LPI - Annual Report 2020 | FinancialReports.eu

Stock code: 2369

Lingsen Precision Industries, LTD.

Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

Address: No. 5-1, S. 2nd Rd., Tanzi Dist., Taichung City 427058, Taiwan (R.O.C.) TEL: (04)25335120

I t e m 1. Cover Page 2. Table of Contents 3. Independent Auditor's Report 4. Parent Company Only Balance Sheets 5. Parent Company Only Statements of Comprehensive Income 6. Consolidated Statements of Changes in Equity 7. Parent Company Only Statements of Cash Flows 8. Notes to Parent Company Only Financial Statements (1) Company History (2) Approval Date and Procedures of The Financial Statements (3) New Standards, Amendments and Interpretations Adopted (4) Summary of Significant Accounting Policies (5) Significant Accounting Assumptions and Judgement, And Major Sources of Estimation Uncertainty (6) Explanation of Significant Accounts (7) Related-Party Transactions (8) Pledged Assets (9) Significant Commitments and Contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Information on Foreign-Currency-denominated Assets and Liabilities (13) Other Disclosures 1. Information on Significant Transactions 2. Information on Investees 3. Information on Investment in Mainland China 4. Information on Major Shareholders 9. Statements of Major Accounting Items	P a g e 1 2 3～6 7 8～9 10 11～12 13 13 13～16 16～28 28 29～54 54～55 55 56 - - 56～57 57 57 57～58 58 65～78	F i n a n c i a l S t a t e m e n t s N o . o f N o t e - - - - - - - 1. 2. 3. 4. 5. 6.～25. 26. 27. 28. - - 29. 30. 30. 30. 30. -

Independent Auditors' Report

To Lingsen Precision Industries, LTD.

Opinion

We have reviewed the accompanying parent company only balance sheets of Lingsen Precision Industries, LTD. as at December 31, 2019 and 2020, and the related parent company only statements of comprehensive income as at 2020 and 2019, as well as the related statements of changes in equity and of cash flows for, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows at 2020 and 2019 in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (“ROC GAAS”). Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the parent company only financial statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of 2020. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these

matters.

Key audit matters of parent company only financial statements of 2020 are described below: Revenue Recognition

The Company's main revenue is from service income of wafer fabrication as well as packaging and final testing of the integrated circuit (IC), which is an index of business performance for the management. The authenticity of recognition is of most significance to the financial statements, for the authenticity of revenue recognition is a key audit matter. Refer to note 4 and 20 in the parent company only financial statements to see accounting policies related to revenue cognition.

Our audit procedures on the matters mentioned above mainly include:

understanding the selling model, evaluating the appropriateness of revenue recognition policy, evaluating and testing the effectiveness of the relevant internal control to the timing of revenue recognition in the sales cycle.
conducting detailed testing by sampling the sales receipts, reviewing delivery order, sales invoice and other related documents, further ascertaining whether the object is consistent, and sending a letter regarding to service income to that customer, in order to confirm the authenticity of service income.

Responsibilities of the management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers," and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance in the Company, including the audit committee, are responsible for overseeing the financial reporting process.

Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GASS will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, parent company only or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with ROC GASS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

From the matters communicated with those charged with governance, we determine the key audit matters of the parent company only financial statements of 2020. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Deloitte & Touche Auditor Shu-Chin, Chiang Auditing and Attestation No FSC No. 1000028068

Auditor Ting-Chien, Su Auditing and Attestation No FSC No. 1070323246

March 18, 2021

---Notice to Readers---

The accompanying financial statements are intended only to present the financial position,financial performance 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 financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. 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.

Lingsen Precision Industries, LTD. Balanced sheet

2020 and December 31, 2019

Amounts expressed in thousands of New Taiwan Dollars

December 31,2020 A m o u n t % $ 1,084,329 16 114,509 2 - - 1,098,847 16 237,007 3 514 - 284,720 4 190,835 3 3,010,761 44 8,457 - 829,935 12 2,661,865 39 155,098 2 89,751 1 241 - 93,249 2 3,838,596 56 $ 6,849,357 100 $ 134,759 2 310,405 5 446,678 6 19,450 - 4,386 - 417,600 6 46,168 1 1,379,446 20 314,000 5 1,156 - 151,784 2 54,241 1 1,822 - 523,003 8 1,902,449 28 3,801,023 56 1,384,604 20 - - 192,020 3 ( 166,267 ) ( 3 ) ( 64,644 ) ( 1 ) ( 199,828 ) ( 3 ) 4,946,908 72 $ 6,849,357 100	December 31,2019	December 31,2019
A m o u n t $ 1,084,329 114,509 - 1,098,847 237,007 514 284,720 190,835 3,010,761 8,457 829,935 2,661,865 155,098 89,751 241 93,249 3,838,596 $ 6,849,357 $ 134,759 310,405 446,678 19,450 4,386 417,600 46,168 1,379,446 314,000 1,156 151,784 54,241 1,822 523,003 1,902,449 3,801,023 1,384,604 - 192,020 ( 166,267 ) ( 64,644 ) ( 199,828 ) 4,946,908 $ 6,849,357	A m o u n t $ 1,503,012 80,561 36 888,935 306,901 16,055 224,682 147,560 3,167,742 7,105 764,697 3,220,683 171,458 105,367 234 11,289 4,280,833 $ 7,448,575 $ 188,068 264,983 424,648 12,378 4,894 345,600 103,421 1,343,992 731,600 893 167,111 77,356 913 977,873 2,321,865 3,801,023 1,451,696 359,085 226,856 ( 461,077 ) ( 74,458 ) ( 176,415 ) 5,126,710 $ 7,448,575	%

The accompanying notes are an integral part of these financial statements.

Lingsen Precision Industries, LTD. Parent Company Only Statements of Comprehensive Income For the years ended December 31, 2020 and 2019

Amounts expressed in thousands of New Taiwan Dollars, only except for loss per share

2020		2019
A m o u n t $ 4,628,930 4,260,775 368,155 50,968 142,056 138,918 358 332,300 35,855 5,694 14,342 909 47,886 490 3,482 ( 9,480 ) ( 248,008 ) ( 184,685 )		A m o u n t $ 3,871,836 3,898,841 ( 27,005 ) 54,117 152,302 150,091 ( 10 ) 356,500 ( 383,505 ) 8,335 11,407 635 26,318 10 2,730 ( 10,558 ) ( 203,859 ) ( 164,982 )		%
				100 101 1 ) 1 4 4 - 9 10 ) - - - 1 - - - 5 ) 4 )
	( (		( ( ( (

(Continued)

2020		2019
A m o u n t ( $ 148,830 ) ( 15,513 ) ( 164,343 ) 1,828 1,352 6,102 ( 366 ) 8,916 ( 139 ) 8,777 ($ 155,566 ) ($ 0.44 ) ($ 0.44 )		A m o u n t ( $ 548,487 ) ( 3,524 ) ( 552,011 ) 12,139 1,379 ( 4,752 ) ( 2,428 ) 6,338 ( 7,906 ) ( 1,568 ) ($ 553,579 ) ($ 1.47 ) ($ 1.47 )		%
( ( ( (	( ( (	( ( ( ( (	( ( (	14 ) - 14 ) - - - - - - - 14 )
(		( ( ( ( (
( ( (

The accompanying notes are an integral part of these financial statements.

Lingsen Precision Industries, LTD. Statements of changes in equity For the years ended December 31, 2020 and 2019

Amounts expressed in thousands of New Taiwan Dollars

		Retained earnings (Note 19) Unappropriated earnings (Unappropriated retained earnings) Legal reserve Appropriated retained earnings (Note 4) $ 359,085 $ 127,687 $ 218,641 - 99,169 ( 99,169 ) - - - - - - - - - - - ( 552,011 ) - - 9,711 - - ( 542,300 ) - - ( 38,249 ) 359,085 226,856 ( 461,077 ) 359,085 ) - 359,085 - ( 34,836 ) 34,836 - - - - - 67,156 - - ( 164,343 ) - - 1,462 - - ( 162,881 ) - - - - - ( 887 ) - - ( 2,499 ) $ - $ 192,020 ($ 166,267 )	Retained earnings (Note 19) Unappropriated earnings (Unappropriated retained earnings) Legal reserve Appropriated retained earnings (Note 4) $ 359,085 $ 127,687 $ 218,641 - 99,169 ( 99,169 ) - - - - - - - - - - - ( 552,011 ) - - 9,711 - - ( 542,300 ) - - ( 38,249 ) 359,085 226,856 ( 461,077 ) 359,085 ) - 359,085 - ( 34,836 ) 34,836 - - - - - 67,156 - - ( 164,343 ) - - 1,462 - - ( 162,881 ) - - - - - ( 887 ) - - ( 2,499 ) $ - $ 192,020 ($ 166,267 )	Retained earnings (Note 19) Unappropriated earnings (Unappropriated retained earnings) Legal reserve Appropriated retained earnings (Note 4) $ 359,085 $ 127,687 $ 218,641 - 99,169 ( 99,169 ) - - - - - - - - - - - ( 552,011 ) - - 9,711 - - ( 542,300 ) - - ( 38,249 ) 359,085 226,856 ( 461,077 ) 359,085 ) - 359,085 - ( 34,836 ) 34,836 - - - - - 67,156 - - ( 164,343 ) - - 1,462 - - ( 162,881 ) - - - - - ( 887 ) - - ( 2,499 ) $ - $ 192,020 ($ 166,267 )	Other equity (Note 4) Unrealized gains or losses of financial assets through other comprehensive income Transaction difference on translation of financial statements of foreign operation at fair value ( $ 14,127 ) ( $ 87,301 ) - - - - - - - - - - ( 7,906 ) ( 3,373 ) ( 7,906 ) ( 3,373 ) - 38,249 ( 22,033 ) ( 52,425 ) - - - - - - - - - - ( 139 ) 7,454 ( 139 ) 7,454 - - - - - 2,499 ($ 22,172 ) ($ 42,472 )	Other equity (Note 4) Unrealized gains or losses of financial assets through other comprehensive income Transaction difference on translation of financial statements of foreign operation at fair value ( $ 14,127 ) ( $ 87,301 ) - - - - - - - - - - ( 7,906 ) ( 3,373 ) ( 7,906 ) ( 3,373 ) - 38,249 ( 22,033 ) ( 52,425 ) - - - - - - - - - - ( 139 ) 7,454 ( 139 ) 7,454 - - - - - 2,499 ($ 22,172 ) ($ 42,472 )	Treasury stocks (Note 19) ( $ 176,415 ) - - - - - - - - ( 176,415 ) - - - - - - - ( 23,413 ) - - ($ 199,828 )		Total equity
					Transaction difference on translation of financial statements of foreign operation ( $ 14,127 ) - - - - - ( 7,906 ) ( 7,906 ) - ( 22,033 ) - - - - - ( 139 ) ( 139 ) - - - ($ 22,172 )
		Legal reserve $ 359,085 - - - - - - - - 359,085 359,085 ) - - - - - - - - - $ -	Appropriated retained earnings $ 127,687 99,169 - - - - - - - 226,856 - ( 34,836 ) - - - - - - - - $ 192,020
( (	(		(	( (	( ( ( ( ( ( (	( ( (	( ( ( (	( ( ( ( (	$ 5,755,066 - 92 76,000 ) 1,131 552,011 ) 1,568 ) 553,579 ) - 5,126,710 - - 64 - 164,343 ) 8,777 155,566 ) 23,413 ) 887 ) - $ 4,946,908
				( ( ( (
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				( ( ( (				( ( (

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The accompanying notes are an integral part of these financial statements.

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Lingsen Precision Industries, LTD.

Parent Company Only Statements of Cash Flows

For the years ended December 31, 2020 and 2019

Amounts expressed in thousands of New Taiwan Dollars

C o d e Cash flows from operating activities A10000 Net loss before tax Adjustment items A20100 Depreciation expenses A20300 Expected credit losses (including reversals of impairment losses or impairment gains) A20900 Interest expenses A21200 Interest revenue A21300 Dividend Income A22400 Share of the loss of subsidiaries and associates accounted for using the equity method A22500 Disposal of interest of property, plant, and equipment A23800 Inventory falling price loss A24100 Exchange gains A29900 Amortization of prepayments A32200 Provision A30000 Net changes in operating assets and liabilities A31125 Contract Assets A31130 Notes receivable A31150 Accounts receivable A31180 Other receivables A31200 Inventories A31240 Other current assets A32150 Accounts payable A32180 Other payables A32230 Other current liabilities A32240 Net defined benefit liabilities A33000 Cash generated from operations A33100 Interest received A33300 Interest paid A33500 Income tax paid AAAA Net cash provided by (used in) operating activities	2020 ( $ 148,830 ) 668,151 358 9,480 ( 5,694 ) ( 909 ) 248,008 ( 490 ) 1,653 ( 2,789 ) 1,480 7,072 ( 33,948 ) 36 ( 211,560 ) 72,312 ( 61,691 ) ( 45,963 ) 47,346 52,627 ( 57,253 ) ( 21,287 ) 518,109 5,964 ( 8,458 ) 15,541 531,156	2019
		( $ 548,487 ) 739,262 ( 10 ) 10,558 ( 8,335 ) ( 635 ) 203,859 ( 10 ) 915 ( 2,820 ) 1,855 292 ( 3,311 ) 3,595 ( 52,389 ) 142,320 ( 12,555 ) 10,104 91,758 11,215 79,391 ( 46,163 ) 620,409 8,362 ( 9,457 ) ( 4,155 ) 615,159

(Continued)

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(Continued)

C o d e Cash flows from investing activities B00020 Disposal of financial assets at fair value through other comprehensive income B02200 Acquisition of subsidiaries, net of cash B02300 Disposal of subsidiaries, net of cash B02700 Acquisition of property, plant, and equipment B02800 Disposal of property, plant, and equipment B03700 Increases in refundable deposits B03800 Decreases in refundable deposits B06700 Increases in other non-current assets B07100 Increase in prepayments for business facilities B07600 Dividends received BBBB Net cash provided by (used in) investing activities Cash flow from financing activities C00100 Increases in short-term loans C00200 Decreases in short-term loans C01600 Long-term borrowings C01700 Repayments of long-term debt C03000 Increases in guarantee deposits received C03100 Decreases in guarantee deposits received C04020 Payments of lease liabilities C04500 Cash dividends paid C04900 Treasury stocks acquired C09900 Unclaimed dividend CCCC Net cash provided by (used in) financing activities EEEE Net increase (decrease) in cash and cash equivalents E00100 Cash and cash equivalents at beginning of period E00200 Cash and cash equivalents at end of period	2020 $ - ( 308,170 ) - ( 132,995 ) 5,901 ( 7 ) - ( 844 ) ( 89,496 ) 909 ( 524,702 ) 524,328 ( 575,868 ) - ( 345,600 ) 909 - ( 5,557 ) - ( 23,413 ) 64 ( 425,137 ) ( 418,683 ) 1,503,012 $1,084,329	2019
		$ 11,751 ( 30,490 ) 1,792 ( 267,024 ) 10 - 800 ( 644 ) ( 14,896 ) 635 ( 298,066 ) 504,210 ( 376,244 ) 430,000 ( 356,659 ) - ( 11 ) ( 6,502 ) ( 76,000 ) - 92 118,886 435,979 1,067,033 $1,503,012

The accompanying notes are an integral part of these financial statements.

