MERRY — Audit Report / Information 2020

Dec 16, 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT

DECEMBER 31, 2020 AND 2019

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

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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Merry Electronics Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Merry Electronics Co., Ltd. and its subsidiaries (the “Group”) as at December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and 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 at December 31, 2020 and 2019, 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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

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

Key audit matters for the Group’s 2020 consolidated financial statements are stated as follows:

Cut-off on sales revenue from distribution warehouses

Description

Refer to Note 4(31) for accounting policy on revenue recognition.

The Group recognises revenue upon delivery or pick-up of goods (the transfer of control of ownership) by customers at the warehouses. Warehouse sales revenue constitutes 28% of total operating revenue for the year ended December 31, 2020. The Group’s revenue recognition is based on inventory movement records of warehouses based on the reports provided by warehouse custodians or bill of lading reports recorded on network platform. As the hubs are located in various locations and there are numerous custodians, the frequency and contents of statements provided by custodians vary, and customers are from different places, the process of revenue recognition contains numerous manual procedures, which would potentially result in inaccurate timing of revenue recognition and the discrepancy between physical inventory quantities in the hubs and quantities per accounting records. Thus, we consider the cut-off on sales revenue from distribution warehouses a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in relation to the above key audit matter:

• A. Understood, evaluated and verified the Group’s procedures for warehouse sales revenue and internal control, including:

• (a) Interviewing the staff from different departments of the sales revenue process from distribution warehouse, and confirming the consistency by comparing interview results with the process of warehouse sales revenue recognition obtained.

• (b) Verifying the internal control of warehouse distribution (checked the terms of transaction / timing of ownership transfer and dates of supporting documents and verifying transactions recognised in the appropriate period by reconciling the quantities of supporting documents with invoices) to confirm the accuracy of the timing of revenue recognition.

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• B. Performed cut-off procedures on sales revenue from distribution warehouses recognised during a specific period before and after the period-end, including verifying delivery schedule of distribution warehouses and ensuring the movements of inventories contained in the statements and cost of goods sold had been recognised in the appropriate period;

• C. Performed physical inventory count observation or confirmed the inventory quantities with hub custodian and agreed the results to accounting records.

Valuation of inventories

Description

Refer to Note 4(13) for accounting policies on inventory valuation, Note 5(1) for significant accounting estimates and assumptions related to inventory valuation, and Note 6(6) for details of allowance for inventory valuation losses. As of December 31, 2020, the balances of inventories and allowance for inventory valuation losses were NT$3,904,966 thousand and NT$(113,307) thousand, respectively.

The Group has a high risk of incurring inventory valuation loss or obsolescence due to fluctuations in market demand and rapidly evolving technology. Further, the measurement of net realisable value of inventories involves subjective judgement resulting in a high degree of estimation uncertainty. Thus, we consider the allowance for inventory valuation loss a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in relation to the above key audit matter:

• A. Understood and assessed the reasonableness of the subsequent inventory valuation and the provision for loss on obsolete and slow-moving inventory.

• B. Inspected the annual plan of the physical inventory count and observed the inventory count; evaluated the effectiveness of the procedures used to identify and control obsolete inventories.

• C. Obtained inventory aging report and verified dates of movements with supporting documents, and ensured the accuracy of inventory aging classification and its consistency with the policies.

• D. Obtained the net realisable value of each kind of inventory and checked whether the applied calculation logic was in agreement with all inventory, tested the supporting documents related to the estimation basis for net realisable value of inventories including verifying the supporting documents of sales and purchase prices, as well as recalculating and assessing the reasonableness of allowance for inventory valuation losses.

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Other matter - parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Merry Electronics Co., Ltd. as at and for the years ended December 31, 2020 and 2019.

Responsibilities of management 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 International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, 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, management is responsible for 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 independent directors and supervisors, are responsible for overseeing the Group’s financial reporting process.

Auditors’ 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. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and 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 these consolidated financial statements.

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

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A. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ 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 auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

E.

F.

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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.

Wang, Yu-Chuan

L iu, Mei-Lan

For and on behalf of PricewaterhouseCoopers, Taiwan February 25, 2021

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 8 6(4) 7(2) 7(2) 6(6) 6(7) 6(2) 6(3) 6(8) 6(9) 6(10) 6(11) 6(30) 6(12)	December 31, 2020 AMOUNT % $ 3,046,963 9 78,919 - 195,179 1 866,600 3 - - 12,441,418 36 273,532 1 71,086 - 705,555 2 3,791,659 11 708,638 2 22,179,549 65 26,468 - 1,573,153 5 4,479,708 13 3,694,738 11 356,010 1 1,418,090 4 156,125 - 271,507 1 11,975,799 35 $ 34,155,348 100	December 31, 2019	December 31, 2019
		AMOUNT $ 3,046,963 78,919 195,179 866,600 - 12,441,418 273,532 71,086 705,555 3,791,659 708,638 22,179,549 26,468 1,573,153 4,479,708 3,694,738 356,010 1,418,090 156,125 271,507 11,975,799 $ 34,155,348	AMOUNT $ 6,589,863 16,913 202,077 - 451 5,448,381 12,934 49,485 385,368 2,117,532 270,473 15,093,477 21,301 2,533,407 3,951,152 2,285,093 155,434 1,502,776 151,674 101,256 10,702,093 $ 25,795,570	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1120 Current financial assets at fair value through other comprehensive income 1136 Current financial assets at amortised cost 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable due from related parties, net 1200 Other receivables 1210 Other receivables - related parties 130X Inventories 1470 Other current assets 11XX Current Assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Non-current financial assets at fair value through other comprehensive income 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXX Total assets				26 - 1 - - 21 - - 2 8 1
				59
				- 10 15 9 1 6 - -
				41
				100

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes 6(13) 6(2) 7(2) 6(2)(14) 7(2) 6(30) 6(15)(16) 6(16) 6(17) 6(30) 6(20) 6(21) 6(22) 6(23) 9	December 31, 2020 AMOUNT % $ 3,271,489 10 30,047 - - - 6,466,930 19 4,167,477 12 1,601,184 5 54,269 - 268,961 1 3,799,911 11 19,660,268 58 - - 807,419 2 1,169,790 4 115,044 - 85,701 - 46,383 - 2,224,337 6 21,884,605 64 2,093,332 6 3,960,123 11 2,006,040 6 269,144 1 3,433,731 10 9,326 1 11,771,696 35 499,047 1 12,270,743 36 $ 34,155,348 100	December 31, 2019	December 31, 2019
		AMOUNT $ 3,271,489 30,047 - 6,466,930 4,167,477 1,601,184 54,269 268,961 3,799,911 19,660,268 - 807,419 1,169,790 115,044 85,701 46,383 2,224,337 21,884,605 2,093,332 3,960,123 2,006,040 269,144 3,433,731 9,326 11,771,696 499,047 12,270,743 $ 34,155,348	AMOUNT $ 470,890 11,799 74 2,773,441 3,920,251 973,026 137,703 258,597 417,964 8,963,745 2,229,959 62,000 956,478 88,694 86,295 410,007 3,833,433 12,797,178 2,086,684 3,870,105 1,745,768 269,144 3,834,442 1,027,834 12,833,977 164,415 12,998,392 $ 25,795,570	%
Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2300 Other current liabilities 21XX Current Liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2640 Accrued pension liabilities 2670 Other non-current liabilities, others 25XX Non-current liabilities 2XXX Total Liabilities Equity attributable to owners of parent Share capital 3110 Share capital - common stock Capital reserve 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments 3X2X Total liabilities and equity				2 - - 11 15 4 - 1 2
				35
				9 - 4 - - 2
				15
				50
				8 15 7 1 15 4
				50
				-
				50
				100

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share)

Items

Years ended December 31, 2020 2019 Notes AMOUNT % AMOUNT % 6(24) and 7(2) $ 34,444,819 100 $ 36,397,793 100 6(6) and 7(2) ( 30,126,271) ( 88) ( 31,357,874) ( 86) 4,318,548 12 5,039,919 14 6(28)(29) ( 344,395) ( 1) ( 377,385) ( 1) ( 1,128,600) ( 3) ( 1,101,667) ( 3) ( 1,704,636) ( 5) ( 1,305,385) ( 4) 12(2) ( 175) - ( 20,130) - ( 3,177,806) ( 9) ( 2,804,567) ( 8) 1,140,742 3 2,235,352 6 6(25) 43,912 - 75,012 - 6(26) 279,246 1 308,251 1 6(27) ( 182,510) - 44,344 - ( 60,817) - ( 81,319) - 6(8) 482,132 1 664,557 2 561,963 2 1,010,845 3 1,702,705 5 3,246,197 9 6(30) ( 383,305) ( 1) ( 715,051) ( 2) $ 1,319,400 4 $ 2,531,146 7

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment loss 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share)

Items	Years ended December 31, 2020 2019 Notes AMOUNT % AMOUNT 6(18) $ 1,439 - ($ 15,027) 6(23) ( 942,810) ( 3) 1,150,081 ( 557) - - 1,012 - ( 120) ( 940,916) ( 3) 1,134,934 6(23) ( 71,085) - ( 119,248) 6(23) 3,353 - ( 2,377) 6(23) 74,113 - ( 140,011) ( 2,425) - 52,830 3,956 - ( 208,806) ($ 936,960) ( 3) $ 926,128 $ 382,440 1 $ 3,457,274 $ 1,321,943 4 $ 2,548,612 ( 2,543) - ( 17,466) $ 1,319,400 4 $ 2,531,146 $ 398,668 1 $ 3,466,522 ( 16,228) - ( 9,248) $ 382,440 1 $ 3,457,274 6(31) $ 6.39 $ 6(31) $ 6.01 $	Years ended December 31,	Years ended December 31,
		2020	2019
				%
Other comprehensive income (loss) Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8311 Other comprehensive income, before tax, actuarial gains (losses) on defined benefit plans 8316 Unrealised (loss) gain on valuation of financial assets at fair value through other comprehensive income 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive loss that will not be reclassified to profit or loss 8310 Components of other comprehensive (loss) income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8367 Unrealised gains (losses) from investments in debt instruments measured at fair value through other comprehensive income, net 8370 Total share of other comprehensive income (loss) of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax relating to the components of other comprehensive (loss) income 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Total other comprehensive (loss) income for the year 8500 Total comprehensive income for the year Profit (loss), attributable to: 8610 Owners of the parent 8620 Non-controlling interest Total Profit Comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Total Comprehensive Income (Loss) Basic earnings per share 9750 Total basic earnings per share Diluted earnings per share 9850 Total diluted earnings per share				- 3 - -
				3
				- - - -
				-
				3
				10
				7 -
				7
				10 -
				10
				12.51
			$	11.54

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Notes 2019 Balance at January 1, 2019 Profit (loss) for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) Appropriations and distribution of 2018 retained earnings: Legal reserve Cash dividends 6(22) Issuance of common stock for cash 6(20) Convertible bonds converted to equity shares 6(16)(20) Share-based payment 6(19) Disposal of investments in equity instruments at fair value through other comprehensive income 6(3) Recognition of change in equity of associates in proportion to the Group's ownership Changes in ownership of subsidiaries Balance at December 31, 2019 2020 Balance at January 1, 2020 Profit (loss) for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) Appropriations and distribution of 2019 retained earnings: 6(22) Legal reserve Cash dividends Convertible bonds converted to equity shares 6(16)(20) Share-based payment 6(19) Disposal of investments in equity instruments designated at fair value through other comprehensive income 6(3) Recognition of change in equity of associates in proportion to the Group's ownership Changes in ownership of subsidiaries Acquisition of non-controlling interests in a subsidiary 4(3) Disposal of investments accounted for using equity method Balance at December 31, 2020	Notes						Equitya	Equitya	ttributable to owners	of	theparent						Non-controlling interest		Total equity
			Share capital - common stock		Capital surplus, additionalpaid-in capital				Retained Earnings				Financial statements translation differences of foreign operations		Total
							Legal reserve		Special reserve		Unappropriated retained earnings
			$ 1,996,625 - - - - - 40,000 48,851 1,208 - - - $ 2,086,684 $ 2,086,684 - - - - - 4,135 2,513 - - - - - $ 2,093,332		$ 2,789,111 - - - - - 408,000 636,587 25,256 - 11,151 - $ 3,870,105 $ 3,870,105 - - - - - 52,460 40,561 - ( 3,100 ) 97 - - $ 3,960,123		$ 1,539,341 - - - 206,427 - - - - - - - $ 1,745,768 $ 1,745,768 - - - 260,272 - - - - - - - - $ 2,006,040		$ 269,144 - - - - - - - - - - - $ 269,144 $ 269,144 - - - - - - - - - - - - $ 269,144		$ 3,189,563 2,548,612 ( 12,022 ) 2,536,590 ( 206,427 ) ( 1,751,419 ) - - - 68,104 - ( 1,969 ) $ 3,834,442 $ 3,834,442 1,321,943 594 1,322,537 ( 260,272 ) ( 1,608,376 ) - - 145,400 - - - - $ 3,433,731		$ 147,032 - 929,932 929,932 - - - - 18,974 ( 68,104 ) - - $ 1,027,834 $ 1,027,834 - ( 923,869 ) ( 923,869 ) - - - 46,785 ( 145,400 ) - - - 3,976 $ 9,326		$ 9,930,816 2,548,612 917,910 3,466,522 - ( 1,751,419 ) 448,000 685,438 45,438 - 11,151 ( 1,969 ) $ 12,833,977 $ 12,833,977 1,321,943 ( 923,275 ) 398,668 - ( 1,608,376 ) 56,595 89,859 - ( 3,100 ) 97 - 3,976 $ 11,771,696		$ 148,611 ( 17,466 ) 8,218 ( 9,248 ) - - - - - - - 25,052 $ 164,415 $ 164,415 ( 2,543 ) ( 13,685 ) ( 16,228 ) - - - - - - - 350,860 - $ 499,047		$ 10,079,427 2,531,146 926,128 3,457,274 - ( 1,751,419 ) 448,000 685,438 45,438 - 11,151 23,083 $ 12,998,392 $ 12,998,392 1,319,400 ( 936,960 ) 382,440 - ( 1,608,376 ) 56,595 89,859 - ( 3,100 ) 97 350,860 3,976 $ 12,270,743

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation expense - property, plant and equipment Depreciation expense - right-of-use assets Amortisation Expected credit impairment loss Compensation cost of employee restricted shares Loss (gain) on financial assets or liabilities at fair value through profit or loss Gains on disposals of investments Share of profit of associates and joint ventures accounted for using equity method Interest income Dividend income Deferred income of government's compensation Loss on disposal of property, plant and equipment Finance costs Interest expense-lease liability Unrealised exchange loss Effect of change in foreign currency exchange Changes in operating assets and liabilities Changes in operating assets Increase in financial assets/liabilities mandatorily measured at fair value through profit or loss Notes receivable Accounts receivable (including related parties) Other receivables (including related parties) Other receivables-related parties Inventories Prepayments Other current assets Financial assets mardatorily measured at fair value through profit or loss - non-current Changes in operating liabilities Accounts payable Accounts payable - related parties Other payables Other payables - related parties Contract liabilities Refund liabilities Other current liabilities Net defined benefit liability-current Cash (outflow) inflow generated from operations Interest received Dividend income Interest paid Income taxes paid Net cash flows (used in) from operating activities

Years ended December 31, Notes 2020 2019 $ 1,702,705 $ 3,246,197 6(9)(28) 350,587 206,457 6(10)(28) 126,399 73,295 6(11)(28) 132,861 132,426 12(2) 175 20,130 6(19) 89,899 52,158 3,731 ( 6,834 ) 6(27) ( 4,978 ) ( 833 ) 6(8) ( 482,132 ) ( 664,557 ) 6(25) ( 43,912 ) ( 75,012 ) 6(26) ( 15,565 ) ( 73,953 ) ( 4,193 ) ( 724 ) 6(27) 6,907 3,552 53,300 79,093 6(10) 7,517 2,226 2,941 20,282 26,120 - 6(33) ( 47,186 ) 158,903 451 444 ( 7,447,309 ) 2,973,814 ( 346,664 ) 28,902 - 344,251 ( 1,652,612 ) 917,132 - 55,086 ( 408,930 ) 45,051 ( 5,167 ) ( 3,127 ) 3,676,792 ( 2,446,460 ) 304,624 ( 421,484 ) 367,486 ( 276,184 ) ( 82,598 ) 105,514 369,805 - 261,373 81,791 22,259 75,688 1,030 ( 14,662 ) ( 3,034,284 ) 4,638,562 39,457 75,350 15,565 73,953 ( 52,914 ) ( 47,656 ) ( 162,861 ) ( 492,478 ) ( 3,195,037 ) 4,247,731

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortised cost – current Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Proceeds from disposal of investments accounted for using equity method Increase in other non-current financial assets (Increase) decrease in guarantee deposits paid Effects of cash changes in consolidated entities Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Increase in other non - current liabilities Repayment of principal portion of lease liabilities Proceeds from long-term borrowings Repayments of long-term borrowings Cash dividends paid Change in non-controlling interests Cancellation of restricted employee shares Proceeds from issuance of shares Net cash flows from (used in) financing activities Effect of change in foreign currency exchange Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Years ended December 31, Notes 2020 2019 ( $ 185,063 ) $ - ( 866,600 ) - 6(33) 206,987 143,315 6(33) ( 1,584,900 ) ( 607,310 ) 19,552 94,132 6(33) ( 50,603 ) ( 69,681 ) 32,835 - ( 65,576 ) ( 3,215 ) ( 52,980 ) 9,630 - ( 4,425 ) ( 2,546,348 ) ( 437,554 ) 6(34) 2,861,012 ( 4,271,509 ) 6(34) 42,477 7,430 6(10)(34) ( 192,834 ) ( 96,425 ) 807,693 62,000 ( 62,000 ) - 6(34) ( 1,608,376 ) ( 1,751,419 ) 4(3) 350,860 - ( 40 ) ( 6,720 ) 6(20) - 448,000 2,198,792 ( 5,608,643 ) ( 307 ) ( 123,800 ) ( 3,542,900 ) ( 1,922,266 ) 6,589,863 8,512,129 $ 3,046,963 $ 6,589,863

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

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MERRY ELECTRONICS CO., LTD AND. SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANISATION

Merry Electronics Co., Ltd. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) on December 24, 1975. The Company and its subsidiaries (collectively referred here in as the “Group”) are primarily engaged in manufacturing, processing, repairing, sales of electric appliance and audiovisual electric products, telecommunication equipment and apparatus electronic parts and components, computers and computing peripheral equipment, restrained telecom radio frequency equipment and medical appliances; planning, design, input as well as output of service items’ equipment; production as well as marketing management consultant of service items’ relevant business; and all business items that are not prohibited or restricted by law, except those that are subject to special approval. The Company’s shares were listed on the Taipei Exchange since August 1998 and transferred to the Taiwan Stock Exchange starting September 2000 with approval from the competent authority. The Company merged with its subsidiary, Huges Hi-Tech Inc., on September 1, 2005. The Company was the surviving company while Huges Hi-Tech Inc. was the dissolved company.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on February 25, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by FSC effective from 2020 are as follows:

follows:
	Effective date by
	International Accounting
New Standards,Interpretations and Amendments	Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition	January 1, 2020
of material’
Amendments to IFRS 3, ‘Definition of a business’	January 1, 2020
Amendments to IFRS 9, IAS 39 and IFRS 7 ,‘Interest rate	January 1, 2020
benchmark reform’
Amendments to IFRS 16, ‘Covid-19 related rent concessions’	June 1, 2020(Note)
Note: Earlier application from January 1, 2020 is allowed by FSC.
The above standards and interpretations have no significant impact	to the Group’s financial
condition and financial performance based on the Group’s assessment.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows:

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	Effective date by
	International Accounting
New Standards,Interpretations and Amendments	Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption	January 1, 2021
from applying IFRS 9’
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘	January 1, 2021
Interest Rate Benchmark Reform - Phase 2’
The above standards and interpretations have no significant impact to the Group’s financial
condition and financial performance based on the Group’s assessment.

