LPI - Audit Report / Information 2022

Stock Code: 2369

Lingsen Precision Industries, Ltd. and Subsidiaries

Consolidated Financial Statements and Independent Auditor’s 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.

Representation Letter

The entities that are required to be included in the combined financial statements of Lingsen Precision Industries, Ltd. as of and for the year ended December 31, 2022, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standards No. 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Lingsen Precision Industries, Ltd. and its subsidiaries do not prepare a separate set of combined financial statements. Declared by

Company Name: Lingsen Precision Industries, Ltd.

Owner: Shu-Chyuan Yeh

February 23, 2023

Independent Auditors’ Report

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

Audit opinions

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

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission 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 Consolidated Financial Statements section of our report. The auditors of the firm, subject to the independence regulations, have maintained independence from the Group 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

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the Group for the year 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters for the Group's consolidated financial statements for the year 2022 are

stated as follows:

Authenticity of service revenue recognition

The main source of revenue of the Group relies on the service revenue from the 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 21 of the consolidated 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.

Other Matters

Lingsen Precision Industries, Ltd. has prepared the parent company only financial statements for 2022 and 2021, to which we have also issued an independent auditor's report with unqualified opinion along with the section on other matters and provided for reference.

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

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

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

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial

statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. The term of “reasonable assurance” refers to high level of assurance. Nevertheless, the audit performed according to the Generally Accepted Auditing Standards cannot guarantee the discovery of material misstatement in the 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 consolidated 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 consolidated 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 a necessary understanding of internal control concerning the inspection in order to design appropriate inspection procedures that are appropriate for the time being. The purpose, however, is not to effectively express opinions on the internal control of the Group.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management level.
According to the audit evidence obtained, evaluate the appropriateness of the continuous operation accounting basis and whether events or circumstances possibly generating material concerns on the continuous operation ability of the Group have significant uncertainty, and provide conclusion thereto. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. Nevertheless, future events or circumstances may cause the Group to have no ability for continuous operation.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including relevant notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence for the financial information of individual entities of the Group and provide opinion on the consolidated financial statements. We handle the guidance, supervision and execution of the audit on the Group and are responsible for preparing the opinion for the Group.

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 significance in the audit of the Group’s 2022 consolidated 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. and Subsidiaries Consolidated Balance Sheet December 31, 2022 and 2021

Unit: In Thousands of New Taiwan Dollars

				December31,	2022					December31,	2021
Code	ASSETS			Amount		%				Amount		%
	Current Assets
1100	Cash and cash equivalents (Notes 4 and 6)		$	1,572,022		18			$	1,646,990		17
1136	Financial assets at amortized cost- current(Notes 4,8 and29)			275,400			3			323,209		3
1140	Contract assets - current (Notes 4 and 21)			100,980			1			150,260		2
1150	Notes receivable (Notes 4 and 21)			-			-			5,593		-
1170	Accounts receivable (Notes 4,9,21 and 28)			974,383		11				1,744,380		19
1200	Other receivables (Notes 4)			15,829			-			24,041		-
1220	Current tax assets (Notes 4 and 23)			59,399			1			210		-
1310	Inventories (Notes 4 and 10)			530,864			6			689,909		7
1470	Other current assets (Notes 15 )			298,704			4			248,858		3
11XX	Total current assets			3,827,581		44				4,833,450		51
	Non-current assets
1517	Financial assets at fair value through other comprehensive income-
	non-current (Note 4 and 7)			34,317			-			34,709		1
1550	Investment accounted for using the equity method (Notes 4 and 12)			-			-			-		-
1600	Property, plant and equipment (Notes 4, 13 and 29)			4,284,385		49				3,984,904		42
1755	Right-of-use assets (Notes 4 and 14)			150,851			2			154,244		2
1840	Deferred tax assets (Notes 4, 5 and 23)			150,887			2			28,600		-
1915	Prepayments for facilities			149,977			2			356,707		4
1920	Refundable deposits (Note 4)			1,309			-			1,018		-
1975	Net defined benefit assets - non-current (Notes 4 and 19)			136,051			1			12,009		-
1990	Other non-current assets			19,896			-			19,139		-
15XX	Total non-current assets			4,927,673		56				4,591,330		49
1XXX	Total assets		$	8,755,254		100			$	9,424,780		100
Code	Liabilities and Equity
	Current Liabilities
2100	Short-term bank borrowings (Notes 4 and 16)		$	405,617			5		$	304,838		3
2150	Notes payable			27,182			-			23,699		-
2170	Accounts payable			188,917			2			491,184		5
2200	Other payables (Note 17)			586,141			7			886,595		9
2230	Deferred tax liabilities (Notes 4 and 23)			-			-			51,330		1
2250	Liability reserve - current (Notes 4 and 18)			5,534			-			3,980		-
2280	Lease liabilities - current (Notes 4 and 14)			5,303			-			5,027		-
2320	Long-term borrowings due in one year (Notes 4, 16 and 29)			340,164			4			360,830		4
2399	Other current liabilities			86,993			1			68,372		1
21XX	Total current liabilities			1,645,851		19				2,195,855		23
	Non-current liabilities
2540	Long-term banks borrowings (Notes 4, 16 and 29)			994,796		11				931,461		10
2570	Deferred tax liabilities (Notes 4 and 23)			19,138			-			804		-
2580	Lease liabilities - non-current (Notes 4 and 14)			144,300			2			147,411		2
2645	Deposits received			1,936			-			51,822		-
25XX	Total non-current liabilities			1,160,170		13				1,131,498		12
2XXX	Total Liabilities			2,806,021		32				3,327,353		35
	Equity attributable to owners of the company
3110	Ordinary shares			3,801,023		43				3,801,023		40
3200	Capital surplus			1,265,021		15				1,250,011		13
	Retained earnings
3310	Legal reserve			91,283			1			-		-
3320	Special reserve			91,034			1			160,419		2
3350	Unappropriated earnings (accumulated deficit)			702,042			8			912,825		10
3400	Other equities	(		62,466 )	(		1 )	(		71,372 )	(	1 )
3500	Treasury shares	(		176,415)	(		2)	(		199,828)	(	2)
31XX	Total equity attributable to owners of the Company			5,711,522		65				5,853,078		62
36XX	Non-controlling interests			237,711			3			244,349		3
3XXX	Total equity			5,949,233		68				6,097,427		65
	Total liabilities and equities		$	8,755,254		100			$	9,424,780		100

The accompanying notes are an integral part of the consolidated financial statements

Lingsen Precision Industries, Ltd. and Subsidiaries Statement 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$

	2022		2021
	Amount $ 6,006,806 5,486,038 520,768 62,240 255,073 165,769 ( 494) 482,588 38,180 10,281 14,040 1,218 83,997 486 35,377 - 22,755 ) 2,360 ) 1,139) 119,145 157,325 43,328 200,653		Amount $ 7,733,302 6,258,406 1,474,896 70,345 338,281 176,579 388 585,593 889,303 3,978 20,882 7,198 32,024 54,462 13,927 42,417 15,743 ) 657 ) 12,000) 146,488 1,035,791 104,200) 931,591		%
( ( (		( ( ( (		(	100 81 19 1 5 2 - 8 11 - - - - 1 - 1 - - - 2 13 1) 12

(Continued from previous page)

