MERRY - Audit Report / Information 2020

MERRY ELECTRONICS CO., LTD.

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND INDEPENDENT AUDITORS’

REPORT

DECEMBER 31, 2020 AND 2019

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 parent company only balance sheets of Merry Electronics Co., Ltd. (the “Company”) as at December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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 parent company only financial statements section of our report. We are independent of the Company 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.

Key audit matters

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

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Key audit matters for the Company’s 2020 parent company only financial statements are stated as follows:

Cut-off on sales revenue from distribution warehouse

Description

Refer to Note 4(30) for accounting policy on revenue recognition.

The Company recognises revenue upon delivery or pick-up of goods (the transfer of control of ownership) by customers at warehouses. Warehouse sales revenue constitutes 36% of total operating revenue for the year ended December 31, 2020. The Company’s revenue recognition is based on inventory movement records of warehouse 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 warehouse 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 Company’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.
B. Performed cut-off procedures on sales revenue from distribution warehouse recognised during a specific period before and after the period-end, including verifying delivery schedule of distribution warehouse and ensuring the movements of inventories contained in the statements and

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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.

Investments accounted for using equity method - valuation of inventories

Description

The Company receives orders from customers and the subsidiaries are tasked to manufacture the products. The subsidiaries (shown as investments accounted for using equity method) have a high risk of incurring inventory valuation loss and 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 of the subsidiaries (shown as investments accounted for using equity method) 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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Responsibilities of management and those charged with governance for the parent company only financial statements

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

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

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

Auditors’ responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 parent company only financial statements.

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

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A. Identify and assess the risks of material misstatement of the parent company only 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 Company’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 Company’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 parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

E.

F.

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

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the company 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.

We also provide those charged with governance with a statement that we have complied with relevant

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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 parent company only 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

Liu, Mei-Lan

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

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying parent company only 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 parent company only 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. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2020 AMOUNT % `$` `322,770` `1` `78,919` `1` `195,179` `1` `866,600` `3` `42,865` `-` `10,105,104` `37` `283,776` `1` `35,934` `-` `1,330` `-` `1,004,088` `4` `15,703` `-` `46,138` `-` `12,998,406` `48` `26,468` `-` `1,483,463` `5` `11,333,709` `42` `1,089,776` `4` `4,147` `-` `259,161` `1` `102,717` `-` `19,514` `-` `14,318,955` `52` `$` `27,317,361` `100`	December 31, 2019	December 31, 2019
	AMOUNT `$` `322,770` `78,919` `195,179` `866,600` `42,865` `10,105,104` `283,776` `35,934` `1,330` `1,004,088` `15,703` `46,138` `12,998,406` `26,468` `1,483,463` `11,333,709` `1,089,776` `4,147` `259,161` `102,717` `19,514` `14,318,955` `$` `27,317,361`	AMOUNT `$` `4,038,861` `16,913` `171,906` `-` `31,585` `4,466,711` `134,974` `17,657` `43,626` `815,756` `16,216` `32,710` `9,786,915` `21,301` `2,435,247` `9,618,330` `770,937` `7,849` `287,174` `88,793` `8,755` `13,238,386` `$` `23,025,301`	%
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 1140 Current contract assets 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventories 1410 Prepayments 1479 Other current assets 11XX Current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Financial assets at fair value through other comprehensive income - non-current 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 1990 Other non-current assets, others 15XX Non-current assets 1XXX Total assets			`18` `-` `1` `-` `-` `19` `1` `-` `-` `4` `-` `-`
			`43`
			`-` `11` `42` `3` `-` `1` `-` `-`
			`57`
			`100`

(Continued)

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MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31, 2019	December 31, 2019
	AMOUNT `$` `89,940` `11,799` `103,882` `5,384,900` `498,778` `7,124` `215,609` `287,887` `6,599,919` `2,229,959` `-` `874,025` `83,476` `1,017` `402,928` `3,591,405` `10,191,324` `2,086,684` `3,870,105` `1,745,768` `269,144` `3,834,442` `1,027,834` `12,833,977` `$` `23,025,301`	%
Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 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 2640 Accrued pension liabilities 2645 Guarantee deposits received 2670 Other non-current liabilities 25XX Non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments 3X2X Total liabilities and equity		`1` `-` `1` `23` `2` `-` `1` `1`
		`29`
		`9` `-` `4` `-` `-` `2`
		`15`
		`44`
		`9` `17` `8` `1` `17` `4`
		`56`
		`100`

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

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MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY 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(23) and 7
$
26,916,049
100
$
30,648,815
100
6(6)(24) and 7
(
25,145,971) (
93) (
27,637,789) (
90)
1,770,078
7
3,011,026
10
6(27)(28)
(
174,589) (
1) (
190,892) (
1)
(
515,948) (
2) (
584,741) (
2)
(
630,752) (
2) (
606,161) (
2)
12(2)
(
1,015)
- (
1,207)
-
(
1,322,304) (
5) (
1,383,001) (
5)
447,774
2
1,628,025
5
6(24)
26,887
-
48,522
-
6(25)
80,342
-
97,074
-
6(26)
(
70,971)
- (
5,693)
-
(
40,154)
- (
63,385)
-
6(7)
1,124,731
4
1,441,489
5

1,120,835
4
1,518,007
5
1,568,609
6
3,146,032
10
6(29)
(
246,666) (
1) (
597,420) (
2)
$
1,321,943
5
$
2,548,612
8

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
7070
Share of profit of associates and
joint ventures accounted for
using equity method
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year

Items	Years ended December 31, 2020 2019 Notes AMOUNT % AMOUNT % 6(23) and 7 `$` `26,916,049` `100` `$` `30,648,815` `100` 6(6)(24) and 7 `(` `25,145,971) (` `93) (` `27,637,789) (` `90)` `1,770,078` `7` `3,011,026` `10` 6(27)(28) `(` `174,589) (` `1) (` `190,892) (` `1)` `(` `515,948) (` `2) (` `584,741) (` `2)` `(` `630,752) (` `2) (` `606,161) (` `2)` 12(2) `(` `1,015)` `- (` `1,207)` `-` `(` `1,322,304) (` `5) (` `1,383,001) (` `5)` `447,774` `2` `1,628,025` `5` 6(24) `26,887` `-` `48,522` `-` 6(25) `80,342` `-` `97,074` `-` 6(26) `(` `70,971)` `- (` `5,693)` `-` `(` `40,154)` `- (` `63,385)` `-` 6(7) `1,124,731` `4` `1,441,489` `5` `1,120,835` `4` `1,518,007` `5` `1,568,609` `6` `3,146,032` `10` 6(29) `(` `246,666) (` `1) (` `597,420) (` `2)` `$` `1,321,943` `5` `$` `2,548,612` `8`
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 7070 Share of profit of associates and joint ventures accounted for using 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. PARENT COMPANY ONLY 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(17)
$
1,439
- ($
15,027)
-
6(22)
(
938,082) (
4)
1,146,956
4
(
3,985)
-
-
-

6(29)
(
288)
-
3,005
-
(
940,916) (
4)
1,134,934
4
6(22)
(
57,400)
- (
113,955)
-
6(22)
3,220
- (
2,377)
-
6(22)
74,246
- (
153,522) (
1)
6(22)(29)
(
2,425)
-
52,830
-

17,641
- (
217,024) (
1)
($
923,275) (
4) $
917,910
3
$
398,668
1
$
3,466,522
11
6(30)
$
6.39
$
12.51
$
6.01
$
11.54

Other comprehensive income
Components of other
comprehensive income 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
8330
Share of other comprehensive
loss of associates and joint
ventures accounted for using
equity method
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
8380
Share of other comprehensive
(loss) income of associates and
joint ventures accounted for
using equity method
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
Basic earnings per share
9750
Total basic earnings per share
Diluted earnings per share
9850
Total diluted earnings per share

Items	Years ended December 31, 2020 2019 Notes AMOUNT % AMOUNT % 6(17) `$` `1,439` `- ($` `15,027)` `-` 6(22) `(` `938,082) (` `4)` `1,146,956` `4` `(` `3,985)` `-` `-` `-` 6(29) `(` `288)` `-` `3,005` `-` `(` `940,916) (` `4)` `1,134,934` `4` 6(22) `(` `57,400)` `- (` `113,955)` `-` 6(22) `3,220` `- (` `2,377)` `-` 6(22) `74,246` `- (` `153,522) (` `1)` 6(22)(29) `(` `2,425)` `-` `52,830` `-` `17,641` `- (` `217,024) (` `1)` `($` `923,275) (` `4) $` `917,910` `3` `$` `398,668` `1` `$` `3,466,522` `11` 6(30) `$` `6.39` `$` `12.51` `$` `6.01` `$` `11.54`
Other comprehensive income Components of other comprehensive income 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 8330 Share of other comprehensive loss of associates and joint ventures accounted for using equity method 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 8380 Share of other comprehensive (loss) income of associates and joint ventures accounted for using equity method 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 Basic earnings per share 9750 Total basic earnings per share Diluted earnings per share 9850 Total diluted earnings per share