(3) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted

by the Group

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

FRSs as endorsed by the FSC are as follows:
	Effective date by
	International Accounting
New Standards,Interpretations and Amendments	Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’	January 1, 2022
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of	To be determined by
assets between an investor and its associate or joint venture’	International
	Accounting Standards Board
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17, 'Insurance contracts'	January 1, 2023
Amendments to IAS 1, ‘Classification of liabilities as current or non-current’	January 1, 2023
Amendments to IAS 1, ‘Disclosure of accounting policies’	January 1, 2023
Amendments to IAS 8, ‘Definition of accounting estimates’	January 1, 2023
Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’	January 1, 2022
Amendments to IAS 37, ‘Onerous contracts- cost of fulfilling a contract’	January 1, 2022
Annual improvements to IFRS Standards 2018-2020	January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”)

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(2) Basis of preparation

• A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

  • (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  • (b) Financial assets and liabilities at fair value through other comprehensive income measured at fair value.

  • (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

• (3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

  • (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

  • (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

  • (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

  • (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

  • (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the

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Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

Name of investor	Name of subsidiary	Main business activities		December 31,2020 December 31,2019 100.00% 100.00% 99.99% 99.99% 99.90% 99.90% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 70.00% 70.00% 70.00% 70.00% 100.00% 100.00% Ownership(%)	December 31,2020 December 31,2019 100.00% 100.00% 99.99% 99.99% 99.90% 99.90% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 70.00% 70.00% 70.00% 70.00% 100.00% 100.00% Ownership(%)	Description
				December 31,2020
MEHO MEHO MEHO MEHO MEHO MEHO MEHO MEHO MEHO	Merry Electronics (HK) Co., Ltd. ("MEST") Merry Electronics (Thailand) Co.,Ltd. ("METC") Merry Electronics (U.S.A.) Co.,Ltd. ("MECA") Danny Dynamics Limited ("DDBV") Merry Electronics (Singapore) Pte.Ltd. ("MESG") Merry Healthcare Co., Ltd. ("MHKY") Asian Elite International Ltd. ("MSCS") Indigo Enterprise Inc. ("INSA") Biotest Medical Corporation ("BTTT")	Sales of the same products as the Company. The same main business as the Company. Agency selling microphone and security system manufactured by affiliates. Equity investments. Manufacturing of other electronic components and circuit board. Sales of medical device. Manufacturing and sales of speaker and amplifier. Equity investments. Manufacturing of medical device.		100.00% 99.99% 99.90% 100.00% 100.00% 100.00% 70.00% 70.00% 100.00%	100.00% 99.99% 99.90% 100.00% 100.00% 100.00% 70.00% 70.00% 100.00%	NOTE 2

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Ownership(%)
Name of Name of Main business December December
investor subsidiary activities 31, 2020 31, 2019 Description
----- End of picture text -----

Name of investor	Name of subsidiary	Main business activities	December 31,2020	December 31,2019	Description
	MERRY &	Manufacturing of
	LUXSHARE	speaker system and
MEHO	(VIETNAM) CO.,	microphone for	51.00%	-	NOTE 5
	LTD. ("MEVN")	consumer
		electronics used.
	Merry Electronics	The same main
MEST	(Shenzhen)Co.,	business as the	100.00%	100.00%
	Ltd. ("MECL")	Company.
	Universal Capital	Equity investments.
	Investment
DDBV	Limited		100.00%	100.00%
	("UCMU")
	Merrytech (HK)	Equity investments.
DDBV	Co.Limited		100.00%	100.00%
	("MTHK")
	Sonavox Canada	Develop-to-order
INSA	Inc. ("SOCV")	and appearance design of speaker	100.00%	100.00%
		and amplifier.
	Sonavox Canada	Equity investments.
SOCV	Holding.		100.00%	100.00%
	("SOCA")
	Seas Fabrikker	Manufacturing and
SOCA	("SENM")	sales of speaker	100.00%	100.00%
		monomer.
	Fulicare	Sales of medical
MHKY	Co., Ltd.	device.	97.12%	95.94%	NOTE 3
	("FUSA")
	Fulicare Medical	Manufacturing of
	Instruments	medical device.
FUSA	(Suzhou)Co.,Ltd		100.00%	100.00%
	("FUSZ")
	Fulicare Medical	Manufacturing of
	Instruments	medical device.
FUSA	(Xiamen) Co.,Ltd		100.00%	100.00%	NOTE 1
	("FUXM")

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Ownership(%)
Name of Name of Main business December December
investor subsidiary activities 31, 2020 31, 2019 Description
----- End of picture text -----

Name of investor	Name of subsidiary	Main business activities	December 31,2020	December 31,2019	Description
	Xiamen Etimbre	Research and
	Hearing	development,
	Technology	manufacturing as
	Co.LTD	well as sales of
FUSA	("ETCX")	hearing aid, hearing	100.00%	100.00%	NOTE 4
		device and
		acoustics
		equipment.
	Austar Hearing	Research and
	Science And	development,
	Technology	manufacturing as
FUSZ、 FUSA	(Xiamen) Co., Ltd ("ASCX")	well as sales of hearing aid, hearing	99.50%	99.50%
		device and
		acoustics
		equipment.
	Austar Hearing	Manufacturing of
	Science And	hearing aid and
ASCX	Technology (Zhangzhou) Co.,	acoustics for rehabilitation	100.00%	100.00%
	Ltd.("ASCZ")	device.
	Xiamen Laiyate	Research and
	Medical Devices	development as
	Co., Ltd	well as technical
ASCX	("LACX")	sales of software	100.00%	100.00%
		functions for
		hearing aid.

• Note 1: The Group established the subsidiary, Fulicare Medical Instruments (Xiamen) Co., Ltd., on June 10, 2019.

• Note 2: In July 2019, Biotest Medical Corp. was merged with the Group.

• Note 3: In February 2020, March 2020, June 2020 and August 2020, the Group increased its capital in FUSA by cash amounting to USD 76 thousand (NTD 2,238 thousand), USD 4 million (NTD 116,400 thousand), USD 963 thousand (NTD 28,026 thousand) and USD 3 million (NTD 87,300 thousand), respectively.

• Note 4: In October 2019, the Board of Directors of the Group during its meeting resolved to undergo an organisational restructuring. Fulicare CO., Ltd. acquired a 100% equity interest in ETCX from FUCS amounting to RMB 500 thousand (NTD 2,308 thousand). On June 18, 2020, Fulicare CO., Ltd. increased its capital by cash amounting to USD 566 thousand (NTD 16,748 thousand).

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• Note 5: On February 27, 2020, the Board of Directors of the Group approved to establish a joint venture, MERRY & LUXSHARE (VIETNAM) CO., LTD., with Luxshare-ICT through investments amounting to USD 12,240 thousand (NTD 366,710 thousand) and USD 11,760 thousand (NTD 350,860 thousand), which resulted in acquiring 51% and 49% of the joint venture equity interests, respectively. The joint venture was established on May 9, 2020.

• C. Subsidiaries not included in the consolidated financial statements:

  • None.

• D. Adjustments for subsidiaries with different balance sheet dates:

  • None.

• E. Significant restrictions:

  • None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

• (4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional and the Group’s presentation currency.

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

• (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• (d) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘Other gains and losses’.

• B. Translation of foreign operations

• (a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  • iii. All resulting exchange differences are recognised in other comprehensive income.

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  - (b) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation.  In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

  - (c) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

• (5) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

  • (b) Assets held mainly for trading purposes;

  • (c) Assets that are expected to be realised within twelve months from the balance sheet date;

  • (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

  • (a) Liabilities that are expected to be settled within the normal operating cycle;

  • (b) Liabilities arising mainly from trading activities;

  • (c) Liabilities that are to be settled within twelve months from the balance sheet date;

  • (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

• (6) Cash equivalents

• Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

• (7) Financial assets at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

• D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

• (8) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:

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• (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

• (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

• (a) The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

• (b) Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

• (9) Financial assets at amortised cost

• The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

• (10) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (11) Impairment of financial assets

• For debt instruments measured at fair value through other comprehensive income including accounts receivable at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

• (12) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

• C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.

• (13) Inventories

• Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in

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applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

• (14) Investments accounted for using equity method / associates

• A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

• B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.

• D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• (15) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures	5 ~ 60 years
Machinery and equipment	2 ~ 12 years
Transportation equipment	7 ~ 12 years
Office equipment	3 ~ 10 years
Others	1 ~ 10 years

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(16) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost comprising the following: (a) The amount of the initial measurement of lease liability;

  • (b) Any lease payments made at or before the commencement date; and

  • (c) Any initial direct costs incurred by the lessee.

  • The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

• For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognise the difference between remeasured lease liability in profit or loss.

• (17) Intangible assets

• A. Computer software

  • Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 1 to 10 years.

• B. Goodwill

  • Goodwill arises in a business combination accounted for by applying the acquisition method.

• C. Intangible assets, mainly patent rights, trademark rights and business rights, are amortised on a straight-line basis over their estimated useful lives of 3 ~ 10 years.

• (18) Impairment of non-financial assets

• A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

• B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use are evaluated periodically. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.

• C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are

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expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

• (19) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(20) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (21) Financial liabilities at fair value through profit or loss

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term.or financial liabilities at fair value through profit or loss. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss at initial recognition:

  • (a) Hybrid (combined) contracts; or

  • (b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

  • (c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.

• B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

• (22) Convertible bonds payable

• A. Convertible bonds issued by the Group contain conversion options (that is, the bondholders have the right to convert the bonds into the Group’s common shares by exchanging a fixed amount of cash for a fixed number of common shares), call options and put options. The Group classifies the bonds payable upon issuance as a financial asset, a financial liability or an equity instrument in accordance with the contract terms. They are accounted for as follows:

  • (a) The embedded call options and put options are recognised initially at net fair value as ‘financial assets or financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognised as ‘gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss’.

  • (b) The host contracts of bonds are initially recognised at fair value. Any difference between the initial recognition and the redemption value is accounted for as the premium or discount on bonds payable and subsequently is amortised in profit or loss as an adjustment to ‘ finance costs ’ over the period of circulation using the effective interest method.

  • (c) The embedded conversion options which meet the definition of an equity instrument are initially recognised in ‘capital surplus—share options’ at the residual amount of total issue price less the amount of financial assets or financial liabilities at fair value through profit or loss and bonds payable as stated above. Conversion options are not subsequently remeasured.

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• (d) Any transaction costs directly attributable to the issuance are allocated to each liability or equity component in proportion to the initial carrying amount of each abovementioned item.

• (e) When bondholders exercise conversion options, the liability component of the bonds (including bonds payable and ‘ financial assets or financial liabilities at fair value through profit or loss ’ ) shall be remeasured on the conversion date. The issuance cost of converted common shares is the total book value of the abovementioned liability component and ‘capital surplus—share options’.

• (23) Derecognition of financial liabilities

A financial liability is derecognised when the obligation specified in the contract is either discharged or cancelled or expires.

• (24) Non-hedging and embedded derivatives

Non-hedging derivatives are initially recognised at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognised in profit or loss.

• (25) Provisions

Provisions (including warranties, decommissioning, restructuring, onerous contracts, and contingent liabilities from business combinations, etc.) are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

• (26) Employee benefits

• A. 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 recognised as expense in that period when the employees render service.

• B. Pensions

• (a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

• (b) Defined benefit plans

• i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep

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market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

     - ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

• C. Employees’ compensation and directors’ and supervisors’ remuneration Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

• (27) Employee share based payment

• A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

• B. Restricted stocks:

  • (a) Restricted stocks issued to employees are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period.

  • (b) For restricted stocks where those stocks do not restrict distribution of dividends to employees and employees are not required to return the dividends received if they resign during the vesting period, the Group recognises the fair value of the dividends received by the employees who are expected to resign during the vesting period as compensation cost at the date of dividends declared.

  • (c) For restricted stocks where employees have to pay to acquire those stocks, if employees resign during the vesting period, they must return the stocks to the Group and the Group must refund their payments on the stocks, the Group recognises the payments from the employees who are expected to resign during the vesting period as liabilities at the grant date, and recognises the payments from the employees who are expected to be eventually vested with the stocks in ’capital surplus – others’.

• (28) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to

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be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

• D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

• E. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

• (29) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• (30) Dividends

• Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

• (31) Revenue recognition

• A. Sales of goods

  • (a) The Group manufactures and sells radio apparatus, communication devices, consumer electronics as well as electronic parts and components. Sales are recognised when control of the products has transferred, being when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

  • (b) The furniture is often sold with volume discounts based on aggregate sales over a 12-month period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated sales discounts. Accumulated experience is used to estimate and provide for the sales discounts and allowances, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognised for expected sales discounts and

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allowances payable to customers in relation to sales made until the end of the reporting period. The sales usually are made with a credit term of 30~120 days. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.

• (c) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

• (32) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises expenses for the related costs for which the grants are intended to compensate. Government grants related to property, plant and equipment are recognised as non-current liabilities and are amortised to profit or loss over the estimated useful lives of the related assets using the straight-line method.

• (33) Business combinations

• A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Group measures at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be measured at the acquisition-date fair value.

• B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree recognised and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognised directly in profit or loss on the acquisition date.

• (34) Operating segments

• Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group’s chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is

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addressed below:

(1) Critical accounting estimates and assumptions

• A. Impairment assessment of goodwill

• The impairment assessment of goodwill relies on the Group’s subjective judgement, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. As of December 31, 2020, the Group recognised goodwill, net of impairment loss, amounted to $937,379.

• B. Evaluation of inventories

• As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31, 2020, the carrying amount of inventories was $3,791,659.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits Short-term securities		December 31,2020		December 31,2019
		1,073 $ 3,032,069 13,821 - 3,046,963 $		723 $ 4,445,967 774,145 1,369,028 6,589,863 $

• A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The Group has no cash and cash equivalents pledged to others.

• C. The Group’s time deposits with maturity over 3 months had been classified as current financial assets at amortised cost and non-current financial assets at amortised cost.

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(2) Financial assets at fair value through profit or loss

Items December 31, 2020 December 31, 2019

Financial assets at fair value through profit or loss Items December 31,2020 December 31,2019	Financial assets at fair value through profit or loss Items December 31,2020 December 31,2019	Financial assets at fair value through profit or loss Items December 31,2020 December 31,2019
Current items: Financial assets mandatorily measured at fair value through profit or loss - Funds 50,000 $ - $ - Non-hedging derivatives 26,316 14,138 - Stocks - 169 - Call options of convertible bonds 446 2,290 Valuation adjustment 2,157 316 78,919 $ 16,913 $ Non-current items: - Funds 26,468 $ 21,301 $ Items December 31,2020 December 31,2019 Current items: Financial liabilities held for trading - Non-hedging derivatives 30,047 $ 11,799 $ A. Amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss are listed below: 2020 2019 Net gains on financial assets (liabilities) at fair value through profit or loss 94,787 $ 69,428 $ Years ended December 31,
		2020 2019 94,787 $ 69,428 $

• A. Amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

• B. The Group entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed as follows:

(Remainder of page intentionally left blank)

~32~

Derivative instruments Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to buy Forward foreign exchange contract to buy Derivative instruments Forward foreign exchange contract to sell Forward foreign exchange contract to buy	Contract amount (Notionalprincipal) Contractperiod Contractprice USD 70,000 thousand 2020/12/3~ 2021/1/29 NTD 28.105~28.487 USD 3,000 thousand 2020/12/22~ 2021/1/7 CNY 6.541 USD 8,189thousand 2020/8/28~ 2021/3/1 THB 31.260 USD 84,000 thousand 2020/12/3~ 2021/3/9 NTD 27.815~28.360 USD 8,205 thousand 2020/8/28~ 2021/3/1 THB 31.200 December 31,2020 December 31, 2019
	Contract amount (Notional principal) Contract period Contractprice USD 63,000 thousand 2019/12/12~ 2020/2/27 NTD 30.017~30.310 USD 63,000 thousand 2019/12/12~ 2020/2/27 NTD 29.835~30.220

The Group entered into forward foreign exchange contracts to hedge exchange rate risk of import and export proceeds. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

• C. As of December 31, 2020 and 2019, the Group had no outstanding payments for settled transactions amounting to $306 thousand (shown as other payables) and $0, respectively.

• D. The Group has no financial assets at fair value through profit or loss pledged to others as collateral.

• E. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

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

Financial assets at fair value through other comprehensive income
Items December 31,2020 Current items: Debt instruments Bonds 89,550 $ Valuation adjustment 3,735) ( 85,815 Equity instruments Stocks 106,080 Valuation adjustment 3,284 109,364 195,179 $ Non-current items: Debt instruments 144,625 $ Bonds 1,620 Valuation adjustment 146,245 Equity instruments Listed stocks 748,154 Unlisted stocks 73,884 882,038 Valuation adjustment 607,846 Accumulated impairment 2,976) ( 1,426,908 $ 1,573,153 $		December 31,2019
		119,854 $ 867 120,721 76,080 5,276 81,356 202,077 $ $ - -
	- 775,130 64,182 839,312 1,697,071 2,976) ( 2,533,407 $ 2,533,407 $

• A. The Group has elected to classify equity and debt investments that are considered to be strategic investments or steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $1,768,332 and $2,735,484 as at December 31, 2020 and 2019, respectively.

• B. (a) During the year ended December 31, 2020, the Group repurchased bond investments at fair value of $30,274 thousand due to the maturity of bonds and resulted in cumulative losses on disposal amounting to $333 thousand (shown as other gains and losses).

• (b) Aiming to satisfy its capital needs, the Company sold $172,377 thousand of equity investments at fair value and resulted in cumulative gains on disposal amounting to $145,400 thousand (transferred from other equity interest to unappropriated retained earnings) during the year ended December 31, 2020.

• (c) During the year ended December 31, 2019, the Group redeemed the debt investment at fair value of $50,833 thousand due to the maturity of bonds and resulted in cumulated gains on disposal amounting to $833 thousand (shown as other gains and losses). Aiming to satisfy its capital needs, the Company sold $88,988 thousand of equity investment at fair value and resulted in cumulative gains on disposal amounting to $68,104 thousand (transferred from other equity interest to unappropriated earnings) during the year ended December 31, 2019.

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• C. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

==> picture [450 x 277] intentionally omitted <==

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

Years ended December 31,
2020 2019
Equity instruments at fair value through other
comprehensive income
Fair value change recognised in other
comprehensive income ($ 942,810) $ 1,150,081
Cumulative gains reclassified to
retained earnings due to derecognition ($ 145,400) ($ 68,104)
Debt instruments at fair value through other
comprehensive income
-
Fair value change recognised in profit or loss ($ 6,335) $
Fair value change recognised in other
comprehensive income $ 3,020 ($ 2,111)
Cumulative other comprehensive (loss)
income reclassified to profit or loss
Reclassified due to derecognition $ 333 ($ 833)
Interest income recognised in profit or loss $ 3,136 $ 4,922
----- End of picture text -----

• D. As at December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Group was $1,768,332 thousand and $2,735,484 thousand, respectively.

• E. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.

• F. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).

• G. The counterparties of the Company’s investments in debt instruments have good credit quality; those debt securities are all rated as investment grade.

