, the future cash flow will also change. Relative interest rate analysis is detailed in note 6(16).

(18) Capital management

The policy of the board of directors maintains the basis of unimpaired capital. It helps maintain the confidence of the investor, creditor and market. It also supports future operating development. Capital includes stock, additional paid-in capital, retained earnings, and other equity of the Company. The board of directors controls the return on capital. It also controls the dividend quality of common shares.

The debt to equity ratio on the reporting date is as follows:

December 31, 2021 $ 6,630,086 (136,631)	December 31, 2021 $ 6,630,086 (136,631)	December 31, 2020 6,025,334 (138,569)
$ 6,493,455		5,886,765
$ 39,519,657		31,801,933
	16.43%	18.51%

The company’s capital management method has not been changed as of December 31, 2021.

~53~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(19) Non cash transactions investing/financing activities

Long-term loan Short-term loans Short-term notes payable Total liabilities from financing activities Long-term loan Short-term loans Short-term notes payable Total liabilities from financing activities	January 1, 2021 Cash flow December 31, 2021 $ 1,300,000 (200,000) 1,100,000 3,800,000 800,000 4,600,000 799,863 13 799,876
	$ 5,899,863 600,013 6,499,876
	January 1, 2020 Cash flow December 31, 2020 $ 900,000 400,000 1,300,000 4,250,000 (450,000) 3,800,000 599,942 199,921 799,863
	$ 5,749,942 149,921 5,899,863

~54~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

VII. Transactions with related party

(1) Names of related parties and their relationship with the company

Related parties that have performed transactions with the Company during the period of the parent company only financial statement include:

Name of related party

Relationship with the Company

Hua Cheng Investment Co., Ltd. Subsidiary of the Company Lien Rui Investment Corp. Subsidiary of the Company Jian Foods Incorporation Subsidiary of the Company Oggi Restaurant Group Co., Ltd. Subsidiary of the Company Camel Ring International Company Subsidiary of the Company Fortune Dragon Holding Inc. Subsidiary of the Company Sun Lead International Limited Subsidiary of the Company Pacific Gateway Holdings Inc. Subsidiary of the Company Hifood Co., Ltd. Subsidiary of the Company Yantai Taihwa Food Industrial Co., Ltd. Subsidiary of the Company Hifood(Shanghai) Co., Ltd. Subsidiary of the Company Lien Hwa Milling Corporation Subsidiary of the Company Lien Hwa Property Development Subsidiary of the Company Corporation Lien Hwa Industrial Corp. Subsidiary of the Company MiTAC Inc. Subsidiary of the Company[Mix System Holdings Ltd. ] Subsidiary of the Company[Ho Li Investment Co., Ltd. ] Subsidiary of the Company[MiTAC Hikari Corp. ] Subsidiary of the Company[Mitac Investment China Co., Ltd. ] Subsidiary of the Company[Mitac (Shanghai) Business Management ] Subsidiary of the Company Consulting Co., Ltd.

MiTAC Information Technology Corp.[MiTAC Communication Co., Ltd. ][Claridy Solutions, Inc. ][Samoa Mitac Information Holding Ltd. ][Aidixun Investment Co., Ltd. ][Claridy Solutions (Wuxi), Inc. ][Claridy Solutions (Nanjing), Inc. ][Claridy Smart Solutions (Beijing) Co., ] Ltd.

Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

~55~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(2) Material transactions with related parties

1. Payable accounts-related parties

The Company's payable accounts-related parties are stated as follows:

Title Type	December 31, 2021 December 31, 2020 $ 2,822 3,302
Other payable Subsidiary

2. Loaning of funds to related parties

The Company’ s loaning of funds to the related party is with interest accrued at the average interest rate of short-term loans received from financial institutions in the year of fund appropriation. The loans are unsecured loans and shall not be recognized as impairment loss after assessment. The interest income arising from loaning to related parties amounted to NT$129 thousand for the years 2020, respectively.

3. Loan from related parties

The Company’ s loaning of funds from the related party is with interest accrued at the average interest rate of short-term loans received from financial institutions in the year of fund appropriation. The loans are unsecured loans. The rent income arising from the investment property amounted to NT$ 4,732 thousand as of 2020, respectively.

4. Other

The Company sold factory land to Lienhwa Industrial Gases Co., Ltd. in 1985 and 1998. The sales revenue was NT$71,934 thousand. Since the company is not sold, the company stated the deferred credits as company profits.

5. Endorsement/guarantee

The Company's subsidiary Lien Hwa Property Development Corporation provided property guarantees for the Company's financing loans with an endorsement guarantee amount of NT$ 4,024,390 thousand , the actual moving amount NT$ 2,274,390 thousand on December 31, 2021 and NT$ 1,524,390 thousand on December 31, 2020.

(III) Key management personnel transactions

Remuneration to key management personnel includes the following:

Short-term employee benefits Post-employment benefits Other long-term benefits	2021	2020 18,819 64 13
	$ 21,498 309 3
	$ 21,810	18,896

~56~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

VIII. Pledged Assets

Pledged Assets	Pledged Assets
The book value of the Company’s pledged assets is as follows: Assets name Charged and pledged guarantees December 31, 2021 Guarantee deposits paid $ 2,671		December 31, 2020 2,671
Guarantee deposits paid

IX. Significant contingent liabilities and unrecognized contractual commitments: None.

X. Losses due to major disasters: None.

XI. Materiality after the period:

The company issued the secured domestic common corporate bonds per the resolution of the meeting of the Board of Directors on January 21, 2022. The total issue amount was no more than NT$5 billion. The bonds could be issued in full or in installments, subject to the market condition, at the par value of NT$1 million, with the duration of five years and issued at fixed interest rate. Meanwhile, the Chairman was authorized to make any decision subject to the market condition. A bank guarantee was furnished as the collateral.