	2022		2021
	Amount $ 117,280 392 ) 23,456) 93,432 9,298 102,730 $ 303,383 $ 207,291 ( 6,638) $ 200,653 $ 310,021 ( 6,638) $ 303,383 $ 0.56 $ 0.55		Amount $ 48,720 4,272 ) 9,744) 34,704 2,456) 32,248 $ 963,839 $ 873,849 57,742 $ 931,591 $ 906,097 57,742 $ 963,839 $ 2.35 $ 2.32	%
( (		( ( (		- - - - - - 12 11 1 12 11 1 12

The accompanying notes are an integral part of the consolidated financial statements

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Lingsen Precision Industries, Ltd. and Subsidiaries

Unit: In Thousands of New Taiwan Dollars

Consolidated Statement of Changes in Equity

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

Equity attributable to owners of the company

Capital surplus (Note 20) $ 1,384,604 - 73 ( 134,666) - - - 1,250,011 - - - 67 7,295 - - - 7,648 $ 1,265,021	Retained earnings(Note 20) Undistributed earnings (losses to be covered) 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) - ( 490,00) - ( 69,385) 69,385 - - - - - - - - 207,291 - - 93,824 - - 301,115 - - - $ 91,283 $ 91,034 $ 702,042	Retained earnings(Note 20) Undistributed earnings (losses to be covered) 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) - ( 490,00) - ( 69,385) 69,385 - - - - - - - - 207,291 - - 93,824 - - 301,115 - - - $ 91,283 $ 91,034 $ 702,042	Retained earnings(Note 20) Undistributed earnings (losses to be covered) 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) - ( 490,00) - ( 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)	Treasury shares (Note 20) ($ 199,828) - - - - - - ( 199,828) - - - - - - - - 23,413 ($ 176,415)		Non-controlling interests (Note 20) $ 186,607 - - - 57,742 - 57,742 244,349 - - - - - ( 6,638) - ( 6,638) - $ 237,711	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
(		( (	(	( ( ( ( (	( ( ( ( ( ( (	( (	(	(	$ 5,133,515 - 73 - 931,591 32,248 963,839 6,097,427 - ( 490,000) - 67 7,295 200,653 102,730 303,383 31,061 $ 5,949,233

The accompanying notes are an integral part of the consolidated financial statements

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Lingsen Precision Industries, Ltd. and Subsidiaries 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 A22500 Gains on disposal of property, plant and equipment A23800 Loss for market price decline and obsolete and slow-moving inventories (gain from price recovery) A23800 Impairment loss (reversal gain) on disposal and discard of property, plant and equipment A24100 Unrealized foreign currency exchange net profit A29900 Amortization of prepayments A29900 Other losses A30000 Net changes in operating assets and liabilities A31125 Contract assets A31130 Notes receivable A31150 Accounts receivable A31180 Other receivables A31200 Inventories A31240 Other current assets A32130 Notes payable 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 $ 157,325 749,640 ( 494) 22,755 ( 10,281) ( 1,218) 7,711 ( 486 ) 36,493 - 8,645 10,304 1,731 49,558 5,603 767,237 9,467 122,990 ( 50,808) 3,482 ( 301,481) ( 276,174) 1,554 18,618 ( 6,762) 1,325,409 9,061 ( 22,080) ( 194,592) 1,117,798	2021
		$1,035,791 762,262 388 15,743 ( 3,978 ) ( 7,198 ) - ( 54,462 ) ( 39,380 ) ( 42,417 ) ( 4,939 ) 7,398 12,000 ( 23,839 ) 3,781 ( 435,223 ) ( 459) ( 314,539 ) ( 107,949 ) 23,699 161,093 271,221 ( 15,470 ) 19,658 ( 17,530) 1,245,651 3,884 ( 14,403 ) 1,801 1,236,933

(Continued on next page)

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(Continued from previous page)

Code
Cash flows from investing activities
B00050
Disposition of financial assets
measured at amortized cost
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
DDDD
Effect of exchange rate changes on cash
and cash equivalents
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

The accompanying notes are an integral part of the consolidated financial statements

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Lingsen Precision Industries, Ltd. and Subsidiaries

Notes to Consolidated 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 consolidated financial statements were expressed in New Taiwan Dollars, which is the Company's functional currency.

2. Approval Date and Procedures of the Consolidated Financial Statements

These consolidated 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 Group’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 (Note 3) 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 annual
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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 Group is continuously assessing the possible impact of the application of other standards and interpretations on the Group’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

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

The preparation of the consolidated financial statements is based on the “Regulations Governing the Preparation of Financial Reports by Securities Issuers" and IFRSs accepted and effectively published by FSC.

(2) Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis

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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:

Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
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).
Level 3 inputs are unobservable inputs for the asset or liability.
(3) Classification of Current and Non-current Assets and Liabilities

Current assets include:

Assets held primarily for the purpose of trading;
Assets that are expected to be realized within twelve months from the balance sheet date; and
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:

Liabilities held primarily for the purpose of trading;
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
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) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries). Adjustments have been made to the financial statements of subsidiaries to allow their accounting policies to be consistent with those used by the Group. During the preparation of the consolidated financial statements, the transaction, account balance, revenue and expense among entities have been eliminated completely. The total

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comprehensive income/loss of the subsidiaries are attributed to the owner’s and non-controlling interests of the Company, and the same is true when the non-controlling interests consequently become loss balance.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Company’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value paid or received is recognized directly in equity and attributed to shareholders of the Company.

Please see Note 11 and Tables 4 and 5 for details of subsidiaries, percentage of ownership and business.

(5) Foreign Currency

In preparing the financial statements of each individual Group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange 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 consolidated financial statements, assets and liabilities from foreign operations, are 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 and attributed to the owner and non-controlling interests, respectively.

(6) Inventories

Inventories include raw materials, work in process, finished goods and products. 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.

(7) Investment in Associates

The associates are entities which are material to the Group, but not subsidiaries or

17 -

joint venture companies.

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

Under the equity method, an investment is initially recognized in the statements of financial positional cost and adjusted thereafter to recognize the Group'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 Group discontinues recognizing its share of further losses if its share of losses of the associate equals or exceeds its interest in the associate. The Group recognizes the additional losses and liabilities which occur in the scope of legal obligation, constructive obligation or payment on behalf of the associates only.

During the evaluation of the impairment of the Group, 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

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

Property, plant and equipment in the course of construction for production are recognized as the cost, 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 depreciation of these assets commences.

Depreciation is recognized using the straight-line method, and each significant part is depreciated separately. The Group 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 Group 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 Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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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 financial liabilities are recognized when a group entity 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 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 Group are classified to financial assets measured at amortized cost and investments in equity instruments measured through other comprehensive income at fair value.
i) Financial assets measured at amortized cost

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

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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 Group may irrevocably designate investments in equity instruments that is not held for trading and not recognized as contingent consideration as at FVTOCI.

Investments in equity instruments measured at fair value through other comprehensive income are measured at fair value. Subsequently the changes in fair value are reported in other comprehensive income and accumulated in other equity. On disposal of investments, the accumulated profit or loss is directly transferred to retained earnings and it is not reclassified to profit or loss.

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The dividend from investments in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss upon the Group'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 Group 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 Group 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 Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of financial assets at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of Investments in equity instruments measured at fair value through other comprehensive income, the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained

21 -

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 Group 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 Group's performance of packaging and final testing service, or the customer controls an asset which the Group's performance has created or enhanced, the related revenue is recognized. Packaging of products relies on the involvement of technicians. The Group measures the work in progress by the percentage of completion. The contract with customer states that the customer is billed after the packaging or the delivery has been completed. A contract asset is thus recognized when the Group renders the service and transfers to accounts receivable when the packaging or delivery is completed. Final testing counts on the involvement of technicians. The Group measures the work in progress by the percentage of completion. Contract customer is billed after the completion of service, and the Group then recognizes accounts receivable when rendering the service.