• (4) Accounts receivable

Accounts receivable
Accounts receivable Less: Allowance for uncollectible accounts	December 31,2020	December 31,2019
	12,471,094 $ 29,676) ( 12,441,418 $	5,477,888 $ 29,507) ( 5,448,381 $

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A. The aging analysis of accounts receivable is as follows:

		December 31,2020		December 31,2019
Not past due	$	12,401,873	$	5,425,988
Up to 30 days		38,897		11,003
31 to 90 days		6,066		19,593
91 to 180 days		24,136		8,674
Over 180 days		122		12,630
	$	12,471,094	$	5,477,888

The above aging analysis was based on past due date.

• B. As of December 31, 2020 and 2019, and January 1, 2019, the balances of receivables (including notes receivable) from contracts with customers amounted to $12,471,094 thousand, $5,478,339 thousand and $8,584,256 thousand, respectively.

• C. The Group does not hold any collateral as security.

• D. The Company entered into a factoring agreement which has no right of recourse with Bank of America. As of December 31, 2020, there were no accounts receivable that were expected to be transferred (reclassified as financial assets at fair value through other comprehensive income). Please refer to Note 6(5) for information on transfers of financial assets.

• E. Information relating to credit risk of accounts receivable is provided in Note 12(2).

(5) Transfer of financial assets

Transferred financial assets that are derecognised in their entirety

On October 2, 2019, the Group entered into a factoring agreement with Bank of America to sell its accounts receivable. Under the agreement, the Group is not obligated to bear the default risk of the transferred accounts receivable, but is liable for the losses incurred on any business dispute. The Group does not have any continuing involvement in the transferred accounts receivable. Thus, the Group derecognised the transferred accounts receivable. As of December 31, 2020, there was no amount that had been past due.

(6) Inventories

Inventories
Raw materials Work in progress Finished goods Raw materials Work in progress Finished goods		December 31,2020
	Cost 1,748,375 $ 543,188 1,613,403 3,904,966 $	Allowance for valuation loss 65,408) ($ 8,318) ( 39,581) ( 113,307) ($ December 31,2019	Book value
			1,682,967 $ 534,870 1,573,822
			3,791,659 $
	Cost 872,722 $ 224,109 1,203,373 2,300,204 $		Book value
			767,555 $ 217,864 1,132,113
			2,117,532 $

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The cost of inventories recognised as expense for the year:

		Years ended	December 31,	December 31,
		2020		2019
Cost of goods sold	$	30,159,093	$	31,215,308
(Gain on reversal of) loss on slow-moving
inventories and decline in market value	(	69,365)		51,742
Loss on scrapping inventory		36,338		90,904
Loss (gain) on physical inventory		205	(	80)
	$	30,126,271	$	31,357,874

The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the year ended December 31, 2020.

(7)	Other current assets
		December	31, 2020	December 31, 2019
	Tax refund receivable (including input tax)	$	490,909	$	139,180
	Prepayment for purchases		14,241		14,689
	Contract assets		43,363		31,585
	Others		160,125		85,019
		$	708,638	$	270,473
(8)	Investments accounted for using the equity method
			Years ended December 31,
			2020		2019
	At January 1	$	3,951,152	$	3,426,878
	Effects of cash changes in consolidated entities		-		4,425
	Disposal of investments accounted for using
	equity method	(	23,548)		-
	Share of profit or loss of investments accounted for using the equity method		482,132		664,557
	Changes in capital surplus	(	4,656)		11,151
	Changes in other equity items		73,558	(	155,859)
	Credit balance of investments accounted for
	using the equity method transferred to non-
	current liabilities		1,070		-
	At December 31	$	4,479,708	$	3,951,152

(Remainder of page intentionally left blank)

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A. Details are as follows ：

Details are as follows：
December 31,2020 Associates with significant influence Merry Electronics(Suzhou) Co., Ltd. (MECE) 3,146,355 $ Associates with insignificant influence Merry Electronics (Huizhou)Co., Ltd. (MECH) 910,702 Guangdong Luxshare & Merry Electronics Co., Ltd. (MEDG) 372,839 Leohab Enterprise Co., Ltd. (LEOHAB) 49,812 Merry Electronics (Shanghai)Co., Ltd. (MECS) 1,070) ( Subtotal 4,478,638 Add: Credit balance of investments accounted for using the equity ethod transferred to non-current liabilities 1,070 4,479,708 $	December 31,2019
	2,842,636 $ 666,377 376,606 66,395 862) ( 3,951,152 - 3,951,152 $

B. Share of profit (loss) of associates accounted for using the equity method ：

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

Years ended December 31,
Investee 2020 2019
----- End of picture text -----

Investee		2020		2019
MECE	$	255,644	$	526,872
MECH		229,121		165,334
MEDG	(	5,350)	(	31,338)
LEOHAB		2,931		5,693
MECS	(	214)	(	2,004)
	$	482,132	$	664,557

C. Associates

(a) The basic information of the associates that is material to the Group is as follows: Shareholding ratio

Company name	Principal place of business	December 31, 2020	December 31, 2019	Nature of relationship	Methods of measurement
MECE	Mainland China	49.00%	49.00%	Holding more than 20% of voting right of stockholders	Equity method

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• (b) The summarised financial information of the associates that is material to the Group is as follows:

Balance sheet

follows: Balance sheet
		MERRY ELECTRONICS(SUZHOU)CO.,LTD.
		December 31,2020			December 31,2019
Current assets		$	4,958,305	$	4,547,442
Non-current assets			6,448,198		6,646,976
Current liabilities		(	4,794,701)	(	5,034,091)
Non-current liabilities		(	50,495)	(	225,852)
Total net assets		$	6,561,307	$	5,934,475
Share in associate's net assets		$	3,215,041	$	2,907,893
Realised (unrealised) loss
from upstream and
sidestream transactions		(	68,686)	(	65,257)
Carrying amount of the
associate		$	3,146,355	$	2,842,636
Statement of comprehensive income
		MERRY ELECTRONICS (SUZHOU) CO.,LTD.
			Years endedDecember31,
		2020			2019
Revenue	$		10,737,808 $		12,490,913
Profit for the period from
continuing operations	$		528,719 $		1,036,414
Total comprehensive income	$		528,719 $		1,036,414
(c) The carrying amount of the Group’s interests			in all individually	immaterial associates and
the Group’s share of the operating		results are	summarised below:
			Years ended		December 31,
			2020		2019
Share of profit of associates and joint
ventures accounted for using the		$	226,488		137,685 $
equity method
Other comprehensive income (loss),
net of tax			21,191		25,618) (
Total comprehensive income		$	247,679		112,067 $

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(9) Property, plant and equipment

Year ended December 31, 2020

Cost Openingbalance Additions Reductions Transfers Land 596,275 $ 200,683 $ - $ - $ Land improvements 656 - - - Buildings and structures 1,016,760 357,707 19,113) ( 51,400) ( Machinery 1,472,017 931,877 45,412) ( 1,918 Transportation equipment 30,774 360 1,012) ( - Office equipment 242,600 55,968 18,764) ( 509) ( Others 136,073 124,965 12,957) ( 1,732) ( Unfinished construction 132,528 232,601 - 83,473) ( 3,627,683 1,904,161 $ 97,258) ($ 135,196) ($ Accumulated depreciation Land improvements 580) ($ 72) ($ - $ - $ Buildings and structures 439,193) ( 90,822) ( 15,239 51,400 Machinery 636,595) ( 199,659) ( 30,908 90) ( Transportation equipment 17,024) ( 4,090) ( 978 - Office equipment 161,280) ( 26,798) ( 16,490 250 Others 87,918) ( 29,146) ( 7,184 434 1,342,590) ( 350,587) ($ 70,799 $ 51,994 $ 2,285,093 $

Effect of foreign currency exchange differences Endingbalance 2,006) ($ 794,952 $ 35) ( 621 19,377) ( 1,284,577 5,692 2,366,092 329 30,451 634 279,929 1,319 247,668 9,185) ( 272,471 22,629) ($ 5,276,761 31 $ 621) ($ 3,830) ( 467,206) ( 6,271) ( 811,707) ( 256) ( 20,392) ( 318) ( 171,656) ( 995) ( 110,441) ( 11,639) ($ 1,582,023) ( 3,694,738 $

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Year ended December 31, 2019

Cost Openingbalance Additions Land 594,180 $ - $ Land improvements 619 - Buildings and structures 1,011,569 58,003 Machinery 1,207,962 375,607 Transportation equipment 32,873 1,658 Office equipment 225,472 27,927 Others 126,302 26,045 Unfinished construction 3,578 140,382 3,202,555 629,622 $ Accumulated depreciation Land improvements 423) ($ 130) ($ Buildings and structures 397,541) ( 30,071) ( Machinery 562,733) ( 137,315) ( Transportation equipment 16,165) ( 4,245) ( Office equipment 147,023) ( 22,871) ( Others 90,479) ( 11,831) ( 1,214,364) ( 206,463) ($ 1,988,191 $	Reductions Transfers - $ - $ - - 93,048) ( 45,605 74,479) ( - 2,858) ( - 5,910) ( 85) ( 12,976) ( - - 11,265) ( 189,271) ($ 34,255 $ - $ - $ 23,690 45,605) ( 47,771 - 2,858 - 5,398 4 11,870 - 91,587 $ 45,601) ($	Effect of foreign currency exchange differences Endingbalance 2,095 $ 596,275 $ 37 656 5,369) ( 1,016,760 37,073) ( 1,472,017 899) ( 30,774 4,804) ( 242,600 3,298) ( 136,073 167) ( 132,528 49,478) ($ 3,627,683 27) ($ 580) ($ 10,334 439,193) ( 15,682 636,595) ( 528 17,024) ( 3,212 161,280) ( 2,522 87,918) ( 32,251 $ 1,342,590) ( 2,285,093 $

The Group has no property, plant and equipment pledged to others as collateral.

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－ (10) Leasing arrangements lessee

• A. The Group leases various assets including land, buildings, machinery and equipment as well as business vehicles. Rental contracts are typically made for periods of 1 to 30 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

• B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Machinery and equipment Transportation equipment Office equipment Other equipment Land Buildings Machinery and equipment Transportation equipment Office equipment Other equipment	December 31,2020 December 31,2019 Carrying amount Carrying amount 92,481 $ 34,417 $ 254,778 111,662 5,810 6,797 2,701 2,260 220 298 20 - 356,010 $ 155,434 $ Years ended December 31,	December 31,2019 Carrying amount
		34,417 $ 111,662 6,797 2,260 298 -
		155,434 $
	2020 Depreciation charge 4,105 $ 119,158 1,358 1,509 200 69 126,399 $	2019
		Depreciation charge
		3,401 $ 63,565 3,633 1,913 172 611
		73,295 $

• C. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets were $322,512 thousand and $49,711 thousand, respectively.

• D. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities	Years ended December 31,	Years ended December 31,
	2020 $7,517	2019
		$ 2,226

• E. For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases were $192,834 thousand and $96,425 thousand, respectively.

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(11) Intangible assets

Cost Openingbalance Additions Reductions Goodwill 937,379 $ - $ - $ Computer software 457,428 43,867 860) ( Customer relationship 326,550 - - Trademarks 61,481 - - Know-how 115,748 - - Others 37,295 4,597 - Subtotal 1,935,881 48,464 $ 860) ($ Accumulated amortisation Computer software 304,302) ($ 52,521) ($ 36 $ Customer relationship 65,679) ( 44,064) ( - Trademarks 7,598) ( 5,518) ( - Know-how 34,671) ( 23,150) ( - Others 20,855) ( 7,608) ( - Subtotal 433,105) ( 132,861) ($ 36 $ Total 1,502,776 $ Year ended December 31,2020		Year ended December 31,2020

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Year ended December 31, 2019

	Cost Openingbalance Goodwill 931,678 $ Computer software 149,690 Customer relationship 326,550 Trademarks 61,481 Know-how 115,748 Others 7,027 Subtotal 1,592,174 Accumulated amortisation Computer software 4,160) ($ Customer relationship 21,582) ( Trademarks 2,298) ( Know-how 11,792) ( Others 100) ( Subtotal 39,932) ( Total 1,552,242 $		First-time merger effects Additions Reductions Transfers 5,701 $ - $ - $ - $ - 64,111 3,455) ( 247,450 - - - - - - - - - - - - 9,000 4,011 - 17,201 14,701 $ 68,122 $ 3,455) ($ 264,651 $ - $ 56,137) ($ 3,455 $ 247,450) ($ - 44,064) ( - - - 5,518) ( - - - 23,150) ( - - - 3,557) ( - 17,201) ( - $ 132,426) ($ 3,455 $ 264,651) ($	Effect of foreign currency exchange differences Endingbalance - $ 937,379 $ 368) ( 457,428 - 326,550 - 61,481 - 115,748 56 37,295 312) ($ 1,935,881 10) ($ 304,302) ($ 33) ( 65,679) ( 218 7,598) ( 271 34,671) ( 3 20,855) ( 449 $ 433,105) ( 1,502,776 $

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A. Details of amortisation on intangible assets are as follows:

Operating costs Selling expenses Administrative expenses Research and development expenses	2020 2019 $ 15,320 $ 13,959 11,503 13,671 63,573 66,190 42,465 38,606 $132,861 $132,426 Years ended December 31,

• B. As of September 1, 2005, the Group merged with Huges Hi-Tech Inc. Thus, the transaction generated goodwill in the amount of $139,735 thousand. The goodwill from business combination shall be tested annually at least for impairment in accordance with IAS 36.

• The recoverable amount of all cash-generating units calculated using the value-in-use exceeded their carrying amount, so goodwill was not impaired. The key assumptions used for value-in-use calculations are as follows:

The cash flow projections are based on financial budgets approved by the management covering a five-year period, the Company estimates a 10% year-on-year growth in sales as the Company will launch new products and improve its technology from 2020 to 2024, the estimation is based on the assumption that the Company is committed to developing and taking bluetooth orders and the experience of sale growths of 94%, 84%, 34%, (3%) and (0.2%) from 2015 to 2019, respectively.

Management determined budgeted gross margin based on past performance and their expectations of market development. The weighted average growth rates used are consistent with the projection included in industry reports. The discount rate of 17.43% used was pre-tax and reflected specific risks relating to the relevant operating segments.

• C. As of December 31, 2020, the goodwill arose from acquiring Asian Elite International Ltd. and Indigo Enterprise Inc. amounting to $581,644 thousand due to the benefits from production technology and market channel such as smart speakers of the companies that are expected to be merged. The goodwill from business combination shall be tested annually at least for impairment in accordance with IAS 36.

The recoverable amount of all cash-generating units calculated using the value-in-use exceeded their carrying amount, so goodwill was not impaired. The key assumptions used for value-in-use calculations are as follows:

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking smart speaker orders, it expects 28%, 40%, 33%, 5% and 2% year-on-year growth in sales from 2021 to 2025 through the launching of new products and improving its technologies during this period.

• Management determined budgeted gross margin based on past performance and its expectations of market development. The weighted average growth rate used are consistent with the

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projection included in industry reports. The discount rate of 17.69% used was pre-tax and reflected specific risks relating to the relevant operating segments.

• D. As of December 31, 2020, the goodwill arose from acquiring Austar Hearing Science and Technology （ Xiamen) Co., Ltd. amounting to $210,299 thousand due to the benefits from production technology and market channel such as smart speakers of the company that are expected to be merged. The goodwill from business combination shall be tested for impairment at least annually in accordance with IAS 36.

The recoverable amount of all cash-generating units calculated using the value-in-use exceeded their carrying amount, so goodwill was not impaired. The key assumptions used for value-in-use calculations are as follows:

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking smart speaker orders, it expects 15%, 12%, 10%, 9% and 3% year-on-year growth in sales from 2021 to 2025 through the launching of new products and improving its technologies during this period.

• Management determined budgeted gross margin based on past performance and its expectations of market development. The weighted average growth rates used are consistent with the projection included in industry reports. The discount rate of 16.17% used was pre-tax and reflected specific risks relating to the relevant operating segments.

(12) Other non-current assets

Other non-current assets
Prepayments for property, plant and equipment (including intangible asset) Refundable deposits Others	December 31,2020 121,924 $ 71,625 77,958 271,507 $	December 31,2019
		72,863 $ 17,577 10,816
		101,256 $

(13) Short-term borrowings

Type of borrowings Bank borrowings Credit loan Type of borrowings Bank borrowings Credit loan		December 31,2020 3,271,489 $ December 31,2019 470,890 $	Interest rate range 0%～4.35% Interest rate range 2.14%～4.79%	Collateral
				None Collateral
				None

• A. Interest expense recognised in profit or loss amounted to $22,846 thousand and $44,528 thousand for the years ended December 31, 2020 and 2019, respectively.

• B. The Group provided endorsements and guarantees for the credit loans as of December 31, 2020.

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(14) Other payables

December31,2020 Other accrued expenses 496,365 $ Payroll payable 466,806 Payables on equipment (Including intangible assets) 360,938 Employee bonus payable 127,027 Others 124,167 Compensation due to directors and supervisors 25,575 Other payables-financial liabilities 306 1,601,184 $	December31,2019 183,922 $ 308,353 77,958 219,531 114,870 68,392 - 973,026 $

(15) Other current liabilities

Other current liabilities
Bonds payable-expiring within one year Contract liability Agreed liabilities on acquisition of subsidiaries (Note) Refund liabilities Current lease liability Other current liabilities, others	December 31,2020 2,203,801 $ 627,002 402,072 343,164 146,612 77,260 3,799,911 $	December 31, 2019
		- $ 256,623 - 81,791 30,119 49,431 417,964 $

Note: On July 1, 2018, the Group acquired 70% of ordinary shares of ASIAN ELIT E INTERNATIONAL LTD. and Indigo Enterprise Inc. in cash, and agreed to obtain the remaining 30% of ordinary shares on the expiry of 3 years after the date of settlement. In accordance with the relevant contracts, the Group had recognised 30% of subsequent equity investment obligations.

(16) Bonds payable

equity investment obligations. Bonds payable
Bonds payable Less: Discount on bonds payable Less: Expiring within one year	December 31,2020 $ 2,231,900 (28,099) 2,203,801 (2,203,801) $-	December 31,2019
		$ 2,289,500 (59,541) - -
			$2,229,959

• A. The details of the second domestic unsecured convertible bonds issued by the Company on December 11, 2018 are as follows:

• (a) The terms of the second domestic unsecured convertible bonds issued by the Company are as follows:

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• i. The competent authority has approved the Company’s second time issuance of domestic unsecured corporate bonds. The bonds are for a total issuance amount of $3,015,000 thousand dollars and a coupon rate of 0%, cover a 3-year period of issuance and a circulation period from December 11, 2018 to December 11, 2021, and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on December 11, 2018.

• ii. The creditors have the right to ask for conversion of the bonds into common shares of the Company by Taiwan Depository & Clearing Corporation through Securities Firms during the period from the date after three months of the bonds issue to the maturity date, except for (i) the stop transfer period for common shares as specified in the terms of the bonds or the laws/regulations; (ii) the Company’s book closure date of stock dividends, book closure date of cash dividends, the period between the date that is 15 business days before the book closure date of a capital increase to the ex-right date; (iii) the period between the record date of a capital reduction and the prior day before the commencement of share trading after shares are repurchased. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.

• iii. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms. As of December 31, 2020, the conversion price of convertible bonds was $132.8 per share.

• iv. The Company may repurchase all the bonds outstanding in cash at the bonds’ face value, based on the Company’s redemption rights to the bonds under Article 18 of the terms of issuance and conversion, after the following events occur: (i) the closing price of the Company common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after three month of the bonds issue to 40 days before the maturity date, or (ii) the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after three months of the bonds issue to 40 days before the maturity date.