XII. Others

(I) Classification of employee benefits, depreciation, depletion and amortization expenses by

function is summarized as follows:

function is summarized	as follows:	as follows:	as follows:
By function By nature	2021			2020
	Classified as operating cost	Classified as operating expense	Total	Classified as operating cost	Classified as operating expense	Total
Employee benefit expense Salary expense Labor and health insurance expense Pension expense Remuneration of Directors Other employee welfare expense Depreciation expense Amortization expense	－－ `－` `－` －－－	30,430 1,355 492 10,028 335 －－	30,430 1,355 492 10,028 335 －－	－－ `－` `－` －－－	22,438 1,086 458 10,120 498 －－	22,438 1,086 458 10,120 498 －－

The information about employees and salary of the Company for the years ended December 31, 2021 and 2020 are as bellow:

~57~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Employees Non-employee directors Average employee benefits (Note1) Average salary Average salary adjustment Remuneration of Supervisor	2021 15	2020 14 7 3,497 3,205 310.37% `－`
	7
	4,076
	3,804
	18.69%
	`－`

Note1 ： Not included Remuneration of Directors.

The company's salary and remuneration policy (including director, manager and staff) are as follows:

(1) Director

In accordance with recommendations rendered by the Remuneration Committee of Lien Hwa Industrial Holdings Corp (thereinafter LHIHC), merit reward and travel allowance for members of the Board of Directors have been approved.

The remuneration amount is in compliance with Article 28 of LHIHC bylaws and shall not exceed one percent of LHIHC’s annual net income when applicable.

The recommendation is deliberated with consideration of multiple indexes, including but not limited to industry-wide remuneration data, time invested and complexity of esponsibilities.

The recommendation is deliberated by the remuneration committee and

reviewed by members of the Board before being presented to the annual general meeting.

(2) Manager

LHIHC evaluates a manager’s merit with consideration of job complexity, quantity of responsibilities, personal performance achievements, internal fairness ratings, operating performance relevant to the position and industry-wide remuneration data. The

recommendation is deliberated by the remuneration committee before being presented in the Board meeting for approval.

The remuneration amount of our managers is in compliance with Article 28 of LHIHC by laws and shall not exceed more than one thousandth of LHIHC’s annual net income when applicable.

(3) Staff

LHIHC evaluates a staff’s merit with consideration of job complexity, quantity of responsibilities, personal performance achievements, internal fairness ratings, operating performance relevant to the position and industry-wide remuneration data. The recommendation is deliberated by the Human Resource Department before being presented to the managers of authority for approval.

~58~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

The remuneration amount of our staff members is in compliance with Article 28 of LHIHC bylaws and shall not exceed more than one thousandth of LHIHC’s annual net income when applicable.

LHIHC also takes staff compliance record with the Code of Conduct, performance evaluation and bonus distribution rules into consideration when recommending relevant awards.

XIII. Supplementary disclosure

(I) Information on material transactions

According to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the company should also disclose the information about material transactions in 2021:

Loaning of funds to others:

Unit: NTD thousand

No.	Lender	Borrowing company	Account titles	Related party	Current maximum amount	Ending balance	Drawdown	Interest rate interval	Nature of loaning of funds (Note 1)	Business transaction amount	Reasons of necessary short-term financing	Amount recognized in loss allowance	Collateral	Collateral	Limit of loans to individual borrowers	Limit of total loans
													Name	Value
0 1 1 1 2 3 4	Lien Hwa Industrial Holdings Corporation Fortune Dragon Holding Inc. `〞` `〞` MiTAC Inc. MiTAC Information Technology Corp. Claridy Solutions, Inc.	Fortune Dragon Holding Inc. Yantai Taihwa Food Industrial Co., Ltd. Hifood Co., Ltd. Hifood(Shanghai) Co., Ltd. MiTAC Information Technology Corp. MiTAC Communication Co., Ltd. MiTAC Communication Co., Ltd.	Other receivable `〞` `〞` `〞` `〞` `〞` `〞`	Yes `〞` `〞` `〞` `〞` `〞` `〞`	285,350 389,340 38,696 14,240 500,000 80,000 20,000	- 221,440 19,376 - 500,000 80,000 -	- 221,440 16,470 - - 10,000 -	- - 0.91% - - 0.98% -	2 2 2 2 2 2 2	- - - - - - -	Working capital `〞` `〞` `〞` `〞` `〞` `〞`	- - - - - - -	- - - - - - -	- - - - - - -	3,951,966 6,533,226 2,613,290 2,613,290 2,436,032 140,656 26,265	7,903,931 9,146,516 9,146,516 9,146,516 4,872,063 281,312 26,265

Note 1: 1. A business associate.

Needs for short-term financing.
Note 2: The limit amount of loans to each borrower shall not exceed 10% of the net value of the recent financial statements audited or reviewed by the CPA, and the total limit of loans shall not exceed 20% of that.

Note 3: If both the borrower and lender are the foreign company that the parent company owns directly or indirectly with 100% of voting rights, the limit amount for the Fortune Dragon Holding Inc. to loan to each borrower and the limit amount of total loans shall not exceed 100% of the net value of the recent financial statements audited or reviewed by the CPA. If the borrower and lender do not meet said criteria, the amount shall not exceed 40%. Said amount loaned shall not exceed 140% in total.

Note 4: The limit amount of loans of MiTAC Inc.to each borrower shall not exceed 10% of the net value of the recent financial statements audited or reviewed by the CPA, and the total limit of loans shall not exceed 20% of that.

Note 5: The limit amount of loans to each borrower and the total limit of loans of the MiTAC Information Technology Corp. shall not exceed 10% of the net value of the recent financial statements audited or reviewed by the CPA, and the total limit of loans shall not exceed 20% of that.

Note 6: The limit amount of loans to each borrower and the total limit of loans of Claridy Solutions, Inc. shall not exceed 40% of the net value of the recent financial statements audited or reviewed by the CPA.