(13) Leases

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

1) The Group as the 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.

The sublease of right-of-use assets of the Group is classified by reference to right-of-use assets, instead of underlying assets. However, if the main lease is short-term lease applicable to recognition exemption of the Group, such sublease is 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 Group as the 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, and 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 consolidated 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 Group 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 consolidated balance sheets.

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(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.

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 Group 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

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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 deferred tax.

1) Current tax

The Group has determined the current income (losses) and calculated taxes payable (receivable) 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 Group 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

25 -

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 Group 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.

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

In the application of the Group’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 Group 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

(1) Loss of property, plant, and equipment

Equipment relevant to semiconductor manufacturing is evaluated in accordance with the recoverable amount of such equipment (equal to the fair value of such asset less cost to sell and the higher amount of its use value). Market value or future changes in cash flow will affect the recoverable amount, resulting in the Group recognizing addition impairment losses or reversing impairment losses recognized. In addition, the subsequent development of the new coronavirus pneumonia epidemic and the possible impact of the military conflict between Russia and Ukraine and related international sanctions have caused the impacts of uncertainty on the interruption of

26 -

the operation of the Group and the fluctuation of the financial market. Consequently, the estimated cash flow, growth rate and discount rate have greater uncertainty.

(2) Income tax

Upon the dates of December 31, 2022 and 2021, the balance of unused loss carryforwards is NT$1,221,823,000 and NT$1,424,940,000 respectively. The carrying amount of deferred tax assets related to temporary differences is NT$150,887,000 and NT$ 28,600,000 respectively. The realization of the deferred tax asset depends mainly on its future profitability or the taxable temporary difference. A significant reversal of deferred tax assets will be recognized as gain or loss if the real profits in the future are less than expected. Such reversal is recognized as gain or loss during the occurrence period.

6. Cash and cash equivalents

and 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 $ 462 698,190 773,566 99,804 $ 1,572,022 0.001-3.20 0.31-4.87 0.65	December 31,2021
			$ 485 770,863 775,792 99,850 $ 1,646,990 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 Enrich Tech Co., Ltd. Amtek Semiconductors Co., Ltd. Anwell Semiconductor Co., Ltd. Perfect Source Technology Corp. Xpert Semiconductor Inc.	December 31,2022 $ 5,434 21,646 7,237 - - - $ 34,317	December 31,2021	December 31,2021
			$ 8,630 18,974 7,105 - - - $ 34,709

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

Anwell Semiconductor Co., Ltd. has registered its dissolution in December 2021, and completed the liquidation, but not yet taken into account.

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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 $ 172,000 103,400 $ 275,400	December 31,2021
			$ 219,320 103,889 $ 323,209

As of December 31, 2022 and 2021, annual rate of time deposits with an initial maturity more than three months is 0.8%-1.44% and 0.11%-0.815%, respectively.
Please see Tables 28 for the information of financial assets at amortized costcurrent.

9. Accounts receivable

nts receivable
Amortized cost Total carrying amount Less: Allowance for bad debts	December 31,2022 $ 977,093 ( 2,710) $ 974,383	December 31,2021
	(	(	$ 1,747,567 3,187) $ 1,744,380

The average collection period for selling products and rendering service is 60 to 90 days, excluding accounts receivable. Credit of key customers is rated by using other public available financial information and historic transaction records. The Group 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 Group has designated functional working group responsible for decision on line of credit, credit approval and other supervision to ensure proper action has been taken to collect overdue accounts receivable. In addition, the collectible amount of accounts receivable shall be reviewed individually at the date of balance sheet to ensure the uncollectible accounts receivable has been listed to appropriate impairment loss. According these, the management considers the Group's credit risk has significantly decreased.

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

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

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The loss allowance for accounts receivable of the Group 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 0.1-0.2 $ 964,121 855) $ 963,266 0~90 days	Aging 91~180 days	Aging 91~180 days	Aging 181~365 days 10-15.5 $ 1,238 ( 110) $ 1,128 Aging 181~365 days	Aging 181~365 days 10-15.5 $ 1,238 ( 110) $ 1,128 Aging 181~365 days	Aging over 365 days	Aging over 365 days		Total
	(		2-3.1 $ 10,169 ( 180) $ 9,989 Aging 91~180 days				(	100 $ 1,565 1,565) $ - Aging over 365 days	(	$ 977,093 2,710) $ 974,383 Total
	(	0.1-0.2 $ 1,709,530 1,537) $ 1,707,993	(	2-3.1 $ 36,809 661) $ 36,148	(	10-15.5 $ 263 24) $ 239	(	100 $ 965 965) $ -	(	$ 1,747,567 3,187) $ 1,744,380

Changes on allowance for accounts receivable loss are as follows:

Balance at the beginning of the yea Current impairment losses Current actual write-off Exchange differences on translation Balance at the end of the year	2022 $ 3,187 ( 494 ) - 17 $ 2,710	2021
		$ 19,668 388 ( 16,864 ) ( 5 ) $ 3,187

10. Inventories

ntories
Raw materials Finished goods Work in process Products	December 31,2022 $ 530,864 - - - $ 530,864	December 31,2021
			$ 689,757 152 - - $ 689,909

Inventory-related operating costs as of 2022 and 2021 are NT$5,486,038,000 and NT$6,258,406,000 respectively.

Operating costs include the following items:

Unamortized fixed production overheads Revenue from sale of scraps Inventory valuation loss (gain from price recovery)	2022 $ - ( 54,217 ) 36,493	2021
		$ 5 ( 70,808 ) ( 39,380 )

Inventory net realizable value recovery was due to the increase of the sales price of the inventory.

Subsidiaries
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(1) Subsidiaries incorporated in the consolidated financial statements The basis for the consolidated financial statements is as follows:

Investor Parent Company Lee Shin Investment Co., Ltd. Lingsen Holding (Samoa) Inc. Li Yuan Investments Co., Ltd.	CompanyName Lingsen Holding (Samoa) Inc. Panther Technology Co., Ltd. Sooner Power Semiconductor Co., Ltd. Lee Shin Investment Co., Ltd. Lingsen America Inc. Nexus Material Corporation Sooner Power Semiconductor Co., Ltd. Nexus Material Corporation Li Yuan Investments Co., Ltd. Ningbo Liyuan Technology Co., Ltd.	Equi tyh o l di ng (%)	Equi tyh o l di ng (%)
		2022 December 31 100 64 99 100 100 78 1 21 100 100	2021 December 31
			100 64 99 100 100 78 1 21 100 100

Please see Tables 4 and 5 for the location and business of aforementioned subsidiaries.

