LPI - Annual Report 2022 | FinancialReports.eu

Stock Code: 2369

Lingsen Precision Industries, Ltd.

Parent Company Only Financial Statements and Independent Auditors’ Report

For the Years Ended December 31, 2022 and 2021

Address: No. 5-1, Nan’er Rd., Tanzi Dist., Taichung City 427058, Taiwan (R.O.C.)

TEL: (04)25335120

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

Independent Auditors’ Report

To the Board of Directors and Shareholders of Lingsen Precision Industries, Ltd.

Audit opinions

We have audited the accompanying parent company only financial statements of Lingsen Precision Industries, Ltd. (the “Company”), which comprise the unconsolidated balance sheets as of December 31, 2022 and 2021, and the unconsolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying unconsolidated financial statements present fairly, in all material respects, the unconsolidated financial position of the Company as of December 31, 2022 and 2021, and its unconsolidated financial performance and its unconsolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulation Governing Auditing and Certification of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the R.O.C. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Unconsolidated Financial Statements section of our report. The auditors of the firm, subject to the independence regulations, have maintained independence from the Company in accordance with the Code of Ethics and perform other obligations of such Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

The key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the unconsolidated financial statements of the Company for the year ended December 31, 2022. These matters were addressed in the context of our audit of the unconsolidated 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 for the Company's unconsolidated financial statements for the year ended December 31, 2022 are stated as follows:

Authenticity of service revenue recognition

The main source of revenue of the Company relies on the service revenue from various wafers and integrated circuit packaging and testing services; therefore, the service revenue is determined to be the main indicator for the management to evaluate the business performance, and its recognition authenticity has a material impact on the overall financial statements. Accordingly, the authenticity of the recognition of specific customer service revenue is listed as the key audit matter. For revenue recognition related accounting policy, please refer to Notes 4 and 20 of the unconsolidated financial statements.

We summarize the main audit procedures executed for the aforementioned matters of the current year as follows:

Understand and assess the internal control design related to the audit and risk in the product sales and payment collection cycle and conduct a test on its effectiveness.
Inspect and obtain samples from the account sales of specific customers, and inspect relevant documents of delivery orders and sales invoices, and also verify whether the payment collection subjects are consistent with the delivery subjects, and also perform letter issuance for customers of service revenue, in order to verify the authenticity of the service revenue.

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

Management is responsible for the preparation and fair presentation of the unconsolidated 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 unconsolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the unconsolidated financial statements, management is also 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, Including the Audit Committee, are responsible for overseeing the Company’s financial reporting process.

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

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

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

Identify and assess the risk of material misstatement of the unconsolidated financial statements due to fraud or error, design and adopt appropriate countermeasures for the risks assessed, and obtain sufficient and appropriate audit evidence in order to be used as the basis for the opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management level.
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 ability of the Company to continue as a going concern. In case where we consider that such events or circumstances have a material uncertainty, then relevant disclosure of the unconsolidated financial statements are required to be provided in our audit report to allow users of unconsolidated financial statements to be aware of such events or circumstances, 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 auditor’s report. However, future events or conditions may cause Lingsen Precision Industries, Ltd. to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the unconsolidated financial statements, including relevant notes, and whether the unconsolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entity of the Company, and express an opinion on unconsolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the Company. We remain solely responsible for our audit opinion.

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

We also provide the governance units with statements that we have complied with relevant matters that may reasonably be thought to bear on our independence, and we have also communicated with the governance units on all relationships and other matters (including relevant protective measures) that may be considered to affect the independence of auditors.

From the matters communicated with those charged with governance, we determine those matters that were of most significant in the audit of the Company’s 2022 unconsolidated

financial statements and are therefore the key audit matters. 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 Taiwan CPA Shu-Ching Chiang CPA Ting-Chien Su

Financial Supervisory Commission Approval Document No. Jin-Guan-Zheng-Shen-Zi No. 1000028068

Financial Supervisory Commission Approval Document No. Jin-Guan-Zheng-Shen-Zi No. 1070323246

February 23, 2023

Lingsen Precision Industries, Ltd. Parent Company Only Balance Sheets December 31, 2022 and 2021

Unit: In Thousands of New Taiwan Dollars

				December 31,	2022					December 31,	2021
Code	ASSETS			Amount		%				Amount		%
	Current Assets
1100	Cash and cash equivalents (Notes 4 and 6)		$	1,146,420		15			$	1,212,698		14
1136	Financial assets at amortized cost- current(Notes 4,8,27 and28)			263,000			3			263,000			3
1140	Contract assets - current (Notes 4 and 20)			94,677			1			135,659			2
1170	Accounts receivable (Notes 4, 9 and 20)			810,312		10				1,439,848		17
1200	Other receivables (Notes 4 )			11,881			-			20,659			-
1220	Current tax assets (Notes 4 and 22)			44,854			1			210			-
1310	Inventories (Notes 4 and 10)			498,820			6			657,624			8
1470	Other current assets (Notes 14)			267,834			4			228,692			3
11XX	Total current assets			3,137,798		40				3,958,390		47
	Non-current assets
1517	Financial assets at fair value through other comprehensive income
	- non-current
	(Note 4 and 7)			9,048			-			9,982			-
1550	Investment accounted for using the equity method (Notes 4 and
	11)			884,958		11				938,874		11
1600	Property, plant and equipment (Notes 4, 12 and 28)			3,179,568		41				2,949,761		35
1755	Right-of-use assets (Notes 4 and 13)			145,342			2			150,220			2
1840	Deferred tax assets (Notes 4, 5 and 22)			145,168			2			23,008			1
1915	Prepayments for facilities			138,629			2			350,718			4
1920	Refundable deposits (Note 4)			534			-			324			-
1975	Net defined benefit assets - non-current (Notes 4 and 18)			136,051			2			12,009			-
1990	Other non-current assets			4,685			-			5,839			-
15XX	Total non-current assets			4,643,983		60				4,440,735		53
1XXX	Total assets		$	7,781,781		100			$	8,399,125		100
Code	Liabilities and Equity
	Current Liabilities
2100	Short-term bank borrowings (Notes 15)		$	282,778			4		$	194,118			2
2170	Accounts payable			186,848			2			479,409			6
2200	Other payables (Notes 16 and 27)			457,912			6			693,056			8
2230	Deferred tax liabilities (Notes 4 and 22)			-			-			26,506			-
2250	Liability reserve - current (Notes 4 and 17)			5,534			-			3,980			-
2280	Lease liabilities - current (Notes 4 and 13)			3,727			-			4,420			-
2320	Long-term borrowings due in one year (Notes 15 and 28)			237,929			3			290,814			4
2399	Other current liabilities			79,315			1			63,888			1
21XX	Total current liabilities			1,254,043		16				1,756,191		21
	Non-current liabilities
2540	Long-term banks borrowings (Notes 15 and 28)			651,957			9			589,886			7
2570	Deferred tax liabilities (Notes 4 and 22)			18,686			-			784			-
2580	Lease liabilities - non-current (Notes 4 and 13)			143,637			2			147,364			2
2645	Deposits received			1,936			-			51,822			-
25XX	Total non-current liabilities			816,216		11				789,856			9
2XXX	Total Liabilities			2,070,259		27				2,546,047		30
	Equity
3110	Ordinary shares			3,801,023		49				3,801,023		45
3200	Capital surplus			1,265,021		16				1,250,011		15
	Retained earnings
3310	Legal reserve			91,283			1
3320	Special reserve			91,034			1			160,419			2
3350	Unappropriated earnings (accumulated deficit)			702,042			9			912,825		11
3400	Other equities	(		62,466 )	(		1 )	(		71,372 )	(		1 )
3500	Treasury shares	(		176,415)	(		2)	(		199,828)	(		2)
3XXX	Total equity			5,711,522		73				5,853,078		70
	Total liabilities and equities		$	7,781,781		100			$	8,399,125		100

The accompanying notes are an integral part of the unconsolidated financial report

Lingsen Precision Industries, Ltd. Parent Company Only Statements of Comprehensive Income For the Years from January 1 to December 31, 2022 and 2021

Unit: Expressed in NT$ thousand; except earnings per share expressed in NT$

Code 4000 Operating revenue (Notes 4, 20 and 27) 5000 Operating costs (Notes 10, 21 and 27) 5900 Gross profit Operating expenses (Notes 21 and 27) 6100 Selling and marketing expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment losses (Notes 4 and 9) 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses (Note 4) 7100 Interest income 7110 Rental income (Note 27) 7130 Dividend income 7190 Other income (Note 27) 7210 Gains on disposal of property, plant and equipment 7230 Net gain on foreign exchange 7510 Interest expenses 7775 Share of loss from subsidiaries and associated companies using the equity method 7000 Total non-operating incomes and expenses		2022		% 100 90 10 1 3 3 - 7 3 - - - 2 - - - (2) -		2021
		Amount $ 5,113,539 4,611,188 502,351 52,575 154,554 131,024 403) 337,750 164,601 6,109 12,537 828 77,632 486 14,749 12,573 ) 100,759) 991)				Amount $ 6,489,676 5,261,577 1,228,099 63,671 208,454 143,554 465 416,144 811,955 3,297 13,477 1,205 29,795 1,829 14,943 8,647 ) 89,182 145,081		%
	( ( ( (				(			100 81 19 1 3 2 - 6 13 - - - 1 - - - 1 2