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

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MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

2019 Balance at January 1, 2019 Profit for the year Other comprehensive income (loss) for the year Total comprehensive income Appropriations and distribution of 2018 retained earnings: Legal reserve Cash dividends Issuance of common stock for cash Convertible bonds converted to equity shares Share-based payment Disposal of investments in equity instruments at fair value through other comprehensive income 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 for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) Appropriations and distribution of 2019 retained earnings: Legal reserve Cash dividends Convertible bonds converted to equity shares Share-based payment Disposal of investments in equity instruments designated at fair value through other comprehensive income Recognition of change in equity of associates in proportion to the Group's ownership Changes in ownership of subsidiaries Disposal of investments accounted for using equoty method Balance at December 31, 2020	Notes		Share capital - common stock	Capital surplus, additional paid-in capital	Capital surplus, additional paid-in capital				Retained Earnings	Retained Earnings			Other equityinterest		Total equity
							Legal reserve		Special reserve		Unappropriated retained earnings
	6(22) 6(19) 6(15)(31) 6(18) 6(3) 6(22) 6(31) 6(18) 6(3)		`$` `1,996,625` `-` `-` `-` `-` `-` `40,000` `48,851` `1,208` `-` `-` `-` `$` `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`

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

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MERRY ELECTRONICS CO., LTD.

PARENT COMPANY ONLY 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-right-of-use assets Gain on modification of lease Amortization Expected credit impairment loss Finance costs Interest expense - lease liability Loss (gain) on financial assets or liabilities at fair value through profit or loss Proceeds from disposal of investments in debt instruments measured at fair value through other comprehensive income Share of profit of associates and joint ventures accounted for using equity method Dividend income Interest income Gain on disposal of property, plant and equipment Gain on disposals of investments Compensation cost of employee restricted shares Unrealised foreign exchange loss Effect of exchange rate changes Changes in operating assets and liabilities Changes in operating assets Financial assets (liabilities) at fair value through profit or loss Accounts receivable Accounts receivable - related parties Contract assets-current Other receivables Other receivables - related parties Inventories Prepayments Other current assets Financial assets mandatorily measured at fair value through profit or loss - non-current Changes in operating liabilities Accounts payable Accounts payable - related parties Contract liabilities Refund liabilities Other payables Other payables - related parties Other current liabilities Other non-current liabilities Cash (outflow) inflow generated from operations Interest paid Income taxes paid Interest received Dividend income Net cash flows (used in) from operating activities	Years ended December 31, Notes 2020 2019 `$` `1,568,609` `$` `3,146,032` 6(8)(27) `17,289` `17,318` 6(9)(27) `8,520` `10,441` `-` `(` `5` `)` 6(10)(27) `50,719` `55,625` 12(2) `1,015` `1,207` `39,837` `63,385` 6(9) `317` `610` `3,731` `(` `2,634` `)` 6(3) `-` `(` `833` `)` 6(7) `(` `1,124,731` `)` `(` `1,441,489` `)` 6(25) `(` `11,694` `)` `(` `69,850` `)` 6(24) `(` `26,887` `)` `(` `48,522` `)` 6(26) `(` `431` `)` `(` `471` `)` 6(26) `(` `5,311` `)` `-` 6(18) `89,899` `52,158` `72,234` `17,781` `3,714` `(` `28,612` `)` `(` `47,186` `)` `154,703` `(` `5,794,008` `)` `2,625,469` `(` `155,686` `)` `(` `128,671` `)` `(` `11,280` `)` `(` `31,585` `)` `(` `23,496` `)` `18,946` `42,299` `(` `11,030` `)` `(` `188,332` `)` `(` `190,698` `)` `513` `(` `7,326` `)` `(` `8,783` `)` `(` `7,669` `)` `(` `5,167` `)` `(` `3,127` `)` `87,603` `101,538` `1,921,690` `(` `1,151,431` `)` `371,404` `14,065` `261,373` `81,791` `(` `119,793` `)` `74,309` `79,842` `(` `49,769` `)` `157` `(` `2,412` `)` `996` `(` `15,596` `)` `(` `2,901,024` `)` `3,243,648` `(` `8,775` `)` `(` `15,061` `)` `(` `115,043` `)` `(` `223,990` `)` `22,242` `48,955` `11,694` `69,850` `(` `2,990,906` `)` `3,123,402`		Years ended December 31,

(Continued)

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MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY 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 Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Acquisition of financial assets at amortised cost - current Decrease in guarantee deposits Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Proceeds from long-term borrowings Cash dividends paid Repayment of principal portion of liabilities Cancellation of restricted employee shares Issuance of common stock for cash Net cash flows from (used in) financing activities 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 6(3) `(` `$` `185,063` `)` `$` `-` 6(3)(31) `176,713` `143,315` 6(7) `(` `604,338` `)` `(` `134,264` `)` 6(7) `32,835` `-` 6(8)(31) `(` `342,261` `)` `(` `42,763` `)` `5,097` `12,141` 6(10)(31) `(` `26,044` `)` `(` `42,812` `)` `(` `866,600` `)` `-` `166` `138` `(` `1,809,495` `)` `(` `64,245` `)` `1,901,685` `(` `4,309,594` `)` `799,950` `-` 6(21) `(` `1,608,376` `)` `(` `1,751,419` `)` 6(9) `(` `8,909` `)` `(` `10,921` `)` `(` `40` `)` `(` `6,720` `)` 6(19) `-` `448,000` `1,084,310` `(` `5,630,654` `)` `(` `3,716,091` `)` `(` `2,571,497` `)` `4,038,861` `6,610,358` `$` `322,770` `$` `4,038,861`		Years ended December 31,

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

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MERRY ELECTRONICS CO., LTD. NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS 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 is primarily engaged in manufacturing, processing, repair, sales of electric appliances and audiovisual electric products, telecommunication equipment and apparatus, computers and computing peripheral equipments, restrained telecom radio frequency equipments, medical appliances, as well as electronic parts and components; planning, design as well as output of service items’ equipments; production as well as marketing management consultant of service items’ relevant business. The Company’s shares were listed on the Taipei Exchange since August 1998 and transferred to the Taiwan Stock Exchange since September 2000 with approval. 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 PARENT COMPANY ONLY

FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These parent company only 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 the FSC effective from 2020 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7 , ‘Interest rate benchmark reform’ Amendments to IFRS 16, ‘Covid-19 related rent concessions’ Note: Earlier application from January 1, 2020 is allowed by FSC.	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

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

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

the Company

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

	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 Company’s financial condition and financial performance based on the Company’s assessment.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

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

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Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
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New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets	To be determined by
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-	January 1, 2023
current’
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	January 1, 2022
before intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a	January 1, 2022
contract’
Annual improvements to IFRS Standards 2018–2020	January 1, 2022

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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(1) Compliance statement

The parent company only financial statements of the Company have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(2) Basis of preparation

A. Except for the following items, the parent company only 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 at fair value through other comprehensive income.
(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 International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

(3) Foreign currency translation

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

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at fair value are translated using the historical exchange rates at the dates of the initial transactions.

(d) All foreign exchange gains and losses 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 company entities and associates 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.
(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 Company 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.

(4) 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 held mainly for trading purposes;
(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

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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.

(5) 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.

(6) 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 Company measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.
D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(7) 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 Company 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:
(a) The objective of the Company’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 Company measures the financial assets at fair value plus transaction costs. The Company 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 Company 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

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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.

(8) Financial assets at amortised cost

The Company’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.

(9) Accounts and notes receivable

A. Accounts and notes receivable entitle the Company 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.

(10) Impairment of financial assets

For debt instruments measured at fair value through other comprehensive income including accounts receivable, at each reporting date, the Company 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 that do not contain a significant financing component, the Company recognises the impairment provision for lifetime ECLs.

(11) Derecognition of financial assets

The Company 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 Company 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 Company has not retained control of the financial asset.

(12) 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 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.