(2) Significant information on subsidiaries of non-controlling interests

CompanyName Panther Technology Co., Ltd.	Percentage of ownership (%)	Percentage of ownership (%)
	December 31,2022 36	December 31,2021
		36

The following summary of financial information of Panther Technology Co., Ltd. is prepared in accordance with the amount prior to elimination of intragroup transactions:

transactions:
Current assets Non-current assets Current liabilities Non-current liabilities Equity Interests attributed to: Owners of the Company Non-controlling interests of Panther Technology Co., Ltd. Operating income Current net profit Total comprehensive income	December 31,2022 $ 286,597 952,467 ( 243,566 ) ( 343,954) $ 651,544 $ 414,837 236,707 $ 651,544 2022 $ 746,341 ($ 18,327) ($ 18,327)	December 31,2021
	( (	( (	$ 448,748 849,074 286,330 ) 341,621) $ 669,871 $ 426,507 243,364 $ 669,871 2021
	( (		$ 907,618 $ 158,648 $ 158,648

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Owners of the Company: Non-controlling interests of Panther Technology Co., Ltd. Total comprehensive income attributable to: Owners of the Company Non-controlling interests of Panther Technology Co., Ltd. Cash flow From operating activities From investing activities From financing activities Net cash inflow		2022 $ 11,669 ) 6,658) $ 18,327) $ 11,669 ) 6,658) $ 18,327) $ 167,592 287,915 ) 31,921 $ 88,402)		2021
	( ( ( ( ( ( ( (		(	$ 101,011 57,637 $ 158,648 $ 101,011 57,637 $ 158,648 $ 286,183 281,455 ) 75,693 $ 80,421

12. Investments accounted for using the equity method

Investees Common stock that has never been listed on the TWSE or TPEx Qi Feng Technology Co., Ltd. Less: Accumulated impairment loss		December 31,2022 Amount Shareho lding $ 11,417 30% 11,417) $ -		December 31,2021	December 31,2021
		Amount $ 11,417 11,417) $ -		Amount $ 11,417 11,417) $ -	Shareho lding
	(		(		30%

Investments accounted for using the equity method as well as the Group's share of profit or loss and other comprehensive income are not calculated in accordance with auditors' reports. However, the management of the Group determines that it shall have little influence if financial statements of Qi Feng Technology Co., Ltd. are not audited.

13. Property, Plant and Equipment

Property, Plant and Equipment
December 31,2022 Assets used by the Company $ 4,097,752 Assets subject to operating leases 186,633 $ 4,284,385 (1) Assets used by the Company 2022 Land Buildings Machinery and equipment Transportation Equipment Office equipment Cost Balance at the beginning of the year $ 127,534 $3,134,344 $4,384,713 $ 24,466 $ 43,374 Increase - 47,241 493,786 7,564 25,923 Decrease - ( 67,513) ( 569,578 ) ( 7,824 ) ( 3,934 ) ( Reclassificatio n - 132,600 322,612 95 - Net exchange difference - 7,206 697 126 11 Balance at the end of the year $ 127,534 $3,253,878 $4,632,230 $ 24,427 $ 65,374	December 31,2021 $ 3,794,027 190,877 $ 3,984,904 Other equipment Unfinished construction Total cost $ 337,392 $ 111,680 $8,163,503 110,926 31,781 717,221 48,193 ) - ( 697,042 ) 5,630 ( 138,230 ) 322,707 534 - 8,574 $ 406,289 $ 5,231 $8,514,963
		(	Unfinished construction $ 111,680 31,781 - ( 138,230 ) - $ 5,231
	$ 337,392 110,926 48,193 ) 5,630 534 $ 406,289			$8,163,503 717,221 697,042 ) 322,707 8,574 $8,514,963

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	Land $ - - - - $ - $ 59,787 - $ 59,787 $ 67,747 $ 127,534 - - - - $ 127,534 $ - - - - - $ - $ 59,787 - $ 59,787 $ 67,747	Buildings $1,396,982 137,421 ( 64,360) 5,511 $1,475,554 $ 59,645 ( 252) $ 59,393 $1,718,931 $3,076,485 73,736 ( 13,448) - ( 2,429) $3,134,344 $1,287,320 124,014 ( 12,565) - ( 1,787) $1,396,982 $ 60,805 ( 1,160) $ 59,645 $1,677,717	Machinery and equipment $2,632,334 511,920 ( 571,792 ) 123 $2,572,585 $ 731 ( 98) $ 633 $2,059,012 $4,813,925 794,310 ( 1,394,878 ) 171,769 ( 413) $4,384,713 $3,426,012 551,120 ( 1,357,224 ) 12,683 ( 257) $2,632,334 $ 40,943 ( 40,212) $ 731 $1,751,648	Transportation Equipment $ 20,508 1,719 ( 7,824 ) 77 $ 14,480 $ - - $ - $ 9,947 $ 23,029 1,466 - - ( 29) $ 24,466 $ 19,095 1,429 - - ( 16) $ 20,508 $ - - $ - $ 3,958	Office equipment $ 27,354 6,273 ( 3,934 ) 5 $ 29,698 $ 705 - $ 705 $ 34,971 $ 76,307 2,199 ( 35,127 ) - ( 5) $ 43,374 $ 53,033 9,447 ( 35,124 ) - ( 2) $ 27,354 $ 708 ( 3) $ 705 $ 15,315	Other equipment $ 169,941 80,906 ( 47,725 ) 232 $ 203,354 $ 1,489 ( 467) $ 1,022 $ 201,913 $ 306,935 107,837 ( 77,184 ) - ( 196) $ 337,392 $ 182,145 63,820 ( 75,939 ) - ( 85) $ 169,941 $ 2,954 ( 1,465) $ 1,489 $ 165,962	c	Unfinished onstruction $ - - - - $ - $ - - $ - $ 5,231 $ - 111,680 - - - $ 111,680 $ - - - - - $ - $ - - $ - $ 111,680	Total cost
									$4,247,119 738,239 ( 695,635 ) 5,948 $4,295,671 $ 122,357 ( 817) $ 121,540 $4,097,752 $8,424,215 1,091,228 ( 1,520,637 ) 171,769 ( 3,072) $8,163,503 $4,967,605 749,830 ( 1,480,852 ) 12,683 ( 2,147) $4,247,119 $ 165,197 ( 42,840) $ 122,357 $3,794,027

In 2021, the Group disposed relevant equipment that had been recognized for impairment loss, and the actual disposal price was used as the recoverable amount, and an impairment loss of NT$42,417,000 was reversed. For 2022, since there was no impairment loss, the Group had not conducted the impairment loss evaluation.

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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 ~ 10 years Transportation Equipment 4 ~ 7 years Office equipment 3 ~ 7 years Other equipment 3 ~ 7 years

Please see note 29 for the amount of property, plant, and equipment used by the Group pledged as collaterals.

(2) 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 Reclassification 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	Machinery and equipment $ - - $ - $ - - $ - $ - $ 15,933 ( 15,933) $ - $ 11,464 1,219 ( 12,683) $ - $ -		Total
			( (	( (	$ 279,629 560 $ 280,189 $ 88,752 4,804 $ 93,556 $ 186,633 $ 295,562 15,933) $ 279,629 $ 95,425 6,010 12,683) $ 88,752 $ 190,877

The Group 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.

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

Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 years	December 31,2022 $ 12,134 4,920 4,920 4,920 4,920 20,922 $ 52,736	December 31,2021	December 31,2021
			$ 12,468 6,061 6,061 6,061 6,061 27,584 $ 64,296

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

life:
Buildings 45 ~ 50 years Machinery and equipment 5 ~ 7 years Lease agreements (1) Right-of-use assets December 31,2022 Carrying amount of right-of-use assets Land $ 148,620 Buildings 2,231 $ 150,851 2022 Addition to right-of-use assets $ 3,149 Depreciation expense of right-of-use assets Land $ 4,386 Buildings 2,211 $ 6,597 Sublease income of right-of-use assets (Rent Income from sublease) $ -	December 31,2021
		$ 152,952 1,292 $ 154,244 2021
	(	$ 370 $ 4,485 1,937 $ 6,422 $ 2,805)

14. Lease agreements

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

(2) Lease liabilities

Lease liabilities
Carrying amount of lease liabilities Current Non-current	December 31,2022 $ 5,303 $ 144,300	December 31,2021
			$ 5,027 $ 147,411

Ranges of discount rates for lease liabilities are as follow

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Land Buildings	December 31,2022 0.67%-0.91% 0.67%-1.65%	December 31,2021
		0.67%-0.91% 0.67%-1.65%

(3) Material leases and terms

The Group 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 Group has no bargain purchase option for leased lands and buildings.