• v. Under the terms of issuance and conversion, all bonds redeemed (including bonds repurchased from the securities trading markets), matured and converted are retired and not to be sold or re-issued; the conversion rights attached to the bonds are also extinguished.

• (b) As of December 31, 2020, the bonds totalling $768,100 thousand (face value) had been converted into 5,299 thousand shares of common stock. After the issuance of the convertible bonds, if the number of common shares increases, the Company shall adjust the conversion price to $132.8 per share in line with the formula of the issuance article.

• B. Regarding the issuance of convertible bonds, the equity conversion options amounting to

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$99,191 thousand were separated from the liability component and were recognised in ‘capital surplus - share options’ in accordance with IAS 32. The call options embedded in bonds payable were separated from their host contracts and were recognised in ‘financial assets at fair value through profit or loss’ in net amount in accordance with IFRS 9 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts.

- (17) Long term borrowings

Type of borrowings	Borrowing period and repayment term Interest rate range Borrowing period is from 2020/2/20 to 2025/2/20; interest is repayable monthly. 0.30%~0.40% Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly. 0.35%~0.50% Borrowing period and repayment term Interest rate range Borrowing period is from 2019/12/30 to 2024/12/15; interest is repayable monthly; principal is repayable in 36 installments from 2022/1/15. 0.63%	Collateral None None Collateral Promissory Note	December31,2020
Long-term bank borrowings Unsecured borrowings Unsecured borrowings Type of borrowings			320,000 $ 487,419
			807,419 $
			December31,2019
Long-term bank borrowings Secured borrowings			62,000 $

• A. In November 2019, the Company entered into a long-term loan contract with Taipei Fubon Bank for the total amount of $400 million. As of December 31, 2020, the drawn amount was $220,000 thousand.

Aforementioned contract conditions:

During the credit period, the following financial ratios shall be maintained and the

audited/reviewed consolidated financial statements shall be checked semi-annually:

• (a) Current ratio shall not be lower than 100%;

• (b) Debt ratio (total liabilities/total equity)shall not be higher than 160%;

• (c) Interest coverage ratio shall not be lower than 10.

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• B. In February 2020, the Company entered into a long-term loan contract with JIHSUN BANK for the total amount of $300 million. As of December 31, 2020, the drawn amount was $100,000 thousand.

Aforementioned contract conditions:

During the credit period, the following financial ratios shall be maintained and the audited/reviewed consolidated financial statements shall be checked semi-annually:

• (a) Current ratio shall not be lower than 100%;

• (b) Debt ratio (total liabilities/tangible assets) shall not be higher than 250%;

• (c) Tangible assets shall be maintained at least $8 billion.

The Company confirmed with banks and assessed that the aforementioned financial ratios were maintained at a level that had no significant impact to the Group.

• Note: The above-mentioned secured borrowings were guaranteed by the Company’s parent company.

(18) Pensions

• A. (a)The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 5.1% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions for the deficit by next March.

• (b) The amounts recognised in the balance sheet are as follows:

subsidiaries will make contributions for the deficit by next March. The amounts recognised in the balance sheet are as follows:
December31,2020 Present value of defined benefit obligations $ 127,292 Fair value of plan assets (44,259) Net defined benefit liability $83,033	December31,2019
	$ 140,594 ( 57,118) $83,476

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(c) Movements in net defined benefit liabilities are as follows:

	Present value of	Present value of	Present value of	Fair value of	Fair value of
		defined benefit			plan		Net defined
			obligations		assets		benefitliability
Year ended December 31, 2020
Balance at January 1		$	140,594	($	57,118)		$	83,476
Current service cost			546		-			546
Interest (expense) income			1,043	(	429)			614
Past service cost	(		2,269)		3,309			1,040
			139,914	(	54,238)			85,676
Remeasurements:
Return on plan assets
(excluding amounts included in interest
income or expense)			-	(	1,218)	(		1,218)
Change in financial assumptions			5,792		-			5,792
Experience adjustments	(		6,013)		-	(		6,013)
	(		221)	(	1,218)	(		1,439)
Pension fund contribution			-	(	900)	(		900)
Paid past pension	(		304)		-	(		304)
Paid pension	(		12,097)		12,097			-
Balance at December 31		$	127,292	($	44,259)		$	83,033
	Present value of			Fair value of
		defined benefit			plan		Net defined
			obligations		assets		benefitliability
Year ended December 31, 2020
Balance at January 1		$	125,392	($	41,348)		$	84,044
Current service cost			284			-		284
Interest (expense) income			1,230	(	404)			826
Past service cost			-		-			-
			126,906	(	41,752)			85,154
Remeasurements:
Return on plan assets
(excluding amounts included in interest
income or expense)			-	(	1,312)	(		1,312)
Change in demographic assumptions			4		-			4
Change in financial assumptions			3,653		-			3,653
Experience adjustments			12,682		-			12,682
			16,339	(	1,312)			15,027
Pension fund contribution			-	(	16,705)	(		16,705)
Paid pension	(		2,651)	(	2,651)			-
Balance at December 31		$	140,594	($	57,118)		$	83,476

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• (d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

• (e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	2020 2019 0.30% 0.75% 3.00% 3.00% Years ended December 31,	2020 2019 0.30% 0.75% 3.00% 3.00% Years ended December 31,
		0.75%
		3.00%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

Increase Decrease 0.25% 0.25% December 31, 2020 Effect on present value of defined benefit obligation 3,183) ($ 3,310 $ December 31, 2019 Effect on present value of defined benefit obligation 3,653) ($ 3,800 $ Discount rate	Increase Decrease 0.25% 0.25% 3,214 $ 3,109) ($ 3,706 $ 3,584) ($ Future salaryincreases

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at

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once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

• (f) The Company expects to pay contribution for pension plan amounting to $2,856 thousand in 2021.

• (g) As of December 31, 2020, the weighted average duration of the retirement plan is 10 years. The analysis of timing of the future pension payment was as follows:

Within 1 year	$ 4,378
1-2 year(s)	7,685
2-5 years	25,085
Over 5 years	93,888
	$131,036

• B. (a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The subsidiaries, MECL, MSCS, ASCX, ETCX, ASCZ, LACX, FUXM and FUSZ, in mainland China have set up a defined contribution plan. Monthly contribution to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.

• (c) The subsidiary, METC, in Thailand is required to pay pension of up to 10 months of employee salaries to the employees upon their retirement. The pension liability is estimated annually based on the employees’ total salaries and expected service years in accordance with the regulations of the Thailand government.

• (d) The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2020 and 2019 were $98,784 thousand and $130,354 thousand, respectively.

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(19) Share-based payment

• A. For the years ended December 31, 2020 and 2019, the Group’s share-based payment arrangements were as follows:

==> picture [455 x 31] intentionally omitted <==

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

Quantity Contract Vesting
Type of arrangement Grant date granted period conditions
----- End of picture text -----

Type of arrangement	Grant date	Quantity granted	Contract period	Vesting conditions
The first restricted stocks to employees in 2016	2016.12.21	1,542 units	3 years	Note
The second restricted stocks to employees in 2016	2017.06.16	458 units	3 years	Note
The first restricted stocks to employees in 2017	2017.12.29	196 units	3 years	Note
The second restricted stocks to employees in 2017	2018.10.26	878 units	3 years	Note
The first restricted stocks to employees in 2019	2019.11.02	813 units	3 years	Note
The second restricted stocks to employees in 2019	2020.08.05	387 units	3 years	Note

• Note: Depending on the employee’s tenure in the Company (1 to 3 years), the employees can vest stocks at the ratio of 30%, 30% and 40% in three years based on the number of stocks written on the notification. The conditions for vesting restricted stocks are as follows:

• (a) For the employees who are currently working in the Company, whose services have reached 1 year and achieved the performance of the most recent year’s consolidated financial statements and the target personal performance, the ceiling of vested share ratio is 30%.

• (b) For the employees who are currently working in the Company, whose services have reached 2 years and achieved the performance of the most recent year’s consolidated financial statements and the target personal performance, the ceiling of accumulated vested share ratio is 60%.

• (c) For the employees who are currently working in the Company, whose services have reached 3 years and achieved the performance of the most recent year’s consolidated financial statements and the target personal performance, the ceiling of accumulated vested share ratio is 100%.

• (d) The Company will repurchase and retire the stocks that do not meet the conditions of vesting for the employees who resign during the vesting period or do not meet the condition of vesting by the issuance price.

The aforementioned restricted stocks issued by the Company cannot be transferred during the vesting period and the commissioned trust custodians execute the shareholders’ rights on behalf of the employees.

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• B. Details of the share-based payment arrangements are as follows:

• (a) The first restricted stocks to employees in 2016

ails of the share-based payment arrangements are as follows: The first restricted stocks to employees in 2016
No. of share (in thousands) Weighted- average exercise price (in dollars) At January 1 - $ - Restricted stocks vested - - Employee restricted shares retired - - At December 31 - - 2020	No. of share (in thousands) Weighted- average exercise price (in dollars) 542 $ 10 ( 4) 10 (538) 10 - - 2019
		$ 10 10 10 -

(b) The second restricted stocks to employees in 2016

At January 1 Restricted stocks vested Employee restricted shares retired At December 31	Weighted- average exercise price (in dollars) 160 10 $ ( 152) 10 (4) 10 (4) 10 2020 No. of share (in thousands)	Weighted- average exercise price (in dollars) 294 10 $ ( 134) 10 - - 160 10 2019 No. of share (in thousands)
	No. of share (in thousands)
	160 ( 152) (4) (4)

(c) The first restricted stocks to employees in 2017

At January 1 Restricted stocks vested Employee restricted shares retired At December 31	Weighted- average exercise price Weighted- average exercise price (in dollars) (in dollars) 108 $ - 164 $ - ( 57) - ( 49) - (50) - (7) - 1 - 108 - 2020 2019 No. of share (in thousands) No. of share (in thousands)
	No. of share (in thousands)
	108 ( 57) (50) 1

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(d) The second restricted stocks to employees in 2017

At January 1 Restricted stocks vested Employee restricted shares retired At December 31	Weighted- average exercise price Weighted- average exercise price (in dollars) (in dollars) 598 $ - 862 $ - ( 234) - ( 251) - ( 46) - (13) - 318 - 598 - 2020 2019 No. of share (in thousands) No. of share (in thousands)

(e) The first restricted stocks to employees in 2019

At January 1 Employee restricted shares granted Restricted stocks vested Employee restricted shares retired At December 31	2020	Weighted- average exercise price (in dollars) - $ - 813 - - - - - 813 - 2019 No. of share (in thousands)
	Weighted- average exercise price (in dollars) 813 $ - - - ( 237) - ( 31) - 545 - No. of share (in thousands)

• (f) The second restricted stocks to employees in 2019

At January 1 Employee restricted shares granted Employee restricted shares retired At December 31	No. of share (in thousands) Weighted- average exercise price (in dollars) - - $ 387 - (5) - 382 - 2020	No. of share (in thousands) Weighted- average exercise price (in dollars) - - $ 387 - (5) - 382 - 2020		2019	2019
		Weighted- average exercise price (in dollars)		No. of share (in thousands)	Weighted- average exercise price (in dollars)
		- $ - - -		- - -	- $ - - -
				-

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• C. The fair value of stock options granted on grant date is measured using the closing price on the grant date. Relevant information is as follows:

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

Fair value
Type of arrangement Grant date Stock price Exercise price per unit
----- End of picture text -----

The first restricted stocks to employees in 2016	2016.12.21	125	10	115
The second restricted stocks to employees in 2016	2017.06.16	187	10	177
The first restricted stocks to employees in 2017	2017.12.29	194.5	0	194.5
The second restricted stocks to employees in 2017	2018.10.26	139.5	0	139.5
The first restricted
stocks to empolyees in 2019	2019.11.02	150	0	150
The second restricted stocks to empolyees in 2019	2020.08.05	169	0	169

• D. Expenses incurred on share-based payment transactions are shown below:

Equity-settled	Years ended December 31,	Years ended December 31,
	2020 89,899 $	2019
		52,158 $

(20) Share capital

• A. As of December 31, 2020, the Company’s authorised capital was $4,000,000 thousand, consisting of 400,000 thousand shares of ordinary stock (including 5,000 thousand shares reserved for employee stock options), and the paid-in capital was $2,093,519 thousand with a par value of $10 (in dollars) per share.

Movements in the number of the Company’s ordinary shares outstanding are as follows (in thousands):

thousands):
At January 1 Employee restricted shares retired Issuance of restricted shares to employees Conversion of convertible bonds Issuance of common stock for cash At December 31	2020 2019 $ 208,668 $ 199,663 ( 136) ( 692) 387 813 414 4,884 - 4,000 $209,333 $208,668 Years ended December 31,
		$208,668

• (a) The Company retired 18,700 employee restricted shares as resolved at the meeting of the Board of Directors on February 25, 2021 with the capital reduction effective date set on

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March 8, 2021.

  - (b) The Company retired 642,100 employee restricted shares as resolved at the meeting of the Board of Directors on February 27, 2020 and July 30, 2020 with the capital reduction effective date set on February 29, 2020 and August 4, 2020. The capital reduction through retirement of employee restricted shares was completed.

  - (c) On April 25, 2019 and July 26, 2019, the Board of Directors of the Company resolved to retire employee restricted share of 164,300 shares. The effective dates for the capital reduction were April 30, 2019 and July 31, 2019. The capital reduction through retirement of employee restricted shares was completed.

  - (d) On December 11, 2018, the Company issued the 2[nd] unsecured convertible bonds. As of December 31, 2020, the face value of those convertible bonds amounted to $768,100 thousand, which had been converted into 5,299 thousand common shares. Please refer to Note 6(16) for further information.

  - (e) In 2019, the Company increased its capital in cash amounting to $448,000 thousand equivalent to 4 million shares with an issuance price at $112 per share and premium at $411,993 thousand. The effective date for the capital increase was set on January 18, 2019. The registration of the capital increase was completed on February 13, 2019.

  - (f) On April 25, 2019, the Board of Directors of the Company resolved to issue employee restricted shares (please refer to Note 6(19)). The issuance was approved by the Competent Authority on September 16, 2019. The Company issued 1,200 thousand common shares with the effective date set on November 2, 2019 and August 5, 2020. The subscription price is $0 per share and the registration was completed on November 29, 2019 and August 27, 2020 for ordinary shares issued of 813 thousand shares and 387 thousand shares, respectively. The employee restricted shares issued are subject to certain transfer restrictions before their vesting conditions are qualified. Other than these restrictions, the rights and obligations of these shares issued are the same as other issued ordinary shares

• (21) Capital surplus

• Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

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2020

		2020
At January 1 Issuance of restricted shares to employees Restricted stocks vested Employee restricted stocks retired Ordinary shares converted from convertible bonds Recognition of change in equity of associates in proportion to the Company’s ownership Changes in ownership interests in subsidiaries At December 31	Share premium Share option $ 3,501,426 $ 101,750 - - 109,457 - - - 55,019 ( 2,559) - - - - $3,665,902 $ 99,191	Employee restricted stocks	Others	Total
		$ 236,457 61,533 ( 106,193) ( 20,972) - - -	$ 30,472 - ( 3,264) - - ( 3,100) 97 $24,205	3,870,105 $ 61,533 - ( 20,972) 52,460 ( 3,100) 97 $3,960,123
		$170,825

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At January 1 Issuance of restricted shares to employees Restricted stocks vested Employee restricted stocks retired Ordinary shares converted from convertible bonds Proceeds from issuing shares Recognition of change in equity of associates in proportion to the Company’s ownership At December 31		Share premium	Share option	Employee restricted stocks $ 256,324 113,820 ( 45,123) ( 88,564) - - - $236,457 2019	Others $ 19,321 - - - - - 11,151 $30,472	Total
		$ 2,376,147 - 45,123 - 668,163 411,993 -	$ 137,319 - - - ( 31,576) ( 3,993) -			2,789,111 $ 113,820 - ( 88,564) 636,587 408,000 11,151 $ 3,870,105
		$3,501,426	$ 101,750

(22) Retained earnings

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, after deduction of mandatory income tax, shall first be used to offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve until the legal reserve equals the paid-in capital. After the provision or reversal of special reserve, the appropriation of the remaining earnings along with the unappropriated earnings of prior years shall be proposed by the Board of Directors and approved by the shareholders. According to the dividend policy adopted by the Board of Directors, 30% to 80% of the Company’s accumulated distributable earnings shall be appropriated as dividends, and cash dividends shall account for at least 5% of the total dividends distributed.

• B. The Company’s dividend policy is summarised below: as the Company operates in a volatile business environment and is in the stable growth stage, the residual dividend policy is adopted taking into consideration the Company’s financial structure, operating results and future expansion plans. In order to encourage employees and operation team, if the Company has any profit for the current year, the Company shall set aside 5% to 10% as employees’ compensation and no more than 2% as directors’ and supervisors’ remuneration. The employees’

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compensation shall be distributed in the form of stock and cash by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors and report it in the shareholders’ meeting. Employees entitled to receive stock or cash as compensation include employees of subsidiaries of the company meeting certain specific requirements.

• C. The Board of Directors may fully or partially appropriate dividends and bonuses in the form of cash by a resolution adopted by the majority vote at its meeting attended by two-thirds of the total number of directors, and then reported to the shareholders. Situations other than that shall be approved by the shareholders at their meeting.

• D. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• E. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land. As of December 31, 2020, the balance of capital surplus as aforementioned was $269,144 thousand.

• F. The Company distributed cash dividends amounting to $7.7 and $8.6 (in dollars) per share, respectively, as resolved at the meeting of Board of Directors on June 19, 2020 and June 19, 2019. The abovementioned distribution of earnings for the years ended December 31, 2019 and 2018 was in agreement with those amounts proposed by the Board of Directors on February 27, 2020 and February 26, 2019.

• G. The appropriation of cash dividends of year 2020 as resolved by the Board of Directors on February 25, 2021 amounted to $5.16.