~59~

Lien Hwa Industrial Holdings Corporation

Notes to the Parent Company Only Financial Statements

2. Making endorsements/guarantees for others:

Unit: NTD thousand

No.	Endorsing/guara nteeing company	Endorsed/guaranteed company	Endorsed/guaranteed company	Limit amount of endorsement/ guarantee to a single enterprise	Current maximum endorsement/ guarantee balance	Current endorsement/ guarantee - ending	Actual amount drawn down	Endorsement/ guarantee amount secured with property as collateral	Ratio of the cumulative endorsement/ guarantee amount to the net worth in the most recent financial statements	Maximum endorsements/ guarantees	Endorsement / guarantee made by the parent company for its subsidiaries	Endorsements/ guarantees made by the subsidiaries for its parent company	Endorsement/g uarantee made for the operations in Mainland China
		Company name	Relationship (Note 1)
0 0 0 0 1 2 3 3 4	Lien Hwa Industrial Holdings Corporation `〞` `〞` `〞` Lien Hwa Properties Corporation MiTAC Inc. MiTAC Information Technology Corp. `〞` MiTAC Communicati on Co., Ltd.	Pacific Gateway Holdings Inc. Fortune Dragon Holding Inc. Lien Hwa Milling Foods Corporation Lien Hwa Properties Corporation Lien Hwa Industrial Holdings Corporation MiTAC Information Technology Corp. MiTAC Communication Co., Ltd. Claridy Solutions, Inc. MiTAC Information Technology Corp.	2 2 2 2 3 1 2 2 3	39,519,657 39,519,657 39,519,657 39,519,657 7,081,943 24,360,315 1,406,560 1,406,560 200,000	199,745 470,828 2,950,000 1,100,000 4,024,390 2,649,346 50,000 32,000 11,288	193,760 318,320 2,950,000 1,100,000 4,024,390 2,412,019 50,000 32,000 11,288	- - 1,495,770 75,000 2,274,390 1,187,055 8,299 2,155 -	- - - - 4,024,390 353,009 - - -	0.49% 0.81% 7.46% 2.78% 170.48% 9.90% 3.55% 2.28% 11.81%	39,519,657 39,519,657 39,519,657 39,519,657 7,081,943 24,360,315 1,406,560 1,406,560 200,000	Y Y Y Y N N N N N	N N N N Y N N N N	N N N N N N N N N

Note 1: The relationship between the endorsing/guarantying subject and the endorsed/guaranteed subject is classified into 3 categories as follows: 1. A business associate.

A company that directly and indirectly holds more than 50% of the voting shares.
A company that directly and indirectly holds more than 50% of the voting shares.

Note 2: The total endorsement and guarantee amount made by the Company for others shall not exceed 100% of the net value in the most recent financial statements. The endorsement and guarantee amount made by the Company to a single subsidiary shall not exceed 100% of the net value in the most recent financial statements.

Note 3: The limit of the endorsement and guarantee amount made by Lien Hwa Properties Corporation to a single company and the total limit of endorsement and guarantee shall not exceed 300% of the net value in the most recent financial statements of Lien Hwa Properties Corporation audited or reviewed by the CPA.

Note 4: The limit of the endorsement and guarantee amount made by MiTAC Inc.to a single company and the total limit of endorsement and guarantee shall not exceed 100% of the net value in the most recent financial statements of MiTAC Inc. audited or reviewed by the CPA.

Note 5: The limit of the endorsement and guarantee amount made by MiTAC Information Technology Corp. to a single company and the total limit of endorsement and guarantee shall not exceed 100% of the net value in the most recent financial statements of MiTAC Information Technology Corp. audited or reviewed by the CPA.

Note 6: The limit of the endorsement and guarantee amount made by MiTAC Communication Co., Ltd. to MiTAC Information Technology Corp. as a single company shall not exceed 30% of the net value in the most recent financial statements of MiTAC Information Technology Corp. audited or reviewed by the Manager CPA, or NT$200,000 thousand, and the total limit of endorsement and guarantee shall not exceed NT$200,000 thousand.

~60~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Marketable securities held at yearend (excluding the equity held by invested subsidiaries, affiliated enterprises and joint ventures): Unit: NTD Thousand/ Thousand shares

Company in possession	Type and name of marketable securities	Relationship with the security issuer	Ledger account		Year end	Year end		Remarks
				Number of shares (Number of unit)	Book value	Percentage held	Fair value (Note 1, 3)
Lien Hwa Industrial Holdings Corporation `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` Hua Cheng Investment Co., Ltd. `〞` `〞` `〞` Fortune Dragon Holding Inc. `〞` `〞` `〞` `〞` `〞`	Great Wall Enterprise Co., Ltd. MiTAC Holdings Corp. Synnex Technology International Corp. Pao Long International Co., Ltd. Getac Technology Corp. Taian Insurance Co .,Ltd. China Trade and Development Corp. Formosa Golf and Country Club Corp. Hsin Yu Energy Development Co., Ltd. Harbinger Venture Capital Corp. Harbinger VI Venture Capital Corp. Global Investment Holdings Co. Ltd. Harbinger VII Venture Capital Corp. Shihlien Fine Chemicals Co., Ltd. B Current Impact Investment Inc. Harbinger VIII Venture Capital Corp. Lien Hwa Industrial Holdings Corporation Waffer Technology Corp. Shihlien Fine Chemicals Co., Ltd. Harbinger Venture Management Co., Ltd. Budworth Investment Limited Asia Global Venture Capital Co., Ltd Harbinger Ruyi Venture Limited Asia Global Venture Capital II Co., Ltd Ever Victory Global Limited. eT Capital, L.P.	The Company is the juridical person director of the company The chairman of the company is the one of the Company `〞` - The chairman of the Company is the representative of the juridical person director of the company - - - - The Company is the juridical person chairman of the company - The Company is the juridical person director of the company - The Company is the juridical person director of the company - - The company invests the Company and evaluates it under the equity method. - - - - - - - - -	Financial assets measured at fair values through other comprehensive profit or loss- non-current `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞`	18,107 95,941 59,526 2,365 7,210 921 50 2 6,076 7 2,410 1,907 8,338 35,384 500 11,250 155 2 1 863 30 446 500 159 72,810 -	966,937 3,377,121 3,940,630 48,846 401,597 25,243 1,237 332 - 57 34,349 24,398 127,205 129,120 4,123 121,822 9,599 58 5 16,743 8 23,814 9,223 7,625 2,273,031 117,773	2.12% 7.95% 3.57% 1.57% 1.21% 0.31% 0.08% 0.01% 2.44% 3.35% 9.96% 3.33% 9.39% 13.61% 6.25% 11.57% 0.01% - % - % 19.99% 3.33% 10.00% 14.29% 3.00% 11.76% 10.55%	966,937 3,377,121 3,940,630 48,846 401,597 25,243 1,237 332 - 57 34,349 24,398 127,205 129,120 4,123 121,822 9,599 58 5 16,743 8 23,814 9,223 7,625 2,273,031 117,773	Note 2