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Code 7900 Net profit before income tax 7950 Income tax benefit(expenses)(Notes 4 and 22) 8200 Net profit for the year Other comprehensive income (loss) (Note 4) 8310 Items not reclassified subsequently to profit or loss 8311 Remeasurement of defined benefit plans (Note 18) 8316 Unrealized gain/(loss) on investments in equity instruments at fair value through other comprehensive income 8330 Share of other comprehensive profits/losses of subsidiaries and associated companies accounted for using equity method 8349 Income tax related to items that will not be reclassified subsequently (Note 22) 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of the financial statements of foreign operations 8300 Other comprehensive income of the year (net amount after tax) 8500 Total comprehensive income for the year Earnings per share (Note 23) 9750 Basic 9850 Diluted		2022		% 3 1 4 2 - - - 2 - 2 6		2021
		Amount $ 163,610 43,681 207,291 117,280 ( 8,227) 7,835 23,456) 93,432 9,298 102,730 $ 310,021 $ 0.56 $ 0.55				Amount $ 957,036 83,187) 873,849 48,720 1,525 5,797 ) 9,744) 34,704 2,456) 32,248 $ 906,097 $ 2.35 $ 2.32		%
	(				( ( ( (		(	15 2) 13 1 - - - 1 - 1 14

The accompanying notes are an integral part of the unconsolidated financial report

Lingsen Precision Industries, Ltd. Parent Company Only Statement of Changes in Equity For the Years from January 1 to December 31, 2022 and 2021

Unit: In Thousands of New Taiwan Dollars

Capital surplus (Note 19) $ 1,384,604 - 73 ( 134,666) - - - 1,250,011 - - - 67 7,295 - - - 7,648 $ 1,265,021	Retained earnings(Note 19) Undistributed earnings (losses to be covered) (Note 4) Legal reserve Special reserve $ - $ 192,020 ($ 166,267) - ( 31,601) 31,601 - - - - - 134,666 - - 873,849 - - 38,976 - - 912,825 - 160,419 912,825 91,283 - ( 91,283) - - ( 490,000) - ( 69,385) 69,385 - - - - - - - - 207,291 - - 93,824 - - 301,115 - - - $ 91,283 $ 91,034 $ 702,042	Retained earnings(Note 19) Undistributed earnings (losses to be covered) (Note 4) Legal reserve Special reserve $ - $ 192,020 ($ 166,267) - ( 31,601) 31,601 - - - - - 134,666 - - 873,849 - - 38,976 - - 912,825 - 160,419 912,825 91,283 - ( 91,283) - - ( 490,000) - ( 69,385) 69,385 - - - - - - - - 207,291 - - 93,824 - - 301,115 - - - $ 91,283 $ 91,034 $ 702,042	Retained earnings(Note 19) Undistributed earnings (losses to be covered) (Note 4) Legal reserve Special reserve $ - $ 192,020 ($ 166,267) - ( 31,601) 31,601 - - - - - 134,666 - - 873,849 - - 38,976 - - 912,825 - 160,419 912,825 91,283 - ( 91,283) - - ( 490,000) - ( 69,385) 69,385 - - - - - - - - 207,291 - - 93,824 - - 301,115 - - - $ 91,283 $ 91,034 $ 702,042	Other equityitems(Note 4) Exchange differences on translation of the financial statements of foreign operations Unrealized Valuation Gain/(Loss) on Financial Assets at Fair Value Through Other comprehensive income ($ 22,172) ($ 42,472) - - - - - - - - ( 2,456) ( 4,272) ( 2,456) ( 4,272) ( 24,628) ( 46,744) - - - - - - - - - - - - 9,298 ( 392) 9,298 ( 392) - - ($ 15,330) ($ 47,136)	Other equityitems(Note 4) Exchange differences on translation of the financial statements of foreign operations Unrealized Valuation Gain/(Loss) on Financial Assets at Fair Value Through Other comprehensive income ($ 22,172) ($ 42,472) - - - - - - - - ( 2,456) ( 4,272) ( 2,456) ( 4,272) ( 24,628) ( 46,744) - - - - - - - - - - - - 9,298 ( 392) 9,298 ( 392) - - ($ 15,330) ($ 47,136)	Other equityitems(Note 4) Exchange differences on translation of the financial statements of foreign operations Unrealized Valuation Gain/(Loss) on Financial Assets at Fair Value Through Other comprehensive income ($ 22,172) ($ 42,472) - - - - - - - - ( 2,456) ( 4,272) ( 2,456) ( 4,272) ( 24,628) ( 46,744) - - - - - - - - - - - - 9,298 ( 392) 9,298 ( 392) - - ($ 15,330) ($ 47,136)	Treasury shares (Note 19) ($ 199,828) - - - - - - ( 199,828) - - - - - - - - 23,413 ($ 176,415)	Total equity
				Exchange differences on translation of the financial statements of foreign operations ($ 22,172) - - - - ( 2,456) ( 2,456) ( 24,628) - - - - - - 9,298 9,298 - ($ 15,330)
	Legal reserve $ - - - - - - - - 91,283 - - - - - - - - $ 91,283	Special reserve $ 192,020 ( 31,601) - - - - - 160,419 - - ( 69,385) - - - - - - $ 91,034
(		( (	( ( (		( ( ( (	( ( ( ( ( (	( ( (	$ 4,946,908 - 73 - 873,849 32,248 906,097 5,853,078 - ( 490,000) - 67 7,295 207,291 102,730 310,021 31,061 $ 5,711,522

					(





	$ 91

The accompanying notes are an integral part of the unconsolidated financial report

Lingsen Precision Industries, Ltd.

Parent Company Only Statement of Cash Flows

For the Years from January 1 to December 31, 2022 and 2021

Unit: In Thousands of New Taiwan Dollars

Code Cash flows from operating activities A10000 Net profit before tax for the year Income/expenses items A20100 Depreciation expense A20300 Expected credit impairment losses A20900 Interest expenses A21200 Interest income A21300 Dividend income A21900 The cost of remuneration on a share-based basis A22400 Share of loss (profit) from subsidiaries and associated companies using the equity method A22500 Gains on disposal of property, plant and equipment A23800 Loss for market price decline and obsolete and slow-moving inventories. A24100 Net gain on foreign exchange A29900 Amortization of prepayments A30000 Net changes in operating assets and liabilities A31125 Contract assets A31150 Accounts receivable A31180 Other receivables A31200 Inventories A31240 Other current assets A32150 Accounts payable A32180 Other payables A32200 Provision (reversal) for liabilities A32230 Other current liabilities A32240 Net defined benefit liability A33000 Cash provided by operating activities A33100 Interest received A33300 Interest paid A33500 Income tax returned AAAA Net cash inflow from operating activities	2022 $ 163,610 548,266 ( 403) 12,573 ( 6,109 ) ( 828 ) 7,711 100,759 ( 486 ) 33,520 1,105 2,767 40,982 626,685 8,997 125,284 ( 39,142) ( 291,538) ( 228,111) 1,554 15,425 ( 6,762) 1,115,859 5,890 ( 12,118 ) (155,183) 954,448	2021
		$ 957,036 584,787 465 8,647 ( 3,297 ) ( 1,205 ) - ( 89,182 ) ( 1,829 ) 6,020 ( 3,659 ) 1,952 ( 21,150 ) ( 342,267 ) ( 3,653) ( 378,924 ) ( 108,858 ) 171,193 237,916 ( 15,470 ) 17,720 ( 17,530) 998,712 3,299 ( 7,406 ) 250 994,855

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Code Cash flows from investing activities B00050 Disposition of financial assets measured at amortized cost B02200 Net cash outflow for obtaining subsidiaries B02700 Purchase of property, plant and equipment B02800 Proceeds from disposal of property, plant and equipment B03700 Increase in refundable deposits B06700 Increase in other non-current assets B07100 Increase in prepaid equipment amount B07600 Dividends received BBBB Net cash outflow from investment activities Cash flows from financing activities C00100 Increase in short-term bank borrowings C00200 Decrease in short-term bank borrowings C01600 Proceeds from long-term bank borrowings C01700 Repayments of long-term bank borrowings C03000 Increase in guarantee deposits C04020 Repaid principal of lease liabilities C04500 Payment of cash dividends C04800 Employees execute stock options C09900 Uncollected overdue dividends CCCC Net cash inflow (outflow) from financing activities EEEE Increase (decrease) of cash and cash equivalents for the year E00100 Beginning cash and cash equivalents of the year E00200 End cash and cash equivalents of the year	2022 - ( $ 29,710 ) ( 464,172 ) 486 ( 210 ) ( 1,613 ) ( 104,584) 828 ( 598,975) 749,733 ( 659,781 ) 300,000 ( 290,814 ) ( 49,886) ( 4,420 ) ( 490,000) 23,350 67 ( 421,751) ( 66,278) 1,212,698 $1,146,420	2021
		28,000 ( $ 28,010 ) ( 771,136 ) 5,002 ( 83 ) ( 6,499 ) ( 349,090 ) 1,205 (1,120,611) 1,133,187 ( 1,072,721 ) 616,700 ( 467,600 ) 50,000 ( 5,514 ) - - 73 254,125 128,369 1,084,329 $1,212,698

The accompanying notes are an integral part of the unconsolidated financial report

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Lingsen Precision Industries, Ltd.

Notes to Parent Company Only Financial Statements

For the Years Ended December 31, 2022 and 2021

(Amounts are expressed in thousands of New Taiwan Dollars or foreign currency, unless stated

otherwise)

1. Company History

Lingsen Precision Industries, Ltd. (referred to as the “Company”) was established in Taichung Export Processing Zone in April 1973 and began its operation in July 1973. The main business is IC packaging 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 Financial Statements

These parent company only financial statements were approved by the Board of Directors on February 23, 2023.

3 . Application of New, Amended And Revised Standards and Interpretations

(1) Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies.

(2)The IFRSs endorsed by the FSC for application starting from 2023

Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 1) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 2) Amendments to IAS 12 “Deferred Tax related to Assets and January 1, 2023 (Not Liabilities arising from a Single Transaction”

Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 2: The amendments will be applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the
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annual reporting period beginning on or after January 1, 2023.

Note 3: Except for deferred taxes that were recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments were applied prospectively to transactions that occur on or after January 1, 2022.