(4) Sublease

The Group subleases right-of-use of land as operating lease, with a lease term of 20 years. The lessee shall adjust the lease payment according to market rent when a right of renewal is exercised. The Group has sold all of the subleases of the right-of-use of land in China region in August 2021.

(5) Information on other lease

Please see Note 13 for agreements that the Group sells property, plant and equipment used by the Group under operating leases.

Expenses relating to short-term leases Total cash outflow for leases	(	2022		2021
		$ 97,657 $ 104,756)	(	$ 89,322 $ 97,293)

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

15. Other current assets

Current Supply inventory Payments on behalf of others Prepayments Tax overpaid retained for offsetting future tax payable Input tax Others Borrowings (1) Short-term bank loans Credit loans Import/export financing loans Annual interest rate (%) Credit loans Import/export financing loans	December 31,2021	December 31,2021
	$ 202,866 8,784 17,464 6,565 12,579 600 $ 248,858 December 31,2021
(1)
		$ 160,720 144,118 $ 304,838 0.80-4.98 0.88-0.90

16. Borrowings

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(2) Long-term bank loans

Long-term bank loans
Mortgage loan(Note 29) Credit loans Less: Amount falling due in one year Amount falling due after one year Annual interest rate (%) Mortgage loan Credit loans Maturity date Mortgage loan Credit loans	December 31,2022 $ 745,074 589,886 1,334,,960 ( 340,164) $ 994,796 0.65-2.20 0.58-1.91 December 31,2022 2024.05-2027.07 2024.04-2026.05	December 31,2021
		$ 673,591 618,700 1,292,291 ( 360,830) $ 931,461 0.42-1.54 0.58-1.61 December 31,2021
		2022.04-2027.07 2022.04-2026.05

17. Other payables

r payables
Payables for Wages and bonuses Payables for factory supplies Payables for annual leave Payables for purchases of equipment Payables for remuneration of employees and remuneration of directors Others	December 31,2022 $ 233,128 122,824 60,830 30,750 23,002 115,607 $ 586,141	December 31,2021
			$ 270,662 212,091 62,169 56,188 154,978 130,507 $ 886,595

18. 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
			(

19. Retirement benefits plan

(1) Defined contribution plans

The labor pension system under the “Labor Pension Act” applicable to the Company, Panther Technology Co., Ltd., Nexus Material Corporation, and Sooner Power

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Semiconductor Co., Ltd. of the Group refers to the defined contribution retirement benefit plans managed by the government. The employer shall contribute labor pension funds equal to 6 percent of an employee's monthly salary to individual labor pension accounts at the Bureau of Labor Insurance (the Bureau) for employees.

Ningbo Liyuan Technology Co., Ltd. participated in social insurance plan managed and planned by government of China, which refers to a defined contribution plan. The endowment insurance paid for the social insurance plan managed by the government is recognized as current expense upon withdrawal.

The retirement procedure and system has not established for Lingsen America Inc.

As investment companies or no employees hired, there is no retirement procedure or system established for Lee Shin Investment Co., Ltd., Lingsen Holding (Samoa) Inc., Li Yuan Investments Co., Ltd.

(2) Defined benefit plans

The Company of the Group has labor pension system as defined benefit plans under the Labor Standards Act of the 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 Group 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:

Balance at January 1, 2022 Service cost Current service cost Interest expense (income) Defined benefit costs recognized in profit or loss	Present value of defined benefit obligation $ 730,046 6,879 5,021 11,900	Fair value of plan assets	Fair value of plan assets	Net defined benefit liabilities(assets) ($ 12,009) 6,879 ( 147) 6,732	Net defined benefit liabilities(assets) ($ 12,009) 6,879 ( 147) 6,732	Net defined benefit liabilities(assets) ($ 12,009) 6,879 ( 147) 6,732
		( ( (	$ 742,055) - 5,168) 5,168)			($ 12,009) 6,879 ( 147) 6,732

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Remeasurement of the net defined benefit liability/asset Return on plan assets (excluding amounts included in net interest expense) Actuarial loss (gain) - changes in demographic assumptions - changes in financial assumptions - experience adjustments Defined benefit costs recognized in other comprehensive income Contributions from employer Benefits paid Balance as of December 31, 2022 Balance as of January 1, 2021 Service cost Current service cost Interest expense (income) Defined benefit costs recognized in profit or loss Remeasurement of the net defined benefit liability/asset Return on plan assets (excluding amounts included in net interest expense) Actuarial loss (gain) - changes in demographic assumptions - changes in financial assumptions - experience adjustments Defined benefit costs recognized in other comprehensive income Contributions from employer Benefits paid Balance as of December 31, 2021		Present value of defined benefit obligation - 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 ( 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)	Net defined benefit liabilities(assets)	Net defined benefit liabilities(assets)
		( (	( ( ( ( ( ( ( ( ( ( (		( ( (	56,261 ) 3 36,848 ) 24,174) 117,280) 12,500 ) 994) 13,494) $ 136,051) $ 54,241 8,079 118 8,197 20,059 ) 1,253 30,169 ) 255 48,720) 24,500 ) 1,227) 25,727) $ 12,009)
		( ( ( ( ( ( (			( ( ( ( ( ( ( ( ( ( ( (

Due to the defined benefit plans under the Labor Standards Act of R.O.C. the Group 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 Group 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
38 -

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 Group 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	December 31,2022 $ 12,000 9 years	December 31,2021	December 31,2021
			$ 18,000 10 years

20. Equity

(1) Ordinary shares

Ordinary shares
Authorized shares (in thousands) Authorized capital Issued and paid shares (in thousands) Issued capital	December 31,2022 500,000 $ 5,000,000 380,102 $ 3,801,023	December 31,2021
			500,000 $ 5,000,000 380,102 $ 3,801,023

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

(2) Capital surplus

Capital surplus
Additional paid-in capital From convertible bonds	December 31,2022 $ 1,123,151 126,434	December 31,2021
		$ 1,123,151 126,434

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Treasury stock transactions Donations	December 31,2022 14,943 493 $ 1,265,021	December 31,2021	December 31,2021
			- 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 Group 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 Group 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 22 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 of NT$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 2022had been proposed by the board of directors on February 23, 2023 as follows:

February 23, 2023 as follows:
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.

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(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.

21. Revenue

nue
Revenue from contracts with customers Service income Sales revenue		2022 $ 6,006,759 47 $ 6,006,806		2021
				$ 7,691,947 41,355 $ 7,733,302

(1) Contract balance

Contract balance
Contract assets - current Notes receivable Accounts receivable		December 31, 2022 $ 100,980 - 974,383 $ 1,075,363		December 31, 2021 $ 150,260 5,593 1,744,380 $ 1,900,233	January1,2021
						$ 126,485 9,386 1,311,023 $ 1,446,894

(2) Details of revenue from contracts with customers

Please see Note 33 for the information on details of revenue from contracts with customers.