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(23) Other equity items

Other equity items
2020	Exchange differences on translation of foreign financial statements	Unrealised gain (loss) from investments in debt instruments measured at fair value through other comprehensive income	Unrealised gain (loss) from investments in equity instruments measured at fair value through other comprehensive income	Cost of unearned employee compensation Total ($ 204,926) $ 1,027,834 ( 65,403) ( 65,403) 89,899 89,899 22,289 22,289 - ( 939,790) - 1,300 - 333 - ( 145,400) - - ( 57,400) - 11,480 - 74,113 - ( 13,905) - 3,976 ($158,141) $ 9,326	Total
At January 1 Issuance of restricted shares to employees Amortisation of employee restricted stocks Employee restricted shares retired Revaluation - gross Revaluation - tax Revaluation transferred to profit or loss - gross Revaluation transferred to retained earnings - gross Currency translation differences: - Group - Tax on Group - Associates - Tax on associates - Adjustment on disposal of associates transferred to profit or loss At December 31	($ 456,833) - - - - - - - ( 57,400) 11,480 74,113 ( 13,905) 3,976 ($438,569)	$ 867 - - - 3,020 - 333 - - - - - -	$ 1,688,726 - - - ( 942,810) 1,300 - ( 145,400) - - - - -
		$4,220	$ 601,816		$ 9,326

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2019	Exchange differences on translation of foreign financialstatements	Unrealised gain (loss) from investments in debt instruments measured at fair value through other comprehensiveincome	Unrealised gain (loss) from investments in debt instruments measured at fair value through other comprehensiveincome	Unrealised gain (loss) from investments in equity instruments measured at fair value through other comprehensiveincome	Unrealised gain (loss) from investments in equity instruments measured at fair value through other comprehensiveincome	Cost of unearned employee compensation Total ($ 223,900) $ 147,032 ( 121,950) ( 121,950) 52,158 52,158 88,766 88,766 - 1,148,537 - ( 3,125) - ( 833) - ( 68,104) - - ( 113,955) - 25,493 - ( 153,522) - 27,337 ($204,926) $1,027,834
At January 1 Issuance of restricted shares to employees Amortisation of employee restricted stocks Employee restricted shares retired Revaluation - gross Revaluation - tax Revaluation transferred to profit or loss - gross Revaluation transferred to retained earnings - gross Currency translation differences: - Group - Tax on Group - Associates - Tax on associates At December 31	($ 242,186) - - - - - - - ( 113,955) 25,493 ( 153,522) 27,337 ($456,833)	$ 3,244 - - - ( 1,544) - ( 833) - - - - -		$ 609,874 - - - 1,150,081 ( 3,125) - ( 68,104) - - - -
			$ 867		$1,688,726

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(24) Operating revenue

Operating revenue
		Years ended	December	31,
		2020		2019
Revenue from contracts with customers	$	34,444,819	$	36,397,793

A. Disaggregation of revenue from contracts with customers

perating revenue 2020 2019 evenue from contracts with customers 34,444,819 $ 36,397,793 $ Years ended December 31, . Disaggregation of revenue from contracts with customers	perating revenue 2020 2019 evenue from contracts with customers 34,444,819 $ 36,397,793 $ Years ended December 31, . Disaggregation of revenue from contracts with customers	perating revenue 2020 2019 evenue from contracts with customers 34,444,819 $ 36,397,793 $ Years ended December 31, . Disaggregation of revenue from contracts with customers	perating revenue 2020 2019 evenue from contracts with customers 34,444,819 $ 36,397,793 $ Years ended December 31, . Disaggregation of revenue from contracts with customers	perating revenue 2020 2019 evenue from contracts with customers 34,444,819 $ 36,397,793 $ Years ended December 31, . Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines and geographical regions: Year ended December31,2020
Total segment revenue Revenue from internal segment transactions Revenue from external customer contracts Main Region Europe US Mainland China Taiwan Others Total segment revenue Revenue from internal segment transactions Revenue from external customer contracts Main Region Europe US Mainland China Taiwan Others			Electronic devices	Others Total 2,988,603 $ 48,462,875 $ 1,829,296) ( 14,018,056) ( 1,159,307 34,444,819 286,479 16,230,109 469,119 15,191,569 345,462 1,806,184 40,181 714,243 18,066 502,714 1,159,307 $ 34,444,819 $ Others Total 1,807,379 $ 51,746,455 $ 564,519) ( 15,348,662) ( 1,242,860 36,397,793 269,605 14,810,552 563,203 17,755,399 364,505 2,122,596 825 528,206 44,722 1,181,040 1,242,860 $ 36,397,793 $
	Taiwan Shenzhen Singapore 26,916,049 $ 13,309,595 $ 5,248,628 $ 9,165) ( 12,179,595) ( - 26,906,884 1,130,000 5,248,628 11,742,872 119,364 4,081,394 13,719,123 650 1,002,677 462,466 998,256 - 671,474 2,588 - 310,949 9,142 164,557 26,906,884 $ 1,130,000 $ 5,248,628 $ Taiwan Shenzhen Singapore 30,723,659 $ 15,004,984 $ 4,210,433 $ 78,386) ( 14,680,937) ( 24,820) ( 30,645,273 324,047 4,185,613 10,883,812 122,367 3,534,768 16,775,583 2,370 414,243 1,406,833 177,939 173,319 511,482 15,899 - 1,067,563 5,472 63,283 30,645,273 $ 324,047 $ 4,185,613 $ Year ended December31,2019 Electronic devices

B. Contract assets and liabilities ：

(a) The Group has recognised the following revenue-related contract assets (shown in other current assets) and liabilities (shown in other current liabilities):

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December 31,2020 December 31,2019 Contract assets 43,363 $ 31,585 $ Contract liabilities 627,002 $ 256,623 $ Refund liabilities 343,164 $ 81,791 $	January1,2019 - $ 195,952 $ - $

(b) Revenue recognised that was included in the contract liability balance at the beginning of the year ：

Years	ended	December 31,
2020		2019

Revenue recognised that was included in the contract liability balance at the beginning of the period $ 207,718 $ 164,963

(25) Interest income

Revenue recognised that was included in the contract liability balance at the beginning of the period Interest income	207,718 $ 164,963 $	207,718 $ 164,963 $
Interest income from bank deposits Interest income from financial assets at fair value through other comprehensive income	Years ended December 31,
	2020 40,776 $ 3,136 43,912 $	2019
		70,090 $ 4,922
		75,012 $

(26) Other income

Other income
Government grants Sample income Dividend income Rent income Other income	Years ended December 31,
	2020 188,780 $ 24,682 15,565 7,571 42,648 279,246 $	2019
		173,967 $ 25,810 73,953 8,083 26,438
		308,251 $

(27) Other gains and losses

Dividend income Rent income Other income $ Other gains and losses	15,565 73,953 7,571 8,083 42,648 26,438 279,246 308,251 $	15,565 73,953 7,571 8,083 42,648 26,438 279,246 308,251 $
Losses on disposals of property, plant and equipment Gain on disposals of investments Foreign exchange loss Gains on financial assets / liabilities at fair value through profit or loss Other gains and losses	Years ended December 31,
	2020 6,907) ($ 4,978 252,192) ( 94,787 23,176) ( 182,510) ($	2019
		3,552) ($ 936 10,780) ( 69,428 11,688) (
		44,344 $

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(28) Expenses by nature

Expenses by nature
		Years ended	December	31,
		2020		2019
Employee benefit expense	$	3,306,368	$	2,729,703
Depreciation charge - property, plant
and equipment		350,587		206,463
Depreciation charge - right-of-use assets		126,399		73,295
Amortisation charge		132,861		132,426
	$	3,916,215	$	3,141,887

(29) Employee benefit expense

and equipment Depreciation charge - right-of-use assets Amortisation charge Employee benefit expense	350,587 206,463 126,399 73,295 132,861 132,426 3,916,215 $ 3,141,887 $
Wages and salaries Share-based payments Labour and health insurance fees Pension costs Directors' remuneration Other personnel expenses	Years ended December 31,
	2020 2019 2,871,775 $ 2,206,825 $ 94,362 52,158 62,096 59,380 100,984 131,464 26,380 135,949 150,771 143,927 3,306,368 $ 2,729,703 $

Note: For the years ended December 31, 2020 and 2019, the Group has 10,207 and 11,764 employees, respectively. For the year ended December 31, 2020, there was 5 non-employee directors. After reelecting directors on June 19, 2019, there was 5 non-employee directors until December 31, 2020. For the year ended December 31, 2019, there was 5 non-employee directors.

• A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees ‘compensation and directors’ and supervisors’ remuneration. The ratio shall not be lower than 5~10% for employees’ compensation and shall not be higher than 2% for directors’ and supervisors’ remuneration.

• B. The details of employees’ compensation and directors’ and supervisors’ remuneration of the Company are as follows:

Company are as follows:
Employees’ compensation Directors’ and supervisors’ remuneration	Years ended December 31,
	2020 110,826 $ 25,575 136,401 $	2019
		205,176 $ 68,392
		273,568 $

The abovementioned amounts were recognised in wages and salaries, and were accrued at 6.5% and 6% for employees’ compensation and 1.5% and 2% for directors’ remuneration for the years ended December 31, 2020 and 2019, respectively, based on the distributable profit of the year.

Employees’ compensation and directors’ and supervisors’ remuneration of 2019 as resolved at the Board of Directors’ meeting were in agreement with those amounts recognised in the profit or loss of 2019.

Information about employees’ compensation and directors’ and supervisors’ remuneration of

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the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

• (30) Income tax

• A. Income tax expense

  • (a) Components of income tax expense:

e tax ome tax expense Components of income tax expense:
			Years ended	December31,
			2020		2019
Current tax:
Current tax on profits for the year		$	189,148	$	457,820
Tax on undistributed surplus earnings			36,704		4,763
Prior year income tax (over) underestimation	(		49,995)		14,960
Total current tax			175,857		477,543
Deferred tax:
Origination and reversal of temporary
differences			207,448		237,508
Income tax expense		$	383,305	$	715,051

(b) The income tax (charge)/credit relating to components of other comprehensive income is as

follows:

follows:
		Years ended	December 31,
		2020	2019
Exchange differences changes on translation
of foreign financial statements - the Group	($	11,480)	($	25,493)
Exchange differences changes on translation
of foreign financial statements
- associates		13,905	(	27,337)
Changes in fair value of financial assets
at fair value through other
comprehensive income	(	1,300)		3,125
Remeasurement of defined benefit obligations		288	(	3,005)
	$	1,413	($	52,710)

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B. Reconciliation between income tax expense and accounting profit

			Years ended	December31,	December31,	December31,
			2020			2019
Current tax:
Tax calculated based on profit
before tax and statutory tax rate		$	455,714		$	773,356
Expenses disallowed by tax regulation			5,117	(		7,677)
Tax exempt income by tax regulation	(		22,488)	(		5,673)
Effect from investment tax credits	(		42,115)	(		65,287)
Tax on undistributed surplus earnings			36,704			4,763
Prior year income tax (over)
underestimation	(		49,995)			14,960
Others			368			609
Income tax expense	$		383,305	$		715,051

(Remainder of page intentionally left blank)

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• C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

							2020	2020	2020
									Recognised in
										other
			January 1,	Recognised in				comprehensive					December 31,
			2020		profit or loss					income				2020
Deferred tax assets:
- Temporary differences:
Unrealised exchange loss	$		3,937	$		16,526		$			-	$		20,463
Remeasurement of defined
benefit obligations			18,241			-		(			288)			17,953
Allowance for bad debts			6,400	(		12)					-			6,388
Accumulated unused
compensated absences			6,473			1,167					-			7,640
Allowance for inventory
valuation losses and loss
for obsolete and slow-
moving inventories			24,288	(		14,476)					-			9,812
Amortisation of discounts
on corporate bonds			7,344			5,716					-			13,060
Cumulative translation
adjustment of long-term equity investment			36,998			-		(		2,425)				34,573
Others			47,993	(		1,757)					-			46,236
Total		$	151,674		$	7,164		($		2,713)			$	156,125
- Deferred tax liabilities
Gain on overseas long-term
investment	($		872,757)	($		225,588)		$			-	($		1,098,345)
Cumulative translation
adjustment of long-term
equity investments			-			-					-			-
Adjustment of land value
increment tax	(		800)			-					-	(		800)
Unrealised gain on
valuation of financial
instruments	(		16,639)			465				1,300		(		14,874)
Others	(		66,282)			10,511					-	(		55,771)
Total	($		956,478)	($		214,612)			$	1,300		($		1,169,790)

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2019

								Recognised in	Recognised in
									other
			January	1,	Recognised in			comprehensive			December		31,
			2020			profit or loss			income			2020
Deferred tax assets:
- Temporary differences:
Unrealised exchange loss	$		9,982		($		6,045)	$	-	$		3,937
Income tax expense				981	(		280)		-				701
Remeasurement of defined
benefit obligations			15,236				-		3,005			18,241
Allowance for bad debts			7,033		(		633)		-			6,400
Unallocated appropriation
of pension				193	(		193)		-				-
Accumulated unused
compensated absences			4,949				1,524		-			6,473
Allowance for inventory
valuation losses and loss
for obsolete and slow-
moving inventories			13,718				10,570		-			24,288
Amortisation of discounts
on corporate bonds				427			6,917		-			7,344
Cumulative translation
adjustment of long-term equity investments				-			-		36,998			36,988
Others			29,816				17,476		-			47,292
Total		$	82,335			$	29,336	$	40,003		$	151,674
- Deferred tax liabilities
Gain on overseas long-term
investment	($		588,227)		($		284,530)	$	-	($		872,757)
Cumulative translation
adjustment of long-term
equity investments	(		15,832)				-		15,832				-
Adjustment of land value
increment tax	(			800)			-		-	(			800)
Unrealised gain on
valuation of financial
instruments	(		14,041)				527	(	3,125)	(		16,639)
Others	(		83,441)				17,159		-	(		66,282)
Total	($		702,341)		($		266,844)	$	12,707	($		956,478)

• D. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

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• E. Merry Healthcare Co., Ltd. Taiwan Branch’s (CAYMAN) income tax returns through 2018 have been assessed and approved by the Tax Authority.

• F. Biotest Medical Corporation’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

• (31) Earnings per share

approved by the Tax Authority. Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares		Year	ended December31,		Earnings per share(in dollars) 2020
		Amount after tax 1,321,943 $ 1,321,943 - 25,824 -	Weighted average number of ordinary shares outstanding (share in thousands)
				206,892 206,892 979 16,297 158 224,326	6.39 $ 6.01 $
		1,347,767 $

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Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Amount after tax 2,548,612 $ 2,548,612 - 27,669 - 2,576,281 $ Year	Amount after tax 2,548,612 $ 2,548,612 - 27,669 - 2,576,281 $ Year	Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 203,745 12.51 $ 203,745 1,375 17,874 308 223,302 11.54 $ ended December 31,2019	Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 203,745 12.51 $ 203,745 1,375 17,874 308 223,302 11.54 $ ended December 31,2019	Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 203,745 12.51 $ 203,745 1,375 17,874 308 223,302 11.54 $ ended December 31,2019
			203,745 203,745 1,375 17,874 308 223,302		12.51 $ 11.54 $
	2,576,281 $

The number of weighted-average outstanding shares is included for assumed conversion of all dilutive potential ordinary shares at the calculation of diluted earnings per share, based on the assumption that employees’ compensation will be all distributed in the form of shares.

• (32) Business combinations

• A. On July 31, 2019, the Group acquired 94.2% of ordinary shares of Biotest Medical Corporation in cash amounting to $9,420 thousand and obtained control over the company. The company has multiple certifications in medical device manufactured. As a result of the acquisition, the Group is expected to increase its presence in the market and expand its market of personal sound amplifier.

• B. The following table summarises the consideration paid for Biotest Medical Corporation and the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets at the acquisition date:

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July31,2019 Purchase consideration Cash paid $ 9,420 Fair value of equity interest in Biotest Medical Corporation held before the business combination 5,220 14,640 Fair value of the identifiable assets acquired and liabilities assumed Cash 4,995 Prepayments 57,209 Other current assets 60 Intangible assets 9,000 Refundable deposits 61 Notes payable ( 386) Other payables (62,000) Indentified net assets 8,939 Goodwill $5,701 Cash outflow generated from acquisitions BTTT Cash paid 9,420) ($ Add: Carrying amount of cash when acquired 4,995 Effect of cash from business combination 4,425) ($		July31,2019

• C. Cash outflow generated from acquisitions

• D. The operating revenue included in the consolidated statement of comprehensive income since July 31, 2019 contributed by Biotest Medical Corporation was $24,822 thousand for the period from July 31, 2019 to December 31, 2019. Biotest Medical Corporation also contributed profit before income tax of $13,152 thousand over the same period. Had Biotest Medical Corporation been consolidated from January 1, 2019, the consolidated statement of comprehensive income for the year ended December 31, 2019 would show an increase in operating revenue of $134,851 thousand and profit before income tax of $2,857 thousand.

• (33) Supplemental cash flow information

• A. Investing activities with partial cash payments

pplemental cash flow information Investing activities with partial cash payments
		Years ended	December 31,
		2020		2019
Purchase of property, plant and equipment	$	1,820,959	$	618,357
Add:
Opening balance of payable on equipment		77,958		48,588
Ending balance of prepayments for equipment		84,488		41,911
Less:
Beginning balance of prepayments for equipment	(	41,911)	(	23,588)
Ending balance of payable on equipment	(	356,594)	(	77,958)
Cash paid during the year	$	1,584,900	$	607,310

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2020 2019 Purchase of intangible assets 48,464 $ 68,122 $ Add: Opening balance of payable - 2,652 Ending balance of prepayments 37,436 30,953 Less: Opening balance of prepayments 30,953) ( 32,046) ( Ending balance of payable 4,344) ( - Cash paid during the year 50,603 $ 69,681 $ Years ended December 31, B. Financial assets at fair value through profit or loss 2020 2019 Change in financial assets at fair value through profit or loss 47,492 $ 158,903 $ Less: Unpaid purchases during the year 306) ( - Net cash flows used during the year 47,186 $ 158,903 $ Years ended December 31, C. Financial assets at fair value through other comprehensive income 2020 2019 Disposal of financial assets at fair value through other comprehensive income 202,651) ($ 147,651) ($ Add: Uncollected proceeds from disposal during the year - 4,336 Less: Collected proceeds from prior period disposal 4,336) ( - Net cash flows received during the period 206,987) ($ 143,315) ($ Years ended December 31, D. Financing activities with no cash flow effects: 2020 2019 Convertible bonds being converted to common stocks 4,135 $ 48,851 $ Years ended December 31,	2020 2019 Purchase of intangible assets 48,464 $ 68,122 $ Add: Opening balance of payable - 2,652 Ending balance of prepayments 37,436 30,953 Less: Opening balance of prepayments 30,953) ( 32,046) ( Ending balance of payable 4,344) ( - Cash paid during the year 50,603 $ 69,681 $ Years ended December 31, B. Financial assets at fair value through profit or loss 2020 2019 Change in financial assets at fair value through profit or loss 47,492 $ 158,903 $ Less: Unpaid purchases during the year 306) ( - Net cash flows used during the year 47,186 $ 158,903 $ Years ended December 31, C. Financial assets at fair value through other comprehensive income 2020 2019 Disposal of financial assets at fair value through other comprehensive income 202,651) ($ 147,651) ($ Add: Uncollected proceeds from disposal during the year - 4,336 Less: Collected proceeds from prior period disposal 4,336) ( - Net cash flows received during the period 206,987) ($ 143,315) ($ Years ended December 31, D. Financing activities with no cash flow effects: 2020 2019 Convertible bonds being converted to common stocks 4,135 $ 48,851 $ Years ended December 31,	2020 2019 Purchase of intangible assets 48,464 $ 68,122 $ Add: Opening balance of payable - 2,652 Ending balance of prepayments 37,436 30,953 Less: Opening balance of prepayments 30,953) ( 32,046) ( Ending balance of payable 4,344) ( - Cash paid during the year 50,603 $ 69,681 $ Years ended December 31, B. Financial assets at fair value through profit or loss 2020 2019 Change in financial assets at fair value through profit or loss 47,492 $ 158,903 $ Less: Unpaid purchases during the year 306) ( - Net cash flows used during the year 47,186 $ 158,903 $ Years ended December 31, C. Financial assets at fair value through other comprehensive income 2020 2019 Disposal of financial assets at fair value through other comprehensive income 202,651) ($ 147,651) ($ Add: Uncollected proceeds from disposal during the year - 4,336 Less: Collected proceeds from prior period disposal 4,336) ( - Net cash flows received during the period 206,987) ($ 143,315) ($ Years ended December 31, D. Financing activities with no cash flow effects: 2020 2019 Convertible bonds being converted to common stocks 4,135 $ 48,851 $ Years ended December 31,
	2020 4,135 $	2019
		48,851 $

