LOTES - Interim / Quarterly Report 2021

Stock Code: 3533

Lotes Co., Ltd. and its Subsidiaries

Consolidated Financial Statements and Accountant’s Review Report

Second Quarter 2021 and Second Quarter 2020

Notice to Readers :

For the convenience of readers, the Consolidated Financial Statements and Accountant’s Review Report have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

Address: No. 15, Wuxun St., Anle Dist., Keelung City 204 Telephone: (02)2433 1110

～1～

Contents I. Cover page II. Table of Content III. Independent Auditor’s Report IV. Consolidated Balance Sheet V. Consolidated Statement of Comprehensive Income VI. Consolidated Statement of Changes in Equity VII. Consolidated Statement of Cash Flows VIII. Notes to the Consolidated Financial Statements (I) Company History (II) Date and Procedures of Approval of Financial Statement (III) Application of New and Revised Standards and Interpretations (IV) Summary of Major Accounting Policies (V) Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties (VI) Descriptions for Important Accounting Items (VII) Related Party Transactions (VIII) Pledged Assets (IX) Significant Contingent Liabilities and Unrecognized Contractual Commitments (X) Significant Disaster Loss (XI) Significant Post-period Events (XII) Others (XIII) Disclosing Information (1) Major Transaction Details (2) Information on Reinvestment Business (3) Investment in Chinese Company (4) Principal Shareholder Information (XIV) Segmental Information	Page
	1 2 3 4 6 7 8 8 8 8～9 9～12 12～13 13～49 49～50 50 50 50 50～51 51 52～60 61～62 63～64 64 65

Contents
I.
Cover page
II.
Table of Content
III.
Independent Auditor’s Report
IV.
Consolidated Balance Sheet
V.
Consolidated Statement of Comprehensive Income
VI.
Consolidated Statement of Changes in Equity
VII.
Consolidated Statement of Cash Flows
VIII.
Notes to the Consolidated Financial Statements
(I)
Company History
(II)
Date and Procedures of Approval of Financial Statement
(III)
Application of New and Revised Standards and Interpretations
(IV)
Summary of Major Accounting Policies
(V)
Primary Sources of Major Accounting Judgment, Estimate and
Assumption Uncertainties
(VI)
Descriptions for Important Accounting Items
(VII) Related Party Transactions
(VIII) Pledged Assets
(IX)
Significant Contingent Liabilities and Unrecognized Contractual
Commitments
(X)
Significant Disaster Loss
(XI)
Significant Post-period Events
(XII) Others
(XIII) Disclosing Information
(1) Major Transaction Details
(2) Information on Reinvestment Business
(3) Investment in Chinese Company
(4) Principal Shareholder Information
(XIV) Segmental Information

Page

1
2
3
4
6
7
8
8
8
8～9
9～12
12～13
13～49
49～50
50
50
50
50～51
51
52～60
61～62
63～64
64
65

～2～

Independent Auditor’s Report

To the Board of Directors, Lotes Co., Ltd.:

Foreword

We have audited the Consolidated Balance Sheet of Lotes Co., Ltd. and its subsidiaries as of June 30, 2021 and 2020, the Consolidated Statement of Comprehensive Income as of April 1 to June 30, 2021 and 2020 and as of January 1 to June 30, 2021 and 2020 as well as the Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and the Notes to the Consolidated Financial Statements (including important accounting policies summary) as of January 1 to June 30, 2021 and 2020. The preparation of consolidated financial statements in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” issued by the Financial Supervisory Commission, which became effective, is the responsibility of management; our responsibility is to express an opinion on these consolidated financial statements based on our review.

Scope

We conducted our review in accordance with Statements on Auditing Standards No. 65, “The Auditor’s Consideration of the Internal Audit Function in an Audit of Financial Statements”. A review of the consolidated financial statements consists of inquiries (primarily of persons responsible for financial and accounting matters), analytical procedures and other review procedures. A review is substantially less in scope than an audit, and consequently, we may not be able to discern all significant matters that could be identified in an audit and express an opinion on those matters.

Conclusion

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS No. 34 “Interim Financial Reporting” issued by the Financial Supervisory Commission, which may affect the presentation of the consolidated financial position of Lotes Co., Ltd. and its subsidiaries as of June 30, 2021 and 2020, and the consolidated financial results as of April 1 to June 30, 2021 and 2020 and as of January 1 to June 30, 2021 and 2020 and consolidated cash flows as of January 1 to June 30, 2021 and 2020.

The engagement partners on the reviews resulting in this independent auditors' review report are Li, Fung-Hui and Chung, Tan-Tan.

KPMG

Taipei, Taiwan (Republic of China)

August 11, 2021

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

～3～

June 30, 2021 and 2020 are reviewed only, not audited in accordance with GAAS

Lotes Co., Ltd. and its Subsidiaries

Consolidated Balance Sheet

June 30, 2021, December 31, 2020, and June 30, 2020

Unit: 1,000 TWD

Jun. 30, 2021	Jun. 30, 2021	Dec. 31, 2020 Amount `％` 2,949,412 15 122,960 1 2,016 - 54,105 - 6,840,879 35 357,029 2 12,937 - 2,559,028 13 62,208 1 87,320 1 6,665 -	Jun. 30, 2021 Amount % $ 752,220 3 197 - 180,175 1 15,622 - 3,075,408 14 3,041,485 13 560,811 2 106,493 - 137,637 1 28,196 - 6,552 -	Dec. 31, 2020 Amount % - - - - 91,659 1 3,574 - 2,501,155 13 1,206,695 6 505,527 3 71,971 - 161,767 1 33,197 - 5,335 -	Jun. 30, 2020 Amount % 46,000 - - - 58,815 - 16,515 - 2,616,501 14 2,067,499 11 392,716 2 90,983 1 148,318 1 22,452 - 32,074 -
Amount	`％`	Amount
			7,904,796 34	4,580,880 24	5,491,873 29
15,107,496 66		13,054,559 68
			15,283 - 51,124 - 17,581 - 22,569 - 164,526 1 22,779 -	18,661 - 49,258 - 21,037 - 27,054 - 104,279 1 2,167 -	68,694 - 41,708 - 28,049 - 22,869 - 74,225 1 78,408 1
28,092 1 5,497,611 24 487,072 2 334,509 1 192,597 1 129,761 1 977,761 4		20,120 - 4,495,974 23 399,749 2 368,019 2 155,510 1 127,144 1 661,820 3
			293,862 1	222,456 1	313,953 2
			8,198,658 35	4,803,336 25	5,805,826 31
7,647,403 34		6,228,336 32
			1,034,779 5 3,956,806 17 9,267,645 41 (738,945) (3)	1,034,779 5 3,958,247 21 9,101,144 47 (594,972) (3)	1,034,779 6 3,961,826 21 7,687,244 42 (840,116) (5)
$ 22,754,899 100		19,282,895 100

			13,520,285 60	13,499,198 70	11,843,733 64
			1,035,956 5	980,361 5	826,139 5
			14,556,241 65	14,479,559 75	12,669,872 69
			$ 22,754,899 100	19,282,895 100	18,475,698 100

(Please refer to the notes to the consolidated financial statement for further details) President: Ho, Te-Yu

Accounting Supervisor: Liu, Hsing-Hsia

Chairperson: Chu, Te-Hsiang

～4～

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Comprehensive Income

April 1 to June 30, 2021 and 2020 and January 1 to June 30, 2021 and 2020

Unit: NT$1,000

Apr. to Jun., 2021 Amount ％ $ 4,859,019 100 2,889,540 59	Apr. to Jun., 2021 Amount ％ $ 4,859,019 100 2,889,540 59	Apr. to Jun.,	2020 ％ 100 57	Jan. to Jun., 2021 Amount ％ 9,602,586 100 5,667,064 59	Jan. to Jun., 2021 Amount ％ 9,602,586 100 5,667,064 59	Jan. to Jun., 2020 Amount ％ 7,872,071 100 4,721,318 60	Jan. to Jun., 2020 Amount ％ 7,872,071 100 4,721,318 60
Amount $ 4,859,019 2,889,540		Amount 4,735,231 2,706,916		Amount 9,602,586 5,667,064		Amount 7,872,071 4,721,318
1,969,479	41	2,028,315	43	3,935,522	41	3,150,753	40
186,389 307,325 502,876 2,065	4 6 10 -	153,332 281,229 366,677 (2,604)	3 6 8 -	371,927 613,734 955,185 3,554	4 6 10 -	271,277 526,551 656,429 (929)	3 7 8 -
998,655	20	798,634	17	1,944,400	20	1,453,328	18
970,824	21	1,229,681	26	1,991,122	21	1,697,425	22
2,459 - 75,394 (63,923) (5,115) (26)	- - 2 (1) - -	9,696 8,385 73,016 (82,134) (4,752) 3	- - 2 (2) - -	6,170 - 123,156 (36,399) (8,822) (1,104)	- - 1 - - -	18,101 8,385 107,767 (53,217) (7,344) 2,509	- - 2 (1) - -
8,789	1	4,214	-	83,001	1	76,201	1
979,613 272,771	22 6	1,233,895 286,127	26 6	2,074,123 532,934	22 6	1,773,626 393,734	23 5
706,842	16	947,768	20	1,541,189	16	1,379,892	18
(3,732) -	- -	2,783 -	- -	(3,727) -	- -	91 -	- -
(3,732)	-	2,783	-	(3,727)	-	91	-
(98,443) 824	(3) -	(167,403) (4,303)	(3) -	(140,694) 501	(1) -	(205,499) (4,303)	(3) -
(99,267)	(3)	(163,100)	(3)	(141,195)	(1)	(201,196)	(3)
(102,999)	(3)	(160,317)	(3)	(144,922)	(1)	(201,105)	(3)
$ 603,843	13	787,451	17	1,396,267	15	1,178,787	15
$ 709,101 (2,259)	16 -	899,485 48,283	19 1	1,542,757 (1,568)	16 -	1,312,383 67,509	17 1
$ 706,842	16	947,768	20	1,541,189	16	1,379,892	18
$ 606,447 (2,604)	13 -	739,258 48,193	16 1	1,398,784 (2,517)	15 -	1,112,659 66,128	14 1
$ 603,843	13	787,451	17	1,396,267	15	1,178,787	15
$	6.85		8.69		14.91		12.68
$	6.84		8.67		14.88		12.65

(Please refer to the notes to the consolidated financial statement for further details) Chairperson: Chu, Te-Hsiang President: Ho, Te-Yu

Accounting Supervisor: Liu, Hsing-Hsia

～ 6 ～

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Changes in Equity

January 1 to June 31, 2021 and 2020

Unit: NT$1,000

		Equity allocated to the owner of the parent company	Equity allocated to the owner of the parent company	Equity allocated to the owner of the parent company	Equity allocated to the owner of the parent company	Equity allocated to the owner of the parent company	Total equity attributable to owners of theparent Non-controlling interest	Total equity 12,545,225 1,379,892 (201,105)
Share capital	Capital reserves	Retained earnings			Other equity items
					Exchange difference between foreign operating office’s statement	Unrealized gain or loss on Financial assets measured at FVTOCI
Ordinary share capital		Legal reserve	Special reserve	Undistributed earnings
$ 1,034,779 - -	3,959,560 - -	1,091,939 - -	317,020 - -	6,062,560 1,312,383 -	(631,970) (18,562) - - (199,815) 91		11,815,326 729,899 1,312,383 67,509 (199,724) (1,381)
-	-	-	-	1,312,383	(199,815) 91		1,112,659 66,128	1,178,787
- - - - - - -	- - - 2,266 - - -	207,604 - - - - - -	- 333,513 - - - - -	(207,604) (333,513) (1,086,518) - - - (10,140)	- - - - - - - - - - - - - 10,140		- - - - (1,086,518) - 2,266 - - 79,229 - (49,117) - -	- - (1,086,518) 2,266 79,229 (49,117) -
$ 1,034,779	3,961,826	1,299,543	650,533	5,737,168	(831,785) (8,331)		11,843,733 826,139	12,669,872
$ 1,034,779 - -	3,958,247 - -	1,299,543 - -	650,533 - -	7,151,068 1,542,757 -	(586,953) (8,019) - - (140,208) (3,765)		13,499,198 980,361 1,542,757 (1,568) (143,973) (949)	14,479,559 1,541,189 (144,922)
-	-	-	-	1,542,757	(140,208) (3,765)		1,398,784 (2,517)	1,396,267
- - - - - -	- - - (1,441) - -	271,615 - - - - -	- (55,561) - - - -	(271,615) 55,561 (1,376,256) - - -	- - - - - - - - - - - -		- - - - (1,376,256) - (1,441) - - 126,330 - (68,218)	- - (1,376,256) (1,441) 126,330 (68,218)
$ 1,034,779	3,956,806	1,571,158	594,972	7,101,515	(727,161) (11,784)		13,520,285 1,035,956	14,556,241

(Please refer to the notes to the consolidated financial statement for further details) President: Ho, Te-Yu

Accounting Supervisor: Liu, Hsing-Hsia

Chairperson: Chu, Te-Hsiang

～ 7 ～

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Cash Flows

January 1 to June 30, 2021 and 2020

Net cash flow from operating activities: Net profit before tax Adjusted items: Income and expenses Depreciation expense Amortization expense Expected credit loss (gain) Net loss (gain) on financial assets and liabilities measured at FVTPL Interest expense Interest income Loss on disposal of property, plan and equipment Losses on inventory valuation loss and scrapping Gain recognized in bargain purchase transaction Other items Total income and expenses Change in assets/liabilities related to operating activities: Net change in operating assets: Increase in notes receivable Increase in accounts receivable Increase in other receivable Increase in inventories Increase in prepayments Decrease (increase) in other current assets Decrease in other financial assets Total changes in operating assets Changes in operating liabilities: Increase (decrease) in contract liabilities Decrease in notes payable Increase in accounts payable Increase (decrease) in other payable Increase (decrease) in provisions Decrease in other current liabilities Decreasein refund liabilities Increase in other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Disposal of financial assets at FVTOCI Acquisition of financial assets at FVTOCI Acquisition of financial assets at FVTPL Disposal of financial assets at FVTPL Acquisition of property, plant and equipment Disposal of property, plant and equipment Acquisition of intangible assets Net cash used in business combination Disposal of investment property Increase in other non-current assets Net cash used in investing activities Cash flows from (used in) financing activities: Increase (decrease) in short-term loans Borrowings of long-term loans Repayments of long-term loans Payments of lease liabilities Increase in other non-current liabilities Changes in non-controlling interest Changes in associates & joint ventures accounted for using equity method Cash inflows from (used in) financing activities: Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	Unit: NT$1,000 Jan. to Jun., 2021 Jan. to Jun., 2020 $ 2,074,123 1,773,626 629,427 508,959 24,368 6,495 4,658 (3,438) (63,891) 1,184 8,822 7,344 (6,170) (18,101) 1,193 3,364 32,799 (4,256) - (8,385) (17) -	Unit: NT$1,000 Jan. to Jun., 2021 Jan. to Jun., 2020 $ 2,074,123 1,773,626 629,427 508,959 24,368 6,495 4,658 (3,438) (63,891) 1,184 8,822 7,344 (6,170) (18,101) 1,193 3,364 32,799 (4,256) - (8,385) (17) -
		1,773,626 508,959 6,495 (3,438) 1,184 7,344 (18,101) 3,364 (4,256) (8,385) -
	631,189	493,166
	(13,210) (91,479) (76,456) (1,576,524) (148,339) 174 78,069	(10,026) (317,338) (47,861) (144,107) (19,819) (3,706) 4,954
	(1,827,765)	(537,903)
	88,516 12,048 574,253 406,542 1,866 (5,001) (24,130) -	4,587 (10,150) 654,964 (93,614) (21) (885) (8,938) 285
	1,054,094	546,228
	(773,671)	8,325
	(142,482)	501,491
	1,931,641 10,767 (8,822) (482,885)	2,275,117 17,073 (7,407) (364,284)
	1,450,701	1,920,499
	- (11,400) (84,433) 133,095 (1,554,018) 13,185 (61,455) - 32,257 (336,616)	4,860 - - 222,392 (626,501) 27,809 (31,664) (59,647) - (83,856)
	(1,869,385)	(546,607)
	752,220 2,000 (4,161) (69,658) 4,909 126,330 (1,441)	(20,660) 60,215 (88,991) (62,394) - 30,180 2,266
	810,199	(79,384)
	(141,195) 250,320 2,949,412	(201,196) 1,093,312 2,845,994
	$ 3,199,732	3,939,306