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Lingsen Precision Industries, LTD.

Notes to Parent Company Only Financial Statements

For the years ended December 31, 2020 and 2019

(Amounts Expressed in thousands of New Taiwan Dollars unless Otherwise Specified)

1. Company history

Lingsen Precision Industries, LTD. (the Company) was established in Taichung Export Processing Zone in April 1973 and began its operation in July 1973. The main business is IC packing and testing as well as optoelectronic devices.

In April 1998, the company's shares were listed on the Taiwan Stock Exchange (TWSE).

The parent company only financial statements were expressed in New Taiwan dollars, which is the Company's functional currency.

2. Approval date and procedures of the consolidated financial statements

These parent company only financial statements were approved by the Board of Directors on March 18, 2021.

3. Application of new standards, amendments and interpretations

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC) Application of aforementioned amendments will not have a significant effect on the Company's accounting policies.
b. IFRSs endorsed by FSC applicable in 2021
Effective date issued by
New standards, amendments, and interpretations I A S B Amendments to IFRS 4, 'Extension of the Temporary effect on the date of Exemption from Applying IFRS 9' issuance
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and Effective for annual IFRS 16 'Interest rate benchmark reform - Phase periods beginning on or II' after January 1, 2021
Amendments to IFRS 16'COVID-19-Related Rent Effective for annual Concessions' periods beginning on or after June 1, 2020
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c. The IFRSs issued by IASB but not yet endorsed and issued into effect by FSC

Effective date issued by New standards, amendments, and interpretations I A S B ( N o t e 1 ) 'Annual Improvements 2018-2020' January 1, 2022 (Note 2) Amendments to IFRS 3 'Reference to the Conceptual Framework' January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28 'dealing with Not yet determined the sale or contribution of assets between an investor and its joint venture or associate' IFRS 17, ‘Insurance contracts’ January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 'Classification of Liabilities as January 1, 2023 Current or Non-current' Amendments to IAS 1 'Disclosure of Accounting January 1, 2023 (Note 6) Policies' Amendments to IAS 8 'Definition of Accounting January 1, 2023 (Note 7) Estimates' Amendments to IAS 16 'Property, Plant and January 1, 2022 (Note 4) Equipment: Proceeds before Intended Use' Amendments to IAS 37 'Onerous Contracts—Cost of January 1, 2022 (Note 5) Fulfilling a Contract'

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: Amendments to IFRS 9 are applicable to the exchange of financial liabilities or revision of agreements during the periods beginning on or after January 1, 2022. Amendments to IAS 41, 'Agriculture' are applicable to the fair value at the periods beginning on or after January 1, 2022. Amendments to IFRS 1 'First-time Adoption of International Financial Reporting Standards' are applicable at the periods beginning on or after January 1, 2022.
Note 3: Amendments are applicable to the merge and acquisition at the periods beginning on or after January 1, 2022.
Note 4: Amendments are applicable to plant, property and equipment in and under necessary places and conditions which meet the operation way expected from the management at the periods beginning on or after January 1, 2021.
Note 5: The Amendments are applicable to all contracts which have not fulfilled obligations on January 1, 2022.
Note 6: The amendments are applicable for annual periods beginning on or after January 1, 2023.
Note 7: The amendments are applicable to the changes on accounting estimates and accounting policies at annual periods beginning on or after January 1, 2023.
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1) Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments state that the Company shall follow the definition of significance and the information on significant accounting policies to be disclosed. The information on accounting policies is of big significance If it is expected that the information is able to affect policies made on the basis of such financial statements by the major user of general financial statements. The amendments declare that:

It is unnecessary that the Company discloses the information on insignificant transactions, other events or conditions which is of no significance to accounting policies.
The Company may judge that the related information is significant due to the nature of transactions, other events or conditions, even if the amount is not material.
Not all accounting policies regarding to material transactions, other events or conditions are themselves material to the financial statements.

Additionally, those amendments explain that if the information relates to significant transactions, other events or conditions and meets the following matters, it may be of big significance:

(1) is changed during the period and affects the significance of financial statements,
(2) is chosen from alternatives permitted by IFRS Standards,
(3) is developed in accordance with IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors' in the absence of an IFRS Standard that specifically applies,
(4) requires to be determined by preliminary judgement or assumptions, or (5) relates to complex accounting, and users of the financial statements would otherwise not understand the relating transactions, other events or conditions.
2) Amendments to IAS 8 'Definition of Accounting Estimates'

The amendments state that accounting estimates are amount affected by measurement uncertainty in financial statements. The Company may have to measure the figures in financial statements using the amount which cannot be observed directly and need to be estimated when it applies the accounting policies. Hence, valuation techniques and the inputs are used in the estimates for this purpose. Changes on valuation techniques and the inputs are changes on accounting estimates if they are not corrections of prior period errors.

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Addition to the aforementioned influences, up to the reporting date, the Company will continue evaluating other influences on financial status and performance resulting from amendments to rules or explanations. The related influences are to be disclosed once the evaluation is accomplished.

4. Summary of significant accounting policies

a. Compliance statement
The financial statements have been prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities.”
b. Basis of preparation

The parent company only financial statements have been prepared on the historical cost basis except for financial instruments and the present value of the defined benefit obligation deducting the net defined benefit liabilities of the fair value of any plan assets which are measured at fair value.

The fair value measurement is categorized into different levels hierarchy based on the observability and significance of inputs:

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

In preparing the parent company only financial statements, the equity method is adopted to the investments in subsidiaries and associates. For the purpose of making the current profit and loss, other comprehensive income and equity in the parent company only financial statements identical to those in the Company's owner, several accounting treatment differences under individual and this basis are adjusted into 'Investments Accounted for Using Equity Method,' 'Share of the Profit or Loss of Subsidiaries and Associates Accounted for Using the Equity Method,' 'Share of Other Comprehensive Income of Subsidiaries and Associates Accounted for Using Equity Method,' and related items.

c. Criteria for classifying assets and liabilities into current and non-current Current assets include:
1) the asset primarily for the purpose of trading,
2) the asset expected to be realized within twelve months after the date of statement of financial position, and
3) cash and cash equivalent, unless the asset is restricted from being exchanged or
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used to settle a liability for at least twelve months after the date of statement of financial position.

Current liabilities include:

1) the liability primarily for the purpose of trading,
2) liabilities expected to be settled within twelve months after the maturity of the debt, even if the liability at the date of statement of financial position to complete the long-term refinancing prior to the financial statements or reschedule payment agreement, and
3) liabilities not having an unconditional right to defer settlement for at least twelve months after the date of statement of financial position.

If none of the above criteria is met, the liability or asset is classified as non-current.

d. Foreign currency

In preparing the financial statements, transactions in currencies (foreign currencies) other than the Company’s functional currency are recognized at the exchange rates prevailing at the dates of the transactions.

Foreign currency monetary amount is translated at the closing rate at each date of the balance sheet. Exchange differences arising from settlement or translation are recognized as profit or loss at the period.

Non-monetary foreign currencies held at fair value at the exchange rates prevailing at the date of transaction; non-monetary foreign currencies held at fair value through other comprehensive income are recognized in other comprehensive income.

Non-monetary items carried at historical cost is reported using the exchange rate at the date of the transaction and will not calculated again.

In preparing the parent company only financial statements, assets and liabilities from foreign operation, including subsidiaries whose location or currency are different from the Company, are translated into the presentation currency, the New Taiwan dollar, at the exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates at the period. The resulting currency translation differences are recognized in other comprehensive income.

If the Company disposes all equity in foreign operations, parts of equity in foreign operations' subsidiaries but loses its control, or retained equity in foreign operations' associates are financial assets and treated under accounting policies

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relating to financial instruments, all accumulated exchange differences relating to foreign operations are reclassified to profit or loss.

If a partial disposal of foreign operations' subsidiaries do not result in a loss of control, accumulated exchange differences are included to equity transaction in proportion but not recognized as profit or loss. Under any disposal of foreign operations, accumulated exchange differences are reclassified to profit or loss in disposal proportion.

e.

Inventories

Inventories include raw materials, finished good Inventory, work in process. Inventories are stated at the lower of cost or net realizable value. The lower of cost and net realizable value is based on the individual inventory items. Net realized value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. The inventory cost is measured by using First In, First Out.

f.

Investment in subsidiaries

Investments in subsidiaries accounted for using the equity method.

Subsidiaries are entities which the Company holds the control of.

Under the equity method, an investment is initially recognized in the statements of financial positional cost and adjusted thereafter to recognize the Company’s share of profit or loss and other comprehensive income of the subsidiaries as well as the distribution received. The Company also recognizes its share in the changes in equities of subsidiaries.

Changes in equity in the ownership of subsidiaries which do not result in loss of control are disposed as equity transaction. The difference between carrying amount invested and the fair value paid and payable or received and receivable is directly recognized as equity.

The loss of shares of the subsidiary equals or exceeds the Company's interest in that subsidiary, including the carrying amount of that subsidiary under equity method and other long-term equity as the Company's net investment in that subsidiary, is recognized as loss according to proportion of shareholding.

The Company considers cash-generating unit in the entire financial statement as testing for impairment and compares its recoverable amount with its carrying amount. If the recoverable amount of assets increases, the reversal of impairment loss will be recognized as profit. However, the carrying amount of assets after the reversal of impairment loss shall not exceed the carrying amount that would have been

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determined net of required amortization and have no impairment loss been recognized. Impairment loss of goodwill shall not reverse in the subsequent period.

If the Company loses the control of its subsidiary, it remeasures the retained investments in its former subsidiary as the fair value on initial recognition of a financial asset. The difference between the fair value of the retained investments and any disposal proceeds and the carrying amount of investment at the date is recognized in the current profit or loss. All amount related to that subsidiary is also recognized in other comprehensive income. The accounting treatment is compliance with the basis of rules that Company needs to follow for its direct disposal of assets or liabilities.

Unrealized profit and loss from downstream transactions with a subsidiary are eliminated in the parent company only financial statements. Profit and loss from upstream and sidestream transactions between subsidiaries are recognized in the Company’s parent company only financial statements only to the extent that interests in the subsidiary are not related to the Company.

g.

Investments in associates

The associates are entities which are material to the Company, but not subsidiaries or joint venture companies.

Investments in the associates are accounted for using the equity method.

Under the equity method, an investment is initially recognized in the statements of financial positional cost and adjusted thereafter to recognize the Company’s share of profit or loss and other comprehensive income of the associates as well as the distribution received. The Company also recognizes its share in the changes in equities of associates.

The Company discontinues recognizing its share of further losses if its share of losses of the associate equals or exceeds its interest in the associate. The Company recognizes the additional losses and liabilities which occur in the scope of legal obligation, constructive obligation or payment on behalf of the associates only.

The entire carrying amount of the investment is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss does not amortized to any assets as part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

Property, plant, and equipment

The property, plant and equipment are recognized at costs and subsequently

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measured at costs of the amount less accumulated depreciation.

Property, plant and equipment in the course of construction for production are recognized as the cost, which includes professional service fees and borrowing costs eligible for capitalization. When completed and ready for intended use, such assets are classified to the appropriate categories of property, plant and equipment, and depreciation of these assets commences.

Depreciation is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis.

When the derecognition of property, plant and equipment commences, the difference between and the net disposal proceeds and the carrying amount is recognized as the gain or loss.

Impairments of related assets including property, plant and equipment, right-of-use assets and contract cost

At the end of each reporting period, the Company reviews whether there is any indication that its property, plant and equipment, right-of-use assets have suffered an impairment loss. If any indication exists, the recoverable amount of the asset is estimated. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher one of which the fair value less costs to sell and its use value. If the recoverable amount of individual assets or cash-generating units is lower than its carrying amount, it would be decreased to its recoverable amount and the impairment loss is recognized in profit or loss.

Inventories recognized in customers' contracts are recognized as impairment loss in accordance with Inventory write off policy and the aforementioned regulations. Subsequently, the excess of carrying amount of assets associated with contract cost over the price received from providing relevant products or service, less direct relevant costs, is recognized as impairment loss. Then the carrying amount of assets associated with contract cost is computed to its cash-generating unit to evaluate the impairment losses on cash-generating unit.