~74~

(34) Changes in liabilities from financing activities

Short-term borrowings Lease liability Convertible bond Long-term borrowings Dividends payable Other non - current liabilities Liabilities from financing activities-gross At January 1, 2020 470,890 $ 118,813 $ 2,229,959 $ 62,000 $ - $ 496,302 $ 3,377,964 $ Changes in cash flow from financing activities 2,776,622 192,834) ( - 745,693 1,608,376) ( 42,477 1,763,582 Additions - - - - 1,608,376 - 1,608,376 Impact of changes in foreign exchange rate 23,977 2,508) ( - 274) ( - 1,091) ( 20,104 Changes in other non-cash items - 338,185 26,158) ( - - 405,604) ( 93,577) ( At December 31, 2020 3,271,489 $ 261,656 $ 2,203,801 $ 807,419 $ - $ 132,084 $ 6,676,449 $ Short-term borrowings Lease liability Convertible bond Long-term borrowings Dividends payable Other non - current liabilities Liabilities from financing activities-gross At January 1, 2019 4,753,434 $ - $ 2,882,721 $ - $ - $ 489,545 $ 8,125,700 $ Changes in cash flow from financing activities 4,269,747) ( 96,425) ( - - 1,751,419) ( 7,430 6,048,161) ( Impact of changes in foreign 12,797) ( - - 62,000 1,751,419 314) ( 1,738,308 Changes in other non-cash items - 215,238 652,762) ( - - 359) ( 437,883) ( At December 31, 2020 470,890 $ 118,813 $ 2,229,959 $ 62,000 $ - $ 496,302 $ 3,377,964 $	Short-term borrowings Lease liability Convertible bond Long-term borrowings Dividends payable Other non - current liabilities Liabilities from financing activities-gross At January 1, 2020 470,890 $ 118,813 $ 2,229,959 $ 62,000 $ - $ 496,302 $ 3,377,964 $ Changes in cash flow from financing activities 2,776,622 192,834) ( - 745,693 1,608,376) ( 42,477 1,763,582 Additions - - - - 1,608,376 - 1,608,376 Impact of changes in foreign exchange rate 23,977 2,508) ( - 274) ( - 1,091) ( 20,104 Changes in other non-cash items - 338,185 26,158) ( - - 405,604) ( 93,577) ( At December 31, 2020 3,271,489 $ 261,656 $ 2,203,801 $ 807,419 $ - $ 132,084 $ 6,676,449 $ Short-term borrowings Lease liability Convertible bond Long-term borrowings Dividends payable Other non - current liabilities Liabilities from financing activities-gross At January 1, 2019 4,753,434 $ - $ 2,882,721 $ - $ - $ 489,545 $ 8,125,700 $ Changes in cash flow from financing activities 4,269,747) ( 96,425) ( - - 1,751,419) ( 7,430 6,048,161) ( Impact of changes in foreign 12,797) ( - - 62,000 1,751,419 314) ( 1,738,308 Changes in other non-cash items - 215,238 652,762) ( - - 359) ( 437,883) ( At December 31, 2020 470,890 $ 118,813 $ 2,229,959 $ 62,000 $ - $ 496,302 $ 3,377,964 $	Short-term borrowings Lease liability Convertible bond Long-term borrowings Dividends payable Other non - current liabilities Liabilities from financing activities-gross At January 1, 2020 470,890 $ 118,813 $ 2,229,959 $ 62,000 $ - $ 496,302 $ 3,377,964 $ Changes in cash flow from financing activities 2,776,622 192,834) ( - 745,693 1,608,376) ( 42,477 1,763,582 Additions - - - - 1,608,376 - 1,608,376 Impact of changes in foreign exchange rate 23,977 2,508) ( - 274) ( - 1,091) ( 20,104 Changes in other non-cash items - 338,185 26,158) ( - - 405,604) ( 93,577) ( At December 31, 2020 3,271,489 $ 261,656 $ 2,203,801 $ 807,419 $ - $ 132,084 $ 6,676,449 $ Short-term borrowings Lease liability Convertible bond Long-term borrowings Dividends payable Other non - current liabilities Liabilities from financing activities-gross At January 1, 2019 4,753,434 $ - $ 2,882,721 $ - $ - $ 489,545 $ 8,125,700 $ Changes in cash flow from financing activities 4,269,747) ( 96,425) ( - - 1,751,419) ( 7,430 6,048,161) ( Impact of changes in foreign 12,797) ( - - 62,000 1,751,419 314) ( 1,738,308 Changes in other non-cash items - 215,238 652,762) ( - - 359) ( 437,883) ( At December 31, 2020 470,890 $ 118,813 $ 2,229,959 $ 62,000 $ - $ 496,302 $ 3,377,964 $	Short-term borrowings Lease liability Convertible bond Long-term borrowings Dividends payable Other non - current liabilities Liabilities from financing activities-gross At January 1, 2020 470,890 $ 118,813 $ 2,229,959 $ 62,000 $ - $ 496,302 $ 3,377,964 $ Changes in cash flow from financing activities 2,776,622 192,834) ( - 745,693 1,608,376) ( 42,477 1,763,582 Additions - - - - 1,608,376 - 1,608,376 Impact of changes in foreign exchange rate 23,977 2,508) ( - 274) ( - 1,091) ( 20,104 Changes in other non-cash items - 338,185 26,158) ( - - 405,604) ( 93,577) ( At December 31, 2020 3,271,489 $ 261,656 $ 2,203,801 $ 807,419 $ - $ 132,084 $ 6,676,449 $ Short-term borrowings Lease liability Convertible bond Long-term borrowings Dividends payable Other non - current liabilities Liabilities from financing activities-gross At January 1, 2019 4,753,434 $ - $ 2,882,721 $ - $ - $ 489,545 $ 8,125,700 $ Changes in cash flow from financing activities 4,269,747) ( 96,425) ( - - 1,751,419) ( 7,430 6,048,161) ( Impact of changes in foreign 12,797) ( - - 62,000 1,751,419 314) ( 1,738,308 Changes in other non-cash items - 215,238 652,762) ( - - 359) ( 437,883) ( At December 31, 2020 470,890 $ 118,813 $ 2,229,959 $ 62,000 $ - $ 496,302 $ 3,377,964 $	Convertible bond	Convertible bond	Convertible bond	Convertible bond	Convertible bond	Convertible bond	Convertible bond	Convertible bond	Convertible bond	Convertible bond
				2,229,959 $ $ - - - ( 26,158) ( 2,203,801 $ $ Convertible bond
							$
	4,753,434 $ 4,269,747) ( 12,797) ( - 470,890 $		- $ 96,425) ( - 215,238 118,813 $			2,882,721 $ - - 652,762) ( 2,229,959 $			- $ - 62,000 - 62,000 $	- $ 1,751,419) ( 1,751,419 - - $		489,545 $ 7,430 314) ( 359) ( 496,302 $	8,125,700 $ 6,048,161) ( 1,738,308 437,883) ( 3,377,964 $

(35) Government grants

• A. For the year ended December 31, 2016, the subsidiary, MECL, entered into a subsidy agreement with Economy, Trade and Information Commission of Shenzhen Municipality, which agreed to subsidise the Company with the maximum of RMB 3 million to purchase equipment and computer software during the period from April 2016 to April 2018. As of December 31, 2020, the Company received RMB 3 million (shown as other non-current liabilities) ； however, RMB 562 thousand (NTD 2,404 thousand) has still not yet been recognised as grants revenue.

• B. For the year ended December 31, 2019, the subsidiary, MECL, applied for Entrepreneur Research and Development Funding Plan from the Science and Technology Innovation Committee of Shenzhen Municipality for the subsidies amounting to RMB 1,744 thousand (NTD 7,999 thousand).

• C. For the year ended December 31, 2018, the subsidiary, MECL, applied for the first batch of the Longhua District Enterprise R&D Investment Funding from Longhua District Science and Technology Innovation Bureau for the total subsidies amounting to RMB 3,282 thousand (NTD 13,965 thousand).

• D. For the year ended December 31, 2020, the subsidiary, MECL, received the electricity subsidy for enterprises in advanced and high-tech manufacturing amounting to RMB 2,233 thousand (NTD 9,553 thousand) from Shenzhen Power Supply Co., Ltd.

• E. For the year ended December 31, 2020, the subsidiary, MECL, received the patent subsidy amounting to RMB 458 thousand (NTD 1,959 thousand) from Market Supervision Administration of Shenzhen Municipality.

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• F. For the year ended December 31, 2020, the Company, MEHO, applied for government subsidies for working capital and salary compensation from Industrial Development Bureau, Ministry of Economic Affairs for the total amount of NTD 45,442 thousand. As of December 31, 2020, the Company received subsidies amounting to NTD 44,751 thousand.

• G. For the year ended December 31, 2020, the subsidiary, MEST, received the subsidy amounting to HKD 572 thousand (NTD 2,177 thousand) under the ‘Employment Support Scheme’ from the local government.

• H. For the year ended December 31, 2020, the subsidiary, MECL, received the subsidy for technological transformation amounting to RMB 4,980 thousand (NTD 21,304 thousand) from Shenzhen Industrial and Information Technology Bureau.

• I. For the year ended December 31, 2020, the subsidiary, MECL, received the subsidy for enterprise research and development amounting to RMB 1,401 thousand (NTD 5,950 thousand) from Science, Technology and Innovation Commission of Shenzhen Municipality.

• J. For the year ended December 31, 2020, the subsidiary, MESG, received the subsidy amounting to SGD 504 thousand (NTD 10,810 thousand) under the ‘Jobs Support Scheme’ from the local government.

• K. For the year ended December 31, 2020, the subsidiary, SOCV, received the subsidy amounting to CAD 315 thousand (NTD 6,936 thousand) under the ‘Emergency Wage Subsidy Program’ from the local government.

• L. For the year ended December 31, 2020, the subsidiary, MECL, received the subsidy amounting to RMB 520 thousand (NTD 2,211 thousand) under the stabilisation subsidy from the local government.

• M. For the year ended December 31, 2020, the subsidiary, MECL, received the subsidy for technological transformation amounting to RMB 5 million (NTD 21,390 thousand) from Shenzhen Longhua District Industrial and Information Technology Bureau.

• N. For the year ended December 31, 2020, the subsidiary, MECL, received the subsidy for work-based vocational training amounting to RMB 5 million (NTD 21,390 thousand) from Shenzhen Longhua District Human Resources Bureau.

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Name

Merry Electronics (Suzhou) Co., Ltd. (MECE)

Merry Electronics (Huizhou) Co., Ltd. (MECH) Merry Electronics (Shanghai) Co., Ltd. (MECS)

Guangdong Luxshare & Merry Electronics Co., Ltd. (MEDG)

Leohab Enterprise Co., Ltd. (LEOHAB) Neocene Technology Co., Ltd. (NEOCENE)

Merry Fuling Co., Ltd. Taiwab Branch (MHNCTW) BESKYTTE HUANG & CO Luxshare Precision Limited Luxshare Precision Industry Co., Ltd Luxshare-ICT (Vietnam) Limited (Luxshare-ICT (Vietnam)) Luxshare Electronic Technology (Kunshan) Co., Ltd. Lanto Electronic Limited

Dongguan Luxshare Precision Industry Co., Ltd.

Luxshare Precision Limited (HK)

Relationship Affiliated company Affiliated company Affiliated company Affiliated company

Affiliated company Other related party (Note 1) Other related party

Other related party Other related party (Note 2) Other related party (Note 2)

Other related party (Note 2)

Other related party (Note 2) Other related party (Note 2) Other related party (Note 2) Other related party (Note 2)

Note 1: NEOCENE is no longer a related party of the Group after the re-election of all directors and supervisors of the Company in June 2019.

Note 2: A corporate director of the Group’s subsidiary, MEVN, and the entity both belong to Luxshare group.

(2) Significant related party transactions

A. Operating revenue

xshare group. gnificant related party transactions Operating revenue
Sales of goods: Luxshare Precision Limited (HK) MECH MECE MEDG Others Total	Years endedDecember31,
	2020 197,757 $ 73,223 4,577 - 8,458 284,015 $	2019
		- $ 28,015 23,946 32,856 5,787
		90,604 $

The prices of goods sold to related parties are based on the different product’s profitability and adjusted annually as there is no comparable transaction for the goods sold to the third parties, and the prices of purchases on behalf of related parties are based on the cost plus mark-ups of 2 ~ 3%. The credit terms to related parties are 60 days end of month and 30 to 120 days end of month to the third parties.

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B. Purchases

Purchases
		Years ended	December	31,
		2020		2019
Purchases of goods
MECE	$	10,002,492	$	12,149,308
MECH		5,730,365		4,050,323
MEDG		-		1,005,709
Others		641,586		6
Total	$	16,374,443	$	17,205,346

The associates are manufacturers for the Group’s products and the prices are based on the different product’s profitability and adjusted annually as there is no comparable transaction for the goods purchased from the third parties. The payment terms are 60 days end of month and 30 to 120 days end of month to the third parties.

C. Receivables from related parties

to 120 days end of month to the third parties. Receivables from related parties
Accounts receivable Luxshare Precision Limited (HK) MECH MECE Others Total Other receivables MECH MECE MEDG Others Total	December31,2020 214,473 $ 46,822 10,276 1,961 273,532 $ 703,400 $ 2,155 - - 705,555 $	December 31, 2019
		- $ - 11,946 988
		12,934 $
		328,449 $ 37,559 18,926 434
		385,368 $

Other receivables as of December 31, 2020 and 2019 mainly were the purchases of raw materials on behalf of MECH, MECE and MEDG.

D. Payables to related parties

on behalf of MECH, MECE and MEDG. Payables to related parties
Accounts payable MECE MECH Others Total Other payables MECE Others Total		December 31,2020		December 31,2019
		2,505,588 $ 1,469,889 192,000 4,167,477 $ 54,169 $ 100 54,269 $		3,074,208 $ 579,327 266,716 3,920,251 $ 91,481 $ 46,222 137,703 $

Other payables mainly were mould developing expense that MECE paid on behalf of the parent company.

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E. Property transactions

• (a) Acquisition of property, plant and equipment:

				Years ended	Years ended	December	December	31,
				2020				2019
Luxshare-ICT (Vietnam)			$		8,732	$		-
MECH					7,317			-
MECE					3,294			84,343
MEDG					1,743			80,756
Total			$		21,086	$		165,099
Disposal of property, plant	and	equipment:
			Years ended		December31,
		2020				2019
		Disposal	Gain (loss) on		Disposal		Gain (loss) on
		proceeds		disposal	proceeds			disposal
MECE	$	-	$	-	$	326	$	-
MEDG		-		-		375		-
MECH		4,632		386		446		-
Total	$	4,632	$	386	$	1,147	$	-

• (b) Disposal of property, plant and equipment:

F. Other current assets - temporary debits of other expenses

BESKYTTE HUANG & CO	2020 2019 1,066 $ - $ Years ended December 31,	2020 2019 1,066 $ - $ Years ended December 31,
		- $

Other current assets mainly were temporary debits of brand royalties. G. Other income

Other income
BESKYTTE HUANG & CO	Years ended December 31,
	2020 1,031 $	2019 - $

Other income mainly was the disposal of other assets recognized as expenses in prior year. (3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments	Years ended December 31,
	2020 80,622 $ 493 20,659 101,774 $	2019
		117,777 $ 247 18,635
		136,659 $

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8. PLEDGED ASSETS

Book value

.PLEDGED ASSETS				Bookvalue
Pledged asset		December31,2020		December31,	2019	Purpose
Time deposits (pledge) (as other						Project
non-current assets)	$	12,200		$	-	guarantee
.SIGNIFICANT CONTINGENT	LIABILITIES AND		UNRECOGNISED CONTRACT
COMMITMENTS
Capital expenditures contracted for		at the balance sheet date but not yet incurred is as follows:
			December 31,2020		December 31, 2019
Property, plant and equipment		$		350,813	$	256,968
Intangible assets				7,412		186,405
		$		358,225	$	443,373

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Company’s capital management is to ensure it has sufficient financial resource and operating plans to meet operational capital for future needs, capital expenditure, research and development expense, obligation repayment and dividend distribution within the next year.

The Company monitors capital by reassessing debt ratios periodically. The debt ratios as at December 31, 2020 and 2019 were as follows:

	December 31, 2020	December 31, 2019
Total debt	21,884,605 $	12,797,178 $
Total assets	34,155,348	25,795,570
Debt ratio	64%	50%

(2) Financial instruments

A. Financial instruments by category

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Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Qualifying equity instrument Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Accounts receivable (including due from related parties) Other receivables (including due from related parties) Guarantee deposits paid Financial assets at amortised cost Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Short-term borrowings Notes payable Accounts payable (including payable to related parties) Other accounts payable (including payable to related parties) Lease liability Corporate bonds payable (including current portion) Long-term borrowings Guaratee deposits received	December 31,2020 105,387 $ 1,536,272 $ 232,060 1,768,332 $ 3,046,963 $ 12,714,950 776,641 71,625 866,600 17,476,779 $ 30,047 $ 3,271,489 - 10,634,407 1,655,453 261,656 2,203,801 807,419 29,329 18,893,601 $	December 31,2019
		38,214 $
		2,614,763 $ 120,721
		2,735,484 $
		6,589,863 $ 5,461,315 434,853 17,577 -
		12,503,608 $
		11,799 $ 470,890 74 6,693,692 1,110,729 118,813 2,229,959 62,000 2,828 10,700,784 $

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• B. Financial risk management policies

• (a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.

• (b) Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. Such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

• (c) Information about derivative financial instruments that are used to hedge certain exchange rate risk are provided in Note 6(2).

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD, RMB and HKD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.

• ii. The Company treasury is responsible for hedging the entire foreign exchange risk exposure.Exchange rate risk is measured through a forecast of highly probable USD and RMB income and expenditures. The Company treasury uses natural hedge to decrease the risk exposure in the foreign currency.

• iii. The Group hedges foreign exchange rate by using forward exchange contracts. However, the Group does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(2).