(Please refer to the notes to the consolidated financial statement for further details) Chairperson: Chu, Te-Hsiang President: Ho, Te-Yu

Accounting Supervisor: Liu, Hsing-Hsia

～ 8 ～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Reviewed only, not audited in accordance with GAAS

Lotes Co., Ltd. and its Subsidiaries

Notes to the Consolidated Financial Statements Second Quarter 2021 and Second Quarter 2020

(Except as otherwise indicated, the unit for all amounts in this document is NT$1,000)

I. Company History

Lotes Co., Ltd. (hereinafter referred to as the “Company”) was incorporated on Aug. 23, 1986 in accordance with the provisions of the Company Law and was approved for registration with its registered office at No.15, Wuxun Street, Anle District, Keelung City. The Company and its subsidiaries (hereinafter referred to as the “Consolidated Company”) are principally engaged in the sale and purchase of various hardware parts and components, the manufacturing and processing of various terminals and their connectors, the import and export business in connection with the preceding item and the agency of the preceding item in connection with the tender quotation and distribution of products of domestic and foreign manufacturers. Please refer to Note 14 for further details.

II. Date and Procedures of Approval of Financial Statement

The Consolidated Financial Statement was approved and released by the Board of Directors on April 11, 2021.

III. Application of New and Revised Standards and Interpretations

(1) Influence of the adoption of new and revised standards and integrations approved by the Financial Supervisory Commission
The Consolidated Company has applied the following newly revised IFRSs from
January 1, 2021, with no material impact on the consolidated financial statements
‧ Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)
‧ Interest Rate Benchmark Reform—Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The Consolidated Company has applied the following newly revised IFRSs from April

1, 2021, with no material impact on the consolidated financial statements.
‧ Covid-19-Related Rent Concessions (Amendment to IFRS 16)
(2) Impact of not adopting IFRSs recognized by the FSC

The Consolidated Company assesses that the application of the following newly amended IFRSs, effective January 1, 2022, will not have a material impact on the consolidated financial statements.

～8～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

‧ Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
‧ Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS 37)
‧ Annual Improvements to IFRS Standards 2018–2020
‧ Reference to the Conceptual Framework (Amendments to IFRS 3)
(3) Newly issued and amended standards and interpretations not yet approved by the FSC

The Consolidated Company estimates that the following newly issued and amended standards, which have not yet been approved, will not have a material impact on the consolidated financial statements.

‧ Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
‧ Insurance Contracts (Amendments to IFRS 17 and IAS 17)
‧ Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
‧ Disclosure of Accounting Policies (Amendments to IAS 1)
‧ Definition of Accounting Estimates (Amendments to IAS 8)
‧ The main change in Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

IV. Summary of Major Accounting Policies

The significant accounting policies used in the consolidated financial statements are summarized below. Unless otherwise stated, the following accounting policies have been applied consistently to all periods presented in the consolidated financial statements.

(1) Compliance statement

The Consolidated Financial Statement was compiled in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the Regulations Governing the Preparation) and IAS 34 “Interim Financial Reporting” which is effective upon endorsement and issuance by the Financial Supervisory Commission. The consolidated financial statements do not include all of the information required to be disclosed in the full annual consolidated financial statements prepared in accordance with the following, as recognized by the Financial Supervisory Commission (FSC): International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), and Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).

Except as described below, the significant accounting policies used in this consolidated financial statement are the same as those used in the 2020 consolidated financial statement; see Note IV to the 2020 consolidated financial statements for related information.

(2) Basis of consolidation

～9～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

1. Subsidiary listed in the Consolidated Financial Statement

The including subsidiaries listed in the Consolidated Financial Statement are as follows:

as follows:
			Shareholding percentage
Name of
Investment		Place of	Jun. 30,	Dec. 31,	Jun. 30,
Company	Name of Subsidiary	Incorporation	2021	2020	2020	Note
The Company	Lotes Investments Limited	Samoa	100.00%	100.00%	100.00%
`〞`	Good Hope Investments	`〞`	100.00%	100.00%	100.00%
	Limited
`〞`	Guansi Development Co., Ltd.	`〞`	100.00%	100.00%	100.00%
`〞`	Zhaxi Investment Co., Ltd.	Anguilla	100.00%	100.00%	100.00%
`〞`	Jiayu Investment Co., Ltd.	Taiwan	100.00%	100.00%	100.00%
`〞`	Lotes USA, Inc	America	100.00%	100.00%	100.00%
`〞`	LOTES EU GmbH	Germany	100.00%	100.00%	100.00%
`〞`	Lerain Technology Co., Ltd.	Taiwan	26.80%	33.92%	33.92%	(Note I)
`〞`	Mikronpoint Co., Ltd.	`〞`	100.00%	100.00%	- %

～10～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The Company	Lotes Vietnam CO., Ltd.	Vietnam	100.00%	- %	- %
Lotes	Loteson International	Hong Kong	100.00%	100.00%	100.00%
Investments	Investments Limited
Limited
Loteson	Lotes Guangzhou Co., Ltd.	China	100.00%	100.00%	100.00%
International
Investments
Limited
Lotes	Lotes Hengnan Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Guangzhou
Co., Ltd.
`〞`	Shenzhen DeYi Automation	`〞`	100.00%	100.00%	100.00%
	Equipment Co., Ltd.
`〞`	Lotes Zhongshan Co., Ltd	`〞`	50.00%	50.00%	50.00%
`〞`	Zhongshan Dezhi Metal Surface	`〞`	100.00%	100.00%	100.00%
	Treatment Co., Ltd.
`〞`	Hengnan Deyi Property	`〞`	100.00%	100.00%	100.00%
	Development Co., Ltd.
`〞`	Guangzhou Leside Technology	`〞`	100.00%	100.00%	100.00%
	Co., Ltd.
Guangzhou	Chongqing Fuxinrui Electronic	`〞`	51.00%	51.00%	51.00%
Leside	Technology Co., Ltd.
Technology
Co., Ltd.
Lotes Suzhou	Lotes Zhongshan Co., Ltd	`〞`	50.00%	50.00%	50.00%
Co., Ltd.
Good Hope	Xincheng Development Co.,	Samoa	100.00%	100.00%	100.00%
Investments	Ltd.
Limited
`〞`	REKA Technology Co., Ltd.	Hong Kong	100.00%	100.00%	100.00%
Guansi	Jae You Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Development
Co., Ltd.
Jae You Co.,	Lotes Suzhou Co., Ltd.	China	100.00%	100.00%	100.00%
Ltd.
Zhaxi	Wangden Investments Limited	Hong Kong	100.00%	100.00%	100.00%
Investment
Co., Ltd.
Wangden	Zongka Technology (Shenzhen)	China	100.00%	100.00%	100.00%
Investments	Co., Ltd.
Limited
Jiayu	Ememe Robot Co., Ltd.	Taiwan	94.37%	94.37%	94.37%
Investment
Co., Ltd.
`〞`	Compertum Microsystems Inc.	`〞`	35.34%	35.34%	31.38% (Note I)

～11～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

`〞`	Good News Medical Co., Ltd.	`〞`	25.44%	5.00%	5.00% (Note I)
`〞`	Lintes Technology Co., Ltd.	`〞`	52.13%	52.13%	52.13%
Lintes	Jiajun Investment Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Technology
Co., Ltd.
Lintes	Genie Precision Machine Co.,	Taiwan	60.00%	60.00%	63.93% (Note II)
Technology	Ltd.
Co., Ltd.
`〞`	Compertum Microsystems Inc.	`〞`	11.77%	11.77%	10.46% (Note I)
`〞`	Jilong Co., Ltd.	Samoa	100.00%	100.00%	100.00%
Jilong Co.,	Rihui Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Ltd.
Rihui Co.,	Lintes Technology (Suzhou)	China	100.00%	100.00%	100.00%
Ltd.	Co., Ltd.

Note 1: Although the Consolidated Company does not hold more than half of the voting shares of this company, it is included as a subsidiary in the consolidated financial statements because the Consolidated Company has control over its major operating activities and other decisions.

Note 2: Please refer to Note VI (V) for the Consolidated Company's acquisition of control over this company.

2. Subsidiary not listed in the Consolidated Financial Statement: none.

(3) Employee benefits

The defined benefit plan pension for the interim period is calculated based on the actuarial pension cost ratio from the previous year’s reporting date to the end of the current period and adjusted for significant market fluctuations, and significant curtailment, liquidation or other significant one-time events after the reporting date.

(4) Income tax

The Consolidated Company’ income tax expense for the interim period is measured and disclosed in accordance with B12 of IAS No. 34 “Interim Financial Reporting”.

Income tax expense, which is recognized directly in equity or other comprehensive income, is measured as the temporary difference between the carrying amount of the related assets and liabilities for financial reporting purposes and their tax bases at the applicable tax rates that are expected to apply when the related assets and liabilities are realized or settled.

V. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

The preparation of the consolidated financial statements in conformity with the Regulations Governing the Preparation of Financial Statements and IAS 34 “Interim Financial Reporting” which is approved by the FSC, requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities,

～12～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

income and expenses. Actual results may differ from the estimates.

The significant judgments made by management in the preparation of the consolidated financial statements and the key sources of estimation uncertainty in the adoption of the Consolidated Company’ accounting policies are consistent with Note V to the 2020 consolidated financial statements.

VI. Descriptions for important accounting items

Except as noted below, the description of significant accounting items in this consolidated financial statement is not yet materially different from the 2020 consolidated financial statement, see Note VI to the 2020 consolidated financial statement for related information.

(1) Cash and cash equivalents

Petty cash Checks and demand deposits Time deposits Cash and cash equivalents listed on the Statement	Jun. 30, 2021 $ 2,633 2,596,878 600,221 $ 3,199,732		Dec. 31, 2020 2,139 2,169,311 777,962		Jun. 30, 2020 2,194 2,367,649 1,569,463 3,939,306
			2,949,412

Please refer to Note VI (XXV) for the disclosure of the interest rate risk and sensitivity analysis of the financial assets of the Consolidated Company.

(2) Financial assets and liabilities
Financial assets and liabilities measured at FVTPL

Jun. 30, 2021 $ 2,364 136,022	Dec. 31, 2020 6,180 116,780	Jun. 30, 2020 - 16,458
$ 138,386	122,960	16,458
$ 197	-	-

Please refer to Note VI (XXV) for the amount recognized in profit or loss based on

～13～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

fair value remeasurement.

The Consolidated Company engages in derivative financial instruments to hedge the exposure to exchange rate risk arising from operating activities. The details of the derivatives of financial assets and financial liabilities measured at fair value through profit or loss as reported in the Consolidated Company's financial statements for which hedge accounting is not applicable are as follows:

	Financial Asset	Jun. 30, 2021
		Principal ($1,000) Expiry date USD 5,000 Jul. 7, 2021 USD 6,000 Jul. 20, 2021 USD 4,000 Jul. 29, 2021 Jun. 30, 2021
	Forward foreign exchange contracts “ “ Financial Liability
		Principal ($1,000) Expiry date USD 1,000 Jul. 7, 2021 USD 1,000 Aug. 30, 2021 Dec. 31, 2020
	Forward foreign exchange contracts “ Financial Asset
		Principal ($1,000) Expiry date USD 3,000 Jan. 8, 2021 USD 4,000 Jan. 11, 2021 USD 2,000 Jan. 12, 2021 USD 9,000 Jan. 20, 2021 USD 2,000 Jan. 22, 2021 USD 4,000 Jan. 28, 2021 USD 5,000 Feb. 9, 2021 USD 2,000 Feb. 18, 2021 USD 2,000 Feb. 19, 2021 USD 2,000 Feb. 23, 2021 USD 9,000 Feb. 24, 2021 USD 4,000 Feb. 26, 2021 USD 6,000 Mar. 10, 2021 USD 4,400 Mar. 15, 2021 USD 2,000 Mar. 23, 2021
	Forward foreign exchange contracts “ “ “ “ “ “ “ “ “ “ “ “ “ “

～14～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Financial assets measured at FVTOCI

Equity instruments measured at FVTOCI: Current: Domestic unlisted shares`－` AICP Technology Corporation Non-current: Domestic listed shares`－` Chailease Finance Co., Ltd. Domestic unlisted shares`－` SteadyBeat Technology Corporation Subtotal Total	Jun. 30, 2021 $ 1,717 20,200 7,892	Dec. 31, 2020 2,016 20,120 -	Jun. 30, 2020 1,669 - -
	28,092	20,120	-
	$ 29,809	22,136	1,669

The Consolidated Company holds these investments in equity instruments that are not held for trading purposes and have been designated as measured at fair value through other comprehensive income.

The Consolidated Company has no dividend income from equity instruments measured at fair value through other comprehensive income for the periods from January 1 to June 30, 2021 and 2020.

On May 8, 2020, due to asset allocation considerations, the Consolidated Company adjusted its investment portfolio to diversify risks and sold Kuang Ying Computer Equipment Co., Ltd. which was designated to be measured at fair value through other comprehensive income, with a fair value of NT$4,860 thousand at the time of disposal, and the accumulated loss on disposal amounted to NT$10,140 thousand, therefore, the aforementioned accumulated loss on disposal was transferred from other equity to retained earnings.

As of June 30, 2021, December 31, 2020 and June 30, 2020, none of the Consolidated Company's financial assets had been pledged as collateral.