When impairment loss subsequently reverses, the carrying amounts of the asset, cash-generating units or contract cost and related assets are increased to the revised recoverable amounts. However, the increased carrying amounts shall not exceed the

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carrying amounts of the asset, cash-generating units or contract cost and related assets which were not recognized as impairment loss at the past period (less amortization or depreciation). The reversal of impairment loss is recognized as profit or loss.

j. Financial instruments

Financial assets and liabilities shall be recognized in the parent company only financial statements when the Company becomes a party to the contractual provisions of the instruments.

At initial recognition, the financial assets and liabilities are measured at its fair value. In the case of the financial assets and liabilities not at fair value through profit or loss, transaction costs are directly attributable to the acquisition or issue of financial assets and financial liabilities. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Financial assets

Regular way purchase and sale of financial assets are recognized and derecognized using trade date accounting.

1) Classification of measurement

Financial assets held by the Company are classified to financial assets measured at amortized cost and investments in equity instruments measured at fair value through other comprehensive income.

(1) Financial assets measured at amortized cost

The Company's financial assets are measured at amortised cost if both of the following conditions are met:

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

Financial assets measured at amortized cost include cash and cash equivalent, contract assets, note receivables, account receivables, other receivables, other current assets and refundable deposits. When the recognition commences, effective interest method is used to determine the carrying amount less any amortised cost of depreciation. Any exchange gains and losses are recognized as gains and losses.

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Credit losses on financial assets are significant financial difficulty of the issuer or borrower, a breach of contract, it becoming probable that the borrower will enter bankruptcy or other financial reorganization, or the disappearance of an active market for the financial asset because of financial difficulties.

(2)

Cash equivalents, for the purpose of meeting short-term cash commitments, consist of highly liquid time deposits and investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and acquired within three months. Investments in equity instruments measured at fair value through other comprehensive income

On initial recognition, the Company may irrevocably designate investments in equity instruments that is not held for trading and not recognized as contingent consideration as at FVTOCI.

Investments in equity instruments measured at fair value through other comprehensive income are measured at fair value. Subsequently the changes in fair value are reported in other comprehensive income and accumulated in other equity. on disposal of investments, the accumulated profit or loss is directly transferred to retained earnings and no reclassified to profit or loss.

The dividend from investments in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss upon the Company's right to receive payment is established, except for apparently the dividend representing the recovery of the partial investment cost.

2)

Impairments of financial assets and contract assets

At the date of each balance sheet, the Company reviews expected credit losses to estimate the impairment loss of financial assets, including notes receivable, and contract assets measured at amortized cost.

The loss allowance for accounts receivable is measured at an amount equal to useful lives expected credit losses. Other financial assets shall be evaluated if credit risk increases significantly after recognition. When the credit risk has not increased, a loss allowance is recognized at an amount equal to expected credit loss within 12 months. If, on the other hand, there has been a significant increase in credit risk since initial recognition, a loss allowance is

22 -

recognized at an amount equal to expected credit loss resulting from all possible default events over the expected life of a financial instrument.

Expected credit losses are weighted average credit losses with the probability of default events. 12-month expected credit losses are expected credit losses that result from default events possible within 12 months after the reporting date. Lifetime expected credit losses result from all possible default events over the expected life of the financial instruments.

For the purpose of internal controls on credit risk, without considering the collaterals it holds, the Company determines the following events as a breach of contract:

(1) There is internal or outside information prevails that it is not possible the borrower pays off the debt.
(2) The overdue exceeds the average credit period, unless there is reasonable and evidencable information prevails the extent of a breach of contract is more appropriate.

All impairment losses on financial assets is decreased its carrying amount through contra accounts.

3) Derecognition of financial assets

The Company derecognizes the financial assets only when the contractual rights to the cash flows from the financial assets expire, or when it transfers the financial assets and substantially all the risks and rewards of ownership of the financial assets to another entity.

On derecognition of financial assets at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of Investments in equity instruments measured at fair value through other comprehensive income, the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

Financial Liabilities

Follow-up measurement

Financial liabilities are measured at amortised cost using effective interest method.

Derecognition of financial liabilities

On the derecognition of financial liabilities, the difference between their

23 -

carrying amount and the consideration paid and payable , including any transfer of non-cash assets or liabilities, is recognized as profit or loss.

k.

Provision

The amount recognized as a provision is, taking risk and uncertainty of obligation into consideration, the best estimate of the expenditure required to settle the obligation at the date of balance sheet.

l.

Revenue recognition

The Company allocates the transaction price to each performance obligation and recognizes the revenue when each of the obligation is satisfied after the customer has identified it.

1) Sales revenue

Sales revenue comes from the sale of semiconductor materials. Since the clients are eligible for pricing and using the products as well as responsible for reselling and taking the risk of depreciation upon the delivery of semiconductor materials, the Company shall recognize the revenue and accounts receivable upon the sale.

2) Service Income

Service Income comes from packaging and final testing.

When the customer simultaneously receives and consumes the benefits provided by the Company's performance of packaging and final testing service, or the customer controls an asset which the Company's performance has created or enhanced, the related revenue is recognized. Packing and final testing of products counts on involvement of technicians. The Company measures the work in progress by the percentage of completion. The contract with customer states that the customer will be billed after the packing and final testing or the delivery is completed. A contract asset is thus recognized when the Company renders the service and transferred to accounts receivable when the packing and final testing or delivery is completed. Final testing counts on the involvement of technicians. The Company measures the work in progress by the percentage of completion. Contract customer will be billed after the completion of service, and the Company will recognize accounts receivable when rendering the service.

m.

Lease

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

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1) The Company as lessor

Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

2)

Under the operating lease, lease payments less lease incentives granted are recognized as revenue on a straight-line basis. The initial direct cost which occurs on granting operating leases is the carrying amount accumulated to the underlying assets and is recognized as expense on a straight of line basis. The Company as lessee

Except for payments for low-value asset leases and short-term leases applicable to exemption of recognition are recognized as expenses on a straight-line basis, the Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of the lease.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities, lease payments made before commencement date less lease incentives granted, initial direct costs as well as estimated costs to restore the underlying assets. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the parent company only balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments and the default fine arises from lease termination. The lease payments are discounted using the interest rate in a lease if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized as profit or loss.

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Lease liabilities are presented on a separate line in the consolidated balance sheets.

n . Borrowing Costs

Borrowing Costs requires that borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset, that necessarily takes a substantial period of time to get ready for its intended use or sale, are included in the cost of the asset.

Where funds are borrowed specifically, costs eligible for capitalization are the actual costs incurred less any income earned on the temporary investment of such borrowings.

Other borrowing costs at the period are recognized as profit or loss. Government grants

A government grant is recognized only when there is reasonable assurance that the Company will comply with any conditions attached to the grant and the grant will be received.

The grant receivable as compensation for costs already incurred or for immediate financial support, with no future related costs, shall be recognized as profit or loss in the period in which it is receivable.

Employee benefits

1) Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expenses in that period when the employees render service.

2) Pensions

For defined contribution plans, the amount of contribution payable in respect of service rendered by employees in that period should be recognized as expenses.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the Projected Unit Credit Method. Service cost and net interest on the net defined benefit liability are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur.

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Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

q.

Net defined benefit liability represents the actual deficit in the Company’s defined benefit plan. Net defined benefit liability shall not exceed the present value of refunds from the plan or reductions in future contributions to the plan. Income tax

The provision for income tax recognized in profit or loss comprises current and deferred tax.

1) Current tax

The Company has determined the current losses and calculated receivable taxes in accordance with regulations established by the jurisdiction for tax return.

According to Income Tax Act in Republic of China, an additional income tax leived at undistributed surplus earnings are recognized in shareholders' annual meeting.

2) Deferred tax

Deferred tax is accounted for temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit or loss.

Deferred tax liability is generally recognized for all taxable temporary differences. Deferred tax asset is recognized for deductible temporary differences or loss carryforwards to the extent that taxable profit is probably available.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company can control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits to realize the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the date of balance sheet and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered. The deferred tax assets originally not recognized is also

27 -

reviewed at the date of balance sheet and increased to the extent that it is probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset is recovered, based on tax rates and laws that have been enacted or substantively enacted by the date of balanced sheet. The measurement of deferred tax liabilities and assets reflects the tax consequences that arise from the manner in which the Company expects, at the date of balance sheet, to recover or settle the carrying amount of its assets and liabilities.

3)

Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except the current and deferred tax that relates to items recognized in other comprehensive income or directly in equity are recognized respectively in other comprehensive income or directly in equity.

Significant accounting assumptions and judgement, and major sources of estimation

uncertainty

In the application of the Company’s accounting policies, the management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experiences and other factors that are considered relevant. Actual results may differ from these estimates.

The Company has taken COVID-19 into consideration on significant accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period when the estimates are revised if the revisions affect only that period. If revisions affect both current and future periods, the accounting estimates are recognized in the current and future periods. Major source of estimates and assumption uncertainty – Income Tax

Upon the end of 2020, the balance of unused loss carryforwards is NT$719,458,000. The carrying amount of deferred tax assets related to unused tax losses is NT$55,999,000 and the carrying amount of deferred tax assets related to temporary differences is NT$33,752,000. The realization of the deferred tax asset depends mainly on its future profitability or the taxable temporary difference. A significant reversal of deferred tax assets will be recognized as gain or loss if the real profits in the future are less than expected.

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6. Cash and cash equivalent

6.	Cash and cash equivalent	Cash and cash equivalent	Cash and cash equivalent
7.	December 31,2020 December 31,2019 Cash on Hand and Petty Cash $ 263 $ 273 Check and Demand deposit 443,140 602,231 Cash equivalent Time deposits 490,000 750,000 Short-Term Notes and Bills 150,926 150,508 $ 1,084,329 $ 1,503,012 Annual percentage rate(%) Cash in Banks 0.001-0.05 0.001-0.38 Time deposits 0.12-0.42 0.22-0.68 Short-Term Notes and Bills 0.23 0.45 Financial assets at fair value through other comprehensive income-non-current December 31,2020 December 31,2019 Listed and OTC stocks ETREND Hightech Corp. $ 2,265 $ 1,743 Emerging stocks Amtek Semiconductors Co., Ltd. (Amtek Semiconductors) 6,192 5,362 Xpert Semiconductor Inc. - - $ 8,457 $ 7,105			December 31,2019
		Listed and OTC stocks ETREND Hightech Corp. Emerging stocks Amtek Semiconductors Co., Ltd. (Amtek Semiconductors) Xpert Semiconductor Inc.	December 31,2020 $ 2,265 6,192 - $ 8,457
					$ 1,743 5,362 - $ 7,105

The Company invests the aforementioned common stocks in accordance with long-term strategic objectives and expects to profit from long-term investments. The management deems if the short-term volatility at fair value of such investments recognized in profit or loss is not consistent with the aforementioned long-term investment plan, it will be determined that such investments are measured through other comprehensive income at fair value.

For the disposal of financial assets measured through other comprehensive income at fair value in subsidiaries of the Company in 2020, the realized loss NT$2,499,000 was transferred to retained earnings.

8. Accounts receivable

ounts receivable
Amortized cost Total carrying amount Less: Allowance for bad debts	December 31,2020 $ 1,100,496 ( 1,649 ) $ 1,098,847	December 31,2019
	(	(	$ 890,226 1,291 ) $ 888,935

The average collection period for selling products and rendering service is 60 to 90 days, excluding accounts receivable. Credit of key customers is rated by using other

29 -

public available financial information and historic transaction records. The Company continues supervising credit risk exposure and credit rating of the counterparty, as well as distributing the total transaction amount into different qualified customers. In addition, the management shall review and approve counterparty's line of credit for the purpose of managing credit risk exposure.

To mitigate credit risk, the management has designated functional working group responsible for decision on line of credit, credit approval and other supervision to ensure proper action has been taken to collect overdue accounts receivable. In addition, the collectible amount of accounts receivable shall be reviewed individually at the date of balance sheet to ensure the uncollectible accounts receivable has been listed to appropriate impairment loss. According these, the management considers the Company's credit risk has significantly decreased.

The loss allowance for accounts receivable is measured at an amount equal to useful lives expected credit losses. For the useful lives expected credit losses, customers' default on records and present financial position, economic trends, as well as GDP expectation and industry outlook are considered. The experience on the Company's credit losses presents that types of loss on different customer groups do not bring obvious differences. Thus the rate of expected credit losses is set based on accounts receivable aging, without further grouping customers.

If any evidence shows the counterparty faces significant financial difficulty and the collectible amount cannot be reasonably expected, the Company will directly offset the relevant accounts receivable but keep track of the receivables. The recovered amount is recognized in profit or loss.

The loss allowance for accounts receivable is measured as follows:

December 31, 2020 Expected credit loss(%) Total carrying amount Allowance for loss Amortized cost December 31, 2019 Expected credit loss(%) Total carrying amount Allowance for loss Amortized cost	0 - 9 0 d a y s	0 - 9 0 d a y s	A g i n g 91-180 days 2 $ 28,777 ( 576 ) $ 28,201 2 $ 20,896 ( 422 ) $ 20,474	A g i n g 181-365 days 10 $ - - $ - 10 $ - - $ -	A g i n g over 365 days 100 $ - - $ - 100 $ - - $ -	T o t a l	T o t a l
	(	0.1 $ 1,071,719 1,073 ) $ 1,070,646 0.1 $ 869,330 869 ) $ 868,461	(			(	$ 1,100,496 1,649 ) $ 1,098,847 $ 890,226 1,291 ) $ 888,935
	(		(			(

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Changes on allowance for accounts receivable loss are as below:

Balance at the beginning of the year Provision (Reversal) Balance at the end of the year Other receivables Time deposits with an initial maturity of more than three months ax Refund Receivable thers Annual percentage rate of time deposits with an initial maturity of more than three months (%) Inventories Raw material Finished good Inventory Work in process	2020 $ 1,291 358 $ 1,649 December 31,2020 $ 220,000 13,586 3,421 $ 237,007 0.3-0.815 December 31,2020 $ 284,709 11 - $ 284,720		2019
		(
		$ 295,000 10,898 1,003 $ 306,901 0.45-1.065 December 31,2019
		$ 224,417 246 19 $ 224,682

9. Other receivables

10. Inventories

Inventory-related operating costs as of 2020 and 2019 are respectively NT$4,260,775,000 and NT$3,898,841,000.