~61~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Company in possession	Type and name of marketable securities	Relationship with the security issuer	Ledger account		Year end	Year end		Remarks
				Number of shares (Number of unit)	Book value	Percentage held	Fair value (Note 1, 3)
`〞` `〞` Sun Lead International Limited `〞` MiTAC Inc. `〞`	Acorn Accelerator Fund I, L.P. eT Capital II, L.P. Kelington Group Berhad Kelington Group Berhad-Warrants B Lien Hwa Industrial Holdings Corporation Ares International Corp.	- - - - Parent company The Company is the juridical person director of the company	`〞` `〞` `〞` Financial assets at fair value through profit or loss- noncurrent Financial assets measured at fair values through other comprehensive profit or loss- non-current `〞`	- - 39,635 13,212 5,527 1,486	26,011 33,696 433,242 66,749 342,101 39,390	7.48% 13.16% 6.16% - % 0.39% 3.15%	26,011 33,696 433,242 66,749 342,101 39,390	Note 2
`〞` `〞` `〞` `〞` MiTAC Inc. `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` Mix System Holdings `〞` `〞` Ho Li Investment Co., Ltd.	Synnex Technology International Corp. MiTAC Holdings Corp. EasyCard Investment Holding Co., Ltd. Far Eastern Electronic Toll Collection Co, Ltd. Digital economy limited partnership Harbinger VII Venture Capital Corp. Harbinger III Venture Capital Corp. Harbinger Venture Capital Corp. LienJie II Investment Co., Ltd. Harbinger VIII Venture Capital Corp. ProMOS Technologies Inc. General Motors corporate bond Renaissance Capital CTCI Corporation UUPON Inc. Budworth Investment Limited Dyna comware Harbinger Ruyi II Venture Limited MiTAC Inc.	The chairman of the company is the one of the Company `〞` - The Company is the juridical person director of the company - - The Company is the juridical person director of the company The chairman of the company is the one of the Company - The Company is the juridical person director of the company - - - - The Company is the juridical person director of the company - - - Parent company	`〞` `〞` `〞` `〞` Financial assets measured at fair values through other comprehensive profit or loss- non-current `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞`	260,521 104,431 6,538 27,723 - 8,338 6 19 1,625 7,500 44 500 - 7,593 996 91 21 5 2,382	17,246,494 3,675,974 61,328 226,851 55,414 127,200 125 162 19,765 81,217 - - 100,018 282,460 5,291 23 1,579 35,791 153,008	15.62% 8.66% 6.28% 9.24% 6.29% 9.39% 6.00% 9.50% 16.25% 7.71% 0.10% - % 12.82% 0.99% 15.00% 10.00% 0.97% 16.13% 0.63%	17,246,494 3,675,974 61,328 226,851 55,414 127,200 125 162 19,765 81,217 - - 100,018 282,460 5,291 23 1,579 35,791 153,008	Note 4 Note 5 Note 2

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Lien Hwa Industrial Holdings Corporation

Notes to the Parent Company Only Financial Statements

Company in possession	Type and name of marketable securities	Relationship with the security issuer	Ledger account	Year end	Year end	Year end	Year end	Remarks
				Number of shares (Number of unit)	Book value	Percentage held	Fair value (Note 1, 3)
`〞` `〞` `〞` Ho Li Investment Co., Ltd. `〞` `〞` `〞` `〞` `〞` Shen Tong International Management Consulting Co., Ltd. `〞` Claridy Solutions `（`Wuxi`）`, Inc.	MiTAC Information Technology Corp. Harbinger VI Venture Capital Corp. Far Eastern Electronic Toll Collection Co, Ltd. UPC Technology Corp. Synnex Technology International Corp. Lien Hwa Industrial Holdings Corporation MiTAC Holdings Corp. Getac Technology Corp. Waffer Technology Corp. Mitac (Shanghai) Computer Co., Ltd. Financial products of Shanghai Pudong Development Bank Co., Ltd. Suying Wealth Management Qiyuan Cash No. 1	Fellow subsidiary of the parent company The chairman of the parent company is its chairman The Company is the juristic person director of that company The chairman of the parent company is its chairman `〞` Ultimate parent company The chairman of the parent company is its chairman Invested company of MiTAC Holdings Corporation under the equity method - - - -	`〞` `〞` `〞` Financial assets measured at fair values through other comprehensive profit or loss- current `〞` `〞` `〞` `〞` `〞` Financial assets measured at fair values through other comprehensive profit or loss- non-current Financial assets measured at fair values through profit or loss- current `〞`	- 1,607 5,256 8,467 460 1,907 4,386 5,358 1 - - -	2 23,905 42,993 182,893 30,452 118,041 154,392 298,440 39 3,475 77,627 25,847	- % 6.64% 1.75% 0.63% 0.03% 0.14% 0.36% 0.90% - % 10.00% - % - %	2 23,905 42,993 182,893 30,452 118,041 154,392 298,440 39 3,475 77,627 25,847	Note 2

Note 1: For the TWSE/TPEx-listed Company with a public market price, the closing price on the last transaction date in the accounting period shall apply.

Note 2: The parent company’s stocks possessed by subsidiaries have been deducted from the book value and these stocks were deemed as treasury stocks.

Note 3: The market price listed by the non-TWSE/TPEx-listed company refers to the equity net value. Some of it is listed in the financial statements of the same period that is prepared by the invested company or audited by the CPA.

Note 4: Among the other things, 23,000 thousand shares were pledged to the bank as the collateral to secure the application of MiTAC Information Technology Corp. for the facility under the bank’s project.

Note 5: Among the other things, 1,500 thousand shares were pledged to the bank as the collateral to secure the application of MiTAC Information Technology Corp. for the facility under the bank’s project.

The amount of the accumulated purchase or sale of the same securities is over NT$300

million or 20% of the paid-in capital:

Unit: NTD Thousand/ Thousand shares

Buying/selling company	Type and name of marketable securities	Ledger account	Trading counterpart	Relationship	Beginning of the period	Beginning of the period	Buy	Buy		S	ell		Yearend	Yearend
					Number of shares	Amount	Number of shares	Amount (Note)	Number of shares	Selling price	Book cost	Disposal gain or loss	Number o shares	f Amount
Lien Hwa Industrial Holdings Corporation	Synnex Technology Internationa l Corp.	Equity instrument investment at fair value through other comprehensiv e profit or loss -Non-curr ent	-	Same chairman.	49,893	2,344,977	9,633	1,595,653	-	-	-	-	59,52	6 3,940,630

Note: Including the adjustments for change in the recognized amount.