(3) Notes, accounts receivable and other receivables

Notes receivable Accounts receivable	Jun. 30, 2021 $ 67,315 6,944,320	Dec. 31, 2020 54,105 6,852,928	Jun. 30, 2020 33,882 6,382,025

～15～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Other accounts receivable Less: Allowance for loss	430,862 (18,594)	359,009 (14,029)	272,195 (9,152) 6,678,950
	$ 7,423,903	7,252,013

Please refer to Note VI (XXV)1.(3) Statement of Changes in Allowance for Loss on Notes and Accounts Receivable as of June 30, 2021, December 31, 2020 and June 30, 2020 for details.

The Consolidated Company assesses that a portion of the accounts receivable and other receivables held by the Consolidated Company under the operating model of collecting cash flows and sales are measured at fair value through other comprehensive income as of June 30, 2021, December 31, 2020 and June 30, 2020, of which NT$0 thousand, NT$0 thousand and NT$187,629 thousand are accounts receivable.

～16～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Information of the factoring of accounts receivable of the Consolidated Company is provided below:

Unit: NT$1,000 ／ 1,000 in foreign currency

		Jun. 30, 2020	Jun. 30, 2020
Factored to	Amount derecognized $ -	Amount can be provided as advance 740,750 USD 25,000	Amount provided as advance -	Transferred to other receivables -	Interest rate range -	Other importa nt matters
CTBC Bank						None

The above quota is used in a circular manner, and the outstanding accounts receivable sold by the Consolidated Company are purchased by China Trust without recourse. In accordance with the terms of the sale and surrender contract, losses arising from commercial disputes (such as return of sales or concessions, etc.) shall be borne by the Consolidated Company and losses arising from credit risk shall be borne by such Banks.

As of June 30, 2021, December 31, 2020 and June 30, 2020, no retained accounts receivable for sale were transferred to other receivables.

(4) Inventroy

Inventroy
Merchandise Finished goods Work in progress Raw materials Goods in transit	Jun. 30, 2021 $ 999,349 1,113,133 1,150,166 839,452 653		Dec. 31, 2020 773,548 676,044 695,361 414,075 -		Jun. 30, 2020 654,455 654,242 447,765 510,148 1,924 2,268,534
	$ 4,102,753		2,559,028

The Consolidated Company’s inventories as of June 30, 2021, December 31, 2020 and June 30, 2020 including an allowance for inventory losses were NT$323,129 thousand, NT$295,528 thousand and NT$268,646 thousand, respectively.

～17～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The Consolidated Company recognized inventory-related expenses as follows:

Cost of goods sold Shutdown cost Losses on inventory valuation loss and scrapping (Reversal of loss) Total	2021 Apr. to Jun. $ 2,866,728 - 22,812 $ 2,889,540	2020 Apr. to Jun. 2,729,931 - (23,015) 2,706,916	2021 Jan. to Jun. 5,634,265 - 32,799 5,667,064	2020 Jan. to Jun. 4,634,775 90,799 (4,256) 4,721,318

As of June 30, 2021, December 31, 2020 and June 30, 2020, the Consolidated Company’s inventories were not pledged as security.

(5) Changes in ownership interests in subsidiaries
Acquisition of subsidiaries

On May 13, 2020, the Consolidated Company acquired control of Genie Precision Machine Co., Ltd. (GPM) by acquiring 63.93% of the shares of GPM, an ultra-precision optical and automation equipment manufacturer, and the acquisition of control of GPM will enable the Consolidated Company to expand its automotive electronics operations.

For the period from the acquisition date to June 30, 2020, the revenue and net income contributed by GPM were NT$55,488 thousand and NT$13,985 thousand, respectively. If the acquisition had occurred on January 1, 2020, management estimates that the Consolidated Company's revenue from January 1, 2020 to June 30, 2020 would have been NT$7,971,386 thousand and net income would have been NT$1,389,583 thousand. These amounts do not reflect the actual revenue and results of operations of the Consolidated Company if the business combination were to be completed on the commencement date of the year of acquisition, and shall not be used as a forecast of future results of operations.

Costs incurred in connection with this acquisition transaction were recognized under “Administrative expenses” in the Consolidated Statement of Comprehensive Income.

～18～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The major categories of the consideration transferred, the assets acquired and liabilities assumed at the date of acquisition and the amounts recognized are as follows:

(1) Net cash outflow from acquired subsidiaries

Consideration paid in cash Less: Cash and cash equivalents acquired	$ 78,533 (18,886)
	$ 59,647

(2) Identifiable assets acquired and liabilities assumed

) Identifiable assets acquired and liabilities assumed
The fair values of the identified assets acquired and liabilities	assumed	at the date
of acquisition are as follows:
Current assets
Cash and cash equivalents	$	18,886
Financial assets measured at amortized cost		5,009
Notes receivable, accounts receivable and other receivables		116,145
Inventories		144,150
Other current assets		12,297
Non-current assets
Property, plant and equipment		214,258
Intangible assets		1,054
Deferred income tax assets		6,190
Other non-current assets		53,033
Current liabilities
Short-term loans		(36,680)
Contractual liabilities - current		(34,282)
Notes payable, accounts payable and other payables		(142,001)
Current income tax liabilities - current		(7,955)
Long-term loans due within one year		(29,491)
Other non-current liabilities - other		(1,097)
Non-current liabilities
Long-term loans		(100,053)
Other non-current liabilities		(76,191)
Fair value of identifiable net assets	$	143,272

The Consolidated Company will review the above matters on an ongoing basis during the measurement period. If, within one year of the acquisition date, new

～19～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

information becomes available regarding facts and circumstances existing at the acquisition date that would identify an adjustment to the provisional amount described above or any additional provision for liabilities existing at the acquisition date, the accounting for the acquisition will be modified.

(3) Gain recognized in bargain purchase transaction

The gain recognized in bargain purchase transaction for acquisition is as follows:

Consideration transferred Add: Non-controlling interests Less: Fair value of identifiable net assets Gain recognized in bargain purchase transaction	$ 78,533 49,049 (135,967)
	$ (8,385)

The Consolidated Company's gain of NT$8,385 thousand from the acquisition of GPM is reported in “Gain recognized in bargain purchase transaction” in the Consolidated Statement of Comprehensive Income.

The Consolidated Company did not subscribe to the subsidiary's cash capital increase in proportion to its shareholding, which did not result in a loss of control.

On May 14, 2021, Lerain Technology Co., Ltd. issued 12,683 thousand new shares with total funds raised of NT$126,832 thousand. The Consolidated Company subscribed 3,794 thousand shares for NT$37,935 thousand, and the Consolidated Company's interest in Lerain Technology Co., Ltd. increased by 7.94% because the shares were not subscribed in proportion to its shareholding.

On May 14, 2021, Good News Medical Co., Ltd. issued 2,000 thousand new shares with total funds raised of NT$20,000 thousand. The Consolidated Company subscribed 611 thousand shares for NT$6,110 thousand, and the Consolidated Company's interest in Good News Medical Co., Ltd. increased by 20.44% because the shares were not subscribed in proportion to its shareholding.

On January 31, 2021, Lerain Technology Co., Ltd. issued 2,210 thousand new shares with total funds raised of NT$22,100 thousand. The Consolidated Company's interest in Lerain Technology Co., Ltd. was reduced by 15.06% as the Consolidated Company did not subscribe.

On April 30, 2020, Compertum Microsystems Inc. issued 1,379 thousand new shares with total funds raised of NT$13,786 thousand. The Consolidated Company's interest in Compertum Microsystems Inc. was reduced by 9.91% as the Consolidated Company did not subscribe.

The effect of changes in the Consolidated Company's ownership interest in the subsidiaries listed above on the equity attributable to owners of parent company was as

～20～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

follows:

Increase in equity after issuance of new shares by subsidiaries Amount not subscribed in proportion to shareholding Capital surplus - recognition of changes in ownership interests in subsidiaries	2021 Jan. to Jun. $ 42,604 (44,045)	2020 Jan. to Jun. 2,266 -
	$ (1,441)	2,266

(6) Subsidiaries with significant non-controlling interests

The non-controlling interests of subsidiaries that are material to the Consolidated Company are as follows:

Name of Subsidiary Lintes Technology Co., Ltd.	Main business place/ Country of incorporation or residence Taiwan	The percentage of ownership interests and voting interests in all non-controlling interests	The percentage of ownership interests and voting interests in all non-controlling interests
		Jun. 30, 2021 Dec. 31, 2020	Jun. 30, 2020
		47.87% 47.87%	47.87%

The aggregate financial information of the above subsidiaries is as follows. The financial information has been prepared in accordance with International Financial Reporting Standards (IFRSs) approved by the Financial Supervisory Commission (FSC), and the financial information represents amounts before the elimination of intercompany transactions: 1. Comprehensive financial information of Lintes Technology Co., Ltd.:

Jun. 30, 2021	Dec. 31, 2020 2,297,917 523,357 (954,458) (75,631) 128,484	Jun. 30, 2020 2,326,420 433,612 (949,406) (208,372) 54,087
$ 2,389,491 746,581 (1,345,826) (69,705) 137,950
$ 1,582,591	1,662,701	1,548,167
$ 757,623	795,973	741,143

2021 2020 2021

2020

～21～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Apr. to Jun. $ 490,337	Apr. to Jun. 750,026	Jan. to Jun. 1,051,121
$ 13,595	112,713	64,312
$ 6,285	5,045	9,466
$ (713)	(3,542)	(1,922)
$ -	(7)	-
$ 12,882	109,171	62,390
$ 6,285	5,038	9,466
$ 6,634	48,474	30,796
$ 6,293	48,413	29,868

～22～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of exchange rate changes Increase (decrease) in cash and cash equivalents	2021 Jan. to Jun. $ (16,263) (263,054) 195,506 3,881	2020 Jan. to Jun. 233,180 (61,771) (95,372) (23)
	$ (79,930)	76,014

(7) Property, plant and equipment

The changes in the costs of the property, plant and equipment, losses on depreciation and impairment of the Consolidated Company are as follows:

Land	Buildings	Machinery	Others	Construction in progress and equipment to be examined	Total
$ 48,584 128,951 - 31,235 - (443)	769,413 66,866 - 750,609 - (16,108)	2,951,297 215,870 6,515 11,056 (25,645) (34,689)	3,275,852 560,103 14,378 323,373 (459,585) (40,022)	1,334,576 685,426 - (1,116,491) - (11,936)	8,379,722 1,657,216 20,893 (218) (485,230) (103,198)
$ 208,327	1,570,780	3,124,404	3,674,099	891,575	9,469,185
$ 49,655 - - - - - (250)	759,739 - - - - - (18,223)	2,698,613 30,566 1,423 213,892 - (118,351) (62,813)	2,740,900 86,796 1,085 96,686 356,658 (576,904) (63,314)	756,731 679,692 (51) - (356,658) - (25,953)	7,005,638 797,054 2,457 310,578 - (695,255) (170,553)
$ 49,405	741,516	2,763,330	2,641,907	1,053,761	7,249,919

impairment:

～23～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

$ - - - -	309,715 19,956 - (3,757)	1,700,534 117,063 (19,880) (21,221)	1,873,499 465,369 (450,972) (18,732)	- - - -	3,883,748 602,388 (470,852) (43,710)
$ -	325,914	1,776,496	1,869,164	-	3,971,574
$ - - - - -	266,518 19,449 - - (6,753)	1,595,925 122,619 62,001 (93,995) (36,650)	1,628,481 383,456 40,697 (570,087) (34,060)	- - - - -	3,490,924 525,524 102,698 (664,082) (77,463)
$ -	279,214	1,649,900	1,448,487	-	3,377,601
$ 48,584	459,698	1,250,763	1,402,353	1,334,576	4,495,974
$ 208,327	1,244,866	1,347,908	1,804,935	891,575	5,497,611
$ 49,655	493,221	1,102,688	1,112,419	756,731	3,514,714
$ 49,405	462,302	1,113,430	1,193,420	1,053,761	3,872,318

Subsidiary, Lotes Zhongshan Co., Ltd, acquired the land use rights for the construction of the new plant in 2017, and the acquisition cost was NT$183,934 thousand to list right-of-use assets in the account. As of June 30, 2021, December 31, 2020 and June 30, 2020, the accumulated expenditures (tax included) for the construction of the new plant were NT$778,450 thousand, NT$787,873 thousand and NT$695,515 thousand, respectively.

Subsidiary, Lotes Hengnan Co., Ltd., acquired the land use rights for the construction of the new plant in 2016, and the acquisition cost was $NT9,878,000 to list right-of-use assets in the account. As of June 30, 2021, December 31, 2020 and June 30, 2020, the accumulated expenditures (tax included) for the construction of the new plant were NT$256,330 thousand, NT$192,369 thousand and NT$64,481 thousand, respectively.

In April, 2019, subsidiary, Lotes Zhongshan Co., Ltd, signed the pre-purchase contract and decoration contract with Zhongshan Willie Property Development Co., Ltd. and Tianjin Xinhong Yuanchuang Decoration Engineering Co., Ltd., respectively. As of June 30, 2021, has to pay the price of RMB 10,881,000 and RMB 3,285,000 respectively (account listed as other non-current assets), is expected to transfer the property in October 2021.

As of June 30, 2021, December 31, 220 and June 30, 2020, real estate, plant and equipment were used as collateral for short-term loans and financing lines. Please refer to

～24～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Note VIII for details.

(8) Right-of-use assets

The changes in the costs of the lease of lands, buildings, machinery and other equipment, losses on depreciation and impairment of the Consolidated Company are as follows:

Land $ 240,690 - - (2,908)	Buildings 347,687 164,733 (74,271) (4,668)	Machinery - - - -	Others 4,131 - - (49)	Total 592,508 164,733 (74,271) (7,625)
$ 237,782	433,481	-	4,082	675,345
$ 236,908 - - (6,108)	254,674 73,783 (24,438) (6,853)	687 - (683) (4)	5,181 - (596) (123)	497,450 73,783 (25,717) (13,088)
$ 230,800	297,166	-	4,462	532,428
$ 10,465 2,609 - (151)	179,759 68,267 (73,982) (1,912)	- - - -	2,535 720 - (37)	192,759 71,596 (73,982) (2,100)
$ 12,923	172,132	-	3,218	188,273
$ 5,150 2,559 - (183)	105,843 58,446 (24,438) (1,540)	687 - (683) (4)	2,344 867 (596) (67)	114,024 61,872 (25,717) (1,794)
$ 7,526	138,311	-	2,548	148,385
$ 224,859	261,349	-	864	487,072
$ 223,274	158,855	-	1,914	384,043

(9) Investment property

The changes in the investment property of the Consolidated Company are as follows:

Cost or deemed cost: Balance on Jan. 1, 2021 Others	Self-owned Assets Land Buildings $ 260,576 44,832 - -	Right-of-use Assets Land 69,160 (31,726)	Total 374,568 (31,726)
	Land $ 260,576 -

～25～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Effect of change in
exchange rate
Balance on Jun. 30, 2021
Balance on Jan. 1, 2020
Addition
Effect of change in
exchange rate
Balance on Jun. 30, 2020
Losses on depreciation and
impairment:
Balance on Jan. 1, 2021
Depreciation
Effect of change in
exchange rate
Balance on Jun. 30, 2021
Balance on Jan. 1, 2020
Depreciation
Effect of change in
exchange rate
Balance on Jun. 30, 2020
Book value:
Jan. 1, 2021
Jun. 30, 2021
Jan. 1, 2020
Jun. 30, 2020
Fair value:
Jan. 1, 2021
Jun. 30, 2021
Jan. 1, 2020
Jun. 30, 2020

-
-
(531)
(531)
$
260,576
44,832
36,903
342,311
$ 248,200
39,285
-
287,485
-
-
97,557
97,557
-
-
(1,944)
(1,944)
$
248,200
39,285
95,613
383,098
$ -
5,481
1,068
6,549
-
562
710
1,272
-
-
(19)
(19)
$
-
6,043
1,759
7,802
$ -
4,483
-
4,483
-
479
348
827
-
-
(7)
(7)
$
-
4,962
341
5,303
$
260,576
39,351
68,092
368,019
$
260,576
38,789
35,144
334,509
$
248,200
34,802
-
283,002
$
248,200
34,323
95,272
377,795

$
467,325
$
466,187
$
322,604
$
418,217

As of June 30, 2021, December 31, 2020 and June 30, 2020, the Consolidated Company’s investment properties were not pledged as security.