As of the date the consolidated financial statements were authorized for issuance, the Company is continuously assessing the possible impact of the application of other standards and interpretations on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

(3)New IFRSs issued by International Accounting Standards Board (IASB) but not yet endorsed and issued into effect by the FSC

New, Revised or Amended Standards and Interpretations
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of
Assets between An Investor and Its Associate or Joint
Venture”
Amendments to IFRS 16 “Leases Liability in a Sale and
leaseback”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IFRS 17 “Initial Application of IFRS 9 and
IFRS 17 - Comparative Information”
Amendments to IAS 1 “Classification of Liabilities as Current
or Non-current”
Amendments to IAS 1 “Non-current Liabilities with
Covenants”

Effective Date
Announced by IASB
(Note 1)
To be determined by IASB
January 1, 2024 (Note 2)
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

4. Summary of Significant Accounting Policies

(1) Statement of Compliance

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

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(2) 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 (assets) of the fair value of any plan assets which are measured at fair value.

The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

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

(3) Classification of Current and Non-current Assets and Liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets that are expected to be realized within twelve months from the balance sheet date; and
3) Cash and cash equivalent (unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the date of statement of financial position).

Current liabilities include:

1) Liabilities held 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 for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date.

Assets and liabilities that are not classified as current are classified as non-current.

(4) Foreign Currency
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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; however, 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 are 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.

(5) Inventories

Inventories include raw materials, finished goods, and 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.

(6) Investment in subsidiaries

The Company’s investments in the subsidiaries are 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. In addition, 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

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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 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 is eliminated in the parent company only financial statements. Profit and loss from upstream and side stream 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.

(7) Investment in Associates

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

The Company’s 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 is 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.

(8) Property, plant and equipment

The property, plant and equipment are recognized at costs and subsequently measured at costs of the amount less accumulated depreciation and impairment losses.

Property, plant and equipment in the course of construction for production are recognized as the cost of the amount less accumulated depreciation and impairment losses. And such cost includes professional service fees and borrowing costs eligible for capitalization. Upon completion and ready for intended use, such assets are classified to the appropriate categories of property, plant and equipment, and

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depreciation of these assets commences.

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

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

(9) 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 such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. 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 of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss 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 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.

(10) 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.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in

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profit or loss.

Financial assets

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

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.

i. Financial assets measured at amortized cost

When the financial assets invested by the Company satisfiy the following two criteria at the same time, it is classified as the amortized cost financial assets:

a. Where the financial assets are held under certain business model, and the purpose of such model is to hold the financial assets in order to collect contract cash flows; and
b. Where contract terms generated cash flow of specific date and such cash flow is completely for the payment of the interest of principle and external circulating principle amount.

Financial assets measured at amortized cost include cash and cash equivalent, financial assets at amortized cost- current, 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 amortized cost of depreciation. Any exchange gains and losses are recognized as gains and losses.

Except for the following two circumstances, calculation of interest income is based on effective interest rate multiplied by total financial asset’s carrying amount:

a. Purchase or origination of credit-impaired financial loans, interest income, credit-adjusted effective interest rate plus financial loans, post-calculation.
b. Non-purchased or originated credit-impaired financial loans, provided that subsequent credit-impaired financial loans continue to be credit-impaired;

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.

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.

ii) Investments in equity instruments measured at fair value through other comprehensive income

On initial recognition, the Company may irrevocably designate

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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 it is not 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 are assessed to determine whether the credit risk has significantly increased since the original recognition. If there is no significant increase, then the allowance loss is recognized according to the 12-month expected credit loss. If it has increased significantly, then allowance loss is recognized according to the lifetime expected credit loss.

Expected credit losses are weighted average credit losses with the probability of default events. The 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:

i) There is internal or outside information prevails that it is not possible the borrower pays off the debt.
ii) The overdue exceeds the average credit period, unless reasonable and supportable information indicates that a delayed default basis 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

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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

1) Follow-up measurement

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

2) Derecognition of financial liabilities

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

(11) Provision for liabilities

The amount recognized as a provision for liabilities 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.

(12) Revenue recognition

The Company allocates the transaction price to each performance obligation and recognizes the revenue when each of the obligations 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. Packaging 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 packaging or the delivery is completed. A contract asset is thus recognized when the Company renders the service and transferred to accounts receivable when the packaging 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.

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(13) Leases

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

1) The Company as lessor

Leases are classified as finance leases 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.

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.

2) 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 Group 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 Group 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. Lease liabilities are presented on a separate line in the balance sheets.

(14) Borrowing costs

Borrowing costs that can be 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.

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

(15) 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.

(16) 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.

Net defined benefit liability represents the actual deficit in the Group’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.

(17) Share-Based Payment Agreement - Employee Stock Option

Employee stock options for employees

Employee stock options are recognized as expenses on a straight-line basis during the vesting period based on the fair value of the equity instrument on the date of grant and the best estimated quantity expected to be acquired, and at the same time adjust the capital reserve - employee stock options. If it is immediately vested on the grant date, it shall be fully recognized as an expense on the grant date.

The company revises the estimated number of employee stock options expected to be acquired on each balance sheet date. If there is a revision to the original estimated quantity, the affected number is recognized as profit or loss, so that the accumulated expenses reflect the revised estimate, and the capital reserve-employee stock option is adjusted accordingly.

(18) Income tax

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

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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 levied at unappropriated earnings is recognized in shareholders' annual meeting.

Income tax payable for prior period is adjusted to the current income tax.

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 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.

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5. Significant Accounting Assumptions and Judgment, 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 incorporates the recent development of the new coronavirus pneumonia epidemic and the possible impact of the military conflict between Russia and Ukraine and related international sanctions on the economic environment into relevant major accounting estimates such as cash flow estimation, growth rate, discount rate, and profitability. For these considerations, management will continue to review the estimates and underlying assumptions. 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 date of December 31, 2022, the balance of unused loss carryforwards was NT$120,631,000.The carrying amount of deferred tax assets related to temporary differences for 2022 and 2021 were NT$145,168,000 and NT$23,008,000 respectively. The realizability of deferred tax assets mainly depends on whether there will be sufficient profits or taxable temporary differences in the future. 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. Such reversal is recognized as gain or loss during the occurrence period.

6. Cash and cash equivalents

nd cash equivalents
Cash on hand and petty cash Check and demand deposit Cash equivalents Time deposits Short-term notes and bills Annual interest rate (%) Cash in banks Time deposits Short-term notes and bills	December 31,2022 $ 248 511,368 535,000 99,804 $ 1,146,420 0.001-1.05 0.975-1.05 0.65	December 31,2021
			$ 273 507,575 605,000 99,850 $ 1,212,698 0.001-0.05 0.13-0.41 0.23

7. Financial assets at fair value through other comprehensive income- non-current

Listed and OTC stocks ETREND Hightech Corp. Emerging stocks Amtek Semiconductors Co., Ltd. Xpert Semiconductor Inc.	December 31,2022 $ 1,811 7,237 - $ 9,048	December 31,2021	December 31,2021
			$ 2,877 7,105 - $ 9,982

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The Company invests the aforementioned common stocks in accordance with long-term strategic objectives and expects to profit from long-term investments. The management of the Company 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.

8. Financial assets at amortized cost- current

ial assets at amortized cost-current
Time deposits with an initial maturity more than three months Time deposit pledged	December 31,2022 $ 160,000 103,000 $ 263,000	December 31,2021
			$ 160,000 103,000 $ 263,000

As of December 31, 2022 and 2021, annual rate of time deposits with an initial maturity more than three months is 0.35%-1.44% and 0.11%-0.815%, respectively.
Please see Tables 28 for the information of financial assets at amortized cost- current.

9. Accounts receivable

nts receivable
Amortized cost Total carrying amount Less: Allowance for bad debts	December 31,2022 $ 812,023 ( 1,711) $ 810,312	December 31,2021
	(	(	$ 1,441,962 2,114) $ 1,439,848

The average collection period for selling products and rendering service of the Company is 60 to 90 days, excluding accounts receivable. Credit of key customers is rated by using other 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 of the Company 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 of the Company shall be reviewed individually at the date of balance sheet to ensure the uncollectible accounts receivable has been listed to appropriate impairment loss. Accordingly, the management of the Company considers the Company's credit risk has significantly decreased.

The loss allowance for accounts receivable of the Company 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

25 -

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, 2022 Expected credit loss (%) Total carrying amount Allowance for loss Amortized cost December 31, 2021 Expected credit loss (%) Total carrying amount Allowance for loss Amortized cost		0~90 days	Aging 91~180 days	Aging 91~180 days	Aging 181~365 days	Aging 181~365 days	Aging over 365 days	Aging over 365 days		Total
	(	0.1 $ 800,230 803) $ 799,427 0~90 days	2 $ 9,971 ( 200) $ 9,771 Aging 91~180 days		10 $ 1,238 ( 124) $ 1,114 Aging 181~365 days		100 $ 584 ( 584) $ - Aging over 365 days		(	$ 812,023 1,711) $ 810,312 Total
	(	0.1 $ 1,406,621 1,407) $ 1,405,214	(	2 $ 35,341 707) $ 34,634		10 $ - - $ -		100 $ - - $ -	(	$ 1,441,962 2,114) $ 1,439,848

Changes on allowance for accounts receivable loss are as follows:

Balance at the beginning of the year Provision(reversal) Balance at the end of the year		2022 $ 2,114 ( 403) $ 1,711		2021
				$ 1,649 465 $ 2,114

Inventories

ntories
Raw materials Finished goods Work in process	December 31,2022 $ 498,820 - - $ 498,820	December 31,2021
			$ 657,624 - - $ 657,624

Inventory-related operating costs as of 2022 and 2021 are NT$4,611,188,000 and NT$5,261,577,000 respectively.