~63~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Purchase amount of real property that exceeds NTD300 million or 20% of the paid-in capital: None.
Amount for the disposal of real property exceeds NTD300 million or 20% of the paid-in capital: None.
Amount of the purchase from and the sale to related parties exceeds NTD100 million or 20% of the paid-in capital: None.
Amount receivable from related parties exceeds NTD100 million or 20% of the paid-in
capital: None.

Unit: NTD thousand

Stated company of account receivable	Name of the trading counterpart	Relationship	Balance of receivable accounts-rela ted parties	Turnover rate	Overdue accounts-r	receivable elated parties	Subsequent recovered amount of receivable accounts-related parties	Appropriated allowance for bad debt
					Amount	Treatment
Fortune Dragon Holding Inc.	Yantai Taihwa Food Industrial Co., Ltd.	Parent-subsidiary	221,440	-	-		-	-

Engaging in derivative transactions: None.
(2) Information about invested business:

The information about invested business (excluding the invested business in Mainland China) of the company in 2021 is as follows:

Unit: NTD Thousand/ Thousand shares

Name of investment company	Name of invested company	Location	Main business	Original investment amount	Original investment amount	Held at yearend	Held at yearend		Investee income recognized in the current period	Investment ~~i~~ncome recognized in the current period	Remarks
				End of the period	End of last year	Number of shares	Ratio	Book value
Lien Hwa Industrial Holdings Corporation `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞`	UPC Technology Corp. Linde Lienhwa Industrial Gases Co., Ltd. MiTAC Inc. MiTAC Information Technology Corp. Hua Cheng Investment Co., Ltd. Lienhwa United LPG Co., Ltd. Lien Rui Investment Corp. Fortune Dragon Holding Inc. Lien Hwa Milling Foods Corporation	Taipei City `〞` `〞` `〞` `〞` `〞` `〞` B.V.I. Taipei City	Organic acid, acid anhydride and its derivatives, plastic toughener, etc. Production of fluids, nitrogen, hydrogen, acetylene and other industrial gases. General investment Integrated system service, automatic system, applied software design and sale of industrial computer General investment Installation, purchase/sale and technical maintenance of the equipment for propane, butane and the mixture. General investment `〞` Manufacturing and sale of flour	3,142,213 400,000 731,636 1,289,599 476,000 62,253 523,500 3,737,817 913,563	3,142,213 400,000 731,636 1,289,599 476,000 62,253 523,500 3,737,817 1,601,000	424,881 1,886 133,470 65,900 71,500 6,848 17,335 120,155 74,999	32.47% 50.00% 35.89% 43.93% 100.00% 24.04% 100.00% 100.00% 74.999%	9,616,088 6,400,663 8,769,075 649,876 1,045,958 82,061 77,910 6,533,226 1,256,566	2,147,462 2,917,454 1,016,193 15,229 41,959 26,131 (15,198) 944,090 215,786	704,582 1,458,727 345,625 6,746 41,720 6,283 (15,194) 944,090 197,877	Subsidiary Notes 1 and 2 Subsidiary Note 3 Subsidiary Note 1 Subsidiary Note 3 Subsidiary Subsidiary Note 3

~64~

Lien Hwa Industrial Holdings Corporation

Notes to the Parent Company Only Financial Statements

Name of investment company	Name of invested company	Location	Main business	Original investment amount	Original investment amount	Held at yearend	Held at yearend		Investee income recognized in the current period	Investment ~~i~~ncome recognized in the current period	Remarks
				End of the period	End of last year	Number of shares	Ratio	Book value
`〞` `〞` Hua Cheng Investment Co., Ltd. `〞` `〞` `〞` `〞` `〞` `〞` `〞` Lien Rui Investment Corp. `〞` `〞` `〞` `〞` Fortune Dragon Holding Inc. `〞` `〞` `〞` MiTAC Inc. `〞` MiTAC Inc. `〞` Mix System Holdings Ltd. Ho Li Investment Co., Ltd.	Lien Hwa Properties Corporation Lien Hwa Industrial Co., Ltd. UPC Technology Corp. MiTAC Inc. MiTAC Information Technology Corp. Jian Foods Incorporation Camel Ring International Company Lien Yung Investment Corp. Tung Da Investment Co., Ltd. Lien Hwa Milling Foods Corporation Jian Foods Incorporation Oggi Restaurant Group Co., Ltd. New Plus Food & Beverage Co., Ltd. Farmdirect Corp. Camel Ring International Company Pacific Gateway Holdings Inc. Boc Lienhwa (B.V.I) Holding Co., Ltd. Hifood Co., Ltd. Sun Lead International Limited Mix System Holdings Ltd. Ho Li Investment Co., Ltd. MiTAC Hikari Corp. MiTAC Information Technology Corp. Mitac Investment China Co. Ltd. Lien Yung Investment Corp.	`〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` Taichung City Taoyuan City Taipei City B.V.I. `〞` Cayman Islands B.V.I. `〞` Taipei City Taipei City `〞` B.V.I. Taipei City	Rental and leasing business General investment Organic acid, acid anhydride and its derivatives, plastic toughener, etc. General investment Integrated system service, automatic system, applied software design and sale of industrial computer Wholesaling and retailing business `〞` General investment `〞` Manufacturing and sale of flour Wholesaling and retailing business Restaurant business `〞` Wholesaling and retailing business `〞` General investment `〞` `〞` `〞` `〞` `〞` System integration service Integrated system service, automatic system, applied software design and sale of industrial computer General investment `〞`	2,201,000 1,000 54,933 84,354 140,128 10 10 87,969 72,699 14 381,000 35,000 99,995 13,500 6,465 1,186,793 1,744 470,630 73,525 268,342 564,035 30,000 367,032 166,065 87,969	2,201,000 1,000 54,933 84,354 140,128 10 10 87,969 72,699 - 381,000 35,000 99,995 13,500 6,465 1,186,793 1,744 470,630 73,525 268,342 564,035 30,000 345,938 166,065 87,969	200,100 100 4,732 7,262 9,004 - 1 9,217 4,848 1 8,189 3,500 7,000 600 642 39,461 50 14,150 3 8,610 82,234 3,000 36,605 5,450 9,217	100.00% 100.00% 0.36% 1.95% 6.00% - % 0.16% 19.99% 19.99% 0.001% 95.86% 100.00% 50.00% 31.58% 99.84% 100.00% 50.00% 65.81% 100.00% 100.00% 100.00% 50.00% 24.40% 100.00% 19.99%	2,360,647 1,000 107,628 501,753 88,597 - 11 159,880 167,511 17 43,437 26,444 - - 6,975 595,362 1,912,755 153,650 520,472 413,979 1,263,030 1,967 343,236 236,071 159,916	141,588 - 2,147,462 1,016,193 15,229 (13,129) 257 35,561 31,882 215,786 (13,129) (2,771) (1,781) (3,449) 257 (21,758) 1,826,439 14,386 70,281 9,837 46,947 (1,660) 15,375 5,779 35,561	141,588 - 7,945 19,439 914 - - 7,109 6,373 1 (12,586) (2,771) - - 257 (21,758) 883,804 9,468 70,281 9,837 44,222 (830) 197 5,779 7,110	Subsidiary `〞` Subsidiary Note 2 Subsidiary `〞` `〞` Subsidiary `〞` `〞` Subsidiary `〞` Subsidiary `〞` `〞` Subsidiary Note 1 Subsidiary `〞` `〞`