(10) Intangible assets

The changes in the cost and amortization of the intangible assets of the Consolidated Company are as follows:

～26～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

$	Computer Software 253,415 63,064 (529) (1,609)	Others 600 - - -

$	314,341	600
$	166,221 34,148 4,127 (412) (2,484)	600 - - - -
$	201,600	600
$	98,505 25,042 (529) (674)	- - - -
$	122,344	-
$	67,032 7,529 4,000 (412) (1,034)	- - - - -
$	77,115	-
$	154,910	600
$	191,997	600
$	99,189	600
$	124,485	600

The amortization expenses of the intangible assets of the Consolidated Company was recognized in the following items in the Consolidated Statement of Comprehensive Income:

2021 2020 2021 2020 Apr. to Jun. Apr. to Jun. Jan. to Jun. Jan. to Jun.

～27～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Operating costs Operating expense	$ 430	323	804	629 6,900
	$ 12,643	3,632	24,238

(11) Other financial assets

The details of the other financial assets of the Consolidated Company are as follows:

Other financial assets - current Time deposits Restricted bank deposits Total	Jun. 30, 2021 $ 9,251 -		Dec. 31, 2020 87,320 -		Jun. 30, 2020 83,734 2
	$ 9,251		87,320		83,736

As of June 30, 2021, December 31, 2020 and June 30, 2020, the Consolidated Company's other financial assets were not pledged as collateral, except for restricted bank deposits, which were pledged as collateral, as described in Note VIII.

(12) Short-term loans

The details, conditions and terms of the short-term loans of the Consolidated Company are as follows:

	Jun. 30, 2021		Amount $ 752,220
	Interest rate range	Maturity year
	0.66%~1.06% Dec. 31, 2020	110
			$ 1,717,470
			Amount $ -
Currency -	Interest rate range - Jun. 30, 2020	Maturity year
		-
			$ 1,556,320
			Amount $ 46,000
	Interest rate range 0.85%~2.55%	Maturity year
		109
			$ 1,525,490

Please refer to Note VI (XXV) for more information on the Consolidated Company’s exposure to interest rate and foreign currency risk, Note VIII for information of the Consolidated Company’s assets pledged as collateral for short-term borrowings, and Note IX for information of the Company’s bank loans and financing facilities are pledged as guaranteed notes.

(13) Long-term loans

The breakdown of the Consolidated Company's long-term loans is as follows:

Jun. 30, 2021 Dec. 31, 2020 Jun. 30, 2020 Bank loans-credit loans (maturity date: $ 17,939 974 6,926

～28～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

May 2022 ~ July 2023, July 2023 and October 2020 ~ June 2022, respectively) Bank loans-guaranteed loans (maturity date: July 2023, May 2022 ~ July 2023 and September 2020 ~ January 2025, respectively) Other loans - guaranteed loans (maturity date: April 2021 ~ February 2026) Subtotal Less: portion due within one year Total Credit not yet used Interest rate range	3,896 -	23,022 -	38,465 55,377 100,768 32,074 68,694 87,416 2.34%~7.54%
	21,835 6,552	23,996 5,335
	$ 15,283	18,661
	$ 54,067	51,907
	1.31%~1.83%	1.31%~1.83%

For details of the guarantees provided by the Consolidated Company for bank loans using assets pledged as collateral, please refer to Note VIII.

(14) Lease liabilities

The book values of the lease liabilities of the Consolidated Company are as follows:

Current Non-current	Jun. 30, 2021 $ 106,493	Dec. 31, 2020 71,971	Jun. 30, 2020 90,983 74,225
	$ 164,526	104,279

For the maturity analysis, please refer to Note VI (XXV)

The amounts recognized in the profit and loss are as follows:

2021 Apr. to Jun. $ 3,817	2020 Apr. to Jun. 2,418	2021 Jan. to Jun. 7,197	2020 Jan. to Jun. 4,752
$ 5,620	3,682	10,252	7,364
$ 1,119	257	1,893	668

The amounts recognized in the Statement of Cash Flows are as follows:

Total cash outflow for leases	2021 Jan. to Jun.

Lease of land, premises and buildings

～29～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The Consolidated Company leases land, premises and buildings for plant, office space and staff quarters. The lease term of the plant and office space is usually one to ten years, and the lease term of the staff quarters is three to eight years. Part of the lease includes an option to extend the lease at the end of the lease term. In cases where it is not reasonably determined to exercise an optional extension of Lease term, the relevant benefits for the period covered by the option are not included in the Lease liabilities.

The Consolidated Company is a sublease of right-of-use assets by business lease.

2. Other leases

The leasing period of machines and other equipment leased by the Consolidated Company shall be two to six years. In addition, the Lease term of some Lease contracts of the Consolidated Company is one year, and these leases are short-term subject leases. The Consolidated Company chooses to apply the exemption of relevant right-of-use assets and lease liabilities.

(15) Refund liabilities - current

Jun. 30, 2021 Dec. 31, 2020 Jun. 30, 2020 Refund liabilities - current $ 137,637 161,767 148,318

The refund liabilities are mainly the prepayments to customers for the sales discount and defects of electronic components.

(16) Provisions

Jun. 30, 2021 Dec. 31, 2020 Jun. 30, 2020 Provisions - non-current Employee benefits $ 51,124 49,258 41,708

Employee benefits are estimated under the Consolidated Company’s defined benefit plan.

(17) Operating lease

The Consolidated Company leases its investment real estate, which is classified as an operating lease because almost all risks and rewards belonging to the ownership of the underlying asset have not been transferred. Please refer to Note VI (IX) for details of the investment real estate.

The maturity analysis of lease payments is presented in the following table for the total undiscounted lease payments to be received after the reporting date:

Jun. 30, 2021 Dec. 31, 2020 Jun. 30, 2020 Not more than 1 year $ 2,709 4,330 3,504

～30～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

1-2 years Total undiscounted lease payment	259 350 -
	$ 2,968 4,680 3,504

In the periods from Apr. 1 to June 30, 2021 and 2020 and from Jan. 1 to June 30, 2021 and 2020, the income tax generated in the investment property from rentals were NT$1,061 thousand, NT$1,217 thousand, NT$2,123 thousand and NT$2,603 thousand, respectively, and the direct operating expenses (including maintenance) incurred in the investment property from rentals were NT$368 thousand, NT$203 thousand, NT$640 thousand and NT$410 thousand, respectively.

(18) Employee benefits

1. Defined benefit plans

The Consolidated Company used actuarially determined pension costs as of December 31, 2020 and 2019 to measure and disclose pension costs for the interim period as there were no significant market fluctuations and no significant curtailments, settlements or other significant one-time events subsequent to the prior fiscal year reporting date.

The Consolidated Company recognized NT$208 thousand, NT$232 thousand, NT$416 thousand and NT$465 thousand of expense in profit or loss from April 1, 2020 to June 30, 2021 and 2020 and from January 1 to June 30, 2021 and 2020, respectively.

2. Defined contribution plan

As to the defined contribution plan, the Consolidated Company shall contribute the retirement funds of employees to the individual accounts for labor retirement funds of the Bureau of Labor Insurance according to 6% of the monthly salaries of labors under the provisions of Labor Pension Act. Under this plan, after contributing fixed amount to the Bureau of Labor Insurance, the Consolidated Company will not assume the legal or constructive obligations of paying extra amount.

The pension expense under the defined contribution retirement funds of the Consolidated Company from April 1 to June 30, 2021 and 2020 and from January 1 to June 30, 2021 and 2020 were NT$3,723 thousand, NT$3,295 thousand, NT$7,347 thousand and NT$5,702 thousand respectively, which have been contributed to the Bureau of Labor Insurance.

In accordance with the pension insurance system established by the government of the People’s Republic of China, the subsidiaries in Mainland China make monthly contributions to employees’ pension insurance based on a certain percentage of their salaries and wages. The monthly pension plan is administered and arranged by the government, and the above-mentioned company has no further obligation other than to

～31～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

make monthly contributions. The related pension expense from April 1 to June 30, 2021 and 2020 and from January 1 to June 30, 2021 and 2020 were NT$55,130 thousand, NT$9,384 thousand, NT$107,345 thousand and NT$48,725 thousand, respectively.

(19) Income tax

The details of the income tax expense of the Consolidated Company are as follows:

2021 Apr. to Jun. $ 249,204 56,192 (14,547)	2020 Apr. to Jun. 284,481 23,963 (42,716)	2021 Jan. to Jun. 501,248 56,192 (17,157)	2020 Jan. to Jun. 372,444 23,963 (42,716)
290,849	265,728	540,283	353,691
(18,078)	20,399	(7,349)	40,043
$ 272,771	286,127	532,934	393,734

A breakdown of the Consolidated Company's income tax expense (benefit) recognized under other comprehensive income from January 1 to June 30, 2021 and 2020 is as follows:

Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of foreign operating entities	2021 Apr. to Jun. $ 824	2020 Apr. to Jun. (4,303)	2021 Jan. to Jun. 501	2020 Jan. to Jun. (4,303)

2. Income tax approval

The Company's income tax returns have been approved by the tax authorities through fiscal 2018.

～32～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The income tax of domestic subsidiaries Jiayu Investment Co., Ltd., Ememe Robot Co., Ltd., Compertum Microsystems Inc., Lintes Technology Co., Ltd. and Genie Precision Machine Co., Ltd. has been approved through fiscal 2019.

(20) Capital and other equity

As of June 30, 2021, December 31, 2020, and June 30, 2020, the total authorized capital stock of the Company were all NT$1,550,000 thousand with a par value of $10 per share, and the actual amount issued were all NT$1,034,779 thousand.

1. Capital reserve

The components of the Company’s capital reserve are as follows:

Premium of issued shares Change in the net value of the stock of subsidiaries and associates accounted for using the equity method Employee stock options	Jun. 30, 2021 $ 3,577,768 363,639 15,399		Dec. 31, 2020 3,577,768 365,080 15,399		Jun. 30, 2020 3,577,768 368,659 15,399 3,961,826
	$ 3,956,806		3,958,247

In accordance with the Companies Act, capital surplus is required to cover losses first before new shares or cash can be issued in proportion to the shareholders’ original shares. Realized capital surplus referred to in the preceding paragraph includes premiums from the issuance of shares in excess of par value and proceeds from gifts received. In accordance with the Regulations Governing the Issuer’s Offerings and Issuance of Marketable Securities, the aggregate amount of capital surplus that may be capitalized each year shall not exceed 10% of the paid-in capital.

2. Retained earnings

In accordance with the Company’s Articles of Incorporation, the Company shall, after the final settlement of each year’s earnings, first complete tax contributions, make up for prior years’ deficits and set aside 10% as legal reserve, except when the legal reserve has reached the level of total capital; the Company is required by law to set aside or reverse special reserve. In the case of unappropriated earnings for the same period, the Board of Directors shall propose a proposal for the distribution of earnings to the shareholders for resolution, and the dividend to be distributed shall not be less than 20% of the net profit for the year after taxation, after deducting the net income provided for by law.

The Company will take into account the environment and growth of the Company and the distribution of earnings should take into account the Company’s future capital

～33～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

expenditure budget and capital requirements, and pay cash dividends of not less than 10% of the dividends distributed in the current year.

(1) Legal reserve

If the Company has no deficit, it may, by resolution of the shareholders in general meeting, issue new shares or cash out of the legal reserve to the extent that such reserve exceeds 25% of the paid-in capital.

(2) Special reserve

When the Company distributes distributable earnings, the Company accounts for other shareholders’ equity in the current year and provides a special reserve of the same amount from current period’s profit or loss as the prior period’s undistributed earnings, and a special reserve of the same amount from prior period’s undistributed earnings is not distributed. If there is a subsequent reversal in the amount of other decreases in shareholders’ equity, the reversal may be distributed in the form of a surplus.

(3) Earnings distribution

The Company's proposed distribution of earnings for fiscal 2020 reached the statutory resolution requirement through electronic voting on June 19, 2021, and was resolved at the annual shareholders' meeting held on July 26, 2021. On June 19, 2020, the shareholders' meeting resolved the distribution of the 2019 earnings, and the dividends distributed to owners are as follows:

Distributed to the holders of ordinary shares: Cash	2020	2020	Amount 1,376,256	2019 Dividend Rate 10.50	2019	2019	Amount 1,086,518
	Dividend Rate
	$ 13.30			10.50

Information on the distribution of earnings as proposed by the Board of Directors and resolved by the Shareholders’ Meeting is available on the “Public Information Observation Post System”.

3. Other equity

Balance on Jan. 1, 2021 Exchange differences arising from the translation of the net assets	Exchange differences on translation of foreign operations $ (586,953) (140,208)	Unrealized gain or loss on financial assets measured at FVTOCI (8,019) -	Total (594,972) (140,208)

～34～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

of foreign operations Unrealized gains from financial assets measured at FVTOCI Balance on Jun. 30, 2021 Balance on Jan. 1, 2020 Exchange differences arising from the translation of the net assets of foreign operations Unrealized losses from financial assets measured at FVTOCI Disposal of equity instruments measured at FVTOCI Balance on Jun. 30, 2020	-	(3,765)	(3,765) (738,945) Total (650,532) (199,815) 91 10,140 (840,116)
	$ (727,161)	(11,784)
	Exchange differences on translation of foreign operations $ (631,970) (199,815) - -	Unrealized gain or loss on financial assets measured at FVTOCI
		(18,562) - 91 10,140
	$ (831,785)	(8,331)

(21) Earnings per share

The basic earnings per share and diluted earnings per share of the Consolidated Company were calculated as follows:

2021 Apr. to Jun.	2020 Apr. to Jun. 899,485	2021 Jan. to Jun. 1,542,757	2020 Jan. to Jun. 1,312,383
$ 709,101
103,478 181	103,478 262	103,478 181	103,478 262
103,659	103,740	103,659	103,740
$ 6.85	8.69	14.91	12.68
$ 6.84	8.67	14.88	12.65

(22) Revenue from contracts with customers
Please refer to Note XIV (III) and (IV) for the disclosure of disaggregation of revenue for the major products and major regional markets.