Operating costs include the following items:

	NT$5,261,577,000 respectively. Operating costs include the following items:
11.	2022 Revenue from sale of scraps ( $ 48,625 ) Inventory valuation losses 33,520 Investments accounted for using the equity method December 31,2022 Investment in subsidiaries $ 884,958 Investment in Associates $ -	2021
		( $ 66,650 ) 6,020 December 31,2021
	Investment in subsidiaries Investment in Associates
			$ 938,874 $ -

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(1) Investment in subsidiaries

Investment in subsidiaries
Investees Private entity Lingsen Holding (Samoa) Inc. Panther Technology Co., Ltd. Sooner Power Semiconductor Co., Ltd. Lee Shin Investment Co., Ltd. Lingsen America Inc. Nexus Material Corporation Less: Transferred treasury shares Accumulated impairment loss		December 31,	2022 Equity% 100 64 99 100 100 78		December 31,2021
		Amount $ 97,576 414,837 220,169 243,633 64,380 27,092 1,067,687 176,415 ) 6,314) $ 884,958			Amount $ 157,776 426,506 215,148 235,569 59,502 27,102	Equity%
						100 64 99 100 100 78
	( (			( (	1,121,603 176,415 6,314 $ 938,874

The Company has been approved by Investment Commission, MOEA to invest in Lingsen Holding (Samoa) Inc. at NT$29,710,000 (US$1,000,000), NT$28,010,000 (US$1,000,000) respectively in June 2022 and July 2021. In the meant, Lingsen Holding (Samoa) Inc. indirectly reinvested in Ningbo Liyuan Technology Co., Ltd. through the investment company Li Yuan Investments Co., Ltd.

Sooner Power Semiconductor Co., Ltd. handled 392,402,000 in November 2022 to reduction in capital for the previous year cumulative losses, the real-shares after paying capital are 216,988,000, which was all subscribed by the Company to maintain its share at 99%.

Please see Tables 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 2022 and 2021 are in accordance with auditors' reports of each subsidiary as of the same period.

(2) Investment in Associates

Investment in Associates
Investees Private entity Qi Feng Technology Co., Ltd. Less: Accumulated impairment loss		December 31,2022 Amount Sharehol ding $ 11,417 30% 11,417) $ -		December 31,2021
		Amount $ 11,417 11,417) $ -		Amount $ 11,417 11,417) $ -	Sharehol ding
	(		(		30%

Investments accounted for using the equity method as well as the Company's 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 31,2022 $ 2,992,935 186,633 $ 3,179,568	December 31,2021
			$ 2,758,884 190,877 $ 2,949,761

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(1) Assets used by the Company

2022 Cost Balance at the beginning of the year Increase Decrease Reclassificatio n Balance at the end of the year Accumulated depreciation Balance at the beginning of the year Increase Decrease Balance at the end of the year Carrying amounts at December 31,2022 2021 Cost Balance at the beginning of the year Increase Decrease Reclassificati on Balance at the end of the year Accumulated depreciation Balance at the beginning of the year Increase Decrease Balance at the end of the year Carrying amounts at December 31,2021		Buildings $2,272,481 14,925 39,536 ) 132,600 $2,380,470 $ 899,381 104,816 39,536) $ 964,661 $1,415,809 Buildings $2,226,536 53,966 8,021 ) - $2,272,481 $ 812,404 94,998 8,021) $ 899,381 $1,373,100	Machinery and equipment $3,170,351 302,715 ( 486,425 ) 316,673 $3,303,314 $2,026,171 363,264 (486,425) $1,903,010 $1,400,304 Machinery and equipment $3,738,206 520,985 ( 1,179,169 ) 90,329 $3,170,351 $2,780,039 422,128 (1,175,996) $2,026,171 $1,144,180	Transportati on Equipment $ 19,385 5,933 ( 6,491 ) - $ 18,827 $ 17,621 723 ( 6,491) $ 11,853 $ 6,974 Transportati on Equipment $ 19,385 - - - $ 19,385 $ 17,039 582 - $ 17,621 $ 1,764	Office equipment $ 25,896 9,359 ( 2,510 ) - $ 32,745 $ 18,701 2,708 ( 2,510) $ 18,899 $ 13,846 Office equipment $ 57,995 1,357 ( 33,456 ) - $ 25,896 $ 45,296 6,861 ( 33,456) $ 18,701 $ 7,195	Other equipment $ 256,466 91,249 ( 39,572 ) 5,630 $ 313,773 $ 135,501 67,073 ( 39,572) $ 163,002 $ 150,771 Other equipment $ 228,907 92,661 ( 65,102 ) - $ 256,466 $ 150,054 50,549 ( 65,102) $ 135,501 $ 120,965	Unfinished construction $ 111,680 31,781 - (138,230) $ 5,231 $ - - - $ - $ 5,231 Unfinished construction $ - 111,680 - - $ 111,680 $ - - - $ - $ 111,680	Total cost
	( (							$5,856,259 455,962 ( 574,534 ) 316,673 $6,054,360 $3,097,375 538,584 (574,534) $3,061,425 $2,992,935 Total cost
	( (							$6,271,029 780,649 ( 1,285,748 ) 90,329 $5,856,259 $3,804,832 575,118 (1,282,575) $3,097,375 $2,758,884

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

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

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Other equipment

3 ~ 7 years

Please see note 28 for the amount of property, plant, and equipment used by the Company pledged as collaterals.

(2) Assets subject to operating leases

Company pledged as collaterals. Assets subject to operating leases
2022 Cost Balance at the beginning of the year Increase Balance at the end of the year Accumulated depreciation Balance at the beginning of the year Increase Balance at the end of the year Carrying amounts at December 31,2022 2021 Cost Balance at the beginning of the year Reclassification Balance at the end of the year Accumulated depreciation Balance at the beginning of the year Increase Balance at the end of the year Carrying amounts at December 31,2021		Buildings $ 279,629 560 $ 280,189 $ 88,752 4,804 $ 93,556 $ 186,633 $ 279,629 - $ 279,629 $ 83,961 4,791 $ 88,752 $ 190,877		Total
				$ 279,629 560 $ 280,189 $ 88,752 4,804 $ 93,556 $ 186,633 $ 279,629 - $ 279,629 $ 83,961 4,791 $ 88,752 $ 190,877

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. The lessee has no bargain purchase option on such asset after the end of the lease period.

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 31,2022 $ 11,854 4,920 4,920 4,920 4,920 20,922 $ 52,456	December 31,2021	December 31,2021
			$ 12,267 6,061 6,061 6,061 6,061 27,584 $ 64,095

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

Buildings

45 ~ 50 years

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13. Lease agreements

(1) Right-of-use assets

Right-of-use assets
Carrying amount of right-of-use assets Land Buildings Depreciation expense of right-of-use assets Land Buildings	December31,2022		December31,2021
		$ 145,342 - $ 145,342 2022		$ 149,573 647 $ 150,220 2021
		$ 4,232 646 $ 4,878		$ 4,231 647 $ 4,878

Except for the depreciation expenses recognized above, there were no major sublease and impairment loss of the right-of-use assets of the Company in 2022 and 2021.

(2) Lease liabilities

Lease liabilities
December 31,2022 Carrying amount of lease liabilities Current $ 3,727 Non-current $ 143,637 Ranges of discount rates for lease liabilities are as follow December 31,2022 Land 0.67%-0.91% Buildings 0.67%-0.91%	December 31,2021 $ 4,420 $ 147,364 December 31,2021 0.67%-0.91% 0.67%-0.91%

		0.67%-0.91% 0.67%-0.91%

(3) Material leases and terms

The Company leases several lands and buildings for the use of plants, office buildings and employee dormitories with a lease term of 1 to 10 years. Upon the termination of the lease period, the Company has no bargain purchase option for leased lands and buildings.

(4) Information on other lease

Please 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		2022 $ 1,663 $ 7,177)		2021
	(		(	$ 1,740 $ 8,382)

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.

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14. Other current assets

r current assets
Current Supply inventory Payments on behalf of others Prepayments Input tax Others	December 31,2022 $ 223,832 28,102 11,128 4,537 235 $ 267,834	December 31,2021
			$ 196,415 8,784 10,393 12,579 521 $ 228,692

15. Borrowings

(1)	Short-term bank loans
		December 31,2022		December 31,2021
	Credit loans	$	250,000		$	50,000
	Import/export financing loans		32,778			144,118
		$	282,778		$	194,118
	Annual interest rate (%)
	Credit loans		1.72-2.02			0.8
	Import/export financing loans		5.50			0.88-0.90
(2)	Long-term bank loans
		December 31,2022		December 31,2021
	Mortgage loan(Note 28)		$ 300,000		$ 264,000
	Credit loans		589,886			616,700
			889,886			880,700
	Less: Amount falling due in one year		( 237,929)		(	290,814)
	Amount falling due after one year		$ 651,957		$ 589,886
	Annual interest rate (%)
	Mortgage loan		1.38-1.65		0.42-1.30
	Credit loans		0.58-1.91		0.42-1.14
		December 31,2022		December 31,2021
	Maturity date
	Mortgage loan		2025.06	2022.04-2022.12
	Credit loans	2024.04-2026.05		2024.04-2026.05
16.Other payables
		December 31,2022		December 31,2021
	Payables for Wages and bonuses	$	193,641	$		231,405
	Payables for factory supplies		84,708			156,449
	Payables for annual leave		49,493			52,741
	Payables for remuneration of
	employees and remuneration of
	directors		22,310			130,505
	Payables for purchases of equipment		22,060			29,530
	Others		85,700			92,426
		$	457,912	$		693,056

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17. Provisions - Current

Provisions for sales returns and allowances are, estimated under experiences, judgment 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 (reversal) Balance at the end of the year		2022 $ 3,980 1,554 $ 5,534		2021
			(	$ 19,450 15,470) $ 3,980

18. Retirement benefits plan

(1) Defined contribution plans

The pension system of the “Labor Pension Act” is applicable to the Company, belonging to the affirmed appropriation of pension plan under the management of the government, and pension is appropriated at the rate of 6% of the monthly salary of employees into the personal dedicated account of the Bureau of Labor Insurance.

(2) Defined benefit plans

The Company has labor pension system as defined benefit plans under the Labor Standards Act of R.O.C... The payment of the employee pension is made 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 percent 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 balance in the Funds is assessed. 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 make up the difference all at once with one appropriation, which is required to be made before the end of March of next year. The Funds are operated and managed by the government’s designated authorities. Accordingly, the Company does not have any right to intervene in the investments of the Funds.