~65~

Lien Hwa Industrial Holdings Corporation

Notes to the Parent Company Only Financial Statements

==> picture [459 x 254] intentionally omitted <==

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

investment company Name of Name of invested company Location Main business Original investment amount End of the period End of last year Number of shares Held at yearend Ratio Book value recognized in the Investee income current period i ncome recognizedin the current Investment period Remarks
〞 Tung Da 〞〞 72,691 72,691 4,848 19.99% 167,510 31,882 6,373
Investment Co.,
Ltd.
MiTAC MiTAC 〞 Sale, rental and 201,312 201,312 20,000 100.00% 95,594 20,156 20,156Subsidiary
Information Communication maintenance of
Technology Co., Ltd. telephone
Corp. switching systems
and data
communication
products,
communication
system project
contracting
〞 Claridy Hsinchu Consulting for and 50,000 50,000 5,000 100.00% 65,662 7,611 7,611 〞
Solutions, Inc. City development of
libraries and
information
systems
〞 Samoa Mitac American General investment 166,915 166,915 5,395 100.00% 127,579 11,438 11,438 〞
Information Samoa
Holding Ltd.
Samoa Aidixun 〞〞 163,512 163,512 8,165 100.00% 126,684 11,778 11,778 〞
Mitac Investment
Information Co.,Ltd.
Holding
Ltd.
----- End of picture text -----

Note 1: The parent company’s stocks possessed by subsidiaries have been deducted from the book value and these stocks were deemed as treasury stocks.
Note 2: The variance refers to the amortization of the difference in equity net value.
Note 3: The variance between the book value and the investment income recognized in the current period and invested company refers to the side stream transaction.
(3) Information about the investment in China:
Relative information about the invested business in Mainland China:

Unit: NTD thousand

Name of the invested company in China (Note 2)	Main business	Paid-in capital amount	Investment method (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of current period	Investment amount remitted or recovered in the current period	Investment amount remitted or recovered in the current period	Accumulated investment amount remitted from Taiwan at the end of current period	Investee income recognized in the current period	Direct and indirect shareholding of the Company	Investment income recognized in the current period	Investment book value at year end	Investment revenue received in the current period
					Remittance	Collection
Yantai Taihwa Food Industrial Co., Ltd. (II).1 Hifood(Shanghai) Co., Ltd. (II).2 Fujian Fuhua Gases Co., Ltd. (II).2 and 3 BOCLH Industrial Gases(Shanghai)Co ., Ltd (II). 2 and 3 Lien Xiong Investment (Shanghai) Co., Ltd. (II). 2 and 3 Shengpin Precision Gas (Shanghai) Co., Ltd. (II). 2 and 3 Lien Hwa Precision Gas (Chengdu) Co., Ltd. (II). 2 and 3 Lien Hwa Precision Gas (Dalian) Co., Ltd. (II). 2 and 3 Linde Lienhwa Gases (Wuhan) Co., Ltd. (II).2 and 3 Linde Lienhwa Gases (Chengdu) Co., Ltd. (II).2 and 3	Manufacturing and sale of flour and flour processed food Rental and leasing business Research and development of industrial gases, development and technical service of electronics industrial gases Mainly in the business of gas production General investment Mainly in the business of gas production `〞` `〞` `〞` `〞`	1,232,224 656,700 824,911 580,438 5,725,631 729,024 501,638 478,312 629,663 718,696	(II) (II) (II) (II) (II) (II) (II) (II) (II) (II)	1,232,224 408,880 - 1,744 - - - - - -	- - - - - - - - - -	- - - - - - - - - -	1,232,224 408,880 - 1,744 - - - - - -	(21,290) 14,989 238,243 104,086 1,055,486 235,244 13,531 130,499 427,329 152,251	100.00% 65.81% 25.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%	(21,290) 9,864 61,102 52,043 527,743 117,622 6,765 65,249 213,664 76,125	589,568 164,259 244,522 248,906 3,600,580 492,384 259,980 342,615 525,513 429,455	- - - - - - - - - -