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(3) Timing o f revenue recognition

Timingof revenue recognition
Performance obligation satisfied over time Performance obligation satisfied at a point in time		2022 $ 6,006,759 47 $ 6,006,806		2021
				$ 7,691,947 41,355 $ 7,733,302

22. Employee benefits and depreciation expenses

Classified as 2022 Employee benefit expense Short-term employee benefits Pensions Defined contribution plans Defined benefit plans Other employee benefits Depreciation expenses Classified as 2021 Employee benefit expense Short-term employee benefits Pensions Defined contribution plans Defined benefit plans Other employee benefits Depreciation expenses	operatingcosts $ 1,453,808 54,530 5,844 118,857 697,764 operatingcosts $ 1,602,060 51,341 7,161 128,588 697,067	operatingexpenses $ 286,127 10,302 888 18,834 51,876 operatingexpenses $ 359,422 10,137 1,036 20,202 65,195	Total
			$ 1,739,935 64,832 6,732 137,691 749,640 Total
			$ 1,961,482 61,478 8,197 148,790 762,262

Under the Company's Articles of Incorporation, the Company shall accrue employees’ compensation and remuneration of directors at the rates of no less than 10% and no higher than 2% respectively, of net profit before income tax, of 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	2022	2021	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 consolidated 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 2021 consolidated report.

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.

42 -

23. Income tax

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

Main components of income tax expense recognized in profit or	loss	loss
2022 Current tax Income tax expense generated in the current year $ 25 Taxation on Undistributed Earnings 20,046 Adjustment on prior years 15 20,086 Deferred tax Income tax expense generated in the current year ( 26,140 ) Adjustment on prior years ( 37,274 ) ( 63,414 ) expense( profit)recognized in profit or loss ($ 43,328) A reconciliation of accounting income and income tax expense is as follows: 2022 Income tax expense (benefit) calculated at the statutory rate $ 31,465 Permanent differences ( 61,414 ) Temporary differences 5,204 Current loss carryforward 23,833 Unrecognized loss carryforward 23,865 Taxation on Undistributed Earnings 20,046 Current investment tax credit used - Effect of exchange rate changes applicable to the consolidated entities ( 22,928) Deferred tax Income tax expense generated in the current year ( 26,140 ) Adjustment on prior years ( 37,274 ) Adjustment on prior years 15 Income tax expense (profit) recognized in profit or loss ($ 43,328)	2021
	$ 51,873 - ( 280) 51,593 ( 34,032 ) 86,639 52,607 $ 104,200 2021
	( ( ( ( ( (	$ 207,158 21,824 ) 15,796 ) 144,240 ) 21,670 - 10,834 ) 15,739 34,032 ) 86,639 280) $ 104,200

(2) Deferred tax assets and liabilities

2022 Deferred tax income assets Temporary differences Defined benefit retirement plans Inventory falling price reserves Vacation pay payable Provision for liabilities Others Loss carryforwards Deferred income tax liabilities	Balance at the beginning of theyear $ 4,974 6,689 12,333 796 3,808 28,600 - $ 28,600	Adjustment at the beginning of theyear $ - - - - - - 101,261 $ 101,261	Defined benefit costs recognized in profit or loss $ - 6,704 (274) 311 (119) 6,622 19,370 $ 25,992	Defined benefit costs recognized in other comprehens ive income	Translation differences $ - - - - 8 8 - $ 8		Balance at the end of theyear
				( $ 4,974 ) - - - - ( 4,974) - ($ 4,974)			$ - 13,393 12,059 1,107 3,697 30,256 120,631 $ 150,887

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2022 Temporary differences Defined benefit retirement plans Difference on depreciation methods Others 2021 Deferred tax income assets Temporary differences Defined benefit retirement plans Inventory falling price reserves Vacation pay payable Provision for liabilities Others Loss carryforwards Deferred income tax liabilities Temporary differences Difference on depreciation methods Others	Balance at the beginning of theyear $ - $ 283 521 $ 804 Balance at the beginning of theyear $ 14,718 5,485 11,061 3,890 152 35,306 55,999 $ 91,305 $ 448 708 $ 1,156	Adjustment at the beginning of theyear $ - $ - - $ - Adjustment at the beginning of theyear $ - - - - - - 86,639 $ 86,639 $ - - $ -	Defined benefit costs recognized in profit or loss $ - ( $ 79) ( 69) ($ 148) Defined benefit costs recognized in profit or loss $ - 1,204 1,272 ( 3,094 ) 3,658 3,040 (142,638) ($ 139,598) ( $ 165 ) ( 187) ($ 352)	Defined benefit costs recognized in other comprehens ive income	Translation differences $ - $ - - $ - Translation differences $ - - - - ( 2) ( 2 ) - ($ 2) $ - - $ -		Balance at the end of theyear
				$ 18,482 $ - - $ 18,482 Defined benefit costs recognized in other comprehens ive income			$ 18,482 $ 204 452 $ 19,138 Balance at the end of theyear
				( $ 9,744 ) - - - - ( 9,744 ) - ($ 9,744) $ - - $ -			$ 4,974 6,689 12,333 796 3,808 28,600 - $ 28,600 $ 283 521 $ 804

(3) Amount of unused loss carryforwards of deferred income tax assets which was not recognized in the consolidated balance sheet.

Year of maturity 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032	December 31,2022 $ - 196,475 209,903 183,311 119,192 122,573 104,397 124,296 103,355 52,477 5,844 $ 1,221,823	December 31,2021	December 31,2021
			208,477 196,476 210,734 183,598 119,192 122,573 104,397 124,296 103,475 51,722 - $ 1,424,940

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(4) Relevant information on unused loss carryforwards

Last taxyear 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032	Sooner Power Semiconductor Co.,Ltd. 116,449 112,206 127,844 119,180 122,548 104,373 117,998 103,290 52,400 3,387 $ 979,675	Nexus Material Corporation 20,464 31,430 9 12 25 24 24 65 77 12 $ 52,142		Lee Shin Investment Co.,Ltd. $ - - - - - - 6,272 - - 2,445 $ 8,717	Ningbo Liyuan Technology Co.,Ltd.	Ningbo Liyuan Technology Co.,Ltd.
						$ 59,563 66,268 55,458 - - - - - - - $ 181,289

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

December 31,2022 $ 2,525,953	December 31,2021	December 31,2021
		$ 2,425,194

(6) Income tax examination

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

(7) Relevant information on income tax of foreign subsidiaries

The profit-seeking enterprise income tax of Ningbo Liyuan Technology Co., Ltd. is calculated in accordance with the tax law in China. As of the end of 2022, there are accumulated losses and no income tax payable.

As locally registered companies, Lingsen Holding (Samoa) Inc. and Li Yuan Investments Co., Ltd. are, under the regulation of the local law, exempt for income from offshore.

The profit-seeking enterprise income tax of Lingsen America Inc. is calculated in accordance with the tax law in America.