Operating costs include the following items:

Revenue from sale of scraps Inventory Valuation Losses	2020 ( $ 34,329 ) 1,653	2019
		( $ 29,883 ) 915

11. Investments accounted for using the equity method

Investment in subsidiaries Investments in associates	December 31,2020 $ 829,935 $ -	December 31,2019
		$ 764,697 $ -

a. Investment in subsidiaries

Investment in subsidiaries
I n v e s t e e s Private entity Lingsen Holding (Samoa) Inc.	December 31,2020 A m o u n t Equity % $ 175,821 100	December 31,2019
	A m o u n t $ 175,821	A m o u n t $ 180,613	Equity %
			100

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Panther Technology Co., Ltd. Sooner Power Semiconductor Co., Ltd. Lee Shin Investment Co., Ltd. (Lee Shin Investment) Lingsen America Inc. (Lingsen America) Nexus Material Corporation Less: transferred treasury shares Accumulated impairment	325,495 64 188,779 99 235,215 100 60,192 100 27,162 78 1,012,664 ( 176,415 ) ( 6,314 ) $ 829,935	321,655 64 125,655 99 229,051 100 63,239 100 27,213 78 947,426 ( 176,415 ) ( 6,314 ) $ 764,697

Sooner Power Semiconductor Co., Ltd. has conducted the capital increase of NT$250,000,000 in December 2020, which was all subscribed by the Company to maintain its share at 99%.

The Company has been approved by Investment Commission, MOEA to invest in Lingsen Holding (Samoa) Inc. at NT$30,040,000 (US$1,000,000), NT$28,130,000 (US$1,000,000) and NT$30,490,000 (US$1,000,000) respectively in May and December 2020 and January 2019. In the meanwhile, Lingsen Holding (Samoa) Inc. indirectly reinvested in Ningbo Liyuan Technology Co., Ltd. through the investment company Li Yuan Investments Co., Ltd.

See Table 3 and 4 for detailed investments in subsidiaries indirectly held by the Company.

The share of profit or loss and other comprehensive income of subsidiaries accounted for using the equity method in 2020 and 2019 are in in accordance with auditors' reports of each subsidiaries as of the same period.

b. Investments in associates

December 31, 2020 December 31, 2019 I n v e s t e e s A m o u n t Shares A m o u n t Shares Private entity Qi Feng Technology Co., Ltd. $ 11,417 30% $ 11,417 30% Less: accumulated impairment ( 11,417 ) ( 11,417 ) - - $ $

Investments accounted for using the equity method as well as the Company's

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share of profit or loss and other comprehensive income are not calculated in accordance with auditors' reports. However, the management of the Company determines that it shall have little influence if financial statements of Qi Feng Technology Co., Ltd. are not audited.

12. Property, Plant and Equipment

erty, Plant and Equipment
Assets used by the Company Assets subject to operating leases	December 31,2020 $ 2,466,197 195,668 $ 2,661,865	December 31,2019
		$ 3,020,224 200,459 $ 3,220,683

a. Assets used by the Company

2020 Cost Buildings Machinery and equipment Transportation equipment Office equipment Other facilities Total costs Accumulated depreciation Buildings Machinery and equipment Transportation equipment Office equipment Other facilities Total accumulated depreciation	Balance at the beginning of t h e y e a r $ 2,279,636 4,322,982 19,114 59,177 250,060 6,930,969 774,065 2,917,306 18,039 39,995 161,340 3,910,745 $ 3,020,224	I n c r e a s e $ 6,240 56,025 2,271 2,463 35,922 $ 102,921 $ 97,679 505,023 1,000 8,946 45,789 $ 658,437	D e c r e a s e $ 59,340 647,701 2,000 3,645 57,075 $ 769,761 $ 59,340 642,290 2,000 3,645 57,075 $ 764,350	Reclassificati o n $ - 6,900 - - - $ 6,900 $ - - - - - $ -	Balance at the e nd o f t h e y e a r
					$ 2,226,536 3,738,206 19,385 57,995 228,907 6,271,029 812,404 2,780,039 17,039 45,296 150,054 3,804,832 $ 2,466,197

2019	Balance at the beginning of t h e y e a r	E f f e c t s o f retrospectivel y ap p lyin g I F R S 1 6	I n c r e a s e	D e c r e a s e	Reclassificati o n	Reclassificati o n	Balance at the en d of th e y e a r
Cost Buildings Machinery and equipment Transportation equipment Office equipment Other facilities Unfinished construction Total costs Accumulated depreciation Buildings Machinery and equipment Transportation equipment	$ 2,589,061 4,778,999 19,794 61,090 219,077 6,142 7,674,163 792,589 3,094,482 17,737	( $ 277,992 ) - - - - - ($ 277,992 ) ( $ 74,292 ) - -	$ 7,277 268,084 - 184 37,385 668	$ 46,333 742,621 680 2,097 9,567 - $ 801,298	$ 7,623 18,520 - - 3,165 ( 6,810 ) $ 22,498 ( $ 89 ) - -	$ 7,623 18,520 - - 3,165 6,810 ) $ 22,498	$ 2,279,636 4,322,982 19,114 59,177 250,060 - 6,930,969
			$ 313,598
			$ 102,190 565,445 982	$ 46,333 742,621 680			774,065 2,917,306 18,039

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Balance at the beginning of t h e y e a r	E f f e c t s o f retrospectivel y ap p lyin g I F R S 1 6	E f f e c t s o f retrospectivel y ap p lyin g I F R S 1 6	Balance at the beginning of t h e y e a r (r e s t a t e d)	I n c r e a s e	D e c r e a s e	Reclassificati o n	Balance at the en d of th e y e a r
32,990 120,014 4,057,812 $ 3,616,351	(	- - $ 74,292 )	32,990 120,014 3,983,520 $ 3,412,651	9,102 50,893	2,097 9,567	- - ($ 89 )	39,995 161,340
				$ 728,612	$ 801,298		3,910,745
							$ 3,020,224

Depreciation is computed on a straight-line basis over the following estimated useful live:

Buildings
Plant building	45-50 year
Hydropower air-conditioning
engineering	3-20 years
Machinery and equipment	3-7 years
Transportation equipment	5-7 years
Office equipment	3-7 years
Other facilities	3-7 years

See note 27 for the amount of property, plant, and equipment used by the Company pledged as collaterals

b. Assets subject to operating leases

Assets subject to operating	leases
2020	Balance at the beginning of t h e y e a r $ 279,629 79,170 $ 200,459 Effe cts o f retrospective ly applying I F R S 1 6 Balance at t h e beginning of t h e y e a r (r e s t a t e d) $ 277,992 $ 277,992 $ 74,292 $ 74,292	I n c r e a s e Balance at the end of theyear $ - $ 279,629 $ 4,791 83,961 $ 195,668 I n c r e a s e Reclassificat i o n Balance at the end of the y e a r $ - $ 1,637 $ 279,629 $ 4,789 $ 89 79,170 $ 200,459	Balance at the end of theyear
Cost Buildings Accumulated depreciation Buildings 2019 Balance at t h e beginning of t h eye a r Cost Buildings $ - Accumulated depreciation Buildings - $ -			$	279,629 83,961 195,668 Balance at the end of the y e a r $ 279,629 79,170 $ 200,459
Buildings 2019 Cost Buildings Accumulated depreciation Buildings
		I n c r e a s e $ - $ 4,789	$

The Company has used buildings based on operating leases with a lease term of 1 to 18 years. All operating lease contracts include the clause where the lessee shall adjust the lease payment according to market rent when a right of renewal is exercised.

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The operating lease payments receivable for the buildings is as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 Years	December 31,2020 $ 10,735 9,690 4,530 4,530 4,530 20,888 $ 54,903	December 31,2019
		$ 9,579 9,121 9,121 3,961 3,961 16,505 $ 52,248

Depreciation is computed on a straight-line basis over the following estimated useful live:

useful live:
Buildings Lease agreements a. Right-of-use assets Carrying amount of right-of-use assets Land Buildings Addition to right-of-use assets Depreciation expense of right-of-use assets Land Buildings Transportation equipment b. Lease liabilities Carrying amount of lease liabilities Current Non-current	December 31,2020 $ 153,804 1,294 $ 155,098 2020 $ - $ 4,277 646 - $ 4,923 December 31,2020 $ 4,386 $ 151,784	45-50 year December 31,2019
		$ 169,518 1,940 $ 171,458 2019
		$ 5,032 $ 4,768 646 447 $ 5,861 December 31,2019
		$ 4,894 $ 167,111

13.Lease agreements

Ranges of discount rates for lease liabilities are as follows:

Land Buildings Transportation equipment	December 31,2020 0.67%-0.91% 0.67%-0.91% -	December 31,2019
		0.67% 0.67% 0.67%

c. Material leases and terms

The Company leases several lands and buildings for the use of plants, office

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buildings and employee dormitories with a lease term of 1 to 10 years. Upon the termination of the contract, the lands and buildings do not contain a bargain purchase option for the Company.

d. Information on other lease

See Note 12 for agreements that the Company sells property, plant and equipment used by the Company under operating leases.

Expenses relating to short-term leases Total cash outflow for leases		2020 $ 120 $ 6,837 )		2019
				$ 3,833 $ 11,506 )
	(		(

The Company leases certain machinery and equipment, buildings and building leases which qualify as short-term leases. The Company has elected to apply the recognition exemption and thus did not recognize right-of-use assets and lease liabilities for these leases.

14. Other assets

r assets
Current Supply inventory Time Deposit Pledge (Note 27) Prepayments Payments on behalf of others Input Tax Others Non-current Prepayments for business facilities Prepayments	December 31,2020 $ 102,003 71,000 10,245 5,086 2,284 217 $ 190,835 $ 91,957 1,292 $ 93,249	December 31,2019
		$ 64,823 71,000 6,286 3,902 929 620 $ 147,560 $ 9,361 1,928 $ 11,289

15. Borrowings

a. Short-term bank loans

Short-term bank loans
Credit loan Import and export financing Annual percentage rate(%) Credit loan Import and export financing	December 31,2020 $ 50,000 84,759 $ 134,759 0.8 0.90-1.32	December 31,2019
		$ 150,000 38,068 $ 188,068 0.96-1.05 2.48-2.80

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b. Long-term bank loans

Long-term bank loans
Collateralized borrowings Credit loan Less: amount falling due in one year Amount falling due after one year Annual percentage rate(%) Collateralized borrowings Credit loan Maturity Collateralized borrowings Credit loan r payables Wages payable Accounts payable, factory supplies Vacation pay payable Accounts payable, equipment Others	December 31,2020 $ 641,600 90,000 731,600 ( 417,600 ) $ 314,000 0.42-1.30 0.42-1.34 2021.11-2022.12 2021.11-2022.04 December 31,2020 $ 172,667 124,636 48,290 20,963 80,122 $ 446,678	December 31,2019

		(
		$ 158,769 87,434 47,100 51,270 80,075 $ 424,648

16. Other payables

17. Provisions - Current

Provisions for sales returns and allowances are, estimated under experiences, judgement of the management and other known reasons for the probable sales returns and allowances, and recognized as the subtraction of operating revenue upon the related service is provided and products are sold at the current year.

Changes on provisions are as below:

Changes on provisions are as below:
Balance at the beginning of the year Current recognition Balance at the end of the year	2020 $ 12,378 7,072 $ 19,450	2019
		$ 12,086 292 $ 12,378

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18. Retirement benefits Plan

a. Defined contribution plans

The labor pension system under Labor Pension Act applicable to the Company is defined contribution retirement benefit plans managed by the government. The employer shall on a monthly basis contribute labor pension funds to individual labor pension accounts at the Bureau of Labor Insurance (the Bureau) for employees.

b. Defined benefit plans

The Company has labor pension system as defined benefit plans under the R.O.C. Labor Standards Law that provide benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement approved. The Company contributes an amount equal to 3% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan. Before the end of each year, the Company assesses the balance in the Funds. If the amount of the balance in the Funds is inadequate to pay retirement benefits for employees qualified with retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The Funds are operated and managed by the government’s designated authorities; as such, the Company does not have any right to intervene in the investments of the Funds.