The amount of defined benefit plans recognized in the consolidated balance sheets is as follows:

as follows:
Present value of defined benefit obligation Fair value of plan assets Net defined benefit assets	December 31,2022 $ 618,521 ( 754,572) ($ 136,051)	December 31,2021
	( (	( (	$ 730,046 742,055) $ 12,009)

Movements the net defined benefit liabilities (assets) are as follows:

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Present value of defined benefit obligation $ 730,046 6,879 5,021 11,900 - 3 ( 36,848 ) ( 24,174 ) ( 61,019) - ( 62,406) ( 62,406) $ 618,521 $ 788,843 8,079 2,339 10,418 - 1,253 ( 30,169 ) 255 ( 28,661) - ( 40,554) ( 40,554) $ 730,046	Fair value of plan assets ($ 742,055) - ( 5,168) ( 5,168) ( 56,261 ) - - - ( 56,261) ( 12,500 ) 61,412 48,912 ($ 754,572) ($ 734,602) - ( 2,221) ( 2,221) ( 20,059 ) - - - ( 20,059) ( 24,500 ) 39,327 14,827 ($ 742,055)	Net defined benefit liabilities(assets)
( (	( ( ( ( ( ( ( ( ( ( ( ( ( (	( ( (

( ( ( ( ( ( (		( ( ( ( ( ( ( ( ( ( ( (

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

1) 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 distributable amount of plan assets of the
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Company shall not be less than the return calculated by the average interest rate on a two-year time deposit published by the local banks.

2) 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. The two will be partially offset on net defined benefit liabilities
3) 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 of the Company are carried out by qualified actuaries. The principal assumptions are as follows:

follows:
Discount rate Expected salary increase rate	December 31,2022 1.30% 2.00%	December 31,2021
		0.70% 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:

Discount rate Increase by 0.25% Decrease by 0.25% Expected salary increase rate Increase by 0.25% Decrease by 0.25%	December 31,2022 ($ 14,474) $ 14,981 $ 14,839 ($ 14,411)	December 31,2021	December 31,2021
	( (	( (	$ 18,181) $ 18,861 $ 18,570 $ 17,997)

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.

Contributions expected in one year Average maturity of defined benefit obligation Equity (1) Ordinary shares Authorized shares (in thousands) Authorized capital Issued and paid shares (in thousands) Issued capital	December 31,2022 $ 12,000 9 years December 31,2022 500,000 $ 5,000,000 380,102 $ 3,801,023	December 31,2021	December 31,2021
		$ 18,000 10 years December 31,2021
			500,000 $ 5,000,000 380,102 $ 3,801,023

19. Equity

A holder of issued common shares with par value of NT$10 per share is entitled to

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vote and to receive dividends.

(2) Capital surplus Additional paid-in capital From convertible bonds Treasury stock transaction s Donations	December 31,2022 $ 1,123,151 126,434 14,943 493 $ 1,265,021	December 31,2021	December 31,2021
			$ 1,123,151 126,434 - 426 $ 1,250,011

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.

(3) 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 10% 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 earnings, the Board of Directors shall propose the surplus earning distribution for shareholders' meeting to determine the allocation of dividends and bonus. Please see Note 21 for distribution policy for employees’ compensation, and 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 Group has no deficit, the portion in excess of 25% of the paid-in capital may be used to distribute as dividends in stocks or cash.

The Company approved loss make-up proposal of 2020 in the shareholders' meeting in August 2021. Due to losses in 2020, after the deficit was compensated with the reversal of special reserve of NT$31,601,000 and capital reserve 134,666,000, no distribution of earnings was made.

The distribution of earnings for 2021 at the shareholders' meeting in June 2022 is as follows:

follows:
Legal reserve Reversal of special reserve Cash dividends Cash dividend per share (NT$)		2021
		$ 91,283 $ 69,385 $ 490,000 $ 1.29

The distribution of earnings for 2022 had been proposed by the board of directors on February 23, 2023 as follows:

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Cash dividends Cash dividend per share (NT$)		2022
		$ 114,031 $ 0.3

The distribution of earnings for 2022 is subject to the resolution of the shareholders’ meeting to be held in May 2023.

(4) Treasury stocks

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

vote.
January 1, 2022 Decrease in 2022 December 31, 2022 January 1, 2021 to December 31, 2021			Eransferred shares to Employee (shares) 2,000,000 2,000,000) - 2,000,000		Shares held by a subsidiary (shares) 5,658,911 - 5,658,911 5,658,911	Total(shares)
		(				7,658,911 (2,000,000) 5,658,911 7,658,911

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

Ltd. is as follows:
December 31, 2022 December 31, 2021	Total shares held(shares) 5,658,911 5,658,911		Carrying amount $ 73,283 $ 156,752	Market value $ 73,283 $ 156,752
					$ 73,283 $ 156,752

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 capital increase from the Company and voting right.

20. Revenue

20.Revenue
2022 Revenue from contracts with custome Service income $ 5,080,398 Sales revenue 33,141 $ 5,113,539 (1) Contract balance December 31, 2022 December 31, 2021 Contract assets - current $ 94,677 $ 135,659 Accounts receivable 810,312 1,439,848 $ 904,989 $ 1,575,507			2021
			$ 6,455,112 34,564 $ 6,489,676 January 1, 2021 $ 114,509 1,098,847 $ 1,213,356

(2) Timing of revenue recognition

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Performance obligation satisfied over time Performance obligation satisfied at a point in time		2022 $ 5,080,398 33,141 $ 5,113,539		2021
				$ 6,455,112 34,564 $ 6,489,676

21. Employee benefits and depreciation expenses

Classified as 2022 Employee benefit expense Short-term employee benefits Labor and health insurance expense Pensions Defined contribution plans Defined benefit plans Remuneration of Directors Other employee benefits Depreciation expenses 2021 Employee benefit expense Short-term employee benefits Labor and health insurance expense Pensions Defined contribution plans Defined benefit plans Remuneration of Directors Other employee benefits Depreciation expenses	operatingcosts $ 1,102,300 131,374 42,643 5,844 - 89,415 511,173 $ 1,238,346 131,452 40,007 7,161 - 101,129 537,075	operatingexpenses $ 185,495 16,942 6,687 888 5,518 10,122 37,093 $ 226,774 15,984 6,495 1,036 23,551 10,846 47,712	Total
			$ 1,287,795 148,316 49,330 6,732 5,518 99,537 548,266 $ 1,465,120 147,436 46,502 8,197 23,551 111,975 584,787

For the years of 2022 and 2021, the Company had average 2,409 and 2,406 employees respectively, which included 5 non-employee directors for both years.

Average labor cost for the years ended December 31, 2022 and 2021 were NT$662,000 and 741,000 respectively. Average salary and bonus were NT$536,000 and 610,000 respectively. The average salary and bonus decreased by 12% year over year.

The Company's remuneration policy

Except for independent directors receive a certain amount of remuneration, the remuneration of directors is reasonably provided according to the result of corporate operation and the director's performance and participation. For remunerations of managerial officers and employees, remunerations are paid according to their respective job positions, responsibilities, future risk and contribution level to the business objectives and according to the remuneration management regulations of the Company.

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

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higher than 2% respectively, of net profit before income tax, of remuneration of employees and remuneration of directors. The remuneration of employees and directors in 2022 and 2021 was resolved by the board of directors in February 2023 and March 2022 respectively as follows:

2022 respectively as follows:	ws:
2022 Accrual Rate Remuneration of employees 10% Remuneration of directors 2%	2022		2021
		Amount		Amount
	Accrual Rate	(cash)	Accrual Rate	(cash)
		$18,592 $ 3,718	10% 2%	$ 108,754 $ 21,751

If there is a change in the amounts after the annual parent company only financial statements are authorized for issuance, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual distribution amount of employee and director remuneration in 2021 and the recognized amount in the individual report of 2021.

Please see “Market Observation Post System” (MOPS) under the Taiwan Stock Exchange for the information on the remuneration of employees and remuneration of directors determined by the board of directors.

22. Income tax

(1) Main components of income tax expense recognized in profit or loss

Current tax Income tax expense generated in the current year Taxation on Undistributed Earnings Deferred tax Income tax expense generated in the current year Adjustment on prior years Income tax expense( profit)recognized in profit or loss		2022 $ - 20,046 20,046 26,453 ) 37,274) 63,727) $ 43,681 )		2021
	( ( ( (		(	$ 26,560 - 26,560 30,012 ) 86,639 56,627 $ 83,187

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

Income tax expense (benefit) calculated at the statutory rate Permanent differences Temporary differences Deduction of losses incurred (set off) in the current year Taxation on Undistributed Earnings Deferred tax Income tax expense generated in the current year Adjustment on prior years Income tax expense (profit) recognized in profit or loss		2022 $ 32,720 59,173 ) 7,083 19,370 20,046 26,453 ) 37,274) $ 43,681)		2021
	( ( ( (		( ( ( (	$ 191,407 21,582 ) 627 ) 142,638 ) - 30,012 ) 86,639 $ 83,187

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(2) Deferred tax assets and liabilities

Defined benefit costs recognized inprofit or loss $ - 6,704 ( 650 ) 311 138 6,503 19,370 $ 25,873 ( $ 79 ) ( 501 ) $ - ($ 580) $ - 1,204 890 ( 3,094) ( 1,000 ) ( 142,638) ($ 143,638) ( $ 165 ) ( 207) ($ 372)	Defined benefit costs recognized in other comprehensive income ( $ 4,974 ) - - - - ( 4,974 ) - ($ 4,974) $ - - 18,482 $ 18,482 ( $ 9,744 ) - - - ( 9,744 ) - ($ 9,744) $ - - $ -	Balance at the end of theyear
	(	$ - 13,393 9,899 1,107 138 24,537 120,631 $ 145,168 $ 204 - $ 18,482 $ 18,686
	( (
(
( ( ( ( ( ( (	( ( (	$ 4,974 6,689 10,549 796 23,008 - $ 23,008 $ 283 501 $ 784

(3) 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:

December31,2022 $ 2,525,953	December31,2021 $ 2,425,194

(4) Income tax examination

The tax authorities have examined the income tax returns of the Company through 2020.