～35～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Balance of Contract

Contract liabilities	Jun. 30, 2021 $ 180,175	Dec. 31, 2020 91,659	Jun. 30, 2020 58,815

The amounts of beginning balances of contractual liabilities as of January 1, 2021 and January 1, 2020 were respectively recognized as income of NT$13,556 thousand, NT$14,171 thousand, NT$54,776 thousand and NT$18,318 thousand as of April 1 to June 30, 2021 and 2020 and as of January 1 to June 30, 2021 and 2020.

(23) Non-operating income and expense

1. Interest income

The breakdown of interest income of the Consolidated Company is as follows:

Interest on bank deposits	2021 Apr. to Jun. $ 2,459	2020 Apr. to Jun. 9,696	2021 Jan. to Jun. 6,170	2020 Jan. to Jun. 18,101

2. Other income

The details of other income of the Consolidated Company are as follows:

Income from molding Income from compensation Income from rentals Income from the sales of R&D products Income from subsidies Others	2021 Apr. to Jun. $ 2,992 1,065 10,700 - 28,781 31,856 $ 75,394	2020 Apr. to Jun. 30,313 2,820 6,880 802 823 31,378	2021 Jan. to Jun. 7,738 11,445 18,786 - 29,042 56,145	2020 Jan. to Jun. 34,949 3,210 13,900 3,285 1,011 51,412 107,767
		73,016	123,156

3. Other income and losses

The details of other income and losses of the Consolidated Company are as follows:

Foreign exchange gain (loss) Net loss from financial	2021 Apr. to Jun. $ (88,132)	2020 Apr. to Jun. (80,706)	2021 Jan. to Jun.	2020 Jan. to Jun.
			(92,488)	(38,460)

assets (liabilities)

～36～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

measured at FVTPL:

Derivatives: Forward foreign exchange contracts 7,722 Metal commodity swap contracts 3,635 Non-derivatives 15,409 Loss from the disposal of property, plant and equipment (174) Lease modification interest - Others (2,383) Total $ (63,923) 4. Financial cost The details of the financial cost of the 2021 Apr. to Jun. Interest expense $ 5,115	7,722 3,635 15,409 (174) - (2,383)	- 3,389 3,121 (3,061) - (4,877)	11,093 - 21,077 3,289 31,721 (4,473) (1,193) (3,364) 17 - (6,626) (10,209)
	$ (63,923)	(82,134)	(36,399) (53,217)
		Consolidated Company are as follows: 2020 Apr. to Jun. 2021 Jan. to Jun. 2020 Jan. to Jun. 4,752 8,822 7,344

～37～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(24) Remuneration for employees and directors, supervisors

In accordance with the Company’s Articles of Incorporation, no less than 3% of the Company’s annual profits shall be appropriated to the Compensation of Employees and no more than 3% to the Compensation of Directors and Supervisors; however, if the Company has accumulated losses, it shall retain the amount of compensation in advance and appropriate the Compensation of Employees and Supervisors in proportion to the aforementioned. The former Compensation of employees to whom stock or cash is issued may include employees of a subordinate company who meet certain criteria.

The estimated amount of compensation of employees from April 1 to June 30, 2021 and 2020 and from January 1 to June 30, 2021 and 2020 were NT$25,700 thousand, NT$29,843 thousand, NT$54,322 thousand and NT$48,093 thousand respectively, and the estimated amount of compensation to directors and supervisors were NT$1,120 thousand, NT$1,120 thousand, NT$2,240 thousand and NT$2,240 thousand. The Company’s Net profit before tax for the period is estimated by multiplying the amount of the Company’s Net profit before issuing the compensation of employees and directors and supervisors by the proportion of the Company’s compensation distribution to employees and directors and supervisors as provided in the Company’s Articles of Incorporation, and is reported as operating costs or expenses for that period. If there is a difference between the actual distribution amount and the estimated amount for the following year, the change in accounting estimate is adjusted and the difference is recognized in profit or loss for the following year. In the event that the Board of Directors resolves to grant a compensation of employees by way of stock, the number of shares of stock-based compensation is calculated based on the closing price of the common stock on the day before the Board of Directors’ resolution.

The difference of NT$46 thousand between the actual allotment of remuneration to employees, directors and supervisors in fiscal 2019 and the estimated amount in the consolidated financial statements for fiscal 2019 has been treated as a change in accounting estimate and the difference has been recognized as profit or loss in fiscal 2020. There is no difference between the actual allotment of remuneration to employees, directors and supervisors in fiscal 2020 and the estimated amount in the consolidated financial statements for fiscal 2020.

(25) Financial instruments and fair value information

1. Credit risk

(1) Credit risk exposure

The carrying amount of a financial asset represents the maximum amount of credit risk. The maximum amount of credit risk exposure was NT$10,630,253 thousand, NT$10,286,606 thousand, and NT$10,699,798 thousand as of June 30, 2021, December

～38～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

31, 2020, and June 30, 2020, respectively.

(2) Credit risk concentration risk

As of June 30, 2021, December 31, 2020 and June 30, 2020, the Consolidated Company's accounts receivable balances from a single customer that exceeded 5% of total accounts receivable were from four different customers. The Consolidated Company regularly evaluates the probability of collection of accounts receivable and recognizes an allowance for loss, and the total loss is always within management's expectations.

(3) Impairment loss

The Consolidated Company for all notes receivable and accounts receivable adopts simplified approach to estimate the expected credit losses, i.e. using the term forecast credit losses measure, measure for this purpose, such as the notes receivable and accounts receivable department press on behalf of clients according to the terms of the contract to pay all amount due ability of credit risk characteristics shall be grouped together, and has set up into a forward-looking information. The expected credit loss analysis of notes receivable and accounts receivable of the Consolidated Company is as follows:

follows:
Not past due 1-60 days past due 61-120 days past due 121-180 days past due 181-270 days past due More than 271 days past due		Jun. 30, 2021	Expected credit loss in the duration of provision 818 1,391 2,662 2,155 1,970 6,520
	Book value of notes and accounts receivable $ 6,489,623 481,291 25,062 6,693 2,446 6,520	Weighted average expected credit loss rate
		0.01% 0.29% 10.62% 32.19% 80.54% 100.00%
	$ 7,011,635		15,516

Not past due 1-60 days past due 61-120 days past due 121-180 days past due 181-270 days past due		Dec. 31, 2020	Expected credit loss in the duration of provision 750 3,690 572 489 1
	Book value of notes and accounts receivable $ 6,413,813 479,202 5,698 1,771 2	Weighted average expected credit loss rate 0.01% 0.77% 10.04% 27.61% 50.00%

～39～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

6,547	100.00% Jun. 30, 2020	6,547
$ 6,907,033		12,049
		Expected credit loss in the duration of provision 937 432 508 101 48 - 6,358
Book value of notes and accounts receivable $ 6,218,330 187,447 3,229 383 160 - 6,358	Weighted average expected credit loss rate
	0.02% 0.23% 15.73% 26.37% 30.00% 100.00% 100.00%
$ 6,415,907		8,384

The changes in the provisions for notes and accounts receivable of the Consolidated Company are as follows:

Opening balance Acquired in business combination Recognized impairment loss (Gain on reversal) Write-offs for the period Foreign currency translation gains and losses Closing balance	2021 Jan. to Jun. $ 12,049 - 3,554 - (87)	2020 Jan. to Jun. 8,592 3,214 (929) (2,465) (28)
	$ 15,516	8,384

2. Liquidity risk

The contracts of financial liabilities are sorted by their maturity dates as follows. The

estimated interests are included, but the effect of net value agreement is excluded.

Jun. 30, 2021 Non-derivative financial liabilities: Short-term loans Long-term loans (including long- term loans - current portion) Notes payable Accounts payable Other payables Lease liabilities Derivative financial liabilities: Forward foreign exchange contracts for non-hedging purposes:	Book Value $ 752,220 21,835 15,622 3,075,408 3,041,485 271,019	Cash flow from the contract 753,007 22,155 15,622 3,075,408 3,041,485 297,403	Within 6 months 753,007 3,318 15,622 3,075,408 3,041,485 64,244	6 to 12 months - 3,499 - - - 54,537	1-to 2years - 15,135 - - - 86,863	2 to-5years - 203 - - - 90,069	More than 5 years - - - - - 1,690

～40～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

197 -	55,737 (55,540)	55,737 (55,540)	- -	- -	- -
$ 7,177,786	7,205,277	6,953,281	58,036	101,998	90,272
$ 23,996 3,574 2,501,155 1,206,695 176,250	24,680 3,574 2,501,155 1,206,695 193,213	2,303 3,574 2,501,155 1,206,695 49,038	3,318 - - - 30,274	6,973 - - - 43,091	12,086 - - - 70,810
$ 3,911,670	3,929,317	3,762,765	33,592	50,064	82,896
$ 46,000 100,768 16,515 2,616,501 2,067,499 165,208	46,099 107,779 16,515 2,616,501 2,067,499 160,753	46,099 19,947 16,515 2,616,501 2,067,499 58,179	- 15,141 - - - 35,690	- 40,384 - - - 28,661	- 31,549 - - - 38,223
$ 5,012,491	5,015,146	4,824,740	50,831	69,045	69,772

The Consolidated Company does not anticipate that the cash flows analyzed at maturity date will alter significantly or that the actual amounts will vary significantly.

Market risk - exchange rate risk
(1) Exposure to exchange rate risk

The Consolidated Company’s financial assets and liabilities exposed to significant foreign currency exchange rate risk are as follows:

		Jun. 30, 2021
$


	Foreign Currency (Note)	Exchange Rate

～41～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Financial liabilities

Financial liabilities
Currency USD RMB HKD JPY EUR Financial assets Currency USD RMB HKD JPY EUR INR VND Financial liabilities Currency USD RMB HKD JPY EUR	$
	$ $	Foreign Currency (Note) 415,424 177,119 7,601 134,465 1,105 4 3,662,009 222,790 71 2,778 75,180 33

～42～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

	Financial assets Currency USD RMB HKD JPY EUR INR VND Financial liabilities Currency USD RMB HKD JPY			Jun. 30, 2020	Jun. 30, 2020
		$ $	Foreign Currency (Note) 380,255 173,784 19,359 160,663 1,391 4 17,980 178,056 54 3,143 93,124

Note: The foreign currencies denominated in the non-functional currencies of the consolidated entities include items that have been eliminated in the consolidated financial statements for inter-group transactions.

Due to the variety of functional currencies of the Consolidated Company, information on exchange gains and losses on monetary items is presented on a consolidated basis. Foreign currency exchange gains and losses (including realized and unrealized) for the periods from April 1 to June 30, 2021 and 2020 and from January 1 to June 30, 2021 and 2020 were NT$88,132 thousand, NT$80,706 thousand, NT$92,488 thousand and NT$38,460 thousand, respectively.

(2) Sensitivity analysis

The Consolidated Company's exchange rate risk arises mainly from cash and cash equivalents denominated in foreign currencies, financial assets at FVTPL, accounts receivable and other receivables, other financial assets, short-term loans, financial liabilities at FVTPL, accounts payable and other payables, which generate foreign currency exchange gains or losses upon translation. As of June 30, 2021 and 2020,

～43～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

when the New Taiwan dollar depreciates or appreciates by 1% against the foreign currencies held by the Consolidated Company, with all other factors held constant, net income after tax would increase or decrease by $50,932 thousand and $54,762 thousand from January 1 to June 30, 2021 and 2020, respectively. The same basis was used for the analysis of both periods.

Market risk - changes in interest rates

The interest rate risk of the Consolidated Company mainly comes from the bank deposit and short-term loan of floating rate, so the interest rate change will cause the effective interest rate of bank deposit and short-term loan to change accordingly, and the future cash flow will fluctuate.

The following sensitivity analysis is based on the risk of interest rate shocks reported by financial instruments on the date of coverage. For floating rate liabilities, the analysis is based on the assumption that the reported amount of daily outstanding liabilities is current throughout the year. The rate of change used by the Consolidated Company in reporting interest rates to the main management is 1% up or down, which represents the management’s assessment of the reasonable range of possible interest rate changes.

The Consolidated Company’ financial assets with variable interest rates as of June 30, 2021, December 31, 2020, and June 30, 2020 were NT$2,599,889 thousand, NT$2,262,409 thousand and NT$2,492,485 thousand, respectively, and its financial liabilities were NT$21,835 thousand, NT$23,996 thousand and NT$55,391 thousand, respectively. If interest rates had increased or decreased by 1%, the Consolidated Company’ net income would have increased or decreased by NT$10,312 thousand and NT$9,748 thousand from January 1 to June 30, 2021 and 2020, respectively, with all other variables held constant.

5. Market risk - fair value

(1) Fair value and carrying amount

The management of the Consolidated Company believes that non-derivative shortterm financial instruments should be estimated at their fair value based on their book value on the balance sheet, and that their book value should be a reasonable basis for the estimated fair value because of the near maturity of such commodities. This method is applied to cash and equivalent cash, notes receivable and payable, accounts receivable and payable, other receivables and payables, deposit margin and short-term borrowings.

In addition to the above financial instruments, the fair value and book value information of the remaining financial instruments and investment real estate of the Consolidated Company on the financial reporting date are as follows:

==> picture [253 x 11] intentionally omitted <==

～44～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The parts measured at fair value: Financial assets: Financial assets measured at FVTPL Financial assets measured at FVTOCI Financial liabilities: Financial liabilities measured at FVTPL Not measured at fair value: Non-financial assets: Investment property	Book value $ 138,386 29,809 197 334,509	Fair value 138,386 29,809 197 466,187	Book value 122,960 22,136 - 368,019	Fair value 122,960 22,136 - 467,325	Book value 16,458 1,669 - 377,795	Fair value 16,458 1,669 - 418,217

(2) The evaluation techniques used to determine fair value are as follows
A. When financial assets are quoted publicly in an active market, this market price is the fair value. When market prices are not available, estimates are made by reference to quoted counterparties or using valuation techniques. The estimates and assumptions used are consistent with the information used by market participants as estimates and assumptions in pricing financial instruments.
B. The fair value of investment properties is based on the evaluations of independent evaluators with recognized professional qualifications and recent experience in the area and type of investment properties evaluated.
(3) Fair value hierarchy
The following table analyzes the fair value hierarchy of financial instruments and
investment property by valuation. Each fair value hierarchy is defined as follows:
A. Level 1: Publicly quoted prices (unadjusted) in an active market for identical assets or liabilities.
B. Level 2: Input parameters for an asset or liability are observable either directly (i.e., prices) or indirectly (i.e., derived from prices), except for publicly quoted prices included in Level 1.
C. Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable parameters).