The amount of defined benefit plans recognized in the parent company only balance sheets is as follows:

balance sheets is as follows:
		December		31,2020			December 31,2019
Present value of defined benefit
obligation		$	788,843					$		786,506
Fair value of plan assets		(	734,602		)			(		709,150	)
Net defined benefit liabilities		$	54,241					$		77,356
Movements the net defined benefit liabilities are				as follows:
	Present value of
	defined benefit			Fair		value of		N	e t d e f i n e d
	o b l	i g a t i o	n	p l a n		a s s e t s		b	e	n e f	i t
								l i	a	b i l i t i	e s
Balance as of January 1,
2019	$	803,059		($		667,401	)		$	135,658
Service cost
Current service cost		8,564				-				8,564
Interest expense		7,848		(		6,541	)			1,307
Defined benefit costs
recognized in profit or
loss		16,412		(		6,541	)			9,871
(Continued)

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(Continued) Remeasurement Return on plan assets (excluding amounts included in net interest expense) Actuarial loss - changes in demographic assumptions - changes in financial assumptions Actuarial loss - experience adjustments Defined benefit costs recognized in other comprehensive income Contributions from employer Benefits paid Balance as of December 31, 2019 Service cost Current service cost Interest expense Defined benefit costs recognized in profit or loss Remeasurement Return on plan assets (excluding amounts included in net interest expense) Actuarial loss - changes in demographic assumptions - changes in financial assumptions Actuarial gain - experience adjustments Defined benefit costs recognized in other comprehensive income Contributions from employer Benefits paid Balance as of December 31, 2020	- 238 Present value of defined benefit o b l i g a t i o n $ 21,079 2,678 23,995 - ( 56,960 ) 786,506 8,246 5,764 14,010 - 1,460 36,809 ( 9,714 ) 28,555 - ( 40,228 ) $ 788,843	( 36,134 ) - Fair value of p l a n a s s e t s $ - - ( 36,134 ) ( 30,000 ) 30,926 ( 709,150 ) - ( 5,297 ) ( 5,297 ) ( 30,383 ) - - - ( 30,383 ) ( 30,000 ) 40,228 ($ 734,602 )	( 36,134 ) 238 N e t d e f i n e d b e n e f i t l i a b i l i t i e s


	(


	(
	(
		(

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Due to the defined benefit plans under the R.O.C. Labor Standards Law, the Company is exposed to the following risks:

Investment risk: The pension funds are invested in domestic and foreign equity securities, debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau of Labor Funds’ designated authorities or under the mandated management. However, the distributions on plan assets shall not be less than the return calculated by the average interest rate on a two-year time deposit published by the local banks.
Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation. However, the return on the debt investments of the plan assets will increase as well. These will be partially offset on net defined benefit liabilities.
Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation are carried out by qualified actuaries. The principal assumptions are as follows:

Discount rate Expected salary increase rate	December 31,2020 0.30% 2.00%	December 31,2019
		0.75% 2.00%

If reasonably likely changes respectively occur in the principal assumptions and all other assumptions are held constant, the amount of present value of the defined benefit obligation is increased or decreased as follows:

December 31,2020 ($ 20,822 ) $ 21,640 $ 21,219 ($ 20,531 )	December 31,2019	December 31,2019
(	(	$ 21,089 ) $ 21,937 $ 21,609 $ 20,886 )

(	(

The sensitivity analysis presented above may not reflect the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

December 31, 2020 December 31, 2019 Contributions expected in one year $ 30,000 $ 30,000

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Average maturity period of defined benefit obligation

10 years

19. Equity

a. Common Stock

Common Stock
Authorized shares (in thousands) Authorized capital Issued and paid shares (in thousands) Issued capital	December 31,2020 500,000 $ 5,000,000 380,102 $ 3,801,023	December 31,2019
		500,000 $ 5,000,000 380,102 $ 3,801,023

A holder of issued common shares with par value of NT$10 per share is entitled to vote and to receive dividends.

b. Capital surplus

Capital surplus
Additional paid-in capital From convertible bonds Treasury stock transactions Donations Interest premium payable on convertible bonds	December 31,2020 $ 1,123,151 252,910 8,190 353 - $ 1,384,604	December 31,2019
		$ 1,123,151 252,910 62,061 289 13,285 $ 1,451,696

The capital surplus generated from donations and the excess of the issuance price over the par value of capital stock (including the stock issued for new capital, convertible bonds, treasury stocks and difference between the price of acquisition or disposal of subsidiaries' equity and the book value) may be used to offset a deficit. In addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or stock dividends to the paid-in capital. However, stock dividends may not exceed a certain percent of the paid-in capital.

Retained earnings and dividend policy

Surplus earning distribution policy under the Company's Articles of Incorporation states that when allocating earnings, the Company shall pay the tax, offset its losses, set aside its legal capital reserve at ten percent of the retained earnings, and then set aside or reverse special capital reserve in accordance with relevant laws or regulations; if here are earnings left, along with accumulated unappropriated surplus, the Board of Directors shall propose the surplus earning distribution for shareholders' meeting to determine the allocation of dividends and bonus .See Note 21 for distribution policy for employees’ compensation, and

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remuneration of directors under the Company's Articles of Incorporation.

Legal capital reserve shall be set aside until its balance equals to full amount of the paid-in capital. The reserve may be used to offset a deficit. When the Company has no deficit, the portion in excess of 25% of the paid-in capital may be used to distributed as dividends in stocks or cash.

The Company regulates to set aside and reverse special capital reserve in compliance with FSC No. 1010012865, FSC No. 1010047490 and 'Common Questions on Special Capital Reserve Appropriation in Adoption of International Financial Reporting Standards (IFRSs).'

The Company approved loss make-up proposal of 2018 in the shareholders' meeting in June 2019. Due to losses in 2019, the earnings were not allocated after deficit was offset and special capital reserve at NT$99,169,000 was set aside. In addition, the capital surplus is distributed in cash at NT$76,000,000, as NT$0.1999 per share.

The Company has approved loss make-up proposal of 2019 in the shareholders' meeting in June 2020. Due to losses in 2019, the earnings were not allocated after special capital reserve at NT$34,836,000 was reversed and deficit was offset respectively by legal capital reserve at NT$359,085,000 and capital surplus at NT$67,156,000.

The Board of Directors in the Company has made the loss make-up proposal of 2020 on March 18, 2021. Due to losses in 2020, the earnings were not allocated after the special capital reserve at NT$31,601,000 and a deficit of capital surplus at NT$134,666,000 were offset.

Loss make-up proposal of 2020 is expected to be determined in the shareholders' meeting in June 2021.

Treasury stocks

In the purpose of transferring stocks to employees, the Board of Directors has determined, from of June 17, 2020 to August 14, 2020, to repurchase 2,000,000 shares to increase treasury stocks at a centralized securities exchange market, at the price of NT$7.28 to NT$13; however, when the stock price is lower than the floor price, the Company can continue the repurchase with the ceiling of total amount of repurchase of NT$26,000,000. Upon December 31, 2020, the Company has repurchased 2,000,000 shares and NT$23,413,000 respectively.

The treasury stocks held by the Company, in accordance with Securities and Exchange Act, shall not be pledged and the Company is not entitle to distribute

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dividends and to vote.

The relevant information on the Company's shares held by Li Xin Investment Co., Ltd. is as follows:

Co., Ltd. is as follows:
December 31, 2020 December 31, 2019	Total Shares O w n e d 5,658,911 5,658,911	C a r r y i n g a m o u n t $ 80,639 $ 58,853	Market value
			$ 80,639 $ 58,853

The shares of the Company held by a subsidiary shall be regarded as treasury stocks. It is given the same rights as the common shareholders, except for cash increase from the Company and voting.

20. Revenue

nue
Revenue from Contracts with Customers Service Income Sales revenue	2020 $ 4,561,972 66,958 $ 4,628,930	2019
		$ 3,808,134 63,702 $ 3,871,836

a. Contract balances

Contract balances
Contract assets - current Notes receivable Accounts receivable	December 31, 2020 $ 114,509 - 1,098,847 $ 1,213,356	December 31, 2019 $ 80,561 36 888,935 $ 969,532	January 1, 2019
			$ 77,250 3,631 840,099 $ 920,980

b. Timing of revenue recognition

Timing of revenue recognition
Performance obligation satisfied over time Performance obligation satisfied at a point in time	2020 $ 4,561,972 66,958 $ 4,628,930	2019
		$ 3,808,134 63,702 $ 3,871,836

21. Labor cost and depreciation

Classified as Classified as o p e r a t i n g C l a s s i f i c a t i o n operating costs e x p e n s e s T o t a l 2020 Employee labor cost Short-term employee benefits $ 971,540 $ 159,731 $ 1,131,271

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Labor and	health
insurance		106,996	14,262	121,258
Pensions
Defined
contribution plans		35,153	6,109	41,262
Defined	benefit
plans		7,525	1,188	8,713
Board
compensation		-	1,800	1,800
Other labor cost		80,209	9,593	89,802
Depreciation expenses		611,629	56,522	668,151
2019
Employee labor cost
Short-term	employee
benefits		914,335	165,190	1,079,525
Labor and	health
insurance		102,219	15,064	117,283
Pensions
Defined
contribution plans		32,943	6,391	39,334
Defined	benefit
plans		8,399	1,472	9,871
Board
compensation		-	1,746	1,746
Other labor cost		78,386	10,097	88,483
Depreciation expenses		677,591	61,671	739,262

For the years of 2020 and 2019, the Company had average 2,187 and 2,269 employees respectively, which included 5 non-employee directors for both years

Average labor cost for the years ended December 31, 2020 and 2019 were NT$638,000 and 589,000 respectively. Average salary and bonus for the years ended December 31, 2020 and 2019 were NT$518,000 and 477,000 respectively. The average salary and bonus increased by 9% year over year.

The Company has established the audit committee to replace the supervisor system in 2016.

The Company's Compensation Policy

Except for independent directors receive a certain amount of compensation, remuneration of directors is reasonably provided by reference to the result of corporate operation and the director's performance and participation.

Under the Company's Articles of Incorporation, the Company shall accrue employees’ compensation and remuneration of directors at the rates of no less than 10% and no higher than 2%, respectively, of net profit before income tax, of employees’ compensation, and remuneration of directors. Due to a deficit in 2020 and 2019, the

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employees' compensation and remuneration of directors have not been estimated yet.

If the amount in the annual parent company only financial statements still has any changes after the date it is approved and published, it is regarded as changes on accounting estimates and will be adjusted to the next year.

Due to a deficit in 2019 and 2018, the employees' compensation and remuneration of directors have not been estimated yet.

Please see 'Market Observation Post System' under the Taiwan Stock Exchange for the information on the employees' compensation and remuneration of directors determined by the Board of Directors.

22. Income Tax

a. Main components of income tax expense recognized in profit or loss

Current tax Adjustment on prior years Deferred tax Income tax expense generated in the current year Adjustment on prior years Income tax expense recognized in profit or loss	2020 $ - 15,403 110 $ 15,513	2019
		$ 3,851 ( 327 ) - $ 3,524

A reconciliation of accounting income and income tax expense is as follows:

Tax benefit at the statutory rate Permanent differences Temporary differences Current loss carryforward Unrecognized loss carryforward Deferred tax Income tax expense generated in the current year Adjustment on prior years Adjustment on prior years Income tax expense recognized in profit or loss	2020 ( $ 29,766 ) 45,169 1,721 ( 17,124 ) - 15,403 110 - $ 15,513	2019
		( $ 109,697 ) 31,453 325 - 77,919 ( 327 ) - 3,851 $ 3,524

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b. Deferred tax assets and liabilities

D e f i n e d benefit costs recognized in profit or loss $ - 331 239 1,414 ( 110 ) 1,874 ( 17,124 ) ($ 15,250 ) ( $ 185 ) 448 $ 263 $ - 183 ( 30 ) 59 110 322 - $ 322	D e f i n e d benefit costs recognized in o t h e r comprehensiv e i n c o m e ( $ 366 ) - - - - ( 366 ) - ($ 366 ) $ - - $ - ( $ 2,428 ) - - - - ( 2,428 ) - ($ 2,428 )	Balance at the end of theyear
( ( ( (	( ( (	$ 14,718 5,485 9,659 3,890 - 33,752 55,999 $ 89,751 $ 448 708 $ 1,156 $ 15,084 5,154 9,420 2,476 110 32,244 73,123 $ 105,367




(	( ( (

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2019 Deferred tax liabilities Temporary differences Difference on depreciation methods Exchange gains	Balance at the beginning of t h e y e a r $ 807 91 $ 898	D e f i n e d benefit costs recognized in profit or loss	D e f i n e d benefit costs recognized in profit or loss	D e f i n e d benefit costs recognized in o t h e r comprehensiv e i n c o m e $ - - $ -	Balance at the end of theyear
		(	$ 174 ) 169 $ 5 )		$ 633 260 $ 893
		(

c. Relevant information on unused loss carryforwards

Y e a r 2018 2019	B a l a n c e n o t d e d u c t e d $ 329,778 389,680 $ 719,458	L a s t t a xye a r
		2028 2029

d. The total amount of deductible temporary differences for which is relevant to invested subsidiaries and no deferred tax assets have been recognized is as follows:

December 31, 2020 December 31, 2019 $ 2,514,376 $ 2,266,368

e. Income tax examination

The tax authorities have examined income tax returns of the Company through 2018.

Loss per Share

per Share
2020 Basic and diluted loss per share Net loss belonging to common stockholders 2019 Basic and diluted loss per share Net loss belonging to common stockholders	N e t l o s s belonging to c o m m o n stockholders ($ 164,343 ) ($ 552,011 )	N u m b e r o f S h a r e s (Denominator) (in thousand) 373,465 374,443	Loss per share ( N T $ )
	( (		( (	$ 0.44 ) $ 1.47 )

It is assumed the Company is able to elect to pay employees' compensation in stocks or cash. Then if the compensation is given in stocks, and the weighted average

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number of ordinary shares outstanding shall be computed to the dilutive potential ordinary shares to calculate diluted EPS. On the calculation of diluted EPS before the decision on issuing shares in the next year, the consideration on the effect of such dilutive potential ordinary shares will continue.

24. Capital Management

The Company manages its capital to ensure that it will be able to maximize shareholders return as a going concern through the optimization of the debt and equity balance. The overall strategy has not changed.

The Company's capital structure is consist of net debt (leases less cash and cash equivalent) and equity (common stocks, capital surplus, retained earnings and other equity).

The Company is allowed not to follow other external laws or regulations on capitals.

The key management of the Company reviews its capital structure for each season, including the consideration on costs of every types of capitals and relevant risks. Based on the key management's advice, the Company balances its overall capital structure by paying dividend payments, new shares issuance, share repurchase and new debt issuance or debt repayment, etc.