~66~

Lien Hwa Industrial Holdings Corporation

Notes to the Parent Company Only Financial Statements

Name of the invested company in China (Note 2)	Main business	Paid-in capital amount	Investment method (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of current period	Investment amount remitted or recovered in the current period	Investment amount remitted or recovered in the current period	Accumulated investment amount remitted from Taiwan at the end of current period	Investee income recognized in the current period	Direct and indirect shareholding of the Company	Investment income recognized in the current period	Investment book value at year end	Investment revenue received in the current period
					Remittance	Collection
Mitac (Shanghai) Business Management Consulting Co., Ltd. (II).2 Claridy Solutions (Wuxi), Inc. (II).2 Claridy Solutions (Nanjing), Inc. (II).2 Claridy Smart Solutions (Beijing) Co., Ltd. (II).2	Business management consulting, business information consulting and system integration services Research and development of Radio Frequency Identification (RFID) technology; production and sale of the products Software research and development and software design Technology development, technology promotion, technology transfer, technology consulting, technology service and library management contract service	82,898 86,695 94,046 -	(II) (II) (II) (II)	31,708 16,441 60,800 15,998	- 15,998 - -	- - - 15,998	31,708 32,439 60,800 -	4,847 8,894 1,776 2,463	100.00% 100.00% 100.00% - %	4,847 8,894 1,776 2,463	140,636 90,018 44,896 -	- - - -

2. Information related to ceiling on investment in Mainland China

Company name	Accumulated amount of remittance from Taiwan to Mainland China at the end of period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs	Ceiling on investment in Mainland China imposed by the Investment Commission of the Ministry of Economic Affairs (Note 3)
The Company MiTAC Inc. MiTAC Information Technology Corp.	3,720,683 49,114 161,191	3,879,253 189,212 161,191	23,711,794 14,616,189 843,936

Note 1: Investment is divided into the following three categories:

(I) Engaged in direct investment in Mainland China;
(II) Investment in Mainland China through a third country company.

(III) Others.

Note 2: In the column of the investment income recognized in the current period:

(I) It should be specified if the investment is in preparation without any investment gain or loss resulted.

(II) The base for the recognition of investment income can be classified into three categories and it shall be specified.
(1) The financial statements audited and attested by the CPA Firms of the parent company in Taiwan;

(2) Other- Self-prepared financial statement

(3) The investment income is recognized based on the shareholding of that company as held by Fortune Dragon Holding Inc. indirectly. Note 3: According to the regulation in the “Principle of Review on Investment and Technical Cooperation in Mainland China” issued by the Investment Commission on August 29, 2008, 60% of the net value is used for the calculation.

Note 4: The numbers in said table are stated in New Taiwan Dollars.

Note 5: The Company invested in Quan Ye Trading Co., Ltd indirectly. The original investment cost was US$1,000 thousand. The equity was disposed of and US$486 thousand of the investment amount was collected and settled in May 2017. It was reported to the Investment Commission of the Ministry of Economic Affairs for future reference and cancellation as of December 31, 2021. After the capital is remitted back to Taiwan, the amount will be deducted from the used amount of the approved limit in Mainland China.

Note 6: Claridy Smart Solutions (Beijing) Co., Ltd. has extinguished upon consolidation into Claridy Solutions (Wuxi), Inc. on November 30, 2021.

3. Material transactions: None.

(4) Information on major shareholders:

Shares Name of major shareholder	No. of shares held	Shareholding percentage
UPC TechnologyCorp.	136,439,678	9.68%
Yih Yuan Investment Corp.	128,887,247	9.14%

~67~

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Note: The major shareholders in this table are shareholders holding more than 5% of the common and preference shares that have completed delivery of non-physical registration (including treasury shares) on the last business day of December 2021 calculated by the Taiwan Depository & Clearing Corporation. However, the share capital recorded in the Company’s financial report and the number of shares actually delivered by the company without physical registration may differ due to calculation

(XIV) Department information

Please refer to the year 2021 consolidated financial statements.

~68~

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) Statement of Cash and Cash Equivalents

December 31, 2021 (In Thousands of New Taiwan Dollars)

Item	Description	Amount 133,690 217 2,724
Cash in bank Time deposits Total	Demand deposits Foriegn deposits (CNY 627 thousand)
		$ 136,631

~69~

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Statement of Changes in Financial Assets Measured at fair Value through Other

－ Comprehensive Income Non-current For the year ended December 31, 2021 (In Thousands of New Taiwan Dollars)

Name of financial instrument	Beginning Balance	Beginning Balance	Addition	Addition	Decrease	Decrease	Ending	balance
	Shares (in thousand)	Fair value	Shares (in thousand)	Amount	Shares (in thousand)	Amount	Shares (in thousand)	Fair value
Great Wall Enterprise Co., Ltd. MiTAC Holdings Corp. SYNNEX Technology International Corp. Pao Long International Co., Ltd. Getac Technology Corp. Taian Insurance Co .,Ltd. China Trade and Development Corp. Formosa Golf and Country Club Corp. Hsin Yu Energy Development Co., Ltd. Harbinger Venture Capital Corp. Harbinger VI Venture Capital Corp. Harbinger VII Venture Capital Corp. Global Investment Holdings Co. Ltd. Shihlien Fine Chemicals Co., Ltd. B Current Impact Investment Corp. Harbinger VIII Venture Capital Corp.	17,580 $ 893,066 85,942 2,535,287 49,893 2,344,977 2,365 42,460 7,210 352,569 921 22,743 50 1,212 2 321 6,076 - 7 59 2,809 36,211 10,000 151,648 2,340 29,924 35,384 89,077 500 4,517 7,500 73,622 $ 6,577,693		527 9,999 9,633 - - - - - - - - - - - - 3,750	73,871 841,834 1,595,653 6,386 49,028 2,500 25 11 - - - - - 40,043 - 48,200	- - - - - - - - - - 399 1,662 433 - - -	- - - - - - - - - 2 1,862 24,443 5,526 - 394 -	18,107 95,941 59,526 2,365 7,210 921 50 2 6,076 7 2,410 8,338 1,907 35,384 500 11,250	966,937 3,377,121 3,940,630 48,846 401,597 25,243 1,237 332 - 57 34,349 127,205 24,398 129,120 4,123 121,822 9,203,017
		$ 6,577,693		2,657,551		32,227

~70~

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) Statement of Changes in Investments Accounted for Using the Equity Method

For the year ended December 31, 2021

(In Thousands of New Taiwan Dollars)