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(13) Investments accounted for using equity method / subsidiaries and associates

A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company 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
B. Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Company are eliminated. The accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
C. The Company’s share of its subsidiaries’ 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 Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.
D. When changes in a subsidiary’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the subsidiary, the Company recognises the Company’s share of change in equity of the subsidiary in ‘Capital surplus’ in proportion to its ownership.
E. Associates are all entities over which the Company 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.
F. The Company’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.
G. 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 Company’s ownership percentage of the associate, the Company recognises the Company’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
H. Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company’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 Company.
I. Pursuant to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the

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financial statements prepared with basis for consolidation. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation.

(14) 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 Company 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:

and equipment are as follows:
Buildings and structures	5 ~ 60 years
Machinery and equipment	2 ~ 10 years
Transportation equipment	7 ~ 12 years
Office equipment	5 ~ 10 years
Others	4 ~ 10 years

(15) 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 lowvalue 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

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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.

(16) Leased assets/ operating leases (lessee)

Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

(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 3 to 5 years.

B. Goodwill

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

C. Other intangible assets are patents and are amortised using the straight-line method over 3 years.

(18) Impairment of non-financial assets

A. The Company 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 should be 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 expected to benefit from the synergies of the business combination.

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(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 and 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 Company measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

(22) Convertible bonds payable

Convertible bonds issued by the Company contain conversion options (that is, the bondholders have the right to convert the bonds into the Company’s common shares by exchanging a fixed amount of cash for a fixed number of common shares), call options and put options. The Company 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.

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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.
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) 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 expenses 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 Company 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 government bonds (at the balance sheet date) of a currency and term consistent with the

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currency and term of the employment benefit obligations.

     - 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.
(26) 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-market 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 Company 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 Company and the Company must refund their payments on the stocks, the Company 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 - restricted stock’.
(27) 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

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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 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 parent company only balance sheet. 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 Company 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 utilized.

(28) Share capital

A. 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.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(29) 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

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on the effective date of new shares issuance.

(30) Revenue recognition

Sales of goods

A. The Company 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 customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’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 customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.
B The products are 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 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 100 days which is consistent with market practice. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Company 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.

(31) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Company 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 Company 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.

(32) Business combinations

A. The Company 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,

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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 Company 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.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’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. The related information is addressed below:

(1) Critical accounting estimates and assumptions

A. Impairment assessment of goodwill
The impairment assessment of goodwill relies on the Company’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. Please refer to Note 6(11) for the information of goodwill impairment. As of December 31, 2020, the Company recognised goodwill, net of impairment loss, amounting to $139,735 thousand.
B. Impairment assessment of investments accounted for using equity method
The Company assesses the impairment of an investment accounted for using equity method as soon as there is any indication that it might have been impaired and its carrying amount cannot be recovered. The Company assesses the recoverable amount of an investment accounted for under the equity method based on the present value of the Company’s share of expected future

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cash flows of the investee, and analyses the reasonableness of related assumptions.

As of December 31, 2020, the Company’s investments accounted for under the equity method, net of impairment loss, amounted to $11,333,709 thousand.

C. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Company 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 $1,004,088 thousand.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and revolving funds Checking accounts and demand deposits Short-term notes and bills	December31,2020 December31,2019 242 $ 196 $ 322,528 2,669,637 - 1,369,028 322,770 $ 4,038,861 $

A. The Company 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 Company has no cash and cash equivalents pledged to others.
C. The Company’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 and liabilities at fair value through profit or loss

Items Current items: Financial assets mandatorily measured at fair value through profit or loss - Funds - Non-hedging derivatives - Stocks - Call options of convertible bonds Valuation adjustment Non-current items: - Funds Items Current items: Financial liabilities held for trading - Non-hedging derivatives	December 31,2020 50,000 $ 26,316 - 446 2,157 78,919 $ 26,468 $ December 31, 2020 30,047 $	December 31,2019
		- $ 14,138 169 2,290 316 16,913 $
		21,301 $
		December 31,2019
		11,799 $

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

loss are listed below:
Net gains on financial assets at fair value through profit or loss	2020 2019 93,258 $ 68,721 $ Years ended December 31,
		68,721 $

B. The Company entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below:

Derivativeinstruments 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		December31,2020	December31,2020
		Contract amount (Notionalprincipal) USD 70,000thousand USD3,000 thousand USD8,189 thousand USD84,000 thousand USD8,205 thousand	Contract period 2020/12/03~ 2021/01/29 2020/12/22~ 2021/01/07 2020/08/28~ 2021/03/01 2020/12/03~ 2021/03/09 2020/08/28~ 2021/03/01	Contract price
				NTD 28.105~28.487 CNY 6.541 THB 31.260 NTD 27.815~28.360 THB 31.200

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==> picture [467 x 102] intentionally omitted <==

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

December 31, 2019
Contract amount
Derivative instruments (Notional principal) Contract period Contract price
Forward foreign exchange 2019/12/12~
USD 63,000 thousand NTD 30.017~30.310
contract to sell 2020/02/27
Forward foreign exchange 2019/12/12~
USD 63,000 thousand NTD 29.835~30.220
contract to buy 2020/02/27
----- End of picture text -----

The Company 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 Company had no outstanding payments for settled transactions amounting to $306 thousand (shown as other payables) and $0, respectively.
D. The Company 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

Items			December31,2020			December31,2019
Current items:
Debt instruments
Bonds		$	89,550		$	89,550
Valuation adjustment	(		3,735)			1,000
			85,815			90,550
Equity instruments
Stocks			106,080			76,080
Valuation adjustment			3,284			5,276
			109,364			81,356
		$	195,179		$	171,906
Non-current items:
Debt instruments
Bonds		$	144,625		$	-
Valuation adjustment			1,620			-
			146,245			-
Equity instruments
Listed stocks			748,154			755,130
Unlisted stocks			58,544			48,107
			806,698			823,237
Valuation adjustment			533,496			1,614,986
Accumulated impairment	(		2,976)	(		2,976)
			1,337,218			2,435,247
		$	1,483,463		$	2,435,247

A. The Company 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 $1,678,642 thousand and $2,607,153 thousand as at December 31, 2020 and 2019, respectively.
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. During the year ended December 31, 2019, the Company 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. As of December 31, 2020 and 2019, the uncollected payments arising from disposal of shares of public offering companies amounted to $0 thousand and $4,336 thousand, respectively.
D. 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 [460 x 378] 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 ($ 938,082) $ 1,152,242
Cumulative gains (losses) 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
$ 3,220 ($ 2,080)
Cumulative other comprehensive
income reclassified to profit or loss
-
Reclassified due to derecognition $ ($ 833)
Interest income recognised in profit
or loss $ 3,064 $ 3,554
----- End of picture text -----

E. 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 Company was $1,678,642 thousand and $2,607,153 thousand, respectively.
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.

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(4) Accounts receivable

Accounts receivable
			December31,2020			December31,2019
Accounts receivable		$	10,109,285		$	4,469,877
Less: Allowance for uncollectable accounts	(		4,181)	(		3,166)
		$	10,105,104		$	4,466,711
A. The ageing analysis of accounts receivable that were past due but not					impaired is as follows:
	December 31, 2020					December 31, 2019
Not past due	$		10,091,321	$		4,455,759
Up to 30 days			12,684			6,431
31 to 90 days			3,151			7,471
91 to 180 days			2,129			216
	$		10,109,285	$		4,469,877

The above ageing 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 $10,109,285 thousand, $4,469,877 thousand, and $7,170,300 thousand, respectively.
C. The Company 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 Company entered into a factoring agreement with Bank of America to sell its accounts receivable. Under the agreement, the Company 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 Company does not have any continuing involvement in the transferred accounts receivable. Thus, the Company derecognised the transferred accounts receivable. As of December 31, 2020, there was no amount that was past due.