23. Earnings per share

2020. ings per share
2022 Basic earnings per share Net profit attributed to the owners of the Company Effect of potentially dilutive ordinary shares Remuneration of employees		Net profit attributable to owners of the Company $ 207,291 -	Number of shares (denominator) (in thousand) 373,457 2,442	Earnings per share(NT$)
					$ 0.56

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Diluted earnings per share Effect of net profit attributed to the owners of the Company plus potential ordinary shares 2021 Basic earnings per share Net profit attributed to the owners of the Company Effect of potentially dilutive ordinary shares Remuneration of employees Diluted earnings per share Effect of net profit attributed to the owners of the Company plus potential ordinary shares		Net profit attributable to owners of the Company $ 207,291 $ 873,849 - $ 873,849	Number of shares (denominator) (in thousand) 375,899 372,443 3,926 376,369	Earnings per share(NT$)	Earnings per share(NT$)
					$ 0.55 $ 2.35 $ 2.32

Since the Company offered to settle compensation paid to employees in cash or shares, the Company assumed the entire amount of the compensation would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

24. Share-Based Payment Agreement

Treasury stock grants to employees

In June 2022, the board of directors resolve to allocate a total of 2,000,000 shares of treasury stocks, which was bought back during from June to August 2020, to employees for subscription. The value of subscription rights per share calculated according to the Black-Scholes valuation model is $3.8556, and the recognized remuneration cost is $7,711,000. The parameters used in the valuation model are as follows:

Grant-date share price	$15.56
Exercise price	$11.71
Expected volatility	28.85%
Expected duration period	0.0301 years
Expected dividend yield	0%
Risk-free interest rate	0.59%

25. Capital risk management

The Company manages its capital to ensure that it is 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 consisting of net debt (leases less cash and cash equivalent) and equity (common stocks, capital surplus, retained earnings and other equity).

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

The key management of the Company reviews its capital structure for each season, including the consideration on costs of every type of capital 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.

26. Financial instruments

(1) 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 approximate its fair value or its fair value cannot be reliably measured.

2) Financial instruments that are measured at fair value on a recurring basis
i. Fair value hierarchy

December 31,2022 Financial assets at fair value through other comprehensive income Emerging stocks Listed and OTC stocks December 31,2021 Financial assets at fair value through other comprehensive income Emerging stocks Listed and OTC stocks		Level 1 $ - 1,811 $ 1,811 $ - 2,877 $ 2,877		Level 2 $ - - $ - $ - - $ -		Level 3 $ 7,237 - $ 7,237 $ 7,105 - $ 7,105		Total
								$ 7,237 1,811 $ 9,048 $ 7,105 2,877 $ 9,982

There was no transfer of fair value measurements between Level 1 and Level 2 for 2022 and 2021.

ii) Reconciliation of Level 3 fair value measurements on financial instruments

Financial assets Balance at the beginning of the year Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Balance at the end of the year	Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income	Financial assets at fair value through other comprehensive income
		Equityinstruments
		2022 $ 7,105 132 $ 7,237		2021
				$ 6,192 913 $ 7,105

iii) 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

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value is computed in reference to investment assets.

(2) Categories of financial instruments

Categories 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 31,2022 $ 2,326,824 9,048 1,553,916	December 31,2021
		$ 3,072,188 9,982 1,884,454

Balance of financial assets measured at amortized cost includes cash and cash equivalent, financial assets at amortized cost- current, 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 short-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.

(3) 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.

i) Foreign currency risk

The Company's sales and purchase transactions are denominated in foreign currency, which exposes the Company to foreign currency risk. Approximately 38%~42% of sales revenue is not denominated in functional currency and approximately 39%~43% of the cost is not denominated in functional currency.

Please see Note 30 for the carrying amount of monetary assets and

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liabilities denominated in non-functional currency at the date of balance sheet.

Sensitivity analysis

The Company is mainly affected by fluctuations in USD and JPY.

The following table details the Company’s sensitivity analysis to a 1% increase and decrease in NTD 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 NTD against the relevant foreign currency.

Impact of fluctuations in exchange rate on profit or loss

Categories of currency USD Japanese yen	2022 $ 2,839 161	2021
		$ 1,094 8

ii) 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:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31,2022 $ 460,804 347,364 945,767 972,664	December 31,2021 $ 530,850 251,363 941,282 975,239

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

43 -

amount of liabilities outstanding at the date of balance sheet is all outstanding at the reporting period. The rate of change is expressed as the increment or decrement by 1% when reporting to the management personnel internally of the Company, which also represents the management's assessment of the reasonable interest rate change.

For floating-rate financial assets and liabilities, when interest rate is increase by 1% and other conditions remain unchanged, the net profit (loss) before tax of the Company in 2022 and 2021 are NT$269,000 and NT$340,000 respectively.

iii) Other price risk

The Company is exposed to price risk due to investments in equity secures. The management of the Company manages 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 2022 and 2021 will increase and decrease NT$18,000 and NT$29,000 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 counterparty will default on its contractual obligations resulting in 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:

The carrying amount of financial assets recognized in the parent company only balance sheet.
ii) The Company has given financial guarantee and not taken the maximum amount to be paid into consideration.

The Company's credit risk is mainly resulted from its five largest customers. As of December 31, 2022 and 2021, the aforementioned customers are accounted for 48% and 52% of accounts receivable and contract assets, respectively.

3) Liquidity risk

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 of the Company monitors the utilization of borrowings and ensures compliance with loan conditions.

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The bank borrowing is a material source of liquidity to the Company. As of December 31, 2022 and 2021, the undrawn loan amounts are as follows:

Undrawn loan amounts	December 31,2022 $ 1,126,408	December 31,2021	December 31,2021
			$ 1,283,022

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 31,2022 Non-interest bearing liabilities Lease liabilities Floating-rate liabilities Fixed-rate liabilities December 31,2021 Non-interest bearing liabilities Lease liabilities Floating-rate liabilities Fixed-rate liabilities		Within 1year $ 379,316 4,789 320,707 200,000 $ 904,812 $ 757,814 5,514 385,353 99,579 $ 1,248,260		1 to 3years $ - 9,531 608,191 - $ 617,722 $ - 9,554 373,525 - $ 383,079	More than 3years	More than 3years
						$ - 156,413 43,766 - $ 200,179 $ - 161,179 216,361 - $ 377,540

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

December 31, 2022 Lease liabilities December 31, 2021 Lease liabilities		Within 1 year		1-5years		5~10 years
		$ 4,789 $ 5,514		$ 18,918 $ 19,024		$147,026
						$151,709

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.

27. Related-party transactions

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

(1) Related party name and categories Related Party Name Relationship with the Company 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., Ltd. Subsidiary

45 -

(2)	Operating income Relatedpartycategory Subsidiary		2022 $ -		2021
					$ 439

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.

(3)	Purchase Relatedpartycategory Second-tier subsidiary		2022 $ -		2021
					$ 1,050

Raw materials are purchased form subsidiary, and no other similar non-related party transaction can be compared. The payment is collected at 30 days T/T following the date the goods are sold in principle.

	date the goods are sold in principle.
(4)	Operating expense - miscellaneous expense Relatedpartycategory 2022 Second-tier subsidiary $ -		2021
			$ 420

Parts are purchased form subsidiary, and no other similar non-related party transaction can be compared. The payment is collected at 30 days T/T following the date the goods are sold in principle.

(5) 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 U.S.A. (in USD). The commission expenses in 2022 and 2021 are NT$2,043,000 and NT$6,569,000, respectively. The commissions payable as of December 31 2022 and 2021 are NT$393,000 and NT$529,000, respectively.

(6) Non-operating income - rent income

Non-operating income - rent income
Related PartyCategory/Name Subsidiary Sooner Power Semiconductor Co., Ltd. Panther Technology Co., Ltd. Lee Shin Investment Co., Ltd.	2022 $ - - 36 $ 36	2021 $ 720 178 36 $ 934

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

(7)	Non-operating income - other revenue Relatedpartycategory Subsidiary	Non-operating income - other revenue Relatedpartycategory Subsidiary	2022 $ 229		2021
					$ 566

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(8) Endorsements/guarantees

Company Subsidiary	Guarantees Bank loans Bank loans	December 31, 2022 $ - USD 5,000	December 31, 2021
			$ 210,000 USD 5,000

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

loans:
December 31,2022 Pledged time deposits $ 103,000 (9) Remuneration of key management personnel 2022 Short-term employee benefits $ 40,675 Pensions 400 $ 41,075	December 31,2021
		$ 103,000 2021
		$ 77,736 425 $ 78,161

The remuneration of directors and other key management personnel were determined by the Remuneration Committee in accordance with the individual performance and the market trends.