25. Financial instruments

a. Information on fair value
1) Financial instruments that are not measured at fair value The management of the Company considers that the carrying amounts of financial assets and liabilities that are not measured at fair value approximates its fair value or its fair value cannot be reliably measured.
2) Financial instruments that are measured at fair value on a recurring basis
- (1) Fair value hierarchy

Fair value hierarchy
December 31,2020 Financial assets at fair value through other comprehensive income Emerging stocks Listed and OTC stocks	L e v e l 1 $ - 2,265 $ 2,265	L e v e l 2 $ - - $ -	L e v e l 3 $ 6,192 - $ 6,192	T o t a l
				$ 6,192 2,265 $ 8,457

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December 31,2019 Financial assets at fair value through other comprehensive income Emerging stocks Listed and OTC stocks	$ - 1,743 $ 1,743		$ - - $ -		$ 5,362 - $ 5,362	$ 5,362 1,743 $ 7,105

Transfer between level 1 and level 2 fair value measurements in 2020 and 2019.

(2) Reconciliation of Level 3 fair value measurements on financial instruments

instruments
F i n a n c i a l a s s e t s Balance at the beginning of the year Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Disposal Balance at the end of the year	F i n a n c i a l a s s e t s a t f a i r v a l u e t h r o u gh o t h e r c o m p r e h e n s i v e i n c o m e
	E	q u i t y i n s	t	r u m e n t s
		2020 $ 5,362 830 - $ 6,192		2019
			(	$ 15,527 1,586 11,751 ) $ 5,362

(3) Valuation techniques and input value used in Level 3 fair value measurement

The securities of emerging stocks held by the Company have no market price reference and thus are evaluated under the cost approach. Its fair value is computed in reference to investment assets.

b.Categories of financial instruments

gories of financial instruments
Financial assets Financial assets measured at amortized cost Financial assets at fair value through other comprehensive income Financial Liabilities Amortized cost	December 31,2020 $ 2,605,933 8,457 1,404,307	December 31,2019
		$ 2,850,679 7,105 1,749,943

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Balance of financial assets measured at amortized cost includes cash and cash equivalent. contract assets, notes and accounts receivable, other receivables, pledged time deposit and refundable deposits, and other financial assets measured at amortized cost.

Balance of financial liabilities measured at amortized cost includes shor-term bank loans, accounts payable, other payables, long-term bank loans (including amount falling due in one year) and guarantee deposits received and other financial liabilities measured at amortized cost.

Financial risk management objectives and policies

The majority of financial instruments include equity instrument investments, accounts receivable, accounts payable, borrowings and lease liabilities, etc. The financial management department provides service for each unit by organizing and coordinating the market operation nationally and internationally, supervising and reporting the internal risks by analyzing risk exposure according to the extent and breadth of risk, and managing financial risks associated with the Company's operation. Such risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

The Company is exposed to the financial market risks, primarily changes in foreign currency exchange rates and interest rates, due to its operation.

The Company is exposed to market risk associated with financial instruments and the management and measurement of such exposure have not changed.

(1) Foreign currency risk

The Company's sales and purchase transactions are denominated in foreign currency, which exposes the Company to foreign currency risk. Approximately 20%~24% of sales revenue is not denominated in functional currency and approximately 45%~49% of the cost is not denominated in functional currency.

See Note 29 for the carrying amount of monetary assets and liabilities denominated in non-functional currency at the date of balance sheet.

Sensitivity analysis

The company is mainly affected by fluctuations in U.S. dollar and Japanese yen.

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The following table details the Company’s sensitivity analysis to a 1% increase and decrease in NT dollar against the relevant foreign currency. The rate of 1% is the sensitivity rate used when reporting foreign currency risk internally to the key management and represents the management’s assessment of the reasonably likely change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and the end-of-year exchange rate is adjusted to 1% increase and decrease. The following table details the amount resulting in changes in net loss before tax to a 1% increase and decrease in NT dollar against the relevant foreign currency.

The impact of fluctuations in exchange rate on p r o f i t o r l o s s C a t e g o r i e s o f c u r r e n c y 2020 2019 U.S. Dollar $ 962 $ 343 Japanese yen 80 203

The Company's sensitivity to foreign exchange rate increases in 2020, is arising from the increase in borrowings and accounts payable denominated in U.S. dollar as well as decrease in foreign currency deposit denominated in Japanese yen.

(2) Interest rate risk

The Company is exposed to interest rate risk for the reason that it has borrowed money at both fixed and variable rate. The Company maintains an appropriate fixed and floating rate for portfolio to manage interest rate risk. The hedge is evaluated on a regular basis, which makes its point of view and the established risk preference identical, to ensure the most efficient hedging strategy is adopted.

The carrying accounts of financial assets and liabilities exposed to interest rate risk at the date of balance sheet are as follows:

December 31, 2020 December 31, 2019

Fair value interest rate
risk
Financial assets	$	481,925	$	681,508
Financial Liabilities		258,555		322,005
Cash flows Interest rate
risk
Financial assets		889,428		1,182,991
Financial Liabilities		763,974		1,115,268

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Sensitivity analysis

The following sensitivity analysis is determined in accordance with interest rate risk of non-derivative instruments at the date of balance sheet. For the floating rate liabilities, the analysis is to assume that the amount of liabilities outstanding at the date of balance sheet is all outstanding at the reporting period. The rate of change used to report interest rate to the key management is 1% increase and decrease in interest rate and represents the management's assessment of reasonable likely changes in interest rate.

For floating-rate financial assets and liabilities, when interest rate is increase by 1% and other conditions remain unchanged, the net loss before tax in 2020 and 2019 are NT$1,255,000 and NT$677,000, respectively.

(3) Other price risk

The Company is exposed to price risk due to investments in equity securies. The management manage the risk by investing in portfolio with different risks.

Sensitivity analysis

The following sensitivity is analyzed according to the exposure to equity price risk at the date of balance sheet.

If the equity price changes by 1%, the other comprehensive income in 2020 and 2019 will increase and decrease NT$22,000 and NT$17,000 respectively due to changes in fair value of financial assets measured at fair value through profit or loss.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. The maximum credit risk exposure due to the financial loss arising from the counterparty not performing its obligation and the Company's financial guarantee primarily results from:

(1) The carrying amount of financial assets recognized in the parent company only balance sheet.
(2) The Company has given financial guarantee and not taken the maximum amount to be paid into consideration.
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The Company's credit risk is mainly resulted from its five largest customers. As of December 31, 2020 and 2019, the aforementioned customers are accounted for 45% and 48% of accounts receivable and contract assets, respectively.

3) Liquidity risk management

The Company manages and maintains a level of cash and cash equivalents adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, the management monitors the utilization of borrowings and ensures compliance with loan conditions.

The bank borrowing is a material source of liquidity to the Company. As of December 31, 2020 and 2019, the undrawn loan amounts are as follows:

Undrawn loan amounts	December 31,2020 $ 1,236,331	December 31,2019
		$ 1,440,282

Liquidity and interest risks of non-derivative financial liabilities

The funds are adequate to the Company's operations and thus the Company is not exposed to liquidity risk and financing to meet the contractual obligations.

The maturity of the Company’s non-derivative financial liabilities which the repayment period has been committed is as follows:

December 31,2020 Non-interest bearing liabilities Lease liabilities Floating-rate liabilities Fixed-rate liabilities December 31,2019 Non-interest bearing liabilities Lease liabilities Floating-rate liabilities Fixed-rate liabilities	Within 1year $ 536,126 5,514 449,974 102,385 $ 1,093,999 $ 483,762 6,035 383,668 150,000 $ 1,023,465		1 to 3years $ - 10,303 314,000 - $ 324,303 $ - 12,071 731,600 - $ 743,671		more that 3 years
					$ - 165,944 - - $ 165,944 $ - 180,340 - - $ 180,340

The further information on a maturity analysis of lease liability is below:

December 31, 2020 Lease liabilities	Wi t h in 1 y e a r $ 5,514	1-5years $19,834	5-10years	10-15years	10-15years	15-20years	15-20years	O v e r 2 0 y e a r s	O v e r 2 0 y e a r s
			$156,413		$ -		$ -		$ -

53 -

Wi t h in 1 O v e r 2 0 y e a r 1-5 years 5-10 years 10-15 years 15-20 years y e a r s

==> picture [379 x 19] intentionally omitted <==

The amount of the aforementioned floating rate instrument of non-derivative liabilities will change resulting from the floating rate is different from the interest rate estimated at the date of balance sheet.

26. Related Party Transaction

The transactions between the Company and other related parties, excluding those disclosed in other notes, are as follows:

a. Related party name and categories

R e l a t e d P a r t y N a m e R e l a t e d P a r t y C a t e g o r i e s Lingsen America Inc. Subsidiary Ningbo Liyuan Technology Co., Ltd. Second-tier subsidiary Lee Shin Investment Co., Ltd. Subsidiary Panther Technology Co., Ltd. Subsidiary Sooner Power Semiconductor Co., Subsidiary Ltd.

b. Operating Income

Related Part y Cate gories 2020 2019 Subsidiary $ 2,876 $ 4,972

The operating revenue from subsidiaries is processing fee income paid for work in process outsourced to the Company and no other similar non-related party transaction can be compared. The payment will be collected at 60 days T/T following the date the goods are sold.

c.
Operating expense - commission expense

The Company has signed a commission agreement with Lingsen America Inc. states that the Company shall pay a 2% commission on monthly sales revenue of particular exports in the United State (in U.S. dollar). The commission expenses in 2020 and 2019 are NT$5,793,000 and NT$8,897,000, respectively. The commissions payable as of December 31 2020 and 2019 are NT$1,979,000 and NT$2,211,000, respectively.

d. Non-operating Income - Rent Income

Related Party Categories/Name 2020 2019 Subsidiary Sooner Power Semiconductor Co., Ltd. $ 2,160 $ 2,160

54 -

Panther Technology Co., Ltd. Lee Shin Investment Co., Ltd.	1,556 36 $ 3,752	4,434 36 $ 6,630

The majority of non-operating income is rent income of machinery and equipment and office.

e. Non-operating Income - Other Revenue

Related PartyCategories Subsidiary Accounts receivable Related PartyCategories Subsidiary Endorsements/guarantees C o m p a n y G u a r a n Subsidiary Bank loans Bank loans	2020 2019 $ 122 $ 285 December 31,2020 December 31,2019 $ 32 $ 1,102 t e e s December 31, 2020 December 31, 2019 $ 210,000 $ 210,000 U.S. Dollar 5,000 U.S. Dollar 5,000	2019	2019
		$ 285 December 31,2019
	$		$ 1,102 December 31, 2019
	t e e s
Bank loans Bank loans			$ 210,000 U.S. Dollar 5,000

f. Accounts receivable

g. Endorsements/guarantees

The following assets are pledged as collaterals for subsidiaries' loans:

Pledge time deposits	December 31,2020 $ 71,000	December 31,2019
		$ 71,000

h. Compensation of key management personnel

Short-term employee benefits Pensions	2020 $ 28,853 507 $ 29,360	2019
		$ 34,052 668 $ 34,720

The compensation to directors and other key management personnel were determined by the Compensation Committee in accordance with the individual performance and the market trends.

27. Pledged Assets

The following assets are pledged as collaterals for bank loan limit:

Property, plant, and equipment Pledged time deposits (recognized in other current assets)	December 31,2020 $ 1,265,329 71,000 $ 1,336,329	December 31,2019
		$ 1,708,454 71,000 $ 1,779,454

55 -

28. Significant Contingent Liabilities and Unrecognized Commitments

Significant contingent commitments of the Company at the end of balance sheet, excluding those disclosed in other notes, are as follows:

a. For customs duties guarantee and other objectives, the financial institution has provided guarantee details as follows:

December 31,2020 $ 33,950	December 31,2019
	$ 41,150

b. Unrecognized commitments are as follows:

Purchases of property, plant, and equipment	December 31,2020 $ 342,880	December 31,2019
		$ 73,950

Significant information on exchange rate of foreign currency financial assets and liabilities

The following information is summarized according to the foreign currencies other than the functional currency of the Company. The exchange rates disclosed are used to translate the foreign currencies into the functional currency. The significant financial

assets and liabilities denominated in foreign currencies are as follows:

Foreign currency a s s e t s Monetary items U.S. Dollar Japanese yen N o n - m o n e t a r y i t e m s Investments accounted for using the equity method U.S. Dollar Foreign currency l i a b i l i t i e s Monetary items U.S. Dollar Japanese yen	December31,2020 F o r e i g n c u r re ncy Exchange r a t e N T D $ 9,948 28.48 $ 283,319 86,438 0.2763 23,883 8,287 28.48 236,014 13,326 28.48 379,524 57,575 0.2763 15,908	December31,2020 F o r e i g n c u r re ncy Exchange r a t e N T D $ 9,948 28.48 $ 283,319 86,438 0.2763 23,883 8,287 28.48 236,014 13,326 28.48 379,524 57,575 0.2763 15,908	December31,2019	December31,2019	December31,2019
	F o r e i g n c u r re ncy $ 9,948 86,438 8,287 13,326 57,575	Exchange r a t e 28.48 0.2763 28.48 28.48 0.2763	F o r e i g n c u r re ncy $ 9,769 109,706 8,134 8,624 36,176	Exchange r a t e 29.98 0.276 29.98 29.98 0.276	N T D
					$ 292,875 30,279 243,852 258,548 9,985

Significant unrealized exchange gains or losses are as follows:

F o r e i g n c u r r e n cy U.S. Dollar	2020	Exchange g a i n s $ 3,433	2019
	E x c h a n g e r a t e 28.48（USD：NTD）		E x c h a n g e r a t e 29.98（USD：NTD）	Exchange g a i n s ( l o s s e s )
				$ 1,918

56 -

Japanese yen[ 0.2763][（][JPY][：][NTD][）] 104 0.276（JPY：NTD） ( 616 ) $ 3,537 $ 1,302