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(6) Inventories

Finished goods Raw materials Finished goods Raw materials	Cost 1,007,280 $ 15,201 1,022,481 $ Cost 874,580 $ 1,136 875,716 $	Allowance for slow- moving and valuation losses Bookvalue 18,393) ($ 988,887 $ - 15,201 18,393) ($ 1,004,088 $ Allowance for slow- moving and valuation losses Bookvalue 59,960) ($ 814,620 $ - 1,136 59,960) ($ 815,756 $ December31,2020 December31,2019

The cost of inventories recognised as expense for the year:

		Years ended	December	31,
		2020		2019
Cost of goods sold	$	25,187,538	$	27,625,559
(Gain on reversal of) loss on market value
decline and obsolete and slow-moving
inventories	(	41,567)		12,230
	$	25,145,971	$	27,637,789

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

(7) Investments accounted for using equity method

		2020			2019
At January 1	$	9,618,330	$		8,300,401
Addition of investments accounted for
using equity method		604,338			134,264
Disposal of investments accounted for
using equity method	(	23,548)			-
Share of profit or loss of investments
accounted for using equity method		1,124,731			1,441,489
Changes in capital surplus	(	3,003)			11,151
Changes in other equity items		12,861	(		268,975)
At December 31	$	11,333,709		$	9,618,330

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MERRY ELECTRONICS (HK) CO., LTD. DANNY DYNAMICS LIMITED LEOHAB ENTERPRISE CO., LTD. MERRY ELECTRONICS (U.S.A.) CO., LTD. MERRY ELECTRONICS (SINGAPORE) PTE., LTD. MERRY ELECTRONICS (THAILAND) CO., LTD. MERRY HEALTHCARE CO., LTD. GUANGDONG LUXSHARE & MERRY ELECTRONICS CO., LTD. ASIAN ELITE INTERNATIONAL LTD. INDIGO ENTERPRISE INC. BIOTEST MEOLCAL CORPORATION(“BTTT”) MERRY & LUXSHARE (VIETNAM) CO., LTD.	December 31,2020 3,146,438 49,812 718,627 372,839 104,635 756,167 21,652 364,484 11,333,709 $ 558,130 $ 4,085,419 27,373 1,128,133		December 31,2019 2,838,996 66,395 541,594 376,606 93,666 794,473 27,792 - 554,432 $ 3,627,334 36,408 660,634
			9,618,330 $

A. Subsidiaries:

(a) Details of the subsidiaries of the Company are provided in Note 4(3) in the Company’s consolidated financial statements as of and for the year ended December 31, 2020.
(b) In December 2018, the Board of Directors of the Company resolved to acquire 100% of shares in the second-tier subsidiary, Fulicare Medical Technology (Xiamen) Co., Ltd., for a consideration of USD10 million. For the years ended December 31, 2020 and 2019, the Company has remitted USD 7 million (NTD 208,150 thousand) and USD 3 million (NTD 94,845 thousand), respectively.
(c) To meet customers’ demand and expand market of health care personal sound amplification product business, the Company made a cooperation investment with Biotest Medical Corp. for a consideration of no more than NTD10 million as resolved at the meeting of the Board of Directors on December 27, 2018. In February 2019, the Board of Directors resolved to invest in Biotest Medical Corp. in the amount of NTD 9,420 thousand and acquire 94.20% equity interests. The effective date for the conversion was set on July 31, 2019.
(d) In October 2019, the Board of Directors of the Company resolved to increase its investment in the second-tier subsidiary, Fulicare Co., Ltd., amounting to USD 1,900 thousand. For the years ended December 31, 2020 and 2019, the Company has remitted USD 1,040 thousand (NTD 31,007 thousand) and USD 295 thousand (NTD 9,354 thousand), respectively.
(e) In October 2019, the Board of Directors of the Company resolved to establish the second-tier

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subsidiary, Fulicare Co., Ltd. TAIWAN BRANCH (SAMOA), Taiwan branch, and set NTD 30,000 thousand as working capital. The registration was completed on November 20, 2019.

(f) On February 27, 2020, the Board of Directors of the Company 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.
(g) On November 30, 2020, the Company sold 2,352 thousand shares in Leohab Enterprise Co., Ltd. at a premium for proceeds of $32,835 thousand, resulting in a decrease in share interests from 30.91% to 21% and gains on disposal of investments of $5,311 thousand. The change in share interests was transferred from other equity interest to profit and loss. Refer to Note 6(22) for details.
(h) The liquidation of the Company’s second-tier subsidiary, Fulicare Medical Instruments Technical Services (Suzhou)Co.,Ltd. was completed in May 2019.
(i) The liquidation of the Company’s second-tier subsidiary, Fulicare Medical Instruments (Suzhou)Co.,Ltd. was completed in April 2019.
B. Associates

The carrying amount of the Company’s interests in all individually immaterial associates and the Company’s share of the operating results are summarised below:

As of December 31, 2020 and 2019, the carrying amount of the Company’s individually immaterial associates amounted to $422,651 thousand and $443,001 thousand, respectively.

		Years ended	December	31,
		2020		2019
Share of loss of associates accounted for using equity method	($	2,419)	($	25,645)
Other comprehensive income (loss), net of tax		9,023	(	15,978)
Total comprehensive income (loss)	$	6,604	($	41,623)

C. The recognised share of (loss) profit of subsidiaries and associates accounted for using equity method is as follows:

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		Years ended	December	31,
		2020		2019
MERRY ELECTRONICS
(HK) CO., LTD.	$	417,441	$	675,996
DANNY DYNAMICS LIMITED		259,314		525,582
LEOHAB ENTERPRISE CO., LTD.		2,931		5,693
MERRY ELECTRONICS
(U.S.A.) CO., LTD.	(	7,478)		3,720
MERRY ELECTRONICS
(SINGAPORE) PTE. LTD.		518,927		307,560
MERRY ELECTRONICS
(THAILAND) CO., LTD.		33,401	(	10,765)
MERRY HEALTHCARE CO., LTD.	(	71,578)	(	7,757)
GUANGDONG LUXSHARE & MERRY	(	5,350)	(	31,338)
ASIAN ELITE INTERNATIONAL LTD.		8,273		2,415
INDIGO ENTERPRISE INC.	(	37,617)	(	42,769)
BIOTEST MEOLCAL CORPORATION(“BTTT”)	(	6,140)		13,152
MERRY & LUXSHARE (VIETNAM)
CO., LTD.		12,607		-
	$	1,124,731	$	1,441,489

(Remainder of page intentionally left blank)

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(8) Property, plant and equipment

Year ended December31,2020
Cost Openingbalance Additions Reductions Endingbalance Land 558,900 $ 200,683 $ - $ 759,583 $ Buildings and structures 177,110 3,960 3,264) ( 177,806 Machinery 93,285 5,698 1,326) ( 97,657 Transportation equipment 4,082 - - 4,082 Office equipment 66,332 3,305 3,659) ( 65,978 Others 9,361 6,901 6,085) ( 10,177 Unfinished construction 21,553 120,247 - 141,800 930,623 $ 340,794 $ 14,334) ($ 1,257,083 Accumulated depreciation Buildings and structures 35,539) ($ 4,086) ($ 3,264 $ 36,361) ($ Machinery 69,414) ( 5,006) ( - 74,420) ( Transportation equipment 1,266) ( 583) ( - 1,849) ( Office equipment 45,454) ( 6,529) ( 3,659 48,324) ( Others 8,013) ( 1,085) ( 2,745 6,353) ( 159,686) ( 17,289) ($ 9,668 $ 167,307) ( 770,937 $ 1,089,776 $ YearendedDecember31,2019
Cost Opening balance Additions Reductions Ending balance Land 558,900 $ - $ - $ 558,900 $ Buildings and structures 176,947 163 - 177,110 Machinery 89,565 16,566 12,846) ( 93,285 Transportation equipment 2,582 1,500 - 4,082 Office equipment 65,697 816 181) ( 66,332 Others 9,072 289 - 9,361 Unfinished construction 2,485 19,068 - 21,553 905,248 $ 38,402 $ 13,027) ($ 930,623 Accumulated depreciation Buildings and structures 31,205) ( 4,334) ($ - $ 35,539) ( Machinery 65,921) ( 4,669) ( 1,176 69,414) ( Transportation equipment 737) ( 529) ( - 1,266) ( Office equipment 38,531) ( 7,104) ( 181 45,454) ( Others 7,331) ( 682) ( - 8,013) ( 143,725) ( 17,318) ($ 1,357 $ 159,686) ( 761,523 $ 770,937 $

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`－` (9) Leasing arrangements lessee

A. The Company leases various assets including land, buildings, machinery and equipment, business vehicles, multifunction printers. Rental contracts are typically made for periods of 1 to 5 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:

Buildings Transportation equipment (Business vehicles) Office equipment (Photocopiers) Other equipment Buildings Transportation equipment (Business vehicles) Office equipment (Photocopiers) Other equipment	December 31,2020 December 31, 2019 Carryingamount Carrying amount $ 2,607 $ 6,044 1,417 1,789 123 16 - - 4,147 $ 7,849 $ 2020 2019 Depreciation charge Depreciation charge $ 7,443 $ 9,117 997 605 80 108 - 611 8,520 $ 10,441 $ Years ended December 31,	December 31, 2019
		Carrying amount
		$ 6,044 1,789 16 -
		7,849 $
	2020 Depreciation charge $ 7,443 997 80 - 8,520 $

C. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets were $4,818 thousand and $4,269 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	2020 2019 $ 317 $ 610 Years endedDecember31,
	2020 $ 317

E. For the years ended December 31, 2020 and 2019, the Company’s total cash outflow for leases were $8,909 thousand and $10,921 thousand, respectively.