28. 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 31,2022 $ 817,981 103,000 $ 920,981	December 31,2021	December 31,2021
			$ 1,007,528 103,000 $ 1,110,528

29. 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:

(1) For customs duties guarantee and other objectives, the financial institution has provided guarantee details as follows:

provided guarantee details as follows:
December 31,2022 $ 28,000 (2) Unrecognized commitments are as follows: December 31,2022 Purchase of property, plant and equipment $ 127,388	December 31,2021
	$ 28,000 December 31,2021
		$ 383,128

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:

47 -

Foreign currency assets Monetary items USD Japanese yen Non-monetary items Investment accounted for using the equity method USD Foreign currency liabilities Monetary items USD Japanese yen Euro	December31,2022 Foreign Currency Exchange rate NTD $ 14,063 30.71 $ 431,875 123,574 0.2324 28,719 5,274 30.71 161,965 4,818 30.71 147,961 54,126 0.2324 12,579 - - -	December31,2022 Foreign Currency Exchange rate NTD $ 14,063 30.71 $ 431,875 123,574 0.2324 28,719 5,274 30.71 161,965 4,818 30.71 147,961 54,126 0.2324 12,579 - - -	December31,2021	December31,2021	December31,2021
	Foreign Currency $ 14,063 123,574 5,274 4,818 54,126 -	Exchange rate 30.71 0.2324 30.71 30.71 0.2324 -	Foreign Currency $ 13,284 173,864 7,850 17,235 177,046 427	Exchange rate 27.68 0.2405 27.68 27.68 0.2405 31.32	NTD
					$ 367,701 41,814 217,288 477,065 42,580 13,374

Significant unrealized exchange gains (losses) are as follows:

2022	2021
Exchange rate 30.71 (USD : NTD) 0.2324 (JPY: NTD) 32.72(EUR : NTD)	Exchange rate 27.68 (USD : NTD) 0.2405 (JPY: NTD) 31.32 (EUR : NTD)	Net exchange gains (losses)
		$ 2,671 ( 252 ) 85 $ 2,504

30. Other disclosures

(1) Information on significant transactions and (2) 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.
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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.
(3) 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:
- i) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None.
- ii) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None.
- iii) The amount of property transactions and the amount of the resultant gains or losses: None.
- iv) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 1.
- v) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: None.
- vi) 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: Note 26.
(4) Information of major shareholders: names, numbers of shares held, and shareholding percentages of shareholders who hold 5% or more of the equity: Table 5.
49 -

Lingsen Precision Industries, Ltd. and Subsidiaries

Endorsements/guarantees provided

For the year ended December 31, 2022

Table 1

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

No.	Endorsement/ guarantee provider	Guaranteed party	Guaranteed party	Limits on endorsement/g uarantee amount provided to each guaranteed party (Note)	Maximum balance for the period	Ending balance	Amount actually drawn	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of accumulated endorsement/g uarantee to net equity per latest financial statements(%)	Maximum amount of endorsement/g uarantee allowance (Note)	Guarantee provided by parent company	Guarantee provided by subsidiary	Guarantee provided to subsidiaries in Mainland China
		Company Name	Relationship
0	Parent Company	Ningbo Liyuan Technology Co., Ltd.	Third-tier subsidiary	$ 856,728	$ 153,550 (USD5,000)	$ 153,550 (USD 5,000)	$ 122,840 (USD 4,000)	$ 103,000	3	$ 1,713,456	Y	-	Y

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

50 -

Lingsen Precision Industries, Ltd. and its subsidiaries

Marketable securities held

December 31, 2022

Table 2

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

Holding company name	Marketable securities types and name	Relationship with the issuers	Financial statement account		End ofyear	End ofyear
				Shares/Units	Carrying amount	Shareholding %	Fair value (Note 3)
Parent Company Lee Shin Investment Co., Ltd.	Stock Amtek Semiconductors Co., Ltd. ETREND Hightech Corp. Xpert Semiconductor Inc. Stock The Company 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	685,464 75,000 44,891 5,658,911 1,897,836 150,000 155,163	$ 7,237 1,811 - 73,283 21,646 3,623 -	2 - - 1 19 - 11	$ 7,237 1,811 - 73,283 21,646 3,623 -

Note 1: Please see Tables 3 and 4 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.

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Lingsen Precision Industries, Ltd. and its subsidiaries

Information on investees

For the year ended December 31, 2022

Table 3						Unit: Amounts expressed in	Unit: Amounts expressed in	Unit: Amounts expressed in	thousands of New Taiwan Dollars/ shares	thousands of New Taiwan Dollars/ shares
Investor	Investee	Location	Main business	Initial investment amount		Balance	at December 31,2021		Current income (losses) of the investee	Share of income (losses) recognized
				End of current year	End of last year	Number of shares	Ratio %	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. (Notes`１`) Nexus Material Corporation (Notes 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, U.S.A. Taichung City Hsinchu County, Taiwan Hsinchu County, Taiwan Cayman Islands	General investments IC testing Electronic parts and components manufacturing General investments 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 General investments	$ 1,718,458 230,146 215,148 300,000 53,483 32,311 24,000 912 14,192 1,718,458	$ 1,688,748 230,146 604,223 300,000 53,483 32,311 24,000 2,561 14,192 1,688,748	54,000,000 22,922,899 21,514,797 30,000,000 5,348,315 1,000,000 2,400,000 98,660 1,419,214 54,000,000	100 64 99 100 78 100 30 1 21 100	$ 97,576 414,837 220,169 67,218 20,778 64,380 - 1,010 5,514 97,576	( $ 92,743 ) ( 18,327 ) 5,069 229 ( 12 ) ( 1,587 ) - 5,069 ( 12 ) ( 92,743 )	( $ 92,743 ) ($ 11,669 ) 5,021 229 ( 10 ) ( 1,587) - 23 ( 2) ( 92,743 )

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.

52 -

Lingsen Precision Industries, Ltd. and Subsidiaries

Information on Investment in Mainland China

For the year ended December 31, 2022

					For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022	For the year ended December 31, 2022
Table 4					Unit: Amounts expressed in New Taiwan Dollars and in thousands of foreign currency
Name of Investee in Mainland China	Main business	Paid-in capital	Investment method	Accumulated investment amount of outflow from Taiwan at the beginning of theyear	Outward remittance or repatriation of investment amount at beginningof theyear		Accumulated investment amount of outflow from Taiwan at the end of the year	Current income (losses) of the investee	Ownership percentage of direct or indirect investment	Investment gain (loss) recognized for the year (Note 2)	Book value of investment at the end of year	Inflow of investment revenue to Taiwan upon the end of the year
					Outward remittance	Repatriation
Ningbo Liyuan Technology Co., Ltd.	IC packing and testing as well as optoelectronic devices	USD 54,000	(Note 1)	$ 1,688,748 ( USD 53,000 )	$ 29,710 ( USD 1,000 )	$ -	$ 1,718,458 ( USD 54,000 )	( $ 92,743 )	100%	( $ 92,743 )	$ 97,576	$ -

					limitation on investee regulated under Investment Commission, MOEA (Note 3) $ 3,426,913
Accumulated investment amount of outflow in China mainland from Taiwan at the end of theyear		Investment amount approved by Investment Commission, MOEA			limitation on investee regulated under Investment Commission, MOEA (Note 3)
$ 1,718,458 ( USD 54,000 )		USD 55,000			$ 3,426,913

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

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'.

53 -

Lingsen Precision Industries, Ltd. Information of Major Shareholders December 31, 2022

Table 5

Name of major shareholder	Shares	Shares
	Total shares held (shares)	Shareholding percentage
Trust account in CTBC Bank for ESOP committee of Lingsen Precision Industries, ltd. MAX FORTUNE Investment Limted (British Virgin Islands)	24,188,020 19,069,854	6.36% 5.01%

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 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 parent company only 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 10% 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 (MOPS) website.
54 -

§Statements of Major Accounting Items

Item
Statements of assets, liabilities, and equity items
Statement of cash and cash equivalents
Statement of accounts receivable
Statement of inventories
Statement of other current assets
Statement of changes in financial assets measured at fair value
throughother comprehensive income- 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 short-term borrowings
Statement of accounts payable
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

No./Index
Table 1
Table 2
Table 3
Note 14
Table 4
Table 5
Note 12
Table 6
Note 22
Table 7
Table 8
Note 16
Note 17
Table 9
Table 10
Note 22
Table 11
Table 12
Table 13
Note 21

55 -

Lingsen Precision Industries, Ltd.

Statement of cash and cash equivalents

December 31, 2022

Table 1

Unit In Thousands of New Taiwan Dollars, Unless Stated Otherwise

Item Cash Cash on hand and petty cash Cash in banks Checking accounts Demand deposits Foreign currency demand deposit (Note 1) Time deposits Cash equivalents Time deposits with an initial maturity of less than three months Short-term notes and bills Less: Time deposit pledge (Note 2) Time deposits with an initial maturity in three months		Amount
	$ 248 2,601 345,388 163,379 263,000 774,616 535,000 99,804 1,409,420 ( 103,000 ) ( 160,000) $ 1,146,420

Note 1: It includes US$4,385,000 and JPY 123,574,000, converted at the exchange rate of ＝＝
US$1 NT$30.71 and JPY$1 NT$0.2324.
Note 2: The due period is between January and February 2023, at an annual percentage rate of 0.88%/0.35%. It has been provided to the bank as collateral, transferred to financial assets at amortized cost- current, to make endorsement and guarantee for Ningbo Liyuan Technology Co., Ltd.
56 -

Lingsen Precision Industries, Ltd.

Statement of accounts receivable

December 31, 2022

Table 2

Unit: Amounts expressed in thousands of

New Taiwan Dollars

Customer name Company A Company B Company C Company D Company E Company F Others (Note) Less: Allowance for bad debts		Amount
	(	$ 139,670 135,963 90,948 83,687 80,181 42,580 238,994 812,023 1,711) $ 810,312

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

57 -

==> picture [445 x 233] intentionally omitted <==

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

Lingsen Precision Industries, Ltd.
Statement of inventories
December 31, 2022
Table 3 Unit: Amounts expressed in thousands of
New Taiwan Dollars
Item Cost Net realizable value
Raw materials $ 498,820 $ 498,820
Finished goods - -
- -
Work in process
$ 498,820 $ 498,820
----- End of picture text -----

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Lingsen Precision Industries, Ltd.

Statement of changes in financial assets measured at fair value through other comprehensive income - non-current

For the year ended December 31, 2022

Table 4

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

Balance at the beginning	Balance at the end of theyear Number of shares Fair value 75 $ 1,811 685 7,237 45 - 7,237 $ 9,048	Guarantee or pledge status
Number of shares 75 527 45	Number of shares 75 685 45
		None None None

59 -

Lingsen Precision Industries, Ltd.