24. Earnings per Share

ings per Share
2022 Basic earnings per share Net profit attributed to the owners of the Company Potentially dilutive ordinary shares effect	Net profit attributable to owners of the Company $ 207,291	Number of shares (denominator) (in thousand) 373,457	Earnings per share(NT$)
				$ 0.56

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Remuneration of employees Diluted earnings per share Net profit attributed to the owners of the Company Plus potentially dilutive ordinary shares effect 2021 Basic earnings per share Net profit attributed to the owners of the Company Potentially dilutive ordinary shares effect Remuneration of employees Diluted earnings per share Net profit attributed to the owners of the Company Plus potentially dilutive ordinary shares effect		Net profit attributable to owners of the Company - $ 207,291 $ 873,849 - $ 873,849	Number of shares (denominator) (in thousand) 2,442 375,899 372,443 3,926 376,369	Earnings per share(NT$)	Earnings per share(NT$)
					$ 0.55 $ 2.35 $ 2,32

Since the Group offered to settle compensation paid to employees in cash or shares, the Group 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.

25. 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%

26. Capital risk management

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

The Group's capital structure consists of net debt (leases less cash and cash equivalent) and equity attributed to the Company's owner (common stocks, capital surplus, retained

46 -

earnings and other equity).

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

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

27. Financial instruments

(1) Information on fair value
1) Financial instruments that are not measured at fair value

The management of the Group 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

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 $ - 5,434 $ 5,434 $ - 8,630 $ 8,630		Level 2 $ - - $ - $ - - $ -		Level 3 $ 28,883 - $ 28,883 $ 26,079 - $ 26,079		Total
								$ 28,883 5,434 $ 34,317 $ 26,079 8,630 $ 34,709

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

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
		Equityinstruments
		2022 $ 26,079 2,804 $ 28,883		2021
			(	$ 32,186 6,107) $ 26,079

47 -
iii) Valuation techniques and input value used in Level 3 fair value measurement

The securities of emerging stocks held by the Group have no market price reference and thus are evaluated under the cost approach. Its fair 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 $ 2,939,923 34,317 2,227,793	December 31,2021
		$ 3,895,491 34,709 2,562,620

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

The Group 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 Group's sales and purchase transactions are denominated in foreign currency, which exposes the Group to foreign currency risk. - 48 -

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

Sensitivity analysis

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

The following table details the Group’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 rate. 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 $ 4,319 161	2021
		$ 1,031 10

ii) Interest rate risk

The Group is exposed to interest rate risk for the reason that it has borrowed money at both fixed and variable rate. The Group 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 $ 690,770 349,603 1,152,952 1,540,577	December 31,2021 $ 740,851 252,017 1,224,360 1,497,550

Sensitivity analysis

49 -

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

For floating-rate financial assets and liabilities, when interest rate is increase by 1% and other conditions remain unchanged, the net profit (loss) before tax of the Group in 2022 and 2021 are NT$3,876,000 and NT$2,732,000 respectively.

iii) Other price risk

The Group is exposed to price risk due to investments in equity secures. The management 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$54,000 and NT$86,000 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 Group. The maximum credit risk exposure due to the financial loss arising from the counterparty not performing its obligation and the Group's financial guarantee primarily results from:

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

The Group'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 Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, the management of the Group monitors the utilization of borrowings and ensures compliance with loan conditions.

50 -

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

December 31, 2022 December 31, 2021 Undrawn loan amounts $ 1,285,118 $ 1,471,202

Liquidity and interest risks of non-derivative financial liabilities

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

The maturity of the Group’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 $ 485,280 6,383 545,781 200,000 $ 1,237,444 Within 1year		1 to 3years $ - 10,195 839,052 - $ 849,247 1 to 3years	More than 3years $ - 156,413 155,744 - $ 312,157 More than 3years	More than 3years $ - 156,413 155,744 - $ 312,157 More than 3years

		$ 913,669 5,701 566,089 99,579 $ 1,585,038		$ - 9,554 553,330 - $ 562,884		$ - 161,178 378,131 - $ 539,309

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
		$ 6,383 $ 5,701		$ 19,582 $ 19,024		$147,026 $151,708

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.

28. Related-party transactions

Transactions, balances, income and expenses between the Company and subsidiaries (related parties of the Company) may be all eliminated in consolidation, which are thus not disclosed in the note. Except for other notes disclosed, transactions between the Group and other related parties are as follows.

Remuneration of key management personnel

Short-term employee benefits Pensions		2022 $ 56,096 698 $ 56,794		2021
				$ 90,320 820 $ 91,140

51 -

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.

29. Pledged assets

The following assets are provided as collaterals and import duty payable for maximum loan amount:

loan amount:
Property, plant and equipment Pledged time deposits (recognized in other current assets)	December 31,2022 $ 1,521,107 103,400 $ 1,624,507	December 31,2021
			$ 1,647,120 103,889 $ 1,751,009

30. Significant contingent liabilities and unrecognized commitments

Significant contingent commitments of the Group 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 $ 162,518	December 31,2021
	$ 28,000 December 31,2021
		$ 468,895

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 Group. The exchange rates disclosed are used to translate the foreign currencies into the functional currency. The significant financial assets and liabilities denominated in foreign currencies are as follows:

Foreign currency assets Monetary items USD Japanese yen Foreign currency liabilities Monetary items USD Japanese yen	December 31,2022 Foreign Currency Exchange rate NTD $ 22,952 30.71 $ 704,856 123,574 0.2324 28,719 8,888 30.71 272,950 54,126 0.2324 12,579	December 31,2022 Foreign Currency Exchange rate NTD $ 22,952 30.71 $ 704,856 123,574 0.2324 28,719 8,888 30.71 272,950 54,126 0.2324 12,579	December 31,2021	December 31,2021	December 31,2021
	Foreign Currency $ 22,952 123,574 8,888 54,126	Exchange rate 30.71 0.2324 30.71 0.2324	Foreign Currency $ 25,105 173,864 21,382 178,026	Exchange rate 27.68 0.2405 27.68 0.2405	NTD
					$ 694,906 41,814 591,854 42,815

52 -

Significant unrealized exchange gains or losses are as follows:

Foreign Currency USD USD Japanese yen Japanese yen Euro	2022		Net exchange gains (losses) $ 12,342 7,899) 424 - - $ 4,867	2021
	Exchange rate 30.71 (USD : NTD) 6.9646 (USD : CNY) 0.2324 (JPY: NTD) 0.0529 (JPY : CNY) 32.72 (EUR : NTD)			Exchange rate 27.68 (USD : NTD) 6.3757 (USD : CNY) 0.2405 (JPY: NTD) 0.0556 (JPY : CNY) 31.32 (EUR : NTD)		Net exchange gains (losses)
		(			(	$ 1,896 1,629 253 ) 2 85 $ 3,359

32. Other disclosures

(1) Information on significant transactions and (ii) investees
1) Financing provided to others: None.
2) Endorsements/guarantees provided: Table 1.
3) Marketable securities held (excluding investment in subsidiaries, associates): Table 2.
4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital: None.
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.
9) Trading in derivative instruments: None.
10) Others: The business relationship between the parent and the subsidiaries and significant transactions between them: Table 3.
11) Information on investees: Table 4.
(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 5.
53 -
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:
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: Table 3.

(4) Information of major shareholders: names, numbers of shares held, and shareholding percentages of shareholders who hold 5% or more of the equity: Table 6.

33. Information on department

Information provided the key operating decision maker for resources allocation and performance evaluation of department focuses on each classification of products provided or service rendered. The department which shall be reported is IC packing and testing and others.

(1) Departmental income and operation results

Departmental income 2022 2021 $ 6,006,759 $ 7,691,947 47 41,355 $ 6,006,806 $ 7,733,302	Departmentalprofits or losses	Departmentalprofits or losses
2022 $ 6,006,759 47 $ 6,006,806		2021
	$ 934,700 ( 45,397) 889,303 3,978 20,882 7,198 32,024 54,462 13,927 42,417 ( 15,743 ) ( 657 ) ( 12,000 ) $ 1,035,791
		$ 1,035,791

54 -

The reported departmental income is generated from transactions with external customers. There were no intragroup sales occurred in 2022 and 2021.