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(10) Intangible assets

Year ended December 31, 2020

Cost		Openingbalance	Openingbalance			Additions	Reductions	Reductions	Reductions	Transfers	Transfers		Endingbalance	Endingbalance
Goodwill		$	139,735		$	-		$	-	$	-		$	139,735
Patents			25,157			4,597			-		-			29,754
Computer software			432,998			18,109			-		-			451,107
			597,890		$	22,706		$	-	$	-			620,596
Accumulated amortisation
Patents	(		20,450)	($		3,067)		$	-	$	-	(		23,517)
Computer software	(		290,266)	(		47,652)			-		-	(		337,918)
	(		310,716)	($		50,719)		$	-	$	-	(		361,435)
		$	287,174										$	259,161
			Year ended			December 31,	2019
Cost		Opening balance				Additions	Reductions			Transfers			Endingbalance
Goodwill		$	139,735		$	-		$	-	$	-		$	139,735
Patents			21,146			4,011			-		-			25,157
Computer software			375,235			61,218	(		3,455)		-			432,998
			536,116		$	65,229	($		3,455)	$	-			597,890
Accumulated amortisation
Patents	(		17,201)	($		3,249)		$	-	$	-	(		20,450)
Computer software	(		241,345)	(		52,376)			3,455		-	(		290,266)
	(		258,546)	($		55,625)		$	3,455	$	-	(		310,716)
		$	277,570										$	287,174

Details of amortisation on intangible assets are as follows:

Details of amortisation on intangible assets	are as follows:	are as follows:
Operating costs Selling expenses Administrative expenses Research and development expenses	Years ended December 31,
	2020 16,004 $ 2,697 15,280 16,738 50,719 $	2019
		14,407 $ 2,606 20,796 17,816
		55,625 $

(11) Impairment of non-financial assets

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:

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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 2021 to 2025. The estimation is based on the Company’s commitment to developing and taking Bluetooth orders and the experience of sale growths of 94%, 84%, 34%, (3)% and (0.2)% from 2016 to 2020, respectively.

Management determined the 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.

(12) Short-term borrowings

Short-term borrowings
Type of Borrowings Bank borrowings Unsecured borrowings Type of Borrowings Bank borrowings Unsecured borrowings	December 31, 2020 1,954,640 $ December 31,2019 89,940 $	Interest rate range 0.00%~0.66% Interest rate range 2.14%	Collateral
			None Collateral
			None

Interest expense recognised in profit or loss amounted to $4,888 thousand and $13,042 thousand for the years ended December 31, 2020 and 2019, respectively.

(13) Other payables

Salary and bonus payable Employees’ compensation payable Remuneration due to directors and supervisors Machinery and equipment payable Others	December 31,2020 December 31, 2019 133,490 $ 132,358 $ 121,382 219,531 25,575 68,392 6,795 675 98,471 77,822 385,713 $ 498,778 $

(14) 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	December 31,2019
	2,203,801 $ 561,308 402,072 343,164 2,954 10,087 3,523,386 $	- $ 189,905 - 81,790 7,118 9,074
		287,887 $

~43~

Note: On July 1, 2018, the Company acquired 70% of ordinary shares of Asian Elite International Ltd. and Indigo Enterprise Inc. in cash, and agreed to obtain the remaining 30% of ordinary shares on the date 3 years after the date of settlement. In accordance with the relevant contracts, the Company had recognised 30% of the subsequent equity investment obligations.

(15) Bonds payable

Bonds payable
Bonds payable Add: Premium on bonds payable Less: Discount on bonds payable Less: Current portion	December 31,2020	December 31,2019
	2,231,900 $ 28,099) ( 2,203,801 2,203,801) ( - $	2,289,500 $ 59,541) ( 2,229,959 - 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:
- i. The competent authority has approved the Company’s second issuance of domestic unsecured corporate bonds for a total issuance amount of US$3,015 million at a coupon rate of 0%, covering a 3-year period of issuance and a circulation period from December 11, 2018 to December 11, 2021. The bonds 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 bondholders 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 the stop transfer period as specified in the terms of the bonds or the laws/regulations and 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, 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

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at any time after the following events occur: (i) the closing price of the Company’s common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after one 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 the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations 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, the Company should adjust the conversion price of convertible bonds of $132.8 per share in accordance with the terms set out in the indenture when there is an increase in issued common shares.
B. Regarding the issuance of convertible bonds, the equity conversion options amounting to $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.

- (16) Long term borrowings

Borrowing period Type of borrowings and repayment term Interest rate range Collateral December 31, 2020 Borrowing period is from 2020/2/20 to Unsecured 2025/2/20; interest is borrowings repayable monthly. 0.30% ～ 0.40% None $ 320,000 Borrowing period is from 2020/2/20 to Unsecured 2027/2/19; interest is borrowings repayable monthly. 0.35% ～ 0.50% None 479,950 $ 799,950

December 31, 2019: No long-term borrowings.

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.

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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.
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, as confirmed with its creditor banks, assessed that the aforementioned financial ratios were maintained at a level that had no significant impact to the Company.

(17) Pensions

A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, 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 Act. 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 contributes 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, and contributes 8% of the manager’s salaries and wages to the retirement fund deposited. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of 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 will make contributions for the deficit by next March.

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

		December 31,2020		December 31,2019
Present value of defined
benefit obligations	$	127,292	$	140,594
Fair value of plan assets	(	44,259)	(	57,118)
Net defined benefit liability	$	83,033	$	83,476

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

Present value of defined benefit obligations Year ended December 31,2020 Balance at January 1 140,594 $ Current service cost 546 Interest expense (income) 1,043 Past service cost 2,269) ( 139,914 Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumption 5,792 Experience adjustments 6,013) ( 221) ( Pension fund contribution - Paid past pension 304) ( Paid pension 12,097) ( Balance at December 31 127,292 $ -	Fair value of plan assets	Net defined benefit liability
	57,118) ($ - 429) ( 3,309 54,238) ( - - 1,218) ( 900) ( - 12,097 44,259) ($ 1,218) (	83,476 $ 546 614 1,040 85,676 5,792 6,013) ( 1,439) ( 900) ( 304) ( - 83,033 $ 1,218) (

(Remainder of page intentionally left blank)

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Present value of defined benefit obligations Year ended December 31,2019 Balance at January 1 125,392 $ Current service cost 284 Interest expense (income) 1,230 Past service cost - 126,906 Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in demographic assumption 4 Change in financial assumption 3,653 Experience adjustments 12,682 16,339 Pension fund contribution - Paid pension 2,651) ( Balance at December 31 140,594 $ -	Fair value of plan assets	Net defined benefit liability
	41,348) ($ - 404) ( - 41,752) ( - - - 1,312) ( 16,705) ( 2,651 57,118) ($ 1,312) (	84,044 $ 284 826 - 85,154 4 3,653 12,682 15,027 16,705) ( - 83,476 $ 1,312) (

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s 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 has no right to participate in managing and operating that fund and hence the Company is 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.

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

==> picture [428 x 67] intentionally omitted <==

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

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

----- End of picture text -----

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:

==> picture [442 x 142] intentionally omitted <==

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

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

----- End of picture text -----

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 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:

==> picture [431 x 76] intentionally omitted <==

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

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

----- End of picture text -----

B. (a) Effective July 1, 2005, the Company has 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 contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual

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pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

(b) The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2020 and 2019 were $29,530 thousand and $29,017 thousand, respectively.

(18) Share-based payments

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

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

Note: Depending on the employees’ 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 did not meet the conditions of vesting for the employees who resign during the vesting period or not meet the condition of vesting by the issuance price.

~50~

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.