Jun. 30, 2021 Measured at fair value: Financial assets measured at FVTPL Financial assets measured at FVTOCI	Level 1 $ 136,022 20,200		Level 2 - -		Level 3 2,364 9,609		Total 138,386 29,809

～45～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

$ 156,222	-	11,973
$ -	197	-
$ -	-	466,187
$ 116,780 20,120	- -	6,180 2,016
$ 136,900	-	8,196
$ -	-	467,325
Level 1 $ 16,458 -	Level 2 - -	Level 3 - 1,669
$ 16,458	-	1,669
$ -	-	418,217

(4) Transfer between the level 1 and the level 2

The Consolidated Company does not have any transfers from January 1 to June 30,

2021 and 2020.

(5) Quantitative information on the fair value measurement of significant non-observable input values (level 3)

			Ja	toJun., 2021
$	Opening balance 6,180	Profit and	Losses Recognized in other comprehensi ve income -	Additio	n Transferred to level 3 -
		Recognized in profit or loss 2,364		Purchase -

～46～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Financial assets measured at FVTOCI		2,016	-	(3,807)		11,400			-	-				9,609
	$	8,196	2,364	(3,807)		11,400			-		(6,180)			11,973
				Jan.	toJun., 2020
			Profit and Losses			Addition				Reduction
Name		Opening	Recognized	Recognized	Purchase		Transferred			Sales,		Closing
		balance	in profit or	in other			to level 3			disposal or		balance
			loss	comprehensi						clearing
				ve income
Financial assets measured at FVTPL	$	219,103	(1,375)	-	-				-	(217,728)			-
Financial assets measured at FVTOCI		6,438	-	91	-				-		(4,860)			1,669
	$	225,541	(1,375)	91	-				-	(222,588)				1,669
The above total	gains or		losses are	reported	in	“Other			gains	and	losses”			and
“Unrealized valuation gains (losses) on financial assets at							FVTOCI,” of				which		those
related to assets still held		as of June 30, 2021 and 2020 are as					follows:
						2021					2020
					Jan.		to	Jun.		Jan.		to Jun.
Total gain or loss
Recognized in (loss)	gain (reported in “Other gains				$				2,364			-
and losses”)
Recognized in other comprehensive income								(3,807)					(262)
(reported as “Unrealized valuation gains (losses)
on financial assets at FVTOCI”)

～47～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(6) Quantitative information on the fair value measurement of significant non-observable input values (level 3)

The Consolidated Company's financial assets measured at FVTPL classified as Level 3 fair value were NT$2,364 thousand, NT$6,180 thousand and NT$0 thousand as of June 30, 2021, December 31, 2020 and June 30, 2020, respectively. Quantitative information is not disclosed because there is no active market for quoted prices but reference to counter-parties' quotes, and the relationship between significant nonobservable inputs and fair values cannot be fully obtained in practice. The remaining quantitative information of significant non-observable inputs measured at fair value for Level 3 is listed below:

Relationship between significant non-observable Valuation Significant noninputs and fair Item technique observable inputs value Financial assets Net Asset Value ‧Net asset value ‧Positive fair value measured at Method relationship － FVTOCI investment in equity instruments with no active market

(26) Financial Risk Management

The Consolidated Company’ financial risk management objectives and policies are consistent with those disclosed in the 2020 consolidated financial statement; see Note VI (XXVII) to the 2020 consolidated financial statement for related information.

(27) Capital management

The Consolidated Company’ capital management objectives, policies and procedures have not changed materially from those disclosed in the 2020 consolidated financial statements; see Note VI (XXVIII) of the 2020 consolidated financial statements for related information.

(28) Investment and fund raising activities for non-cash transactions

Please refer to Notes VI (VIII) and VI (XIV) for information on the Consolidated Company’ non-cash trading investments and fundraising activities for right-of-use assets acquired under leases from January 1 to June 30, 2021 and 2020.

A reconciliation of the Consolidated Company's liabilities from fundraising activities for the periods from January 1 to June 30, 2021 and 2020 is as follows:

Non-cash change

～48～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Short-term loans Long-term loans(`含`Long- term loans - current portion) Lease liabilities Total liabilities from fundraising activities	Jan. 1, 2021 Cash flow Other Change in exchange rate Change in fair value Jun. 30, 2021 $ - 752,158 - 62 - 752,220 23,996 (2,161) - - - 21,835 176,250 (66,796) 164,427 (2,862) - 271,019
	$ 200,246 683,201 164,427 (2,800) - 1,045,074

Short-term loans Long-term loans Lease liabilities Total liabilities from fundraising activities	Jan. 1, 2020 Cash flow $ 29,980 (21,145) - (28,776) 155,411 (58,603)	Non-cash change Other Change in exchange rate Change in fair value Jun. 30, 2020 36,680 485 - 46,000 129,544 - - 100,768 72,191 (3,791) - 165,208
	$ 185,391 (108,524)	238,415 (3,306) - 311,976

VII. Related party transactions

(1) Parent company and ultimate controller: The Company is the ultimate controller of the Company and the Company’s subsidiaries.
(2) Names and relationships of related parties

The related parties with whom the Company had transactions during the period covered by these consolidated financial statements are as follows:

Name of related party Relationship with the Company

Key Management

Including directors, supervisors, managers, their relatives, spouses, etc.

(3) Material transactions with the related parties

1. Lease

The Consolidated Company entered into a one-year lease agreement with a related party for the warehouse with reference to the rental rate of the neighboring warehouses, with a total contract value of NT$60 thousand. Interest expense of NT$1 thousand, NT$0 thousand, NT$1 thousand and NT$1 thousand was recognized from April 1 to June 30, 2021 and 2020 and from January 1 to June 30, 2021 and 2020, respectively. The balance of lease liabilities as of June 30, 2021, December 31, 2020 and June 30, 2020 were NT$89 thousand, NT$0 thousand and NT$30 thousand, respectively.

～49～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(4) Major management personnel transaction

Related compensation includes:

Short-term employee benefits Post-employment benefits	2021 Apr. to Jun.	2020 Apr. to Jun.	2021 Jan. to Jun.	2020 Jan. to Jun. 28,419 615 29,034
	$ 16,098 327	13,675 326	30,860 643
	$ 16,425	14,001	31,503

VIII. Pledged assets

The carrying value of the assets pledged as collateral by the Consolidated Company was as follows:

	Name of Asset	Jun. 30, 2021 $ - 43,263		Dec. 31, 2020 - 66,669		Jun. 30, 2020 2 129,006
	Other financial assets - current Property, plant and equipment
		$ 43,263		66,669		129,008

IX. Significant contingent liabilities and unrecognized contractual commitments

(1) Significant unrecognized contractual commitments:

As of June 30,2021 , the Consolidated Company, had signed and unpaid major plant construction contracts, with the value of approximately RMB 37,430,000.

As of June 30, 2021, the Consolidated Company had outstanding land use rights purchase contracts amounting to approximately US$7,665 thousand.

As of June 30, 2021, the Consolidated Company had unpaid contracts related to information system amounting to approximately NT$10,068 thousand.

(2) The issuance of guarantee notes for bank loans, financing lines and derivative financial commodity transactions:

Guaranteed notes

Jun. 30, 2021 Dec. 31, 2020 Jun. 30, 2020 $ 1,633,082 1,570,240 1,185,190

X. Significant disaster loss: None.

XI. Significant post-period events

On May 13, 2021, the Board of Directors approved the issuance of 2,500 thousand shares of common shares with a par value of $10 per share and the issuance of 10,000 unsecured domestic convertible bonds with a par value of NT$100,000 each and a total par value of NT$1 billion, with a maturity of three years and a coupon rate of 0%. The shares and bonds are approved by the Financial Supervisory Commission on July 23, 2021 with Jin-Guan-Zheng-Fa-Zi letter No.

～50～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

1100349428 and Jin-Guan-Zheng-Fa-Zi letter No. 11003494281, respectively.

XII. Others

(1) Employee benefits, depreciation, depletion and amortization functions are summarized below:

Function Nature	April toJune, 2021	April toJune, 2021	April toJune, 2021	April toJune, 2020	April toJune, 2020	April toJune, 2020
	Operation cost	Operation expense	Total	Operation cost	Operation expense	Total
Employee benefit expenses Salaries expenses Labor and health insurance expenses Pension expense Remuneration to directors Other employee benefit expenses Depreciation expenses Amortization expenses	1,061,649 105,332 750 - 48,710 228,962 430	341,202 29,112 3,181 1,462 27,251 111,590 12,643	1,402,851 134,444 3,931 1,462 75,961 340,552 13,073	539,848 16,781 739 - 43,384 201,869 323	290,502 17,745 2,788 1,375 32,115 93,629 3,632	830,350 34,526 3,527 1,375 75,499 295,498 3,955

Function Nature	January toJune, 2021			January toJune, 2020
	Operation cost	Operation expense	Total	Operation cost	Operation expense	Total
Employee benefit expenses Salaries expense Labor and health insurance expenses Pension expense Remuneration to directors Other employee benefit expenses Depreciation expenses Amortization expenses	2,025,801 206,075 1,493 - 94,107 460,414 804	685,422 60,271 6,270 2,925 62,084 214,842 24,238	2,711,223 266,346 7,763 2,925 156,191 675,256 25,042	882,236 92,590 828 - 69,302 404,290 629	532,070 39,286 5,339 2,730 55,265 183,933 6,900	1,414,306 131,876 6,167 2,730 124,567 588,223 7,529

(2) Seasonality of operations:

The Company’s operations are subject to seasonal fluctuations due to the downstream computer industry.

～51～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

XIII. Footnote disclosure of financial statements

(1) Major transaction details

In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions form January 1 to June 30, 2021:

1. Capital lending to others:

==> picture [462 x 79] intentionally omitted <==

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

Unit: NT$1,000 ／ 1,000 in foreign currency
Collateral
[No. ] Lender Borrower Item Related Max Amount Balance at the Actual Interest Nature Business Purpose f or Allowance Name Value Individual Overall limit
Party for the term end Lending rate of the Amount the lending for bad debt Limit (Note 2) (Note 2)
Amount lending
(Note
1)
0 The Company Lotes Intracom Yes 219,365 215,630 - 4.5% 2 - Working - None - 2,704,057 5,408,114
Guangzhou pany (RMB50,000) (RMB50,000) capital
Co., Ltd. transacti
----- End of picture text -----

Note 1: The description of loaning funds to others are as follow:

(1) Where an business transaction is necessary.
(2) Where an short-term financing facility is necessary.
Note 2: The amount of the Company’s financing to a single party shall not exceed 20% of the Company’s
net worth.
The total amount of funds lent by the Company to others shall not exceed 40% of the Company’s net worth.

2. Endorsement for others:

Unit: NT$1,000 ／ 1,000 in foreign currency

No.	Name of the Company that provides the endorsement	Endorsement	Endorsement	Ceiling on amount of endorsement for a enterprise (Note 2)	Balance of the ceiling endorsement fee in the period	Ending balance of the endorsement fee	Amount actually used	Amount of endorsement backed by assets	Percentage of the accumulated amount of endorsement in the net value of current financial statement (%)	Ceiling on amount of endorsement (Note 2)	Endorsement made by parent company to subsidiary	Endorsement made by subsidiary to parent company	Endorsement made to any party in Mainland China
		Company Name	Relations hip (Note 1)
0 0 1 2 2	The Company “ Lotes Gu Lintes Technology Co., Ltd. “	REKA Technology Co., Ltd. Lotes Guangzhou Co., Ltd. aREKA Technology Co., Ltd. Lintes Technology (Suzhou) Co., Ltd. Genie Precision Machine Co., Ltd.	2 2 1 2 2	2,704,057 2,704,057 1,188,340 791,295 791,295	35,000 362,180 (USD13,000) 85,605 (USD3,000) 114,140 (USD4,000) 101,260	35,000 362,180 (USD13,000) 83,580 (USD3,000) 55,720 (USD4,000) 101,260	- - - - 16,965	- - - - -	0.26% 2.68% 1.41% 3.52% 6.40%	6,760,143 6,760,143 2,970,851 1,582,591 1,582,591	Yes “ No “ “	No “ “ “ “	No Yes No Yes No

Note 1: There are seven types of relationship between the Endorser and Endorsee, which can be marked:

(1) Companies with business dealings.
(2) Companies in which the company directly and indirectly holds more than 50% of the voting rights.
(3) Companies that hold more than 50% of the voting rights in the company, both directly and indirectly.

～52～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(4) The Company owns, directly and indirectly, more than 90 percent of the voting shares.
(5) Company that is mutually insured under a contract between its peers or co-manufacturers based on the need to perform the work.
(6) Company in which all of the contributory shareholders have given their endorsement in proportion to their shareholding in the joint venture.
(7) Intercompany performance guarantees and guarantees for pre-sale contracts in accordance with the Consumer Protection Act.

Note 2:

(1) The amount of the Company’s guarantee for a single corporate endorsement shall not exceed 20% of the net worth of the Company.
- The aggregate amount of the Company’s guarantees under external endorsement shall not exceed 50% of the net worth of the Company.
(2) The amount of Lotes Guangzhou Co., Ltd’s guarantee for a single corporate endorsement is limited to not more than 20% of the net worth of the company.
- The aggregate amount of Lotes Guangzhou Co., Ltd’s external endorsement guarantees is limited to an amount not exceeding 50% of the Company’s net worth.
(3) The amount of Lintes Technology Co., Ltd.’s guarantee for a single corporate endorsement is limited to not more than 50% of the net worth of the company.
- The aggregate amount of Lintes Technology Co., Ltd.’s external endorsement guarantees is limited to an amount not exceeding 100% of the Company’s net worth.
Securities Held at the End of Fiscal Period (excluding the equity of controlled by subsidiaries, affiliated companies, or joint company):

Unit: NT$1,000

Company which holds securities	Category and name of security	Relationship with the issuer of the security	Listed as	End of the fiscal period	End of the fiscal period	End of the fiscal period	End of the fiscal period	Note
				Shares	Book Value	Shareholding proportion	Fair value
Lotes Co., Ltd. Jiayu Investment Co., Ltd. “ “ “ “ “ “ “ Lintes Technology Co., Ltd.	SteadyBeat Technology Corporation GRAND-TEK TECHNOLOGY CO., LTD. TAIDOC TECHNOLOGY CORPORATION Lian Hong Art Company Limited Patec Precision Industry Co., Ltd. OTO PHOTONICS INC. LUCEMITEK CO., LTD. RADINET COMMUNICATIO NS INC. AICP Technology Corporation Chailease Finance Co., Ltd., Type A Preferred Stock	None “ “ “ “ “ “ “ None “	Financial assets measured at FVTOCI – non- current Financial assets measured at FVTPL - current “ “ “ “ “ “ Financial assets measured at FVTOCI - current Financial assets measured at FVTOCI – non- current	950,000 382,980 30,000 1,017,000 477,000 1,368,800 1,169,977 600,000 400,000 202,000	7,892 15,089 6,840 101,548 12,545 - - - 1,717 20,200	9.90 % 1.56 % 0.03 % 2.98 % 1.04 % 4.57 % 17.33 % 26.25 % 5.33 % 0.13 %	7,892 15,089 6,840 101,548 12,545 - - - 1,717 20,200	Note Note Note

～53～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Note: All of them were recognized in losses.