• iv. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, RMB, HKD and CAD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

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(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD：HKD USD：NTD USD：RMB USD：THB SGD：USD Non-monetary items USD：NTD USD：NTD Current financial investments at fair value through other comprehensive income Current financial assets at amortised	(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD：HKD USD：NTD USD：RMB USD：THB SGD：USD Non-monetary items USD：NTD USD：NTD Current financial investments at fair value through other comprehensive income Current financial assets at amortised				December	December	Degree of variation Effects on profit or loss Effect on other comprehensive income 3% 9,539 $ - $ 3% 378 - 3% 7,464 - 3% 22 - 3% 8,042 - 3% 1,188 - 3% 333 - 3% 1,129 $ - $ 3% 313,318 - 3% 98,890 - 3% 4,380 - 3% - - 3% 6,335 - $ 3% 2,563 - $ 31,2020 Sensitivityanalysis	Degree of variation Effects on profit or loss Effect on other comprehensive income 3% 9,539 $ - $ 3% 378 - 3% 7,464 - 3% 22 - 3% 8,042 - 3% 1,188 - 3% 333 - 3% 1,129 $ - $ 3% 313,318 - 3% 98,890 - 3% 4,380 - 3% - - 3% 6,335 - $ 3% 2,563 - $ 31,2020 Sensitivityanalysis	Degree of variation Effects on profit or loss Effect on other comprehensive income 3% 9,539 $ - $ 3% 378 - 3% 7,464 - 3% 22 - 3% 8,042 - 3% 1,188 - 3% 333 - 3% 1,129 $ - $ 3% 313,318 - 3% 98,890 - 3% 4,380 - 3% - - 3% 6,335 - $ 3% 2,563 - $ 31,2020 Sensitivityanalysis
			Foreign currency amount (In thousands)	Exchange rate	Book value (NTD)
							Degree of variation	Effects on profit or loss
			11,164 $ 2,882 8,736 201 9,412 1,390 2,534 1,321 $ 366,711 115,742 5,126 - 8,000 $ 3,000 $				3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	9,539 $ 378 7,464 22 8,042 1,188 333 1,129 $ 313,318 98,890 4,380 - 6,335 2,563	- $ - - - - - - - $ - - - - - $ - $

(Foreign currency: functional currency) Investments accounted for using the equity method USD：NTD HKD：NTD RMB：NTD Financial liabilities Non-monetary items Bank loan USD：NTD USD：RMB USD：CAD RMB：NTD Payables HKD：RMB RMB：NTD USD：NTD USD：RMB	(Foreign currency: functional currency) Investments accounted for using the equity method USD：NTD HKD：NTD RMB：NTD Financial liabilities Non-monetary items Bank loan USD：NTD USD：RMB USD：CAD RMB：NTD Payables HKD：RMB RMB：NTD USD：NTD USD：RMB	Foreign currency amount (In thousands) Exchange rate 110,476 $ 28.48 247,654 3.67 85,181 4.38 48,000 $ 28.48 42,815 6.51 2,600 0.78 4,500 4.38 234 $ 0.84 213,075 4.38 230,702 28.48 61,494 6.51	Book value (NTD) Degree of variation Effects on profit or loss Effect on other comprehensive income December 31,2020 Sensitivityanalysis 3,146,355 $ 3% - $ 94,391 $ 909,632 3% - 27,289 372,839 3% - 11,185 1,367,040 $ 3% 41,011 $ - $ 1,219,371 3% 36,581 - 74,048 3% 2,221 - 19,697 3% 591 859 $ 3% 26 $ - $ 932,629 3% 27,979 - 6,570,393 3% 197,112 - 1,751,349 3% 52,540 -

~84~

(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD：HKD USD：NTD USD：RMB USD：THB SGD：USD Non-monetary items USD：NTD Current financial investments at fair value through other comprehensive income	(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD：HKD USD：NTD USD：RMB USD：THB SGD：USD Non-monetary items USD：NTD Current financial investments at fair value through other comprehensive income	(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD：HKD USD：NTD USD：RMB USD：THB SGD：USD Non-monetary items USD：NTD Current financial investments at fair value through other comprehensive income	(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD：HKD USD：NTD USD：RMB USD：THB SGD：USD Non-monetary items USD：NTD Current financial investments at fair value through other comprehensive income			December 31,2019	December 31,2019
				Foreign currency amount (In thousands)	Exchange rate	Book value (NTD)		Sensitivityanalysis
							Degree of variation	Effects on profit or loss	Effect on other comprehensive income
				45,571 $ 42,433 8,549 1,060 12,096 1,361 1,612 671 $ 157,140 43,517 3,478 2,435 3,033 $	~85~ 29.9800 4.3050 7.7890 3.8490 6.9640 29.6890 1.1185 7.7890 29.9800 6.9640 29.6890 0.7432 29.9800	1,366,219 $ 182,674 66,588 16,148 362,638 41,235 7,136 5,226 $ 4,711,057 1,304,640 104,270 54,252 90,929 $	3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	40,987 $ 5,480 1,998 484 10,879 1,237 214 157 $ 141,332 39,139 3,128 1,628 - $	- $ - - - - - - $ - - - - 2,728 $
			USD：NTD value through other comprehensive income

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December 31, 2019
Sensitivity analysis
Foreign
currency
amount Exchange Book value Degree of Effects on Effect on other
(Foreign currency: functional currency) (In thousands) rate (NTD) variation profit or loss comprehensive income
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Investments accounted for
using the equity method
USD：NTD	$	94,818	29.9800	$	2,842,636	3%	$	-	$	85,279
HKD：NTD		172,906	3.8490		665,514	3%		-		19,965
RMB：NTD		87,480	4.3050		376,601	3%		-		11,298
Financial liabilities
Non-monetary items
Bank loan
USD：NTD	$	3,000	29.9800	$	89,940	3%	$	2,698	$	-
USD：RMB		9,435	6.9640		282,861	3%		8,486		-
USD：CAD		2,600	1.3040		77,948	3%		2,338		-
Payables
HKD：RMB	$	5,671	0.8941	$	5,070	3%	$	152	$	-
RMB：NTD		197,913	4.3050		852,015	3%		25,560		-
USD：NTD		155,831	29.9800		4,671,813	3%		140,154		-
USD：RMB		22,426	6.9640		679,360	3%		20,381		-

Total exchange gain (loss), including realised and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2020 and 2019 amounted to a loss of $252,192 thousand and a loss of $10,780 thousand, respectively.

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Price risk

• i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

• ii. The Group’s investments in equity securities comprise shares and open-end funds issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 3% with all other variables held constant, post-tax profit for years ended December 31, 2020 and 2019 would have increased/decreased by $794 thousand and $654 thousand, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $46,088 thousand and $78,443 thousand, respectively, as a result of other comprehensive income classified as available-for-sale equity investment and equity investment at fair value through other comprehensive income.

• Cash flow and fair value interest rate risk

• i. The Group’s borrowings are measured at amortised cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.

• ii. If the borrowing interest rate had increased/decreased by 0.25% with all other variables held constant, profit (loss), net of tax for the years ended December 31, 2020 and 2019 would have increased/decreased by $8,158 thousand and $1,066 thousand, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortised cost, at fair value through profit or loss and at fair value through other comprehensive income.

• ii. For banks and financial institutions, the Group transacts with a variety of banks and financial institutions, mainly domestic and overseas well-known financial institutions, to avoid concentration in any single counterparty and to minimise credit risk. The Group can only enter into the financial services and loan agreement provided by banks and financial institutions after being approved by the Board of Directors or authorised management according to the Company’s delegation of authorisation policy. To prevent legal risks, all the Group signs with banks and financial institutions after all documents are examined by counsel or legal advisor profession. The Group periodically checks the credit rating, conditions and quality of service as well as transactions. According to the Group’s operating condition, the credit limits and utilisation of credit limits are monitored on a regular basis and maintained within a reasonable range to ensure it meets the needs of the operation.

• iii. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.

• iv. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

• (i) If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• (ii) For investments in bonds that are traded over the counter, if any external credit rating

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agency rates these bonds as investment grade, the credit risk of these financial assets is low.

• v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

• (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

• (ii) The disappearance of an active market for that financial asset because of financial difficulties;

• (iii) Default or delinquency in interest or principal repayments;

• (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

• vi. The Group classifies customers’ accounts receivable, contract assets in accordance with geographic area. The Group applies the modified approach using provision matrix to estimate expected credit loss under the provision matrix basis.

• vii. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.

• viii. The Group used the forecastability of adjust historical and timely information to assess the default possibility of accounts receivable, contract assets and lease payments receivable. As of December 31, 2020 and 2019, the provision matrix is as follows:

December 31, 2020 Expected loss rate Total book value Loss allowance December 31, 2019 Expected loss rate Total book value Loss allowance		Not past due		Up to 30 days		31 to 90 days
	0.02% 12,401,873 $ 3,038) ($ Not past due		2.13% 38,897 $ 828) ($ Up to 30 days		25.59% 6,066 $ 1,552) ($ 31 to 90 days
	0.06% 5,425,988 $ 3,489) ($		13.94% 11,003 $ 1,534) ($		16.23% 19,593 $ 3,180) ($

• ix. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable are as follows:

allowance for accounts receivable are as follows:
At January 1 Provision for impairment Effect of foreign exchange At December 31	2020
	Accounts receivable
	29,507 $ 175 6) ( 29,676 $

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		2019
		Accounts receivable
At January 1	$	9,349
Provision for impairment		20,130
Effect of foreign exchange		28
At December 31	$	29,507

For provisioned loss during the years ended December 31, 2020 and 2019, the impairment losses arising from customers’ contracts were a loss of $175 thousand and a loss of $20,130 thousand, respectively.

• x. For the years ended December 31, 2020 and 2019, there was no loss allowance for investments in debt instruments at fair value through other comprehensive income.

• xi. For investments in debt instruments at amortised cost and at fair value through other comprehensive income, the credit rating levels are presented below:

Financial assets at fair value through other comprehensive income Group 1 Financial assets at fair value through other comprehensive income Group 1				December 31,2020	December 31,2020
		12 months 85,815 $		Significant increase in credit risk Impairment of credit - $ - $ Lifetime December 31,2019		Total 85,815 $ Total 120,721 $
				Significant increase in credit risk
		12 months 120,721 $		Significant increase in credit risk Impairment of credit - $ - $ Lifetime
				Significant increase in credit risk
				- $

Group 1: Debt instruments designated as investment grade.

• (c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.

• ii. Group treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.

• iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for

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non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

iv. The Group has $7,597,976 thousand and $10,698,351 thousand in undrawn borrowing facilities as of December 31, 2020 and 2019, respectively.

December 31,2020 Non-derivative financial liabilities Short-term borrowings Accounts payable Accounts payable-related parties Other payables (including related parties) Lease liabilities Other current liabilities Bonds payable Long-term borrowings Derivative financial liabilities Forward exchange contracts	Less than 3 months	Between 3 months and 1year	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total
	2,591,817 $ 6,062,301 4,043,135 1,588,845 39,865 76,729 - 828 30,047	681,792 $ 404,629 124,342 66,608 110,075 531 2,231,900 10,001 -	- $ - - - 57,231 - - 84,284 -	- $ - - - 24,612 - - 635,779 -	- $ - - - 35,049 - - 87,718 -	3,273,609 $ 6,466,930 4,167,477 1,655,453 266,832 77,260 2,231,900 818,610 - 30,047

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December 31,2019 Non-derivative financial liabilities Short-term borrowings Notes payable Accounts payable Accounts payable -related parties Other payables (including related parties) Lease liabilities Other current liabilities Bonds payable Long-term borrowings Derivative financial liabilities Forward exchange contracts	Less than 3 months	Between 3 months and 1year Between 1 and 2 years 92,354 $ - $ - - 415,671 - 45 - 30,014 - 20,388 18,217 721 - - - 295 393 - -	Between 2 and 5 years	Over 5 years	Total
	397,574 $ 74 2,357,770 3,920,206 1,080,715 9,346 48,711 - 83 11,799		- $ - - - - 30,374 - 2,289,500 62,606 -	- $ - - - - 42,953 - - - -	489,928 $ 74 2,773,441 3,920,251 1,110,729 121,278 49,432 2,289,500 63,377 11,799

(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, and derivative instruments with quoted market prices is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in certain derivative instruments and equity instruments is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in certain derivative instruments, equity investment without active market and is included in Level 3.

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• B. Financial instruments not measured at fair value Financial instruments not measured at fair value include the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, long-term and short-term bank borrowings, notes payable, accounts payable and other payables.

• C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities as at December 31, 2020 and 2019 is as follows:

December 31,2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Forward exchange contracts -Fund -Call options of convertible bonds Financial assets at fair value through other comprehensive income -Equity securities -Debt securities Total Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts	Level 1 - $ - 52,157 - 1,402,262 232,060 1,686,479 $ - $	Level 2 - $ 26,316 - - - - 26,316 $ 30,047 $	Level 3 26,468 $ - - 446 134,010 - 160,924 $ - $	Total
				26,468 $ 26,316 52,157 446 - - 1,536,272 232,060
				1,873,719 $
				30,047 $

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December 31, 2019 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
-Equity securities $ 485 $ - $ 21,301 $ 21,786
- -
-Forward exchange contracts 14,138 14,138
- -
-Call options of 2,290 2,290
convertible bonds
Financial assets at fair value
through other comprehensive
income
-
-Equity securities 2,485,433 129,330 2,614,763
-Debt securities 120,721 - - 120,721
Total $ 2,606,639 $ 14,138 $ 152,921 $ 2,773,698
Liabilities
Recurring fair value measurements
Financial liabilities at fair
value through profit or loss
-Forward exchange contracts $ - $ 11,799 $ - $ 11,799
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• D. The methods and assumptions the Group used to measure fair value are as follows:

• i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares Open-end fund Closing price at Net asset value at Market quoted price evaluation date evaluation date

• ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods.

• iii. Forward exchange contracts are usually valued based on the current forward exchange rate.

• vi. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

• E. For the years ended December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.

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F. The following chart is the movement of Level 3 for the years ended December 31, 2020 and 2019:

019:
		Years ended	December 31,
		2020		2019
At January 1	$	152,921	$	165,242
Added in the year		5,167		3,127
Transferred as subsidiaries due to business
combination for the year (Note)		-	(	5,220)
Proceeds collected from the capital reduction
for the year		-	(	7,830)
Losses recognised in profit or loss	(	1,844)	(	1,910)
Gains (losses) recognised in
other comprehensive income		4,680	(	488)
At December 31	$	160,924	$	152,921

Note: On February 26, 2019, the Board of Directors resolved the business combination of BTTT with the equity transfer date set on July 31, 2019. Please refer to Note 6(32) for details.

G. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Equity securities Private equity funds in venture capital Call options of convertible bonds	Fair value at December 31, 2020 134,010 $ 26,468 446	Valuation technique Market comparable companies Net asset value Binary tree convertible bond valuation model	Significant unobservable input Price to book ratio multiple N/A Risk-free interest rate	Range (weighted average) 15,818 $ 26,468 0.0544%	Relationship of inputs to fair value
					The higher the multiplier, the higher the fair value N/A The higher the risk- free interest rate, the lower the fair value

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Equity securities Private equity funds in venture capital Call options of convertible bonds	Fair value at December 31, 2019 129,330 $ 21,301 2,290	Valuation technique Market comparable companies Net asset value Binary tree convertible bond valuation model	Significant unobservable input Price to book ratio multiple N/A Risk-free interest rate	Range (weighted average) 15,267 $ 21,786 0.4816%	Relationship of inputs to fair value
					The higher the multiplier, the higher the fair value N/A The higher the risk- free interest rate, the lower the fair value

• H. The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:

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December 31, 2020

Financial assets Call options of convertible bonds Equity securities Financial assets Call options of convertible bonds Equity securities	Input	Change		Recognised in profit or loss	Recognised in profit or loss		Recognised in other comprehensive income	Recognised in other comprehensive income
				Favourable change	Unfavourable change		Favourable change	Unfavourable change
	Risk-free interest rate Stock price Volatility Cash flow Input	±20bp ±10% ±5% ±10% Change		- $ 446 223 - 669 $			- $ - - 13,401 13,401 $ 31,2019	- $ - - 13,401) ( 13,401) ($
				Recognised in profit or loss			Recognised in other comprehensive income
				Favourable change	Unfavourable change		Favourable change	Unfavourable change
	Risk-free interest rate Stock price Volatility Cash flow	±20bp ±10% ±5% ±10%		- $ 1,603 2,290 - 3,893 $	- $ 1,145) ( 229) ( - 1,374) ($		- $ - - 12,933 12,933 $	- $ - - 12,933) ( 12,933) ($

(4) Assessment of impact of COVID-19

The Group was adversely affected by the COVID-19 pandemic during the 2020. As a result, production of some of the Group’s factories came to a halt and orders were delayed. As of December 31, 2020, all factories have resumed operations. Additionally, although the Group’s sales orders from certain areas have declined because of the said pandemic, the Group’s overall business and financed position were not significantly impacted based on the Group’s assessment.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 4.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 5.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

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• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 7.

• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(2).

• J. Significant inter-company transactions during the reporting periods: Purchases or sales of goods from or to related parties reaching $100 million or more: Please refer to table 8.

• (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 9.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 10.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 11.

(4) Major shareholders information

Major shareholders information: None.

14. SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions. Business organisation is divided into Taiwan, Shenzhen, Singapore and other segments based on the operating regions. The Company’s revenue is mainly from manufacturing and sales of microphones, receivers, speakers and other electronic components.

(2) Measurement of segment information

The Group evaluates the performance of the operating segments based on post-tax profit or loss.

(3) Information about segment profit or loss, assets and liabilities

• A. The segment information provided to the chief operating decision-maker for the reportable segments for the year ended December 31, 2020 is as follows:

Taiwan Revenue Revenue from external 26,906,884 $ customers Inter-segment revenue 9,165 Revenue total 26,916,049 $ Segment profit (loss) 1,321,943 $ Segment profit (loss) contains： Interest revenue 26,887 $ Interest expense 40,154 Depreciation & amortization 76,528 Income tax expense 246,666 Recognised investment profit which is adopting equity method 1,124,731	Shenzhen 1,130,000 $ 12,179,595 13,309,595 $ 228,432 $ 15,323 $ 15,392 288,474 39,655 -	Singapore Others 5,248,628 $ 1,159,307 $ - 1,829,296 5,248,628 $ 2,988,603 $ 518,927 $ 747,359) ($ - $ 1,702 $ 805 4,466 4,487 240,358 106,306 9,322) ( - 642,599) (	Total
			34,444,819 $ 14,018,056
			48,462,875 $
			1,321,943 $
			43,912 $ 60,817 609,847 383,305 482,132

Note: The Group does not use segment information relating to assets and liabilities to evaluate segment performance. As a result, such information is not disclosed.

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• B. The segment information provided to the chief operating decision-maker for the reportable segments for the year ended December 31, 2019 is as follows:

Revenue Revenue from external customer Inter-segment revenue Revenue total Segment profit (loss) Segment profit (loss) contains： Interest revenue Interest expense Depreciation & amortization Income tax expense Recognised investment profit which is adopting equity method	Taiwan 30,645,273 $ 78,386 30,723,659 $ 2,548,612 $ 48,522 $ 63,385 83,384 597,188 1,441,489	Shenzhen 324,047 $ 14,680,937 15,004,984 $ 129,310 $ 23,984 $ 12,490 139,190 67,120 -	Singapore Others 4,185,613 $ 1,242,860 $ 24,820 564,519 4,210,433 $ 1,807,379 $ 304,673 $ 433,983) ($ - $ 2,506 $ 419 5,025 880 188,730 66,334 15,591) ( - 776,932) (	Total
				36,397,793 $ 15,348,662 51,746,455 $ 2,548,612 $ 75,012 $ 81,319 412,184 715,051 664,557

• Note: The Group does not use segment information relating to assets and liabilities to evaluate segment performance. As a result, such information is not disclosed.

• C. The Group’s reportable operating segments are classified based on the operating regions.

• D. The accounting policies of the operating segments are in agreement with the significant accounting policies summarised in Note 4. The Group’s segment profit (loss) is measured with the current profit (loss), which is used as a basis for the Group in assessing the performance of the operating segments.

(4) Reconciliation for segment income (loss)

Sales between segments are carried out at arm’s length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.