B. Details of the share-based payment arrangements are as follows:
(a) The first restricted stocks to employees in 2016

The first restricted stocks to	employees in 2016
Options outstanding at January 1 Restricted stocks vested Employee restricted shares retired Options outstanding at December 31	No. of options Weighted- average exercise price (in dollars) - - $ - - - - - - 2020	No. of options Weighted- average exercise price (in dollars) 542 10 $ 4) ( 10 538) ( 10 - 2019
		542 4) ( 538) ( -	10 $ 10 10

(b) The second restricted stocks to employees in 2016

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

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(c) The first restricted stocks to employees in 2017

) The first restricted stocks to employees in 2017	) The first restricted stocks to employees in 2017	) The first restricted stocks to employees in 2017	) The first restricted stocks to employees in 2017	) The first restricted stocks to employees in 2017
Weighted- average exercise price (in dollars) Options outstanding at January 1 108 - $ Restricted stocks vested 57) ( - Employee restricted shares retired 50) ( - Options outstanding at December 31 1 - 2020 No. of options The second restricted stocks to employees in 2017 Weighted- average exercise price (in dollars) Options outstanding at January 1 598 - $ Restricted stocks vested 234) ( - Employee restricted shares retired 46) ( - Options outstanding at December 31 318 - 2020 No. of options The first restricted stocks to employees in 2019 Weighted- average exercise price (in dollars) Options outstanding at January 1 813 - $ Restricted stocks granted to employees - - Restricted stocks vested 237) ( - Employee restricted shares retired 31) ( - Options outstanding at December 31 545 - 2020 No. of options					Weighted- average exercise price (in dollars) 164 - $ 49) ( - 7) ( - 108 - 2019 No. of options Weighted- average exercise price (in dollars) 862 - $ 251) ( - 13) ( - 598 - 2019 No. of options Weighted- average exercise price (in dollars) - - $ 813 - - - - - 813 - 2019 No. of options
	No. of options		Weighted- average exercise price (in dollars)
					( (


		No. of options		Weighted- average exercise price (in dollars)		Weighted- average exercise price (in dollars) - - $ 813 - - - - - 813 - No. of options
	813 - 237) ( 31) ( 545			- $ - - - -

(d) The second restricted stocks to employees in 2017

(e) The first restricted stocks to employees in 2019

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	2020	2020		2019	2019
			Weighted-			Weighted-
			average			average
		exercise price			exercise price
	No. of options		(in dollars)	No. of options		(in dollars)
Options outstanding at
January 1	-	$	-	-	$	-
Restricted stocks granted
to employees	387		-	-		-
Employee restricted
shares retired	5) (		-	-		-
Options outstanding at
December 31	382		-	-		-

B. 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:

Type of arrangement The first restricted stocks to employees in 2016 The second restricted stocks to employees in 2016 The first restricted stocks to employees in 2017 The second restricted stocks to employees in 2017 The first restricted stocks to employees in 2019 The second restricted stocks to employees in 2019	Grant date 2016.12.21 2017.06.16 2017.12.29 2018.10.26 2019.11.02 2020.08.05	Stockprice	Exerciseprice	Fair valueper unit
		125 187 194.5 139.5 150 169	10 10 0 0 0 0	115 177 194.5 139.5 150 169

C. 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 $

(19) Share capital

A. As of December 31, 2020, the Company’s authorised capital was $4 billion, consisting of 400 million shares of ordinary stock (including 5 million 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.

~53~

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

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

(a) On February 25, 2021, the Board of Directors of the Company resolved to retire employee restricted share in the amount of 18,700 shares. The effective dates for the capital reduction were March 8, 2021.
(b) On February 27, 2020 and July 30, 2020, the Board of Directors of the Company resolved to retire employee restricted share in the amount of 642,100 shares. The effective dates for the capital reduction were 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 in the amount 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 2nd unsecured convertible bonds. As of December 31, 2020, the face value of those convertible bonds amounted to $768,100, which had been converted into 5,299 thousand common shares. Please refer to Note 6(15) for further information
(e) In 2019, the Company increased its capital by issuing 4 million shares with a par value of $112 (in dollars per share). The total amount of capital increase was $448,000 thousand. The capital increase was set effective on January 18, 2019 and the registration has been completed in 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(18)). 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 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 common shares.

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(20) Capital surplus

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. However, capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

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

~55~

At January 1 Issuance of restricted shares to employees Restricted stocks vested Employee restricted stocks retired Proceeds from issuance of convertible bonds 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	Treasury share option Employee restricted stocks 137,319 $ 256,324 $ - 113,820 - 45,123) ( - 88,564) ( - - 31,576) ( - 3,993) ( - - - 101,750 $ 236,457 $ 2019	Others	Total
		2,376,147 $ - 45,123 - - 668,163 411,993 - 3,501,426 $		19,321 $ - - - - - - 11,151 30,472 $	2,789,111 $ 113,820 - 88,564) ( - 636,587 408,000 11,151 3,870,105 $

(21) 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 summarized 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

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expansion plans. In order to encourage employees and operations 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’ compensation shall be distributed in the form of stock and cash by a resolution adopted by a majority vote at a meeting of the 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 the parent company or 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 – Corporate - 1010012865, 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 was $269,144 thousand.
F. The Company distributed cash dividends amounting to $7.7 and $8.6 per share, respectively as resolved at the meeting of Board of Directors on June 19, 2020 and June 19, 2019, respectively. 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, respectively.
G. The appropriation of cash dividends for 2020 as resolved by the Board of Directors on February 25, 2021 amounted to $5.16 per share.

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(22) Other equity items

Other equity items
2020	Exchange differences on translation of foreign financial statements	Unrealised gains (losses) from investments in debt instruments measured at fair value through other comprehensive income	Unrealised gains (losses) 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 - ( 934,862) - ( 3,628) - 333 - ( 145,400) - ( 57,400) - 11,480 - 74,113 - 13,905) ( - 3,976 ($158,141) $ 9,326
At January 1 Issuance of restricted shares to employees Amortisation of employee restricted stocks Employee restricted shares retired Revaluation - gross Revaluation - subsidiaries Revaluation transferred to profit or loss - subsidiaries 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 - - - 3,220 ( 200) 333 - - - - - - $4,220	$ 1,688,726 - - - ( 938,082) ( 3,428) - ( 145,400) - - - - - $ 601,816

~58~

2019	Exchange differences on translation of foreign financial statements	Unrealised gains (losses) from investments in debt instruments measured at fair value through other comprehensive income	Unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income	Cost of unearned employee compensation Total ($ 223,900) $ 147,032 ( 121,950) ( 121,950) 52,158 52,158 88,766 88,766 - 1,145,412 - ( 833) - ( 68,104) - ( 113,955) - 22,791 - ( 153,522) - 30,039 ($204,926) $1,027,834	Total
At January 1 Issuance of restricted shares to employees Amortisation of employee restricted stocks Employee restricted shares retired Revaluation - gross Revaluation transferred to profit or loss - gross Revaluation transferred to retained earnings – gross Currency translation differences: - Group - Tax on Group - Associates - Tax on associates At December 31	($ 242,186) - - - - - - ( 113,955) 22,791 ( 153,522) 30,039 ($456,833)	$ 3,244 - - - ( 1,544) ( 833) - - - - - $ 867	$ 609,874 - - - 1,146,956 - ( 68,104) - - - - $ 1,688,726
					$1,027,834

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(23) Operating revenue

Years ended December 31, 2020 2019 Revenue from contracts with customers $ 26,916,049 $ 30,648,815

A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods and services at a point in time in the following geographical regions:

Year ended December 31, 2020

Electronic devices

==> picture [517 x 336] intentionally omitted <==

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

Mainland
Taiwan Europe US China Others Total
Total segment revenue $ 680,639 $ 11,742,872 $ 13,719,123 $ 462,466 $ 310,949 $ 26,916,049
Revenue from
external customer
contracts 680,639 11,742,872 13,719,123 462,466 310,949 26,916,049
Timing of revenue
recognition
At a point in time 680,639 11,742,872 13,719,123 462,466 310,949 26,916,049
Total $ 680,639 $ 11,742,872 $ 13,719,123 $ 462,466 $ 310,949 $ 26,916,049
Year ended December 31, 2019
Electronic devices
Mainland
Taiwan Europe US China Others Total
Total segment revenue $ 411,816 $ 10,883,812 $ 16,775,583 $ 1,485,219 $ 1,092,385 $ 30,648,815
Revenue from
external customer
contracts 411,816 10,883,812 16,775,583 1,485,219 1,092,385 $ 30,648,815
Timing of revenue
recognition
At a point in time 411,816 10,883,812 16,775,583 1,485,219 1,092,385 30,648,815
Total $ 411,816 $ 10,883,812 $ 16,775,583 $ 1,485,219 $ 1,092,385 $ 30,648,815
----- End of picture text -----

B. Contract assets and liabilities:

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

Contract assets Contract liabilities Refund liabilities	December31,2020 42,865 $ 561,308 $ 343,164 $	December 31, 2019 31,585 $ 189,904 $ 81,791 $	January1,2019
			- $
			175,839 $
			- $

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(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 year $ 189,613 $ 144,857