Name of investee	Beginning Balance	Beginning Balance	Addition	Addition	Decrease Ending balance		Market Value or Net Assets Value Unit price Total amount	Market Value or Net Assets Value Unit price Total amount	Note
	Shares (in thousand) Amount		Shares (in thousand) Amount		Shares (in thousand) Amount Shares (in thousand) Percentage of ownership	Amount
Equity Method`－`Listed Company UPC Technology Corp. Equity Method`－`Unlisted company Linde Lienhwa Industrial Gases Co., Ltd. MiTAC Inc. MiTAC Information Technology Corp. Hua Cheng Investment Co., Ltd. Lienhwa United LPG Co., Ltd. Lien Rui Investment Corp. Fortune Dragon Holding Inc. Lien Hwa Milling Corp. Lien Hwa Property Development Corp. Lien Hwa Industrial Corp. Total	424,881 $ 8,112,569 1,886 5,522,690 125,710 6,595,097 65,900 641,759 71,500 833,452 6,848 81,462 17,335 93,104 120,155 5,255,503 100,100 1,712,040 200,100 2,245,043 100 1,001 $ 31,093,720		- 1,503,519 - 877,973 7,760 2,173,978 - 8,117 - 212,506 - 599 - - - 1,277,723 - - - 115,604 - - 6,170,019		- - 424,881 32.47% - - 1,886 50.00% - - 133,470 35.89% - - 65,900 43.93% - - 71,500 100.00% - - 6,848 24.04% - 15,194 17,335 100.00% - - 120,155 100.00% 25,101 455,474 74,999 75.00% - - 200,100 100.00% - 1 100 100.00% 470,669	9,616,088 6,400,663 8,769,075 649,876 1,045,958 82,061 77,910 6,533,226 1,256,566 2,360,647 1,000	21.60 9,177,429 3,393.78 6,400,663 65.50 8,742,917 9.38 617,902 14.76 1,055,557 11.98 82,061 4.49 77,904 54.37 6,533,226 16.74 1,255,415 11.80 2,360,647 10.00 1,000 36,304,721		Note1,2,3 Note1,4 Note3 Note4 Note4
		$ 31,093,720		6,170,019		36,793,070		36,304,721

Note1: The difference between the closing balance and the net equity value is the difference due to goodwill.

Note2: The difference between the closing balance and the net equity value is the difference arising from the amortization of the difference in equity net value..

Note3: The difference between the balance at the end of the period and the net equity value is because the book value has been deducted from the parent company's stock held by the subsidiary and treated as treasury stock. Note4: The difference between the closing balance and the net equity value is due to side stream transactions.

~71~

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) Statement of Short-term loan

December 31, 2021 (In Thousands of New Taiwan Dollars)

Type	Description	Ending balance	Contract Period	Range of interest rate Loan commitment	Collateral None Note	Note
Unsecured loans Secured loan Total		$ 2,750,000 1,850,000	2021.11.26~2022.06.01 2021.12.03~2022.01.14	0.80%~0.81% 3,050,000 0.80% 3,700,000
		$ 4,600,000

Note ： The subsidiary Lien Hwa Properties Corporation provided property, plant, and equipment and investment property as guarantee for bank loans. Please refer to Note 7 for details.

~72~

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) Statement of Short-term notes payable

December 31, 2021 (In Thousands of New Taiwan Dollars)

Amount

Item Bills Finance Companies Term of contract Term of Interest rate	Issue amount $ 800,000	Unamortized discount on commercial promissory notes payable	Book value Note 799,876
		(124)

Item	Description	Amount $ 25,024 23,197 2,822 4,901
Other payables Total	Payables for salary and bonus Dividend payable Related party Other
		$ 55,944

~73~

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) Statement of Long-term loan

December 31, 2021 (In Thousands of New Taiwan Dollars)

Creditor Description	Amount Term of contract Interest rate	Collateral Note `-` Repayment due to loan contract.
A、B、C Bank	$ 1,100,000 2021.06.28-2023.11.30 0.89%~1.10%

~74~

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation) Statement of Administrative Expenses

For the year ended December 31, 2021 (In Thousands of New Taiwan Dollars)

Item	Description	Amount $ 32,612 10,028 4,513 6,247	Note
Salary and wages expense Remuneration of Directors Services expense Other expense Total			The balance of each item does not exceed 5%.
		$ 53,400

~75~

AI assistant

LHIHC — Audit Report / Information 2021

51754_rns_2021-11-12_e2c7c883-dc76-49a4-828a-5d76f616c977.pdf

Lien Hwa Industrial Holdings Corporation (Original name: Lien Hwa Industrial Corporation)

Independent Auditors’ Report

Opinion

Basis for opinion

Key audit matters

The responsibility of the management and the governing body for the parent company only financial statements

Our responsibility for the audit of the parent company only financial statements

KPMG

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Parent Company Only Balance Sheet

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation

(original name: Lien Hwa Industrial Corporation)

Parent Company Only 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)

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Parent Company Only Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Parent Company Only Statement of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation (original name: Lien Hwa Industrial Corporation)

Parent Company Only Statement of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

For the years ended December 31, 2021 and 2020

I. Company profile

II. Financial report approval date and procedures

III. Application of new standards, amendments and interpretations

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

IV. Summary of Significant Accounting Policies

(4) Financial liabilities

(5) Derecognition of financial liabilities

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(XIII) EPS

(XIV) Department information

V. Significant accounting judgments, estimations and major sources of assumption uncertainty

VI. Description of significant accounting items

(3) Other receivables

(4) Investment under equity method

1. Subsidiaries

2. Affiliates

3. Collateral

(5) Investment property

(9) Employee benefits

1. Defined benefit plan

(1) Composition of plan assets

(2) Changes in the present value of defined benefit obligation:

(4) Expenses recognized in profit or loss

(5) Actuarial assumptions

(6) Analysis of sensitivity

2. Defined contribution plan

2. Deferred income tax assets and liabilities

3. Authorization of income tax

1. Issuing of common shares

2. Capital surplus

3. Retained earnings

Lien Hwa Industrial Holdings Corporation Notes to the Parent Company Only Financial Statements

(1) Legal reserve

(2) Special reserve

(3) Distribution of earnings

4. Treasury stocks

(12) EPS

1. Basic earnings per share

(1) Net profit attributed to common stock shareholders of the Company

(2) Weighted average outstanding shares of common stocks (thousand shares)

2. Diluted earnings per share

(14) Remunerations to Directors and employees

(15) Non-operating revenue and expense

1. Interest income

2. Other revenue

LHIHC Audit Report / Information 2021