Statement of changes in investments accounted for using the equity method

For the year ended December 31, 2022

Table 5

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

Balance at the beginning of theyear Number of shares Amount 53,000 $ 157,776 22,923 426,506 60,422 215,148 30,000 235,569 1,000 59,502 5,348 27,102 2,400 11,417 1,133,020 ( 176,415 ) ( 17,731) $ 938,874	Increase (Decrease) Number of shares Amount 1,000 $ 29,710 - - - - - - - - - - - - $ 29,710	Balance at the end of the year Number of shares Shareholding % Amount 54,000 100 $ 97,576 22,923 64 414,837 21,515 99 220,169 30,000 100 243,633 1,000 100 64,380 5,348 78 27,092 2,400 30 11,417 1,079,104 ( 176,415 ) ( 17,731) $ 884,958	Balance at the end of the year Number of shares Shareholding % Amount 54,000 100 $ 97,576 22,923 64 414,837 21,515 99 220,169 30,000 100 243,633 1,000 100 64,380 5,348 78 27,092 2,400 30 11,417 1,079,104 ( 176,415 ) ( 17,731) $ 884,958	Market value or equity net value
Number of shares 53,000 22,923 60,422 30,000 1,000 5,348 2,400	Number of shares 1,000 - - - - - -	Number of shares 54,000 22,923 21,515 30,000 1,000 5,348 2,400	Shareholding % 100 64 99 100 100 78 30	(Note)
				$ 97,576 414,837 220,169 67,218 64,380 20,778 - $ 884,958

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

60 -

Lingsen Precision Industries, Ltd.

Statement of Changes in Right-of-use Assets and Accumulated Depreciation For the year ended December 31, 2022

Unit: Amounts expressed in thousands of New Taiwan Dollars

Cost Land Buildings Accumulated depreciation Land Buildings	Balance at the beginning of the year $ 162,849 2,586 165,435 13,276 1,939 15,215 $ 150,220		Increase $ - - $ - $ 4,232 646 $ 4,878	Balance at the end of theyear	Balance at the end of theyear
					$ 162,849 2,586 165,435 17,508 2,585 20,093 $ 145,342

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Lingsen Precision Industries, Ltd.

Statement of short-term borrowings

December 31, 2022

Table 7

Unit: Amounts expressed in thousands of

New Taiwan Dollars

Loan type and bank Credit loans Taishin International Bank (Jianbei Branch) KGI Bank (Shizheng Branch) Bank of Taiwan (Tan Zi Branch) Taipei Fubon Bank (Zhonggang Branch) Import/export financing loans The Hongkong and Shanghai Banking Corporation Limited (Taichung Branch) Mega International Commercial Bank (Tan Zi Branch)	Maturity date (Note) 2023.02.01 2023.02.07 2023.02.16 2023.03.13 2023.03.29 2023.03.29	Annual interest rate(%) 1.84 1.96-2.02 1.72-1.85 1.85 5.50 5.50	Amount
			$ 100,000 50,000 50,000 50,000 23,178 9,600 $ 282,778

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

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Lingsen Precision Industries, Ltd.

Statement of accounts payable December 31, 2022

Table 8

Unit: Amounts expressed in thousands of New Taiwan Dollars

Companyname Company A Company B Company C Company D Company E Others (Note)	Amount
	$ 32,137 31,025 28,198 21,649 13,619 60,220 $ 186,848

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

63 -

Lingsen Precision Industries, Ltd.

Statement of lease liabilities

December 31, 2022

Table 9 Item Land Buildings Less: Amount falling due in one year	Description Plant and office Plant and office	Unit: Amounts expressed in thousands of New Taiwan Dollars Lease term Discount rate (%) Balance at the end of theyear 2013.04.16-2031.10. 21 0.67-0.91 $ 147,364 2020.01.01-2022.12. 31 0.67-0.91 - 147,364 ( 3,727) $ 143,637

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Lingsen Precision Industries, Ltd.

Statement of long-term borrowings

December 31, 2022

Table 10

Unit: Amounts expressed in thousands of New Taiwan Dollars

Loan type and bank Mortgage loan Mega International Commercial Bank (Tan Zi Branch) Credit loans CTBC Bank (Taichung Regional Center) Taipei Fubon Bank (Zhonggang Branch) O-Bank (Taichung Branch)	Loan period 2022.08.22-2025.06.26 2021.03.05-2026.03.05 2021.08.20-2024.04.10 2021.05.20-2026.05.20 2021.04.26-2026.04.15	Repayment method The maximum repayment period for each transaction shall not exceed the expiry date of the utilization period, and the principal shall be repaid once due. Grace period refers to 18 months from the first drawdown date. Starting from October 15, 2022, the equal principle shall be paid on the 15th day of each month, and the remaining amount shall be repaid at a lump sum upon maturity, and interest is collected on a monthly basis. Each drawdown date shall not exceed final maturity date, which is one business day prior to final drawdown date. The principal shall fully be repaid in one lump sum upon its maturity. Grace period refers to the first 2 years of the 60 months from the first drawdown date. Starting from the 3rd year, the equal principle shall be paid on the 15th day of each month. Grace period refers to 36 months from the first drawdown date. The equal principle shall be paid on the 15th day of each month, and divided into 25 periods for payment.	Annual interest rate 1.38%-1.65% 0.7%-1.325% 1.14%-1.91% 0.58%-1.24% 0.74%-1.40%	Amount falling due in oneyear $ 75,000 96,596 50,000 16,333 - $ 237,929	Amount falling due after oneyear $ 225,000 209,290 50,000 67,667 100,000 $ 651,957		Total
							$ 300,000 305,886 100,000 84,000 100,000 $ 889,886

65 -

Lingsen Precision Industries, Ltd. Statement of operating revenue

For the year ended December 31, 2022

Table 11

Unit: Amounts expressed in thousands of New Taiwan Dollars

Item Packaging and final testing of IC Revenue from contracts with customers Other operating income Less: Sales allowance Operating income	Quantity (thousand PCS) Around 3,712,198		Amount
		(	$ 4,992,441 94,676 33,141 5,120,258 6,719) $ 5,113,539

66 -

Lingsen Precision Industries, Ltd.

Statement of operating costs

For the year ended December 31, 2022

Table 12

Unit: Amounts expressed in thousands of

New Taiwan Dollars

Item
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
Production overheads
Production cost
Work in process at the beginning of the year
Work in process at the end of the year
Cost of finished goods inventory
Finished goods inventory at the beginning of the
year
Finished goods 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

Amount

$ 686,260
1,577,793
(
560,976 )
(
35,546 )
(
31,568)
1,635,963
725,334

2,229,450
4,590,747
2,554
(
2,554)
4,590,747
2,253
(
2,253)
4,590,747
(
48,625 )
33,520

35,546
$ 4,611,188

67 -

Lingsen Precision Industries, Ltd. Statement of operating expenses For the year ended December 31, 2022

Table 13

Unit: Amounts expressed in thousands of New Taiwan Dollars

Item Salary expense Depreciation Insurance expense Commissions expense Others		Selling expenses $ 31,796 324 3,140 3,721 13,594 $ 52,575	Administrativ e expenses $ 83,353 10,572 8,587 - 52,042 $ 154,554	Research and development expenses $ 83,541 26,197 7,768 - 13,518 $ 131,024		Total
						$ 198,690 37,093 19,495 3,721 79,154 $ 338,153

68 -

AI assistant

LPI — Annual Report 2022

52036_rns_2022-11-09_264fbaac-a64a-4a29-b1de-df53fa544a78.pdf

Lingsen Precision Industries, Ltd.

Parent Company Only Financial Statements and Independent Auditors’ Report

Independent Auditors’ Report

Audit opinions

Basis for Opinion

Key Audit Matters

Authenticity of service revenue recognition

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

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

Lingsen Precision Industries, Ltd. Parent Company Only Balance Sheets December 31, 2022 and 2021

Lingsen Precision Industries, Ltd. Parent Company Only Statements of Comprehensive Income For the Years from January 1 to December 31, 2022 and 2021

Lingsen Precision Industries, Ltd. Parent Company Only Statement of Changes in Equity For the Years from January 1 to December 31, 2022 and 2021

Lingsen Precision Industries, Ltd.

Parent Company Only Statement of Cash Flows

(Continued from previous page)

1. Company History

2. Approval Date and Procedures of the Financial Statements

3 . Application of New, Amended And Revised Standards and Interpretations

4. Summary of Significant Accounting Policies

(5) Inventories

(6) Investment in subsidiaries

(7) Investment in Associates

(8) Property, plant and equipment

(10) Financial instruments

profit or loss.

Financial assets

Financial liabilities

1) Follow-up measurement

(11) Provision for liabilities

(12) Revenue recognition

(14) Borrowing costs

(15) Government grants

(16) Employee benefits

Employee stock options for employees

1) Current tax

5. Significant Accounting Assumptions and Judgment, and Major Sources of Estimation Uncertainty

6. Cash and cash equivalents

7. Financial assets at fair value through other comprehensive income- non-current

8. Financial assets at amortized cost- current

9. Accounts receivable

(1) Investment in subsidiaries

(2) Investment in Associates

12. Property, Plant and Equipment

(1) Assets used by the Company

13. Lease agreements

14. Other current assets

15. Borrowings

17. Provisions - Current

18. Retirement benefits plan

(2) Defined benefit plans

19. Equity

20. Revenue

21. Employee benefits and depreciation expenses

The Company's remuneration policy

22. Income tax

(2) Deferred tax assets and liabilities

23. Earnings per share

24. Share-Based Payment Agreement

25. Capital risk management

26. Financial instruments

1) Market risk

Sensitivity analysis

Sensitivity analysis

iii) Other price risk

Sensitivity analysis

2) Credit risk

3) Liquidity risk

27. Related-party transactions

28. Pledged assets

29. Significant Contingent Liabilities and Unrecognized Commitments

Significant unrealized exchange gains (losses) are as follows:

30. Other disclosures

Lingsen Precision Industries, Ltd. and Subsidiaries

Endorsements/guarantees provided

Table 1

Lingsen Precision Industries, Ltd. and its subsidiaries

Marketable securities held

LPI Annual Report 2022