(24) Interest income

Interest income from bank deposits Interest income from financial assets not at fair value through profit or loss Other income Dividend income Grant revenue (Note) Sample income Rent income Other income	2020 2019 23,823 $ 44,968 $ 3,064 3,554 26,887 $ 48,522 $ Years ended December31, Years ended December 31,	2020 2019 23,823 $ 44,968 $ 3,064 3,554 26,887 $ 48,522 $ Years ended December31, Years ended December 31,
	2020 11,694 $ 44,856 8,951 6,391 8,450 80,342 $	2019 69,850 $ - 14,364 6,604 6,256 97,074 $

(25) Other income

Note: This refers to the government subsidies for working capital and salary compensation from Industrial Development Bureau, Ministry of Economic Affairs, applied for by the Company. (26) Other gains and losses

Other gains and losses
		Years ended	December	31,
		2020		2019
Net currency exchange losses	($	169,910)	($		73,253)
Net gains on financial assets at fair
value through profit or loss		93,258			68,721
Gains on disposal of
property, plant and equipment		431			471
Gains on disposals of investment		5,311			833
Other losses	(	61)	(		2,465)
	($	70,971)	($		5,693)

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(27) Expenses by nature

Expenses by nature
		Years ended	December	31,
		2020		2019
Employee benefit expense	$	957,114	$	1,027,528
Depreciation charge-
property, plant and equipment		17,289		17,318
Depreciation - right-of-use assets		8,520		10,441
Amortisation charge		50,719		55,625
	$	1,033,642	$	1,110,912

As of December 31, 2020 and 2019, the Company had 765 and 654 employees. After reelecting directors on June 19, 2020, there were 5 non-employee directors until December 31, 2020. For the year ended December 31, 2019, there were 5 non-employee directors.

(28) Employee benefit expense

Employee benefit expense
Wages and salaries Share-based payments Labour and health insurance fees Pension costs Directors' remuneration Other employee benefit expense	Years ended December 31,
	2020 703,198 $ 94,362 59,027 31,730 26,380 42,417 957,114 $	2019
		773,321 $ 56,411 57,100 30,127 69,276 41,293
		1,027,528 $

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 be from 5% to 10% for employees’ compensation and shall not be higher than 2% for directors’ 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’ 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 for 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 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.

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(29) Income tax

A. Income tax expense

(a) Components of income tax expense:

e tax ome tax expense Components of income tax expense:
			Years ended	December	31,
			2020		2019
Current tax:
Current tax on profits for the year		$	55,037	$	315,664
Tax on undistributed surplus earnings			36,704		4,763
Prior year income tax overestimation	(		53,562)		-
Total current tax			38,179		320,427
Deferred tax:
Origination and reversal of
temporary differences			208,487		276,993
Income tax expense		$	246,666	$	597,420

(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	($	11,480)		($	22,791)
Exchange differences changes
on translation of foreign financial
statements - associates		13,905		(	30,039)
Remeasurement of defined
benefit obligations		288		(	3,005)
	$	2,713		($	55,835)
Reconciliation between income tax expense	and	accounting profit:
		Years ended December			31,
		2020			2019
Current tax:
Tax calculated based on profit
before tax and statutory tax rate	$	313,722	$		629,206
Expenses disallowed by tax regulation	(	347)			-
Tax exempt income by tax regulation	(	16,346)	(		5,673)
Effect from investment tax credits	(	33,873)	(		31,485)
Tax on undistributed surplus earnings		36,704			4,763
Prior year income tax over estimation	(	53,562)			-
Others Income tax expense	$	368 246,666	$		609 597,420

B. Reconciliation between income tax expense and accounting profit:

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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:

Deferred tax assets: Temporary differences: Remeasurement of defined benefit obligations Allowance for bad debts Accumulated unused compensated absences Allowance for inventory valuation losses and loss on obsolete and slow-moving inventories Amortisation of discounts on corporate bonds Unrealised exchange loss Unrealised loss on valuation of financial instruments Cumulative translation adjustment of long-term equity investments Deferred tax liabilities Temporary differences: Gain on overseas long-term investment Unrealised exchange gain Unrealised gain on valuation of financial instruments Others				2020		December31
		January1	Recognised in profit or loss	Recognised in other comprehensive income
	18,241 $ 6,118 4,580 11,992 7,344 3,520 - 36,998 88,793 $ 872,757) ($ 468) ( - 800) ( 874,025) ($		- $ - 365 8,313) ( 5,716 18,123 746 - 16,637 $ 225,588) ($ 468 4) ( - 225,124) ($	288) ($ - - - - - - 2,425) ( 2,713) ($ - $ - - - - $	17,953 $ 6,118 4,945 3,679 13,060 21,643 746 34,573 102,717 $ 1,098,345) ($ - 4) ( 800) ( 1,099,149) ($

~64~

							2019	2019
					Recognised in			Recognised in other
			January1			profit or loss	comprehensive income			December31
Deferred tax assets:
Temporary differences:
Remeasurement of defined benefit obligations		$	15,236		$	-	$	3,005		$	18,241
Allowance for bad debts			6,118			-		-			6,118
Unallocated appropriation
of pension			192	(		192)		-			-
Accumulated unused
compensated absences			4,083			497		-			4,580
Allowance for inventory
valuation losses and loss
on obsolete and
slow-moving inventories			9,546			2,446		-			11,992
Amortisation of discounts
on corporate bonds			427			6,917		-			7,344
Unrealised exchange loss			3,597	(		77)		-			3,520
Unrealised loss on valuation
of financial instruments			1,586	(		1,586)		-			-
Cumulative translation
adjustment of long-term
equity investments			-			-		36,998			36,998
		$	40,785		$	8,005	$	40,003		$	88,793
Deferred tax liabilities
Temporary differences:
Gain on overseas long-term
investment	($		588,227)	($		284,530)	$	-	($		872,757)
Cumulative translation
adjustment of long-term
equity investments	(		15,832)			-		15,832			-
Unrealised exchange gain			-	(		468)		-	(		468)
Others	(		800)			-		-	(		800)
	($		604,859)	($		284,998)	$	15,832	($		874,025)

D.The Company invested in MERRY ELECTRONICS (HK) CO., LTD. and MERRY LECTRONICS (U.S.A.) CO., LTD. Before 2000, the unappropriated retained earnings of MERRY ELECTRONICS (HK) CO., LTD. and MERRY LECTRONICS (U.S.A.) CO., LTD. were not distributed because of permanent investment and their accumulated deficit were not covered. Therefore, the difference between the carrying amount and taxable amount of long-term equity investments was not recognised as deferred tax. However, the retained earnings after 2001 would be distributed and remitted back for the consideration of the whole operation plan. Therefore, from 2001, the deferred tax liabilities and assets would be recognised for the retained earnings and accumulated deficit.

~65~

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

(30) Earnings per share

	Amount aftertax Weighted average number of ordinary shares outstanding (shares in thousands) Earnings per share(in dollars) Basic earnings pershare Profit attributable to ordinary shareholders of the parent 1,321,943 $ 206,892 6.39 $ Diluted earnings pershare Profit attributable to ordinary shareholders of the parent 1,321,943 $ 206,892 Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - 979 Convertible bonds 25,824 16,297 Employee restricted shares - 158 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 1,347,767 $ 224,326 6.01 $ YearendedDecember31,2020	Amount aftertax Weighted average number of ordinary shares outstanding (shares in thousands) Earnings per share(in dollars) Basic earnings pershare Profit attributable to ordinary shareholders of the parent 1,321,943 $ 206,892 6.39 $ Diluted earnings pershare Profit attributable to ordinary shareholders of the parent 1,321,943 $ 206,892 Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - 979 Convertible bonds 25,824 16,297 Employee restricted shares - 158 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 1,347,767 $ 224,326 6.01 $ YearendedDecember31,2020	Amount aftertax Weighted average number of ordinary shares outstanding (shares in thousands) Earnings per share(in dollars) Basic earnings pershare Profit attributable to ordinary shareholders of the parent 1,321,943 $ 206,892 6.39 $ Diluted earnings pershare Profit attributable to ordinary shareholders of the parent 1,321,943 $ 206,892 Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - 979 Convertible bonds 25,824 16,297 Employee restricted shares - 158 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 1,347,767 $ 224,326 6.01 $ YearendedDecember31,2020	Amount aftertax Weighted average number of ordinary shares outstanding (shares in thousands) Earnings per share(in dollars) Basic earnings pershare Profit attributable to ordinary shareholders of the parent 1,321,943 $ 206,892 6.39 $ Diluted earnings pershare Profit attributable to ordinary shareholders of the parent 1,321,943 $ 206,892 Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - 979 Convertible bonds 25,824 16,297 Employee restricted shares - 158 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 1,347,767 $ 224,326 6.01 $ YearendedDecember31,2020
		Weighted average number of ordinary shares outstanding (shares in thousands)
			206,892 206,892 979 16,297 158 224,326	6.39 $ 6.01 $