The cumulative purchase or sale of the same securities amounted to at least NT$300 million or 20% of the paid-in capital: None.
Acquisition of real property amounting to NT$300 million or 20% or more of the paid-in capital:

Unit: NT$1,000

The company which acquired the property	Name of Asset	Date of occurrence	Amount of Transaction (Note 2)	Payment condition (Note 2)	Counterparty of transaction	Relations hip	If the counterparty is a related party, the information of its previous transfer shall be provided	If the counterparty is a related party, the information of its previous transfer shall be provided	If the counterparty is a related party, the information of its previous transfer shall be provided	If the counterparty is a related party, the information of its previous transfer shall be provided	Reference for pricing	Purpose of the acquisition andthe condition of use	Other agreed matters
							Owner	Relationship with the Issuer	Date of transfer	Amount
Lotes Zhongshan Co., Ltd Lotes Hengnan Co., Ltd. Lotes Co., Ltd. Lintes Technology Co., Ltd.	Plant (Note 1) “ Land use rights Land and Building, Lot 1159, Jiankang Rd., Zhonghe Dist., New Taipei City	Oct. 2017 ~ Jun. 2021 Oct. 2019 ~ Jun. 2021 Jan. 11, 2021 Dec. 16, 2020	879,608 316,595 305,067 237,700	778,450 256,330 91,520 237,700	Chongqing Chuangyou Construction Group, etc “ GREEN i-PARK CORPORATI ON Natural person	None “ “ “	- - - -	- - - -	- - - -	- - - -	Bidding “ Mutual bargaining Appraisal report provided by an appraisal firm	Constructi on of plant “ “ For office use (Note 3)	None “ “

～54～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Note 1: Build the factory by own contracting committee.

Note 2: The conversions to NTD were made at the exchange rates prevailing on the balance sheet date.

Note 3: To be used as an office after the decoration is completed.

Disposal of real property amounting to NT$300 million or 20% or more of paid-in capital: None.
The amount of sales to or from related parties is at least $100 million or 20% of the paidin capital:

Unit: NT$1,000

The company which purchases (sells) products	Name of Transaction Counterparty	Relationship	Condition of Transaction	Condition of Transaction	Condition of Transaction	Condition of Transaction	Situation and reason for the conditions of transaction to be different from the ordinary ones	Situation and reason for the conditions of transaction to be different from the ordinary ones	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Remarks
			Purchase (sales)	Amount	Percentage in total goods purchased (sold)	Credit period	Unit Price	Credit period	Balance	Percentage in the notes and accounts receivable (payable)
Xincheng Development Co., Ltd. “ REKA Technology Co., Ltd. “ “ “ “ “ Lotes Guangzhou Co., Ltd. “ Lintes Technology (Suzhou) Co., Ltd. Lotes Hengnan Co., Ltd.	The Company Lotes Suzhou Co., Ltd. The Company Lotes Guangzhou Co., Ltd. Lotes Hengnan Co., Ltd. “ Lotes Zhongshan Co., Ltd Guangzhou Leside Technology Co., Ltd. REKA Technology Co., Ltd. Lotes Hengnan Co., Ltd. Lintes Technology Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd.	Subsidiary The ultimate parent company is the same parent company Subsidiary The ultimate parent company is the same parent company “ “ “ “ “ “ Subsidiary The ultimate parent company is the same parent company	Net revenue from the goods sold Net expense from the goods purchased Net revenue from the goods sold Net expense from the goods purchased Net expense from the goods purchased Net revenue from the goods sold Net expense from the goods purchased Net revenue from the goods sold Net expense from the goods purchased Net expense from the goods purchased Net revenue from the goods sold Net revenue from the goods sold	649,631 676,207 4,786,795 4,814,548 312,771 264,531 988,746 453,774 1,270,368 163,128 827,882 176,506	95.84 % 99.76 % 75.81 % 77.86 % 5.06 % 4.19 % 15.99 % 7.34 % 36.58 % 4.70 % 95.70 % 29.82 %	Settled by month at intervals of 90 days “ “ “ “ “ “ “ “ “ “ “	- - - - - - - - - - - -	No significant difference “ “ “ “ “ “ “ “ “ “ “	293,898 (311,024) 1,357,340 (1,188,612) (93,633) 129,120 (318,134) 431,511 (896,786) (41,465) 185,773 122,655	93.69% 99.11% 36.16% 46.12% 3.63% 3.44% 12.35% 11.49% 44.71% 2.07% 91.10% 35.65%

～55～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Zongka Technology (Shenzhen) Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd.	Guangzhou Leside Technology Co., Ltd. “	“ “	Net expense from the goods purchased Net expense from the goods purchased	319,183 155,284	82.72 % 38.20 %	“ “	- -	“ “	(313,586) (137,336)	79.45% 43.49%

8. Amounts due from related parties amounting to at least NT$100 million or 20% of paid-in

capital:

Unit: NT$1,000

Related party with accounts receivable by the Company	Name of transaction counterparty	Relationship	Balance of receivalbes from the related party	Turnover Ratio	Past due receivables from the related party	Past due receivables from the related party	Amount received after the period ended	Amount of loss
					Amount	Solution
Xincheng Development Co., Ltd. REKA Technology Co., Ltd. “ “ “ “ Lotes Suzhou Co., Ltd. Good Hope Investments Limited Lotes Guangzhou Co., Ltd. “ Lotes Zhongshan Co., Ltd Lotes Hengnan Co., Ltd. Guangzhou Leside Technology Co., Ltd. “ Lintes Technology (Suzhou) Co., Ltd.	The Company “ Lotes Guangzhou Co., Ltd. Lotes Hengnan Co., Ltd. Lotes Zhongshan Co., Ltd Guangzhou Leside Technology Co., Ltd. Xincheng Development Co., Ltd. REKA Technology Co., Ltd. “ Lotes Zhongshan Co., Ltd REKA Technology Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. Lintes Technology Co.,Ltd.	Subsidiary “ The ultimate parent company is the same parent company “ “ “ “ Parent company The ultimate parent company is the same company “ The ultimate parent company is the same company “ “ “ Subsidiary	293,898 1,357,430 896,786 129,120 324,436 431,511 311,024 861,460 1,188,612 432,083 318,134 122,655 313,586 137,336 185,773	4.46 6.21 4.24 5.06 - 4.21 4.38 - 8.23 - 7.97 3.09 4.07 4.52 5.93	- - - - - - - - - - - - - - -		117,743 1,107,777 325,803 - 76,814 325,643 118,528 - 166,092 97,258 250,740 - 61,880 - 158,623	- - - - - - - - - - - - - - -

Engagement in derivative transactions: Please refer to Note VI (II) and (XXIII).

～56～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

10. Business relationships and material transactions between parent and subsidiaries:

Business relationships and significant intercompany transactions from January 1 to June 30, 2021:

Unit: NT$1,000

				Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000
No.	Name	Transaction with	Relation ship	Transaction in 2021
				Subject	Amount	Term	Operating revenue Accounting for total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1	The Company “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ Lotes Guangzhou Co., Ltd. “ “ “ “ “ “ “	Ememe Robot Co., Ltd. Lintes Technology Co., Ltd. “ “ “ “ Jiayu Investment Co., Ltd. LOTES USA, INC. “ Xincheng Development Co., Ltd. “ “ “ “ REKA Technology Co., Ltd. “ “ “ “ Lotes Suzhou Co., Ltd. Good News Medical Co., Ltd. Lotes Guangzhou Co., Ltd. Lerain Technology Co., Ltd. LOTES VIETNAM COMPANY LIMITED “ “ REKA Technology Co., Ltd. “ “ “ “ “ Lotes Suzhou Co., Ltd. “	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3	Other receivables Other income Sales revenue Net expense from the goods purchased Accounts receivable Accounts payable Other income Administrative expenses Other payables Accounts receivable Accounts payable Net expense from the goods purchased Sales revenue Selling expenses Accounts receivable Accounts payable Sales revenue Net expense from the goods purchased Selling expenses Other income Other income Interest income Other income Other receivables R&D expenses Accounts payable Accounts receivable Accounts payable Purchases for the period Sales revenue Purchase of fixed assets Other receivables Sales revenue Purchases for the period	2,272 172 114 40,326 146 30,321 17 17,981 2,614 2,501 293,898 649,631 1,617 852 10,931 1,357,340 11,772 4,786,795 1 103 21 1,306 82 230 8 8 1,188,612 896,786 1,270,368 4,814,548 121,054 92,937 3,025 3,661	Same as other transactions “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “	0.01% -% -% 0.42% -% 0.13% -% 0.19% 0.01% 0.01% 1.29% 6.77% 0.02% -% 0.05% 5.97% 0.12% 49.85% -% -% -% 0.01% -% -% -% -% 5.22% 3.94% 14.49% 50.14% 0.53% 0.41% 0.03% 0.04%

～57～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2	Lotes Guangzhou Co., Ltd. “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ Lotes Suzhou Co., Ltd. “ “ “ “ “ “ “ “ “ “ “	Lotes Suzhou Co., Ltd. “ Lotes Hengnan Co., Ltd. “ “ “ “ “ Zongka Technology (Shenzhen) Co., Ltd. “ “ “ “ Shenzhen DeYi Automation Equipment Co., Ltd. “ “ “ “ “ Lintes Technology (Suzhou) Co., Ltd. “ Lotes Zhongshan Co., Ltd “ “ “ “ “ “ “ Guangzhou Leside Technology Co., Ltd. Zhongshan Dezhi Metal Surface Treatment Co., Ltd. “ “ Xincheng Development Co., Ltd. “ Xincheng Development Co., Ltd. “ Zongka Technology (Shenzhen) Co., Ltd. “ Lintes Technology (Suzhou) Co., Ltd. “ “ “ Shenzhen DeYi Automation Equipment Co., Ltd. “	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Accounts receivable Accounts payable Accounts receivable Accounts payable Sale of fixed assets Other receivables Purchases for the period Sales revenue Administrative expenses Accounts receivable Other receivables Sales revenue Other income Accounts receivable Accounts payable Other receivables Sales revenue Purchases for the period Other income Sales revenue Accounts receivable Other payables Accounts receivable Other receivables Sales revenue Purchases for the period Sale of fixed assets Purchase of fixed assets Accounts payable Sales revenue Purchases for the period Accounts payable Sale of fixed assets Sales revenue Accounts receivable Accounts payable Purchases for the period Sales revenue Accounts receivable Sales revenue Other receivables Accounts receivable Other income Sales revenue Purchases for the period	2,374 4,351 5,347 41,465 2,031 4,544 163,128 1,878 578 10,371 17 9,886 99 8,235 949 13 10,071 848 74 31,597 36,257 7,714 9,229 432,083 13,531 59,267 69,731 2,375 27,079 1 62,507 17,820 478 676,207 1,201 311,024 1,615 20,480 20,177 4,869 6,162 3,282 8,946 54,395 6	Same as other transactions “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “	0.01% 0.02% 0.02% 0.18% 0.01% 0.02% 1.70% 0.02% -% 0.05% -% 0.10% -% 0.04% -% -% 0.10% -% -% 0.33% 0.16% 0.03% 0.04% 1.90% 0.14% 0.62% 0.31% 0.01% 0.12% -% 0.65% 0.08% -% 7.04% 0.01% 1.37% 0.02% 0.21% 0.09% 0.05% 0.03% 0.01% 0.04% 0.57% -%

～58～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 5 5 5 6 6 6 7 2 2 2 2 2 2 3 3	REKA Technology Co., Ltd. “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ Lotes Hengnan Co., Ltd. “ “ “ “ “ “ “ “ “ Lintes Technology (Suzhou) Co., Ltd. “ “ Lintes Technology Co., Ltd. “ “ Zongka Technology “ “ “ “ “ “ REKA Technology Co., Ltd. “	Xincheng Development Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. “ “ Good Hope Investments Limited Ememe Robot Co., Ltd. Lotes Hengnan Co., Ltd. “ “ “ Shenzhen DeYi Automation Equipment Co., Ltd. Lotes Zhongshan Co., Ltd “ “ “ Guangzhou Leside Technology Co., Ltd. “ LOTES VIETNAM COMPANY LIMITED “ Shenzhen DeYi Automation Equipment Co., Ltd. “ Zongka Technology (Shenzhen) Co., Ltd. “ Lotes Suzhou Co., Ltd. “ “ “ Lotes Zhongshan Co., Ltd “ Lintes Technology Co., Ltd. “ “ Genie Precision Machine Co., Ltd. “ Jiayu Investment Co., Ltd. Lotes Zhongshan Co., Ltd “ “ Lotes Zhongshan Co., Ltd “ “ “ Xincheng Development Co., Ltd. “	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Accounts payable Sales revenue Purchases for the period Accounts payable Accounts payable Accounts receivable Sales revenue Accounts receivable Purchases for the period Accounts payable Sales revenue Sales revenue Purchases for the period Other receivables Accounts payable Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable Accounts payable Sale of fixed assets Sales revenue Accounts receivable Sales revenue Accounts receivable Accounts payable Other payables Operating expenses Other payables Sales revenue Accounts receivable Accounts payable Sales revenue Purchases for the period Accounts payable Accounts receivable Purchases for the period Accounts receivable	18,955 30,500 750 742 861,460 7,630 264,531 129,120 312,771 93,633 23,455 1,672 988,746 324,436 318,134 453,774 431,511 11,750 11,619 176,506 122,655 61,186 48,970 2,216 2,244 1,976 1,766 20,075 4,269 827,882 185,773 1,565 216 206 74,282 36 46,715 7 59 75 84 80 26,427 283	Same as other transactions “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “ “	0.08% 0.32% -% -% 3.79% 0.03% 2.75% 0.57% 3.26% 0.41% 0.24% 0.02% 10.30% 1.43% 1.40% 4.73% 1.90% 0.12% 0.05% 1.84% 0.54% 0.64% 0.22% 0.02% 0.01% 0.01% 0.01% 0.21% 0.02% 8.62% 0.82% 0.01% -% -% 0.33% -% 0.21% -% -% -% -% -% 0.28% -%