30. Other disclosures

a.Information about significant transactions and b. investees
1) Financing provided to others: None
2) Endorsements/guarantees provided: Table 1
3) Marketable securities held (excluding investment in subsidiaries, associates): Table 2
4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital: None
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None
9) Trading in derivative instruments: None
10) Information on investees: Table 3
c. Information on investment in Mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: Table 4
2) Significant direct or indirect transactions through a third area with the investee in the Mainland Area, and its prices and terms of payment, unrealized gain or loss are as follows:
- (1) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None
- (2) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None
- (3) The amount of property transactions and the amount of the resultant gains or losses: None
57 -
(4) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 1
(5) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: None
(6) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: Table 26
d. Information on major shareholders: names, numbers of shares held, and shareholding percentages of shareholders who hold 5 percent or more of the equity: Table 5
58 -

Amounts expressed in New Taiwan Dollars and in thousands of foreign currency

Lingsen Precision Industries, LTD. and its subsidiaries

Endorsements/guarantees provided

For the year ended December 31, 2020

Table 1

N o .	Endorsement/g u a r a n t e e p r o v i d e r	G u a r a n t e e d p a r t y	G u a r a n t e e d p a r t y	L i m i t s o n endorsement/gu arantee amount provided to each guaranteed party ( N o t e )	M a x i m u m balance for the p e r i o d	Ending balance	Amount actually d r a w n	A m o u n t o f Endorsement/ G u a r a n t e e Collateralized by Properties	R a t i o o f a c c u m u l a t e d endorsement/gu arantee to net equity per latest f i n a n c i a l statements(%)	M a x i m u m a m o u n t o f endorsement/gu a r a n t e e a l l o w a n c e ( N o t e )	G u a r a n t e e p r o v i d e d b y parent company	G u a r a n t e e p r o v i d e d b y s u b s i d i a r y	G u a r a n t e e p r o v i d e d t o subsidiaries in Mainland China
		Company Name	R e l a t i o n s h i p
0	Parent Company	Sooner Power Semiconductor Co., Ltd. Ningbo Liyuan Technology Co., Ltd.	Subsidiary Third-tier subsidiary	$ 742,036 742,036	$ 210,000 142,400 ( US$ 5,000 )	$ 210,000 142,400 ( US$ 5,000 )	$ - 113,920 (US$ 4,000 )	$ - 71,000	4 3	$ 1,484,072 1,484,072	Y Y	－－	－ Y

Note: Limits on endorsement/guarantee amount provided to each guaranteed party shall not exceed 15% of the Company's net worth and maximum amount allowance shall not exceed 30% of the Company's net worth.

59 -

Lingsen Precision Industries, LTD. and its subsidiaries

Marketable securities held

December 31, 2020

Table 2

Amounts expressed in thousands of New Taiwan Dollars/thousands of shares

Held company name	Marketable securities t y p e s a n d n a m e	Relationship with the issuers	F i n a n c i a l s t a t e m e n t a c c o u n t	D e c e m b e r 3 1 , 2 0 2 0	D e c e m b e r 3 1 , 2 0 2 0	D e c e m b e r 3 1 , 2 0 2 0	D e c e m b e r 3 1 , 2 0 2 0
				S h a r e / U n i t s	Carrying amount	S h a r e s %	F a i r v a l u e ( N o t e 2 )
Parent Company Lee Shin Investment Co., Ltd.	Stock Amtek Semiconductors Co., Ltd. ETREND Hightech Corp. Xpert Semiconductor Inc. Stock The Company (Note 1) Enrich Tech Co., Ltd. ETREND Hightech Corp. Anwell Semiconductor Co., Ltd.	None None None Parent Company None None None	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current	527 75 45 5,659 1,898 150 155	$ 6,192 2,265 - 80,639 25,994 4,530 -	2 - - 1 19 - 11	$ 6,192 2,265 - 80,639 25,994 4,530 -

Note 1: See Table 4 and 5 for related information on investment in subsidiaries.

Note 2: Fair value of investment in emerging stocks is computed in reference to investment assets under the cost approach.

60 -

Lingsen Precision Industries, LTD. and its subsidiaries

Information on investees

For the year ended December 31, 2020

Table 3

Amounts expressed in thousands of New Taiwan Dollars/thousands of shares

I n v e s t o r	I n v e s t e e s	L o c a t i o n	M a i n B u s i n e s s	Initial investment amount	Initial investment amount	Bal ance at Decem ber 31,20 20	Bal ance at Decem ber 31,20 20	Bal ance at Decem ber 31,20 20	Current income (losses) of the i n v e s t e e	Share of income (losses) recognized
				D e c e m b e r 3 1 , 2 0 2 0	D e c e m b e r 3 1 , 2 0 1 9	S h a r e s	R a t i o %	Carrying amount
Parent Company Lee Shin Investment Co., Ltd. Lingsen Holding (Samoa) Inc.	Lingsen Holding (Samoa) Inc. Panther Technology Co., Ltd. Sooner Power Semiconductor Co., Ltd. Lee Shin Investment Co., Ltd. (Note 1) Nexus Material Corporation (Note 2) Lingsen America Inc. Qi Feng Technology Co., Ltd. (Note 2) Sooner Power Semiconductor Co., Ltd. Nexus Material Corporation Li Yuan Investments Co., Ltd.	Samoan Islands Hsinchu County, Taiwan Hsinchu County, Taiwan Taichung City Hsinchu County, Taiwan California, America Taichung City Hsinchu County, Taiwan Hsinchu County, Taiwan Cayman Islands	Investment activities IC testing Electronic Parts and Components Manufacturing Investment activities Wholesale of electronic materials and electronic parts and components manufacturing Intermediary Electronic parts and components production and processing Electronic Parts and Components Manufacturing Wholesale of electronic materials and electronic parts and components manufacturing Investment activities	$ 1,660,738 230,146 604,223 300,000 53,483 32,311 24,000 2,561 14,192 1,660,738	$ 1,602,568 230,146 354,223 300,000 53,483 32,311 24,000 2,561 14,192 1,602,568	52,000 22,923 60,422 30,000 5,348 1,000 2,400 277 1,419 52,000	100 64 99 100 78 100 30 1 21 100	$ 175,821 325,495 188,779 58,800 20,848 60,192 - 866 5,532 175,821	( $ 65,992 ) 6,032 ( 187,094 ) ( 959 ) ( 65 ) 122 - ( 187,094 ) ( 65 ) ( 65,992 )	( $ 65,992 ) 3,840 ( 184,968 ) ( 959 ) ( 51 ) 122 - ( 1,137 ) ( 14 ) ( 65,992 )

Note 1: Treasury stocks have been deducted from the carrying amount of Lee Shin Investment Co., Ltd.

Note 2: Accumulated impairment loss has been deducted from the carrying amount of Nexus Material Corporation and Qi Feng Technology Co., Ltd.

Note 3: See Table 4 for related information on investee in mainland China.

61 -

Lingsen Precision Industries, LTD. and its subsidiaries Information on investment in Mainland China For the year ended December 31, 2020 Table 4 Amounts expressed in New Taiwan Dollars and in thousands of foreign currency Accumulated Current inflow and outflow of O w n e r s h i p i n v e s t m e n t c a p i t a l[Accumulated ] i n v e s t m e n t Percentage of I n f l o w o f a m o u n t o f a m o u n t o f Current income S h a r e o f C u r r e n t Book value of i n v e s t m e n t I n v e s t e e i n outflow from outflow from (losses) of the income (losses) r e c o g n i t i o n investment at r e v e n u e t o mainland China M a i n B u s i n e s s Issued capital[Method of ] Taiwan at the investment Taiwan at the i n v e s t e e of direct or the end of year Taiwan upon Company Name beginning of O u t f l o w I n f l o w end of the year i n d i r e c t ( N o t e 2 ) the end of the t h e y e a r i n v e s t e e s y e a r Ningbo Liyuan IC packing and testing US$ 52,000 (Note 1) $ 1,602,568 $ 58,170 $ - $ 1,660,738 ( $ 65,992 ) 100% ( $ 65,992 ) $ 175,821 $ - Technology Co., as well as ( US$ 50,000 ) ( US$ 2,000 ) ( US$ 52,000 ) Ltd. optoelectronic devices Accumulated investment amount of outflow Investment amount approved by Investment limitation on investee regulated under in China mainland from Taiwan at the end C o m m i s s i o n , M O E A Investment Commission, MOEA (Note 3) o f t h e y e a r $ 1,660,738 U.S. Dollar 55,000 $ 2,968,145 ( U.S. Dollar 52,000 )

Note 1: Investment in Mainland China companies through a company invested and established in a third region. Note 2: Investment in profit or loss in accordance with reports audited by the CPA from the parent company.

Note 3: Limitation is calculated under 'Regulations Governing the Examination of Investment or Technical Cooperation in Mainland China.'

62 -

Lingsen Precision Industries, LTD. Information on major shareholders December 31, 2020

Table 5

S h a r e h o l d e r s	S h a r e s	S h a r e s
	Total Shares Owned	O w n e r s h i p P e r c e n t a g e
Trust account in CTBC Bank for ESOP committee of Lingsen Precision Industries, LTD. RUBYTOP Investment Co., Ltd (British Virgin Islands)	25,442,792 19,239,854	6.69% 5.06%

Note 1:This table is based on the information provided by the Taiwan Depository & Clearing Corporation for shareholders holding greater than five percent of the Company's shares completed the process of registration and book-entry delivery in dematerialized form, including treasury stocks, at the last business date of current quarter. There may be a discrepancy in the number of shares recorded on the Company's financial statements and its dematerialized securities arising from the difference in basis of preparation.
Note 2: As table above, the shareholder who delivers the shares to the trust is disclosed by the individual trustee who opened the trust account. In accordance with the Security Exchange Act, the shareholders have to disclose the insider equity more than ten percent of the shares, including their own shares and their delivery to the trust, and have the right to make decisions on the trust property. Information on insider equity is available on the Market Observation Post System website.
63 -

§STATEMENTS OF MAJOR ACCOUNTING ITEMS

I
T
E
M

Statements of assets, liabilities, and equity items
Statement of cash and cash equivalents
Statement of trade receivables
Statement of other receivables
Statement of inventories
Statement of other current assets
Statement of financial assets measured at amortized cost - non-current
Statement of changes in investments accounted for using the equity
method
Statement of changes in property, plant and equipment
Statement of changes in right-of-use assets
Statement of deferred tax assets
Statement of other non-current assets
Statement of short-term borrowings
Statement of trade payables
Statement of other payables
Statement of provisions - current
Statement of lease liabilities
Statement of long-term borrowings
Statement of deferred tax liabilities
Statements of profit or loss items
Statement of operating revenue
Statement of operating costs
Statement of operating expenses
Summary statement of current period employee benefits and
depreciation expenses by function

I
N
D
E
X
N U M B E R S
Table 1
Table 2
Note 9
Table 3
Note 14
Table 4
Table 5
Note 12
Table 6
Note 22
Note 14
Table 7
Table 8
Note 16
Note 17
Table 9
Table 10
Note 22
Table 11
Table 12
Table 13
Note 21

64 -

		Lingsen Precision Industries, LTD.	Lingsen Precision Industries, LTD.	Lingsen Precision Industries, LTD.
		Statement of cash and cash equivalents
				December 31, 2020
Table 1				Amounts Expressed in		thousands of New
						Taiwan Dollars
					unless Otherwise Specified
I	t		e	m	A	m	o u n	t
Cash
	Cash on Hand and Petty Cash					$	263
	Cash in Banks
	Check						3,713
	Demand deposit						359,480
	Foreign currency demand			deposit (Note 1)			79,947
	Time deposits						291,000
							734,403
Cash equivalent
	Time deposits with	an initial		maturity of less			490,000
	than three months
	Short-Term Notes and Bills						150,926
							640,926
							1,375,329
Less: Time Deposit Pledge (Note			2)			(	71,000	)
Time deposits with an initial maturity of more than						(	220,000	)
	three months
						$	1,084,329

Note 1: It includes US$1,969,000 and JPY 86,438,000, converted at the exchange rate of ＝＝
US$1 NT$28.48 and JPY$1 NT$0.2763.
Note 2: The due period is between January and Feburary in 2021, at an annual percentage rate of 0.38%. It has been provided to the bank as collateral, transferred to other current assets, to make endorsement and guarantee for Ningbo Liyuan Technology Co., Ltd.
65 -

Lingsen Precision Industries, LTD.

Statement of trade receivables

December 31, 2020

Table 2

Amounts expressed in thousands of New

C u s t o m e r ' s N a m e A Company B Company C Company D Company E Company F Company Related party Others (Note) Less: Allowance for bad debts	A	Taiwan Dollars m o u n t
		$ 257,338 137,071 121,964 84,089 83,760 69,322 32 346,920 1,100,496 1,649 ) $ 1,098,847
	(

Note: The amount of individual customer does not exceed 5% of the account balance.

66 -

Lingsen Precision Industries, LTD. Statement of inventories December 31, 2020 Table 3 Amounts expressed in thousands of New Taiwan Dollars I t e m C o s t Net realizable value Raw material $ 284,709 $ 284,709 Finished good Inventory 11 11 Work in process - 2 $ 284,720 $ 284,722	Lingsen Precision Industries, LTD. Statement of inventories December 31, 2020 Table 3 Amounts expressed in thousands of New Taiwan Dollars I t e m C o s t Net realizable value Raw material $ 284,709 $ 284,709 Finished good Inventory 11 11 Work in process - 2 $ 284,720 $ 284,722	Lingsen Precision Industries, LTD. Statement of inventories December 31, 2020 Table 3 Amounts expressed in thousands of New Taiwan Dollars I t e m C o s t Net realizable value Raw material $ 284,709 $ 284,709 Finished good Inventory 11 11 Work in process - 2 $ 284,720 $ 284,722
		$ 284,709 11 2 $ 284,722

67 -

Lingsen Precision Industries, LTD.