Departmental interest refers to profits made by each department, excluding interest revenue, rental income, dividend income, disposal of income of property, plant and equipment, exchange gain or loss, financial cost and income tax expense. The amount of measurement provided to the key operating decision maker for resource allocation and performance evaluation of departments.

(2) Total assets and liabilities of department

The Group did not provide reportable information on departments' asset to the operating decision maker, and thus the measurement of assets is zero.

(3) Major income from products and service

The main business of the Group is IC packing and testing as well as optoelectronic devices, both as single category.

(4) Information by regions

The Group is located mainly in Asia, Americas and Europe.

Information on the Group’s income from continuing operations by locations of operation and non-current assets by location of assets, from external customers, are as follows:

Income from external

as follows:	Income from external
Asia Europe Americas	customers 2022 2021 $ 5,153,120 $ 7,068,669 486,053 402,248 367,633 262,385 $ 6,006,806 $ 7,733,302	Non-current assets
	2022 $ 5,153,120 486,053 367,633 $ 6,006,806	December 31, 2022 $ 4,606,248 - 170 $ 4,606,418	December 31, 2021
				$ 4,515,665 - 348 $ 4,516,013

Non-current assets exclude financial assets and deferred income tax assets.

(5) Information on major customers

Income from a single customer which exceeds 10% of total income of the Group is as follows:

as follows:
Customer name Customer A Customer B	2022	% 15 13	2021
	Amount $ 871,715 $ 770,620		Amount $ 1,464,248 $ 553,078	%
				19 7

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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.

56 -

Lingsen Precision Industries, Ltd. and its subsidiaries

Marketable securities held

December 31, 2022

Table 2

Unit: Amounts expressed in thousands of New Taiwan Dollars/ of 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 (Note 2) 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 Table 4 and 5 for related information on investment in subsidiaries. Note 2: The amount has been written-off in preparation of the consolidated financial statements

Note 3: Fair value of investment in emerging stocks is computed in reference to investment assets under the cost approach.

57 -

Lingsen Precision Industries, Ltd. and its subsidiaries

The business relationship between the parent and the subsidiaries and significant transactions between them

For the year ended December 31, 2022

Table 3

Unit: Amounts expressed in thousands of New Taiwan Dollars

No.	Name	Transaction party	Relationship with the transaction party (Note 1)		Transaction status	Transaction status
				Item	Amount (Note 2)	Transaction condition	Percentage of total revenue or total assets the consolidation(%)
0 1 2	Parent Company Sooner Power Semiconductor Co., Ltd. Panther Technology Co., Ltd.	Lingsen America Inc. Lee Shin Investment Co., Ltd. Ningbo Liyuan Technology Co., Ltd. Panther Technology Co., Ltd. Nexus Material Corporation	1 1 1 2 2	Commissions expense Expenses payable Rental income Other income Other income Rent expense Deposits received Rental income	$ 2,043 393 36 229 1,988 2,803 600 36	60 days 60 days `－` 30 days `－` － `－` `－` 60 days	- - - - - - - -

Note 1: (1) Parent company to subsidiary.

(2) Subsidiary to parent company.

Note 2: The amount has been written-off in preparation of the consolidated financial statements

58 -

Lingsen Precision Industries, Ltd. and its subsidiaries

Information on investees

For the year ended December 31, 2022

Table 4						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. (Note 3) Panther Technology Co., Ltd. (Note 3) Sooner Power Semiconductor Co., Ltd. (Note 3) Lee Shin Investment Co., Ltd. (Notes`１`and 3) Nexus Material Corporation (Notes 2 and 3) Lingsen America Inc. (Note 3) Qi Feng Technology Co., Ltd. (Note 2) Sooner Power Semiconductor Co., Ltd. (Note 3) Nexus Material Corporation (Note 3) Li Yuan Investments Co., Ltd. (Note 3)	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: The amount has been written-off in preparation of the consolidated financial statements.

Note 4: Please see Table 5 for relevant information on the investee in mainland China.

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Lingsen Precision Industries, Ltd. and Subsidiaries

Information on Investment in Mainland China For the year ended December 31, 2022

Table 5


Table 5					Unit: Amounts expressed in New Taiwan Dollars and in thousands of foreign currency 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 $ 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
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. (Note 4)	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

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'. Note 4: The amount has been written-off in preparation of the consolidated financial statements.

60 -

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

Table 6

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 consolidated financial statements and its dematerialized securities arising from the difference in basis of preparation.
Note 2: As table above, the shareholder who delivers the shares to the trust is disclosed by the individual trustee who opened the trust account. In accordance with the Security Exchange Act, the shareholders have to disclose the insider equity more than ten percent of the shares, including their own shares and their delivery to the trust, and have the right to make decisions on the trust property. Information on insider equity is available on the Market Observation Post System (MOPS) website.
61 -

AI assistant

LPI — Audit Report / Information 2022

52036_rns_2022-11-09_6b6aa4b2-ac50-47b7-b123-5094579482bf.pdf

Lingsen Precision Industries, Ltd. and Subsidiaries

Consolidated Financial Statements and Independent Auditor’s Report

Representation Letter

Independent Auditors’ Report

Audit opinions

Basis for Opinion

Key Audit Matters

Other Matters

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

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

Lingsen Precision Industries, Ltd. and Subsidiaries Consolidated Balance Sheet December 31, 2022 and 2021

Lingsen Precision Industries, Ltd. and Subsidiaries Statement of Comprehensive Income For the Years from January 1 to December 31, 2022 and 2021

Equity attributable to owners of the company

Lingsen Precision Industries, Ltd. and Subsidiaries Statement of Cash Flows

(Continued from previous page)

1. Company History

2. Approval Date and Procedures of the Consolidated Financial Statements

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

4. Summary of Significant Accounting Policies

(5) Foreign Currency

(6) Inventories

(7) Investment in Associates

Financial liabilities

(11) Provision for liabilities

(12) Revenue recognition

1) Sales revenue

(14) Borrowing costs

(18) Income tax

1) Current tax

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

Major source of estimates and assumption 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

10. Inventories

12. Investments accounted for using the equity method

13. Property, Plant and Equipment

14. Lease agreements

(3) Material leases and terms

(4) Sublease

(5) Information on other lease

15. Other current assets

16. Borrowings

17. Other payables

18. Provisions - Current

Changes on provisions are as below:

19. Retirement benefits plan

(1) Defined contribution plans

(2) Defined benefit plans

20. Equity

(3) Retained earnings and dividend policy

(4) Treasury stocks

21. Revenue

(2) Details of revenue from contracts with customers

22. Employee benefits and depreciation expenses

23. Income tax

(2) Deferred tax assets and liabilities

24. Earnings per Share

25. Share-Based Payment Agreement

Treasury stock grants to employees

26. Capital risk management

27. Financial instruments

1) Market risk

Sensitivity analysis

Sensitivity analysis

iii) Other price risk

Sensitivity analysis

2) Credit risk

3) Liquidity risk

Liquidity and interest risks of non-derivative financial liabilities

28. Related-party transactions

Remuneration of key management personnel

29. Pledged assets

30. Significant contingent liabilities and unrecognized commitments

32. Other disclosures

33. Information on department

LPI Audit Report / Information 2022