• A. A reconciliation of income after adjustment and total segment income from continuing operations is provided as follows:

operations is provided as follows:
		Years ended	December 31,
		2020		2019
Adjusted revenue from reportable segments	$	45,474,272	$	49,939,076
Adjusted revenue from other operating segments		2,988,603		1,807,379
Total operating segments		48,462,875		51,746,455
Elimination of inter-segment revenue	(	14,018,056)	(	15,348,662)
Total consolidated operating revenue	$	34,444,819	$	36,397,793

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• B. A reconciliation of adjusted current income before tax and the income before tax from continuing operations is provided as follows:

		Years ended	December 31,	December 31,
		2020		2019
Adjusted income from reportable
segments after income tax	$	2,069,302	$	2,981,416
Adjusted income from other operating
segments after income tax		206,382		500,082
Total operating segments		2,275,684		3,481,498
revenue	(	953,741)	(	932,886)
Income from continuing operations
after income tax	$	1,321,943	$	2,548,612

(5) Information on products and services

Revenues from external customers are mainly manufacturing, processing, repairing and sales of radio apparatus, communication devices, consumer electronics, automatic control system, electronic security systems and fire protection system as well as electronic components; planning, design as well as output of service items’ equipment; production as well as marketing management consultant of service items’ relevant business. Details of revenue is as follows:

(6)

2020 2019 Finished goods sales revenue 34,202,784 $ $ 36,328,892 Technical service revenue 242,035 68,901 34,444,819 $ $36,397,793 Years ended December 31, Geographical information Geographical information for the years ended December 31, 2020 and 2019 is as follows: Non-current Non-current Revenue assets Revenue assets US 15,191,569 $ 1,144 $ 17,755,399 $ 1,039 $ Switzerland 3,380,986 - 1,873,498 - Denmark 5,209,387 - 5,026,268 - China 1,806,184 1,752,409 2,122,596 1,075,391 Netherlands 5,008,577 - 5,688,103 - Others 3,848,116 3,915,167 3,931,929 2,950,282 34,444,819 $ 5,668,720 $ 36,397,793 $ 4,026,712 $ Year ended December 31,2020 Year ended December 31,2019

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(7) Major customer information

Major customer information of the Group for the years ended December 31, 2020 and 2019 is as follows:

A B C	Revenue % Segment 9,680,291 $ 28 Taiwan B 9,518,166 28 Taiwan C 3,456,910 10 Taiwan 22,655,367 $ Year ended December 31,2020	Revenue % Segment 9,680,291 $ 28 Taiwan B 9,518,166 28 Taiwan C 3,456,910 10 Taiwan 22,655,367 $ Year ended December 31,2020	Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
	Revenue 9,680,291 $ 9,518,166 3,456,910 22,655,367 $	% 28 28 10	Revenue 11,744,903 $ 11,598,275 - 23,343,178 $	% 32 32 -	Segment
					Taiwan Taiwan

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Expressed in thousands of NTD (Except as otherwise indicated)

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Loans to others

Year ended December 31, 2020

Table 1

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance for the year ended December 31,2020	Balance at December 31, 2020	Actual amount drawn down	Interest rate	Nature of loan(Note 3)	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Limit on loans granted to a singleparty (Note 2)	Ceiling on total loans granted (Note 1) Note
													Item Value
0 0 1 2	MEHO MEHO ASCX MECL	BTTT METC ETCX ETCX	Other receivables Other receivables Other receivables Other receivables	Y Y Y Y	180,000 $ 200,000 4,377 8,754	- $ - - -	- - - -	- - - -	2 2 2 2	- $ - - -	Business operation Business operation Business operation Business operation	- $ - - -	- - $ - - - - - -	4,708,678 $ 4,708,678 35,476 1,120,096	4,708,678 $ 4,708,678 4,708,678 4,708,678

Note 1: The ceiling on total loans to others is the Company net assets; for short-term financing, the limit to a single party is 40% of the Company net assets.

Note 2: (1)For business transactions, limit on loans granted for a single party is the amount of the transactions.

(2)For short-term financing, limit on loans granted for a single party is 40% of the net assets of the Company. Note 3: (1) For business transactions.

(2) For short-term financing.

Table 1,Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Table 2

Provision of endorsements and guarantees to others

Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1)	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/ guarantee amount as of December 31, 2020	Outstanding endorsement/ guarantee amount at December 31, 2020	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided (Note 4)	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/ guarantor (Note 2)
0 0 0	MEHO MEHO MEHO	BTTT SENM SOCV	2 2 2	9,417,357 $ 9,417,357 9,417,357	1,700,000 $ 28,480 99,680	- $ 28,480 99,680	- $ - 74,048	- $ - -	0.00% 0.24% 0.85%	11,771,696 $ 11,771,696 11,771,696	Y Y Y	N N N	N N N

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

(1)The Company is ‘0’.

• (2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following four categories; fill in the number of category each case belongs to:

(1)Having business relationship.

• (2)The Company holds over 50% of the voting rights directly or indirectly.

(3)This company holds over 50% of the voting rights of the Company directly or indirectly.

(4)The Company holds over 90% of the voting rights directly or indirectly.

Note 3: The guarantees and endorsements for a single party should not exceed 80% of the Company’s net assets.

Note 4: The ceiling on total amount of endorsements/guarantees provided to others by the Company is 100% of the Company's net assets.

Table 2, Page 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) December 31, 2020

Table 3

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by Marketable securities(Note 1) Relationship with the securities issuer General ledger account		As of December	31, 2020		Note
	Number of shares	Bookvalue(in thousands)	Ownership (%)	Fairvalue(in thousands)
The Company 76324296A KGI Taiwan Multi-Asset Income Fund A TWD - Financial assets mandatorily measured at fair value through profit or loss Valuation adjustment The Company JAFCO - Non-current financial assets mandatorily measured at fair value through profit or loss The Company 2881B.TW - Equity instruments measured at fair value through other comprehensive income The Company 2882B.TW - Equity instruments measured at fair value through other comprehensive income The Company 5871A - Equity instruments measured at fair value through other comprehensive income The Company P18QNBF3F10306 - Equity instruments measured at fair value through other comprehensive income Valuation adjustment The Company Stock - 4943.TW - Measured at fair value through other comprehensive income - non-current The Company Stock - 3290.TW - Measured at fair value through other comprehensive income - non-current The Company Stock - FUJITER Semiconductor CO.,LTD. - Measured at fair value through other comprehensive income - non-current The Company Stock - NETVOX TECHNOLOGY CO., LTD - Measured at fair value through other comprehensive income - non-current The Company Stock - EVER THAI AGRI-PRODUCT CO.,LTD. - Measured at fair value through other comprehensive income - non-current The Company Stock - SUNSINO SME Development Co., Ltd. - Measured at fair value through other comprehensive income - non-current The Company Stock - LINSATION Intelligent Technoligy Limited - Measured at fair value through other comprehensive income - non-current The Company Stock - MERRY FULING CO., LTD., TAIWAN BRANCH (SAMOA) - Measured at fair value through other comprehensive income - non-current The Company Bond - XS218687550 - Equity instruments measured at fair value through other comprehensive income Valuation adjustment MEST Stock - Perfect Fortune Inc. - Measured at fair value through other comprehensive income - non-current MEST Stock - LOYAL WIRE& CABLE COMPANY LTD. - Measured at fair value through other comprehensive income - non-current Valuation adjustment	5,015 875 683 585 300 3,000 13,905 5,723 2,126 324 683 169 75 356 5,000 2,126 1,159	50,000 $ 2,157	- 0.71% - - - - 8.84% 5.75% 9.79% 1.32% 5.17% 0.36% 6.35% 19.00% - 18.33% 18.33%	52,157 $
				26,468 $
		52,157 $
		26,468 $
		40,980 35,100 30,000 89,550		42,687 36,797 29,880 85,815
		195,630 451) (		195,179 $
				1,202,761 90,137 15,563 - 6,425 2,123 8,772 10,437 146,245
		195,179 $
		648,164 99,990 27,811 2,976 6,425 2,123 8,772 10,437 144,625
		951,323 535,116 2,976) (		1,483,463 $
				60,297 29,393
		1,483,463 $
		7,810 7,530
		15,340 74,350		89,690 $
		89,690 $

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9.

Table 3,Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital

Year ended December 31, 2020

Investor Table 4	Marketable securities	General ledger account	Counterparty	Relationship with the investor	January1,2020 Balance as at	January1,2020 Balance as at	Addition	Addition		Disposal	Disposal		(Except as otherwise indicated) Balance as at December31,2020 Expressed in thousands of NTD	(Except as otherwise indicated) Balance as at December31,2020 Expressed in thousands of NTD
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Bookvalue	Gain (loss) on disposal	Number of shares	Amount
The Company	Stocks	Long-term investments accounted for using the equity method - MEVN	MERRY & LUXSHARE (VIETNAM) CO.,LTD.	A subsidiary	-	$ -	-	$ 366,710	-	$ -	$ -	$ -	-	$ 366,710

Table 4,Page1

Expressed in thousands of NTD (Except as otherwise indicated)

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more

Year ended December 31, 2020

Table 5

If the counterparty is a related party, information as to the last transaction of

the real estate is disclosed below:

Real estate acquired by	Real estate acquired	Date of the event	Transaction amount	Status of payment	Counterparty	Relationship with the counterparty	Original owner who sold the real estate to the counterparty	Relationship between the original owner and the acquirer	Date of the original transaction	Amount	Basis or reference used in setting the price	Reason for acquisition of real estate and status of the real estate	Other commitments
MEVN	Plant	May 11,2020	$ 483,488	411,436	HOP LUC CONSTRUC- TION JOINT STOCK COMPANY	None	-	-	-	-	-	For business use	-

Table 5,Page1

Table 6

Expressed in thousands of NTD

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

Year ended December 31, 2020

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationshipwith the counterparty			Transaction	Transaction	Differences in transaction terms compared to third party transactions(Note 1)	Differences in transaction terms compared to third party transactions(Note 1)	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Note
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance (Note2)	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company The Company The Company METC MESG MESG MESG	MECL MECE MECH Luxshare-ICT (Vietnam) Limited MEVN The Company MECH METC MECL	A subsidiary of the Company Investment accounted for using the equity method Investment accounted for using the equity method Other related party A subsidiary of the Company Parent Company Investment accounted for using the equity method A subsidiary of the Company A subsidiary of the Company	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases	10,838,828 $ 9,815,633 3,614,382 509,662 426,183 573,052 2,113,650 1,171,234 1,283,027	31% 28% 10% 1% 1% 2% 6% 3% 4%	60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)	30~120 days end of month for the third parties 30~120 days end of month for the third parties 30~120 days end of month for the third parties 30~120 days end of month for the third parties 30~120 days end of month for the third parties 30~120 days end of month for the third parties 30~120 days end of month for the third parties 30~120 days end of month for the third parties 30~120 days end of month for the third parties	3,767,983) ($ ( 2,420,239) ( 754,255) ( 93,618) ( 208,719) ( 271,532) ( 715,525) ( 162,512) ( 423,290)	35% 23% 7% 1% 2% 3% 7% 2% 4%	(Note 3) (Note 3) (Note 3) (Note 3) (Note 3)

Note 1: For purchase transactions with related parties, the price is based on the profitability of the product and will be adjusted annually. Note 2: The balance is the net amount after offsetting accounts receivable and payable due from/ to related parties. Note 3: Inter-company transactions between companies within the Group are eliminated.

Table 6,Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

December 31, 2020

Creditor Table 7	Counterparty	Relationship with the counterparty	Balance as at December 31,2020(Note 1)	Turnover rate	Overdue receivables	Overdue receivables	Allowance for doubtful accounts Amount collected subsequent to the balance sheet date (Note 2) Expressed in thousands of NTD (Except as otherwise indicated)	Allowance for doubtful accounts Amount collected subsequent to the balance sheet date (Note 2) Expressed in thousands of NTD (Except as otherwise indicated)
					Amount	Action taken
The Company MECL MECL METC MEVN	METC The Company MESG MESG The Company	A subsidiary of the Company Parent Company A subsidiary of the Company A subsidiary of the Company Parent Company	$ 271,532 3,767,983 423,290 162,512 208,719	2.89 3.92 3.61 8.24 4.08	- $ - - - -	- - - - -	- $ 3,194,020 138,472 65,724 181,236	- $ - - - -

Note 1: Inter-company transactions between companies within the Group are eliminated. Note 2: The balance was as at February 25, 2021.

Table 7,Page1

Table 8

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Significant inter-company transactions during the reporting periods Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

						Transaction
Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)
0 0 0 0 1 1 2 2 2 2	MEHO MEHO MEHO MEHO METC METC MESG MESG MESG MESG	MECL MECL MEVN MEVN MEHO MEHO MECL METC MECL METC	1 1 1 1 2 2 3 3 3 3	Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Purchases Accounts payable Accounts payable	$ 10,838,828 3,767,983 426,183 208,719 573,052 271,532 1,283,027 1,171,234 423,290 162,512	The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The balance shown was net of receivables as agreed by both parties	31% 11% 1% 1% 2% 1% 4% 3% 1% 0%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

1. Parent company is ‘0’.

2. The subsidiaries are numbered in order starting from ‘1’.

3. Note 2: Relationship between transaction company and counter party is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.): 1. Parent company to subsidiary.

4. Subsidiary to parent company.

5. Subsidiary to subsidiary.

6. Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Table 8,Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Information on investees Year ended December 31, 2020

				Information on investees Year ended December 31, 2020	Information on investees Year ended December 31, 2020
Investor Table 9	Investee	Location	Main business activities	Initial investment amount		Shares held as at December 31,2020			Net profit (loss) of the investee for the year ended December 31,2020	Investment income (loss) recognised by the Company for the year ended December 31,2020 Note Expressed in thousands of NTD (Except as otherwise indicated)
				Balance as at December 31,2020	Balance as at December 31,2019	Number of shares (in thousand shares)	Ownership (%)	Book value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company DDBV DDBV MHKY INSA SOCV SOCA	MEST DDBV LEOHAB ENTERPRISE CO.,LTD. MECA MESG METC MHKY INSA BTTT MEVN UCMU MTHK FUSA SOCV SOCA SENM	HONG KONG British Virgin IS. Taichung City U.S.A SINGAPORE THAILAND CAYMAN SAMOA Taichung City VIETNAM MAURITIUS HONG KONG SAMOA CANADA CANADA NORWAY	General investment business Plastic injection molding and metal stamping Technique, marketing and after service Sales of microphone, receiver and speaker Sales of medical device General investment business Sales of medical device Manufacture of microphone and speaker General investment business General investment business General investment business Sale and development of speaker and power amplifier General investment business Manufacture and sales of speaker monomer Microphone, components and product and sale of other electric products Sales of microphone, receiver and speaker	981,113 $ 1,479,925 96,666 28,887 92,132 484,358 887,287 865,832 14,640 366,710 151 1,392,956 818,916 30 11,112 23	981,113 $ 1,479,925 96,666 28,887 92,132 484,358 648,129 865,832 14,640 - 151 1,392,956 579,758 30 11,112 23	25,658 48,005 4,986 999 800 5,060 24,979 - 9,000 - 5 48,000 - - - -	100.00 100.00 21.00 99.90 100.00 99.99 100.00 70.00 100.00 51.00 100.00 100.00 97.12 100.00 100.00 100.00	4,085,419 $ 3,146,438 49,812 27,373 1,128,133 558,130 718,627 756,167 21,652 364,484 - 3,146,355 732,331 40,445 68,001 54,606	429,868 $ 262,744 13,959 7,485) ( 518,927 32,314 71,578) ( 53,739) ( 6,140) ( 24,720 687 262,057 69,894) ( 10,562) ( 6,212 6,455	417,441 $ 259,314 2,931 7,478) ( 518,927 33,401 71,578) ( 37,617) ( 6,140) ( 12,607 - - - - - -	(Note 1) (Note 1) (Note 1) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)

Note 1: The investment income included unrealised gains or losses and realised gains arising from upstream transactions.

Note 2: The investee is second subsidiary and investment income (loss) is not shown.

Table 9,Page1

Table 10

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Information on investees in Mainland China

Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January1, 2020	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the year ended December 31, 2020	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the year ended December 31, 2020	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020	Net income of investee for the year ended December 31, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2020	Book value of investments in Mainland China as of December 31, 2020 (Note 5)	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2020	Note
					Remitted to Mainland China	Remitted back to Taiwan
MECL MECE MECS Perfect Fortune Inc. LOYAL WIRE& CABLE COMPANY LTD. MECH FUSZ MEDG MSCS ETCX	Manufacture of medical device Manufacture of speaker and amplifier Retail sales of hearing products Research and development of sound equipment, earphones, mobile power supply, charging box, cable, connector, electronic components, plastic hardware, mould and antenna Manufacture and sales of microphone, receiver, speaker and mobile phone Manufacture and sales of microphone, receiver and speaker Electric wire, electric cable and other wire processing Electric wire, electric cable and other wire processing Microphone, receiver, speaker, security system, induction cooker and other electronic component International trade, transit trade and trading consulting; trading amongst companies in bonded area and trading agency in the area	417,321 $ 2,738,859 7,264 42,607 122,572 437,700 280,930 875,400 151,324 19,697	(Note 2) (Note 2) (Note 2) (Note 2、4) (Note 2、4) (Note 2) (Note 2) (Note 1) (Note 1) (Note 2)	453,191 $ 1,369,285 6,055 107,624 - 420,687 310,763 452,564 79,728 2,237	- $ - - - - - - - - 16,772	- $ - - - - - - - - -	453,191 $ 1,369,285 6,055 107,624 - 420,687 310,763 452,564 79,728 19,009	201,437 $ 528,719 437) ( 14,166 5,845 465,563 4,769) ( 10,931) ( 11,819 3,650) (	100.00% 49.00% 49.00% 18.33% 18.33% 49.00% 97.12% 49.00% 70.00% 97.12%	201,437 $ 255,644 214) ( - - 229,121 4,611) ( 5,350) ( 8,273 3,574) (	2,800,241 $ 3,146,355 1,070) ( 60,294 29,392 910,702 733,577 372,839 104,635 8,179	2,282,120 $ 295,185 40,321 4,125 - - - - - -	(Note 3) (Note 3) (Note 3)

Table 10,Page1

Table 10

Expressed in thousands of NTD (Except as otherwise indicated)

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Information on investees in Mainland China

Year ended December 31, 2020

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January1, 2020	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the year ended December 31, 2020	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the year ended December 31, 2020	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020	Net income of investee for the year ended December 31, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2020	Book value of investments in Mainland China as of December 31, 2020 (Note 5)	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2020	Note
					Remitted to Mainland China	Remitted back to Taiwan
ASCX LACX FUXM ASCZ	Manufacture and sales of hearing aid, hearing device and acoustics equipment Sales of medical device Manufacture of hearing aid and acoustics for rehabilitation device Research and development and technical sales of software for hearing aid use	58,044 21,885 17,508 304,784	(Note 2) (Note 2) (Note 2) (Note 2)	275,537 22,180 17,744 94,845	- - - 208,150	- - - -	275,537 22,180 17,744 302,995 3,837,362 $	16,085 2,513) ( 3,889) ( 61,408) (	96.63% 96.63% 96.63% 97.12%	15,355 2,435) ( 3,755) ( 59,563) (	78,170 28,767 26,909 226,195	- $ - - -

Note 1: Reinvesting in the investee in Mainland China through the parent company. Note 2: Through investing in an existing company in the third area, which then invested in the investee in Mainland China. Note 3: The financial statements that are audited and attested by R.O.C. parent company’s CPA. Note 4: The investee is the reinvestment company of MERRY ELECTRONICS (HK) CO.,LTD. shown as non-current financial assets at fair value through other comprehensive income. Note 5: The amount in the table is translated into New Taiwan dollars at the closing exchange rates prevailing at the balance sheet date.

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2020	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Merry Electronics Co., Ltd.	$ 3,837,362	$ 3,727,090	$ 7,063,018

Note 1: (2001) Tai-Cai-Zheng (1) Letter No. 006130 of Securities and Futures Commission, Ministry of Finance, R.O.C

Table 10,Page2

Table 11

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Investeein Mainland China	Counterparty	Sale(purchase)	Sale(purchase)	Propertytransaction	Propertytransaction	Accounts receivable(payable)	Accounts receivable(payable)	Provision of endorsements/guarantees or collaterals	Provision of endorsements/guarantees or collaterals		Financing	Financing		Others
		Amount	%	Amount	%	Balance at December 31,2020	%	Balance at December31,2020	Purpose	Maximum balance during the year ended December 31,2020	Balance at December 31,2020	Interestrate	Interest during the year ended December 31, 2020
MECL MECL MECE MECH MECH	MEHO MESG MEHO MEHO MESG	($ 10,838,828) ( 1,283,027) ( 9,815,633) ( 3,614,382) ( 2,113,650)	31% 4% 28% 10% 6%	- - - - -	- - - - -	($ 3,767,983) ( 423,290) ( 2,420,239) ( 754,255) ( 715,525)	35% 4% 23% 7% 7%	- $ - - - -	- - - - -	- $ - - - -	- $ - - - -	- - - - -	- $ - - - -	- - - - -

Table 11,page1