Statement of financial assets measured at fair value through comprehensive income - non-current For the year ended December 31, 2020

Table 4

Amounts expressed in thousands of New Taiwan Dollars and thousands of shares

Balance at the beginningof theyear S h a r e s F a i r v a l u e 75 $ 1,743 527 5,362 45 - 5,362 $ 7,105	Balance at the beginningof theyear S h a r e s F a i r v a l u e 75 $ 1,743 527 5,362 45 - 5,362 $ 7,105	B a l a n c e a t t h e e n d o f t h eye a r S h a r e s F a i r v a l u e 75 $ 2,265 527 6,192 45 - 6,192 $ 8,457	B a l a n c e a t t h e e n d o f t h eye a r S h a r e s F a i r v a l u e 75 $ 2,265 527 6,192 45 - 6,192 $ 8,457	C o l l a t e r a l
S h a r e s 75 527 45	F a	S h a r e s 75 527 45	F a
				None None None

68 -

Lingsen Precision Industries, LTD.

Statement of changes in investments accounted for using the equity method

For the year ended December 31, 2020

Table 5

Amounts expressed in thousands of New Taiwan Dollars and thousands of shares

Balance at the beginning of the y e a r S h a r e s A m o u n t 50,000 $ 180,613 22,923 321,655 35,422 125,655 30,000 229,051 1,000 63,239 5,348 27,213 2,400 11,417 958,843 ( 176,415 ) ( 17,731 ) $ 764,697	Balance at the beginning of the y e a r S h a r e s A m o u n t 50,000 $ 180,613 22,923 321,655 35,422 125,655 30,000 229,051 1,000 63,239 5,348 27,213 2,400 11,417 958,843 ( 176,415 ) ( 17,731 ) $ 764,697	I n c r e a s e ( D e c r e a s e ) S h a r e s A m o u n t 2,000 $ 58,170 - - 25,000 250,000 - - - - - - - - $ 308,170	Gains or losses of investments ( $ 65,992 ) 3,840 ( 184,968 ) ( 959 ) 122 ( 51 ) - ( 248,008 )	Capital surplus $ - - ( 1,021 ) 1,021 - - - $ -	Tr a n s a ct i o n difference on translation of f i n a n c i a l statements of f o r e i g n o p e r a t i o n $ 3,030 - - - ( 3,169 ) - - ( 139 )	R e	B a l a n c e a t	t h e e n d o f t h e y e a r S h a r e s % A m o u n t 100 $ 175,821 64 325,495 99 188,779 100 235,215 100 60,192 78 27,162 30 11,417 1,024,081 ( 176,415 ) ( 17,731 ) $ 829,935	t h e e n d o f t h e y e a r S h a r e s % A m o u n t 100 $ 175,821 64 325,495 99 188,779 100 235,215 100 60,192 78 27,162 30 11,417 1,024,081 ( 176,415 ) ( 17,731 ) $ 829,935	Market value or new assets v a l u e ( N o t e )
S h a r e s 50,000 22,923 35,422 30,000 1,000 5,348 2,400		S h a r e s 2,000 - 25,000 - - - -					S h a r e s 52,000 22,923 60,422 30,000 1,000 5,348 2,400	S h a r e s % 100 64 99 100 100 78 30
			( ( ( ( (	(	( (	( (				$ 175,821 325,495 188,779 58,800 60,192 20,848 - $ 829,935
	( (								( (

Note: Net income or loss is primarily computed according to investee's financial statement and the percentage of the Company's share.

69 -

Lingsen Precision Industries, LTD.

Statement of changes in right-of-use assets and	Statement of changes in right-of-use assets and	Statement of changes in right-of-use assets and	Statement of changes in right-of-use assets and	accumulated depreciation	accumulated depreciation	accumulated depreciation	accumulated depreciation	accumulated depreciation
	For the year ended December 31, 2020
Table 6			Amounts expressed in			thousands			of New
							Taiwan Dollars
	Balance at the						Balance at the
	beginning of						end		of the
	t h e ye a r	I n c r e a s e D e c r e a s e					y	e	a	r
Cost
Land	$ 174,286	$	-	( $ 11,437		)		$ 162,849
Buildings	2,586		-						2,586
	176,872	$	-	($ 11,437		)		165,435
Accumulated
depreciation
Land	4,768	$	4,277	$	-				9,045
Buildings	646		646		-				1,292
	5,414	$	4,923	$	-			10,337
	$ 171,458							$ 155,098

70 -

Lingsen Precision Industries, LTD. Statement of short-term borrowings

December 31, 2020

Table 7

Amounts expressed in thousands of New Taiwan Dollars

L o a n t y p e s a n d b a n k Credit loan Taipei Fubon Bank (Zhonggang Branch) Import and export financing Bank of Taiwan (Tantzu Branch) HSBC Bank (Taichung Branch) Mega International Commercial Bank (Tan Zi Branch) Taishin International Bank (Taichung Branch)	Maturity date ( N o t e ) 2021.2.18 2021.2.25 2021.1.27 2021.2.25 2021.3.25	A n n u a l p e r c e n t a g e r a t e ( % ) 0.8 0.98 1.30 0.901 0.95	A m o u n t
			$ 50,000 14,398 13,095 19,279 37,987 $ 134,759

Note: The maturiy date refers to the last maturity date among several loans.

71 -

==> picture [445 x 260] intentionally omitted <==

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

Lingsen Precision Industries, LTD.
Statement of trade payables
December 31, 2020
Table 8 Amounts expressed in thousands of New
Taiwan Dollars
C o m p a n y N a m e A m o u n t
A Company $ 86,199
B Company 56,686
C Company 29,836
Others (Note) 137,684
$ 310,405
----- End of picture text -----

Note: The amount of individual customer does not exceed 5% of the account balance.

72 -

Lingsen Precision Industries, LTD.

Statement of lease liabilities

December 31, 2020

Table 9 I t e m Land Buildings Less: amount falling due in one year	D e s c r i p t i o n Plants and office Plants and office	Amounts expressed in thousands of New Taiwan Dollars L e a s e T e r m Discount rate （％） Balance at the end of theyear 2013.04.16-2029.02. 28 0.67-0.91 $ 154,868 2020.01.01-2022.12. 31 0.67-0.91 1,302 156,170 ( 4,386 ) $ 151,784

73 -

Lingsen Precision Industries, LTD. Statement of long-term borrowings December 31, 2020

Table 10

Amounts expressed in thousands of New Taiwan Dollars

L o a n t y p e s a n d b a n k Collateralized borrowings Mega International Commercial Bank (Tan Zi Branch) CTBC Bank (Shizheng Branch) KGI Bank (Shizheng Branch) Credit loan CTBC Bank (Shizheng Branch)	L o a n p e r i o d 2014.03.28-2022.12.1 5 2019.11.29-2022.07.0 4 2015.06.03-2021.11.2 5 2015.12.02-2021.11.2 5 2016.05.13-2021.11.2 5 2015.01.16-2021.11.2 5 2019.04.30-2022.04.3 0 2014.11.25-2021.11.2 5	R e p a y m e n t m e t h o d Down payment is repaid from the 15th of the first month until two years after first drawdown date. After that, the equal principal shall be repaid every three months, divided into twenty-eight periods. (NT$25,000,000 repayment for each period) The settlement shall be made within twelve months; however, it shall be made before the drawdown period. Down payment is repaid from the first date until twenty-four months after first drawdown date. After that, the equal principal shall be repaid every three months, divided into twenty periods. (NT$6,000,000 repayment for each period) Down payment is repaid from the first date until twenty-four months after first drawdown date. After that, the equal principal shall be repaid every three months, divided into twenty periods. (NT$5,650,000 repayment for each period) Down payment is repaid from the first date until twenty-four months after first drawdown date. After that, the equal principal shall be repaid every three months, divided into twenty periods. (NT$1,750,000 repayment for each period) Down payment is repaid from the first date until twenty-four months after first drawdown date. After that, the equal principal shall be repaid every three months, divided into twenty periods. (NT$20,000,000 repayment for each period) Down payment is repaid from the first date until twelve months after first drawdown date. After that, the equal principal shall be repaid every six months, divided into five periods. (NT$40,000 repayment for each period) Down payment is repaid from the first date until twenty-four months after first drawdown date. After that, the equal principal shall be repaid every three months, divided into twenty periods. (NT$500,000 repayment for each period)	A n n u a l percent a ge r a t e 0.42%-0.68% 1.1%-1.2% 0.42%-0.67% 0.42%-0.67% 0.42%-0.67% 0.42%-0.67% 1.13%-1.30% 0.42%-0.67%	Amount falling due i n o n e y e a r $ 100,000 72,000 24,000 22,600 7,000 80,000 72,000 2,000	Amount falling due a f t e r o n e ye a r $ 100,000 128,000 - - - - 36,000 -	T o t a l
						$ 200,000 200,000 24,000 22,600 7,000 80,000 108,000 2,000

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2016.10.14-2021.11.2 5 Down payment is repaid from the first date until twenty-four months after first drawdown date. After that, the equal principal shall be repaid every three months, divided into twenty periods. (NT$9,500,000 repayment for each period) 0.42%-0.67% Taipei Fubon Bank (Zhonggang Branch) 2019.12.27-2022.04.1 0 Each drawdown date shall not exceed final maturity date, which is one business day piror to final drawdown date. The principal shall fully be repaid in one lump sum upon its maturity. 1.14%-1.34%		38,000 - $ 417,600	- 50,000 $ 314,000	38,000 50,000 $ 731,600

75 -

Lingsen Precision Industries, LTD. Statement of operating revenue For the year ended December 31, 2020 Table 11 Amounts expressed in thousands of New Taiwan Dollars I t e m Amount (thousands A m o u n t o f P C S ) Packaging and final testing of IC Approximately $ 4,487,367 4,127,473 Revenue from Contracts with 114,509 Customers Other operating Income 66,958 4,668,834 Less: sales allowance ( 39,904 ) Operating Income $ 4,628,930

76 -

Lingsen Precision Industries, LTD.

Statement of operating costs

For the year ended December 31, 2020

Table 12 Amounts expressed in thousands of New

Taiwan Dollars

I
t
e
m
Raw material at the beginning of year
Current net purchase
Raw material at the end of year
Sales of raw materials
Other expenses
Raw material consumption
Direct labor
Overhead
Manufacturing cost
Work in process at the beginning of the year
Work in process at the end of the year
Cost of finished good Inventory
Finished good Inventory at the beginning of the
year
Finished good Inventory at the end of the year
Cost of sales
Income from Sale of Scrap
Inventory Valuation Losses
Cost of Sales of Raw Materials
Operating costs

A
m
o
u
n
t

$ 245,106
1,643,273
(
307,300 )
(
63,778 )
(
25,552
)
1,491,749
652,351
2,085,069
4,229,169
2,721
(
2,563
)
4,229,327
2,627
(
2,281
)
4,229,673
(
34,329 )
1,653
63,778
$ 4,260,775

77 -

				Lingsen Precision Industries, LTD.	Lingsen Precision Industries, LTD.	Lingsen Precision Industries, LTD.
				Statement of	operating expenses
				For the year ended December 31,		2020
Table 13					Amounts	expressed in thousands of New
								Taiwan Dollars
						Research and
				S e l l i n g	Administrativ	development
I	t	e	m	e x pe n s e s	e expenses	e x p	e n s e s	T	o	t a	l
Salary	and Wages			$ 28,397	$ 69,018	$	71,781		$ 169,196
Depreciation				236	17,119		39,167			56,522
Insurance premium				2,822	7,525		6,712			17,059
Commissions		Expense		6,846	-		-			6,846
Others				12,667	48,394		21,258			82,319
				$ 50,968	$ 142,056	$ 138,918			$ 331,942

78 -

AI assistant

LPI — Annual Report 2020

52036_rns_2020-11-12_0041ec58-9347-418b-998e-a71b631e9b2a.pdf

Table of Contents

Independent Auditors' Report

Opinion

Basis for opinion

Key audit matters

matters.

Responsibilities of the management and those charged with governance for the parent company only financial statements

Auditor’s responsibilities for the audit of the parent company only financial statements

---Notice to Readers---

Lingsen Precision Industries, LTD. Balanced sheet

Lingsen Precision Industries, LTD. Parent Company Only Statements of Comprehensive Income For the years ended December 31, 2020 and 2019

Amounts expressed in thousands of New Taiwan Dollars, only except for loss per share

(Continued)

Lingsen Precision Industries, LTD. Statements of changes in equity For the years ended December 31, 2020 and 2019

Lingsen Precision Industries, LTD.

Parent Company Only Statements of Cash Flows

1. Company history

2. Approval date and procedures of the consolidated financial statements

3. Application of new standards, amendments and interpretations

4. Summary of significant accounting policies

e.

f.

g.

j. Financial instruments

(2)

2)

Financial Liabilities

k.

l.

m.

Lease

2)

q.

3)

uncertainty

6. Cash and cash equivalent

8. Accounts receivable

9. Other receivables

10. Inventories

11. Investments accounted for using the equity method

12. Property, Plant and Equipment

a. Assets used by the Company

13.Lease agreements

c. Material leases and terms

14. Other assets

15. Borrowings

16. Other payables

17. Provisions - Current

18. Retirement benefits Plan

a. Defined contribution plans

b. Defined benefit plans

19. Equity

20. Revenue

21. Labor cost and depreciation

22. Income Tax

b. Deferred tax assets and liabilities

24. Capital Management

25. Financial instruments

Sensitivity analysis

Sensitivity analysis

Sensitivity analysis

3) Liquidity risk management

Liquidity and interest risks of non-derivative financial liabilities

26. Related Party Transaction

27. Pledged Assets

28. Significant Contingent Liabilities and Unrecognized Commitments

30. Other disclosures

Lingsen Precision Industries, LTD. and its subsidiaries

Table 1

Lingsen Precision Industries, LTD. and its subsidiaries

Marketable securities held

Table 2

Lingsen Precision Industries, LTD. and its subsidiaries

Information on investees

Table 3

Table 5

§STATEMENTS OF MAJOR ACCOUNTING ITEMS

LPI Annual Report 2020