～59～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9	(Shenzhen) Co., Ltd. “ “ “ “ Lotes Zhongshan Co., Ltd “ “ “ “ “ “ “ “ “ Shenzhen DeYi Automation Equipment Co., Ltd. “	“ “ Guangzhou Leside Technology Co., Ltd. “ “ “ Shenzhen DeYi Automation Equipment Co., Ltd. “ “ “ Zhongshan Dezhi Metal Surface Treatment Co., Ltd. “ Lintes Technology (Suzhou) Co., Ltd. “ Guangzhou Leside Technology Co., Ltd. “	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Purchases for the period Accounts payable Purchases for the period Accounts payable Sales revenue Accounts receivable Sales revenue Purchases for the period Accounts receivable Accounts payable Accounts payable Purchases for the period Sales revenue Accounts receivable Purchases for the period Accounts payable	335 329 319,183 313,586 39,459 36,481 5,387 285 821 319 8,458 36,173 3,225 3,610 155,284 137,336	“ “ “ “ “ “ “ “ “ “ “ “ “ “ Same as other transactions “	-% -% 3.32% 1.38% 0.41% 0.16% 0.06% -% -% -% 0.04% 0.38% 0.03% 0.02% 1.62% 0.60%

Note 1: The number should be filled in as follows:

0 refer to parent company
Subsidiaries are numbered by company, starting with the Arabic numeral 1.
Note 2: The type of relationship with the counterparty is indicated below:
Parent company to subsidiaries
Subsidiaries to parent company
Subsidiaries to subsidiaries

～60～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(2) Information on reinvestment business:

Information on the Company’s investees from January 1 to June 30, 2021 was as follows (excluding investees in China):

Unit: NT$1,000

Name of the company investing	Name of investee company	Location	Main business	Initial investment amount (Note 1)	Initial investment amount (Note 1)	Shares held at the end of the fiscal period	Shares held at the end of the fiscal period	Shares held at the end of the fiscal period	Gain/loss of investee company in the fiscal period	Gain/loss in the investment recognized in the fiscal period	Remarks
				End of this period	End of the previous year	Shares	Percentage	Book Value
The Company “ “ “ “ “ “ “ “ “ Lotes Investment Ltd. Good Hope Investments Limited “ Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. “ “ “	Lotes Investment Ltd. Good Hope Investments Limited Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. Lotes USA, Inc. LOTES EU GmbH Lerain Technology Co., Ltd. Mikronpoint Co., Ltd. LOTES Vietnam CO., Ltd. Loteson International Investments Limited Xincheng Development Co., Ltd. REKA Technology Co., Ltd. Jae You Co., Ltd. Wangden Investments Limited Ememe Robot Co., Ltd. Compertum Microsystems Inc. Good News Medical Co., Ltd. Lintes Technology	Samoa “ “ Anguilla Taiwan America Germany Taiwan “ Vietnam Hong Kong Samoa Hong Kong “ “ Taiwan “ “ “	Holding and investment businesses “ “ “ General investment Market development Market development Chip design, testing and sales Manufacture and sale of machinery and electronic components Manufacture of connectors for the information industry, communications industry, and consumer electronics industry Holding and investment businesses Sales of connectors for the information industry, communications industry, and consumer electronics industry Sales of connectors for the information industry, communications industry, and consumer electronics industry Holding and investment businesses Holding and investment businesses Manufacture of electrical and audiovisual products Manufacture of electronic components Manufacture and sale of machinery and equipment, electronic parts and components, and optical instruments Manufacture of	725,753 11,180 557,658 13,930 690,000 69,650 3,315 47,321 5,000 172,732 725,753 2,786 2,822 557,677 13,930 69,600 43,880 6,360 486,926	741,904 11,428 570,068 14,240 690,000 71,200 3,502 9,385 5,000 - 741,904 2,848 2,884 570,077 14,240 69,600 43,880 250 486,926	26,050,000 401,281 20,016,426 500,000 69,000,000 2,500,000 100,000 4,732,059 500,000 6,200,000 26,050,000 100,000 101,281 20,016,756 500,000 6,960,000 2,632,800 636,000 29,712,788	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 26.80% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 94.37% 35.34% 25.44% 52.13%	5,729,111 1,550,974 2,450,152 136,962 1,101,249 74,914 2,338 31,224 4,075 169,570 5,941,719 1,354 688,136 2,470,376 136,962 (8,004) 26,244 5,419 824,968	644,505 52,919 240,963 17,364 59,362 756 (1,541) (40,329) (861) (1,952) 644,505 (232) 53,151 240,963 17,364 (242) (13,889) (2,520) 64,312	597,846 52,919 240,505 17,364 58,891 756 (1,541) (8,485) (861) (1,952) 644,505 (232) 53,151 240,963 17,364 (228) (4,908) (354) 33,533	`註`2 `註`2 `註`2

～61～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lintes Technology Co., Ltd. “ Lintes Technology Co., Ltd. “ Jilong Co., Ltd.	Co., Ltd. Jiajun Investment Co., Ltd. Genie Precision Machine Co., Ltd. Compertum Microsystems Inc. Jilong Co., Ltd. Rihui Co., Ltd.	“ “ Taiwan Samoa “	electronic parts and components, other electrical and electronic machinery and equipment General investment Manufacture and sale of optical molds Manufacture of electronic components Holding and investment businesses Holding and investment businesses	15,000 164,833 14,620 137,907 137,907	15,000 164,833 14,620 140,976 140,976	1,500,000 14,671,000 877,200 4,950,000 4,950,000	100.00% 60.00% 11.77% 100.00% 100.00%	15,001 207,551 8,744 225,749 225,749	- 24,424 (13,889) (18,672) (18,672)	- 14,147 (1,635) (31,972) (31,972)	`註`2 `註`2

Note 1: The original investment amount was converted into New Taiwan dollars using the exchange rate at the balance sheet date.

Note 2: Investment income recognized in the current period includes adjustments for unrealized gains or losses on intercompany transactions.

～62～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(3) Investment in Chinese Company:

Names of investee companies in Mainland China, major business activities, and other related information:

Unit: NT$1,000

Name of investee company in Mainland China	Main business	Paid-in capital (Note 3)	Method of investment (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of the fiscal period (Note 3)	Amount of investment remitted out or recovered during theperiod	Amount of investment remitted out or recovered during theperiod	Accumulated investment amount remitted from Taiwan at the end of the fiscal period (Note 3)	Gain/loss of investee company in the fiscal period	Shareholding ratio	Gain/loss in investment recognized in the fiscal period (Note 2)	Carrying amount of investment at the end of the fiscal period	Investment income remitted back to Taiwan by the end of the fiscal period
					Remitted	Recovered
Lotes Guangzhou Co., Ltd. Lotes Suzhou Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Lotes Hengnan Co., Ltd. Lintes Technology (Suzhou) Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. Lotes Zhongshan Co., Ltd Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Hengnan Deyi Property Development Co., Ltd. Guangzhou Leside Technology Co., Ltd. Chongqing Fuxinrui Electronic Technology Co., Ltd.	Manufacture of connectors for the information industry, communications industry, and consumer electronics industry Manufacture of connectors for the information industry, communications industry, and consumer electronics industry Research and development of electronic products, plastic materials and products, and import and export business Manufacture of connectors for the information industry, communications industry, and consumer electronics industry Development and production of optical communication measurement instruments, optical transceivers with speed of 10GB/S and above, and provision of technical services for the above products Manufacturing of robotic arms, automation equipment and relevant components Manufacturing of connectors for the information industry, communications industry, and consumer electronics industry, and production of industrial robots, automation equipment, and related parts Surface treatment of metal products and plastic products Development of real estate, lease of premises, landscape design and interior decorating Research, testing and development R&D and sales of electronic components, automobile components and accessories, computers and accessories, development of molds and the import and export of goods and technologies	743,862 556,900 13,930 709,423 137,907 107,815 1,552,536 178,973 99,190 20,269 4,313	(2) (2) (2) (3) (2) (3) (3) (3) (3) (3) (3)	710,430 556,900 13,930 - 137,907 - - - - - -	- - - - - - - - - - -	- - - - - - - - - - -	710,430 556,900 13,930 - 137,907 - - - - - -	644,505 240,963 17,364 48,431 (14,585) 9,692 133,115 (11,236) (58) 16,309 (962)	100.00% 100.00% 100.00% 100.00% 52.13% 100.00% 100.00% 100.00% 100.00% 100.00% 51.00%	597,841 240,505 17,364 46,446 (14,536) 9,692 133,115 (11,236) (769) 16,309 (491)	5,729,064 2,450,099 136,962 987,528 138,788 119,336 1,732,470 152,622 97,279 33,487 419	- - - - - - - - - - -

Note 1: There are six types of investments:

(1) Investment in Chinese Corporation via Third Region Remittance.
(2) Establishment of a company to reinvest in a continental company through a third regional investment.
(3) Reinvest in Chinese companies by re-investing in existing companies in third regions.
(4) Direct Investment
(5) Others.
(6) NA.
Note 2: The investment gain or loss recognized in the current period has been reconciled with the unrealized gain or loss from intercompany transactions.
Note 3: The balance sheet date exchange rates are used to translate the paid-in capital and remittance of cumulative investment amounts into New Taiwan dollars.

～63～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Investment ceiling in Mainland China:

Name	Accumulated amount remitted from Taiwan at the end of the fiscal period for investment in Mainland China (Note 1)	Investment amount approved by Investment Commission, MoEA (Note 1)	Investment ceiling in Mainland China according to the regulations made by Investment Commission, MoEA
Lotes Co.,Ltd.	NT$1,281,260thousand	NT$1,422,959thousand	NT$8,112,171thousand
Lintes Technology Co.,Ltd.	NT$137,907thousand	NT$137,907thousand	NT$949,554thousand

Note 1: The conversions to NTD were made at the exchange rates prevailing on the balance sheet date.

Significant transactions with the investee companies in China:

Please refer to the “Significant Transactions” and “Business relationship and significant transactions between the Company and its subsidiaries” for details of the significant transactions between the Company and its investee companies in Mainland China, directly or indirectly, from January 1 to June 30, 2021.

(4) Principal shareholder information:

Shares Major Shareholders	Number of shares held	Shareholding ratio
Jinling Investment Co., Ltd.	10,956,237	10.58%
Jiaming Investment Co., Ltd.	9,797,037	9.46%
2nd discretionary entrustment to investment account of Fuh Hwa Investment for New Labor Pension Fund 2018	7,340,775	7.09%
Cathay Life Insurance Company, Ltd.	5,236,000	5.06%

Note:

(1) This table summarizes the principal shareholders’ information for the Company, based on the last business day of each calendar quarter, for the common and preferred shares of the Company for which the stockholders hold at least 5% of the Company’s outstanding common shares and treasury shares. The difference between the number of shares recorded in the financial statements and the number of shares for which the Company has completed the dematerialized shares may be due to differences in the basis of calculation.
(2) If the above information is related to a shareholder’s share held in a trust, it is disclosed in the client’s separate account of the trustee’s trust account. For shareholders who apply for declaration of internal shareholdings of more than 10% according to the Securities and Exchange Act, their shareholdings include their own shares plus shares held by them in the trust and have the right to decide on the use of trust property; please refer to Market Observation Post System for more information on the declaration of internal shareholdings.

～64～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

XIV. Segmental Information

(1) General Information

The company’s main business is the trading of various hardware and tool parts, the manufacturing, processing and trading of various terminals and their finished connectors, the import and export trade of the preceding items, and the agency of the preceding items related to domestic and foreign manufacturers’ products in the tender quotation and distribution business.

(2) Information on reportable segment profit or loss, assets, liabilities and their measurement basis and reconciliation

The Consolidated Company’s major decisions are based on the performance appraisal and resource allocation by the production regions. After analysis, the two regions meet the conditions of consolidation into a single operating segment, therefore the Consolidated Company as a whole is a single operating segment, and the information of segment profit or loss, segment assets and segment liabilities are consistent with the financial statements.

(3) Product and Labor Provision Information

The Consolidated Company’s revenue information from external customers is as follows:

follows:
Product and Labor Name	2021 Apr. to Jun. $ 1,280,662 1,406,732 771,653 538,937 420,432 73,218 367,385	2020 Apr. to Jun. 1,320,102 1,295,692 760,605 481,914 683,240 19,618 174,060	2021 Jan. to Jun. 2,609,032 2,585,459 1,517,957 1,205,989 897,270 148,220 638,659	2020 Jan. to Jun. 2,227,619 2,236,817 1,258,748 832,322 1,074,710 48,025 193,830 7,872,071
DT Server NB Strategic Projects LINTES(High Speed Cable) Automotive Others Total
	$ 4,859,019	4,735,231	9,602,586

(4) Geographical Information

The Consolidated Company’s geographical information is shown below, where revenue is classified based on the geographic location of customers and non-current assets are classified based on the geographic location of assets.

Area Revenue from external customers: Taiwan Mainland China Other countries Total	2021 Apr. to Jun.	2020 Apr. to Jun. 350,761 3,533,373 851,097	2021 Jan. to Jun.
	$ 511,783 3,889,482 457,754
	$ 4,859,019	4,735,231

～65～

AI assistant

LOTES — Interim / Quarterly Report 2021

52339_rns_2021-11-15_bc387764-461d-4932-a935-8ae2c5af2c04.pdf

Lotes Co., Ltd. and its Subsidiaries

Consolidated Financial Statements and Accountant’s Review Report

Notice to Readers :

Table of Contents

Independent Auditor’s Report

Foreword

Scope

Conclusion

KPMG

June 30, 2021 and 2020 are reviewed only, not audited in accordance with GAAS

Lotes Co., Ltd. and its Subsidiaries

Consolidated Balance Sheet

June 30, 2021, December 31, 2020, and June 30, 2020

Unit: 1,000 TWD

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Comprehensive Income

April 1 to June 30, 2021 and 2020 and January 1 to June 30, 2021 and 2020

Unit: NT$1,000

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Changes in Equity

January 1 to June 31, 2021 and 2020

Unit: NT$1,000

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Cash Flows

January 1 to June 30, 2021 and 2020

Reviewed only, not audited in accordance with GAAS

Lotes Co., Ltd. and its Subsidiaries

Notes to the Consolidated Financial Statements Second Quarter 2021 and Second Quarter 2020

(Except as otherwise indicated, the unit for all amounts in this document is NT$1,000)

I. Company History

II. Date and Procedures of Approval of Financial Statement

III. Application of New and Revised Standards and Interpretations

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

IV. Summary of Major Accounting Policies

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

1. Subsidiary listed in the Consolidated Financial Statement

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Subsidiary not listed in the Consolidated Financial Statement: none.

(3) Employee benefits

(4) Income tax

V. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

VI. Descriptions for important accounting items

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Financial assets measured at FVTOCI

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(2) Identifiable assets acquired and liabilities assumed

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(6) Subsidiaries with significant non-controlling interests

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(7) Property, plant and equipment

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(8) Right-of-use assets

(9) Investment property

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(10) Intangible assets

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(13) Long-term loans

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Other leases

(15) Refund liabilities - current

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

1. Defined benefit plans

2. Defined contribution plan

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(19) Income tax

2. Income tax approval

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(20) Capital and other equity

1. Capital reserve

2. Retained earnings

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

3. Other equity

LOTES Interim / Quarterly Report 2021