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==> picture [496 x 407] intentionally omitted <==

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

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

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(31) Supplemental cash flow information

A. Investing activities with partial cash payments

			Years ended December 31,	Years ended December 31,	Years ended December 31,
			2020		2019
Purchase of property, plant and equipment		$	340,794	$	38,402
Add: Opening balance of payable on
equipment			675		10,998
Ending balance of prepayments
for equipment			4,441		-
Less: Ending balance of payable on
equipment	(		3,649)	(	675)
Opening balance of prepayments
for equipment			-	(	5,962)
Cash paid during the year		$	342,261	$	42,763

			Years ended December 31,
			2020		2019
Purchase of intangible assets		$	22,706	$	65,229
Add: Opening balance of payable			-		2,652
Ending balance of prepayments			12,385		5,901
Less: Opening balance of prepayments	(		5,901)	(	30,970)
Ending balance of payable	(		3,146)		-
Cash paid during the year		$	26,044	$	42,812
Financial assets at fair value through profit or loss
			Years ended December 31,
			2020		2019
Change in financial assets at
fair value through profit or loss	$		47,492	($	154,703)
Less: Unpaid purchases during the year	(		306)		-
Cash received during the year	$		47,186	($	154,703)
Financial assets at fair value through other comprehensive income
			Years ended	December 31,
			2020		2019
Change in financial assets at fair value
through other comprehensive income	($		172,377)	($	147,651)
Add: Uncollected proceeds from
disposal during the year			-		4,336
Less: Collected proceeds from prior
period disposal	(		4,336)		-
Cash received during the year	($		176,713)	($	143,315)

B. Financial assets at fair value through profit or loss

C. Financial assets at fair value through other comprehensive income

Change in financial assets at fair value through other comprehensive income Add: Uncollected proceeds from disposal during the year Less: Collected proceeds from prior period disposal Cash received during the year

~68~

D. Financing activities with no cash flow effects

									Years ended	Years ended	Years ended	December31,	December31,	December31,	December31,	December31,
									2020						2019
Convertible bonds being converted
to capital stocks							$				4,135	$							48,851
(32)Changes in liabilities from financing activities
																		Total liabilities
			Short-term		Lease		Convertible				Long-term			Dividends				from financing
		borrowings			Liability			bonds		borrowings					payable				activities
At January 1, 2020	$			89,940	$	7,974	$	2,229,959		$		-	$		-		$		2,327,873
Changes in cash flow from financing activities			1,901,685		(	8,909)			-		799,950		(	1,608,376)					1,084,350
Additions				-		-			-			-		1,608,376					1,608,376
Impact of changes in foreign exchange rate	(			36,985)		-			-			-			-		(		36,985)
Changes in other non-cash items				-		5,135	(	26,158)				-			-		(		21,023)
At December 31, 2020	$		1,954,640		$	4,200	$	2,203,801		$	799,950		$		-		$		4,962,591
																	Total liabilities
				Short-term		Lease			Convertible			Dividends					from financing
				borrowings		Liability				bonds			payable						activities
At January 1, 2019			$	4,399,144		$		-	$	2,882,721		$			-		$		7,281,865
Changes in cash flow from financing activities			(	4,309,594)		(	10,921)				-	(	1,751,419)			(			6,071,934)
Additions					-			-			-		1,751,419						1,751,419
Impact of changes in foreign exchange rate					390			-			-				-				390
Changes in other non-cash items					-		18,895		(	652,762)					-	(			633,867)
At December 31, 2019			$	89,940		$	7,974		$	2,229,959		$			-		$		2,327,873

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7. RELATED PARTY TRANSACTIONS

(1) Relationship of related parties

Names of related parties Relationship with the Company MERRY ELECTRONICS (SHENZHEN) CO., LTD. Subsidiary of the Company (“MECL”) MERRY ELECTRONICS (HK) CO., LTD. Subsidiary of the Company (“MEST”) Merry Electronics （ Suzhou ） Co., LTD. Stockholder which accounts for the (“MECE”) Company using the equity method MERRY ELECTRONICS (Thailand) CO., LTD Subsidiary of the Company (“METC”) MERRY ELECTRONICS (U.S.A) CO., LTD. Subsidiary of the Company (“MECA”) LEOHAB ENTERPRISE CO.,LTD. Stockholder which accounts for the (“LEOHAB”) Company using the equity method UNIVERSAL CAPITAL INVESTMENT LIMITED Subsidiary of the Company (“UCMU”) MERRYTECH (HK) CO., LTD. Subsidiary of the Company ("MTHK") MERRY ELECTRONICS (HUIZHOU) CO., LTD. Stockholder which accounts for the (“MECH”) Company using the equity method MERRY ELECTRONICS (SINGAPORE) PTE. LTD Subsidiary of the Company (“MESG”) MERRY HEALTHCARE CO., LTD. Branch of the Company's Subsidiary (“MHTT”) GUANGDONG LUXSHARE & MERRY Stockholder which accounts for the ELECTRONICS CO., LTD. Company using the equity method (“MEDG”) BIOTEST MEOLCAL CORPORATION Subsidiary of the Company (Note 1) (“BTTT”) MERRY & LUXSHARE(VIETNAM)CO., LTD. Subsidiary of the Company (Note 2) (MEVN) Luxshare-ICT (Vietnam) Limited Other related party (Note 3) (Luxshare-ICT (Vietnam)) Sonavox Canada Inc. Subsidiary of the Company ("SOCV") Seas Fabrikker Subsidiary of the Company ("SENM")

Note 1: The Company was merged and acquired BIOTEST MEDICAL CORPORATION in July, 2019. Note 2: The Company establish a joint venture, MERRY & LUXSHARE (VIETNAM) CO., LTD., with Luxshare-ICT in May 2020.
Note 3: A corporate director of the Company’s subsidiary, MEVN, and the entity both belong to Luxshare-ICT.

~70~

(2) Significant related party transactions

A. Operating revenue

(a) Sales of goods

Year ended December 31, 2020: None.

		Year ended December 31,2019
MECE	$	489
Others		134
	$	623

The credit terms of aforementioned transactions were approximately the same with third parties, which were 60 days after the end of the month, and to third parties were 45 to 120 days after the end of the month.

(b) Technical service revenue

end of the month. Technical service revenue
MESG Others	2020 2019 9,165 $ 3,537 $ 1,858 2,478 11,023 $ 6,015 $ Years ended December 31,
		3,537 $ 2,478
		6,015 $

i. The Company granted licences of manufacturing, technology and intellectual property of electroacoustic products and charged 0.84% to 3.06% of the companies’ net sale amount excluding the sales amount from related parties.

ii. The credit term of aforementioned transactions was 60 days after the end of the month.

B. Purchases

(a) Purchases of goods

chases Purchases of goods
MECL MECE MECH MEDG Luxshare-ICT (Vietnam) MEVN Others	Years endedDecember31,
	2020 10,838,828 $ 9,815,633 3,614,382 - 509,662 426,183 6,761 25,211,449 $	2019
		13,404,793 $ 11,875,381 1,847,478 884,721 - - 1,539
		28,013,912 $

The prices of goods for the aforementioned purchase transactions charged by the companies are based on the different product’s profitability and adjusted annually. The credit terms to the Company was 60 days after the end of the month and 30 to 90 days after the end of the month to third parties.

(b) Administrative service fee

to third parties. Administrative service fee
MECA MESG	Years ended December31,
	2020 47,315 $ 13,426 60,741 $	2019
		55,305 $ 14,186
		69,491 $

~71~

The above administrative service fees were charged for marketing management services provided by the subsidiaries during the period with an additional 1% of service fees less government grants from the local governments for the year ended December 31, 2020 and with an additional 3% of service fees for the year ended December 31, 2019. The credit term was 60 days after the end of the month.

C. Receivables from related parties

(a) Accounts receivable

Accounts receivable
		December 31, 2020		December 31, 2019
METC	$	271,532	$	124,899
MECE		9,690		9,690
Others		2,554		385
	$	283,776	$	134,974

The receivables arise mainly from sale transactions and services provided for granting licences of manufacturing, technology and intellectual property of electroacoustic products.

(b) Other receivables

MECE MTHK METC MESG Others	December 31,2020 - $ - - 1,307 23 1,330 $	December 31,2019 36,618 $ 3,019 2,279 - 1,710 43,626 $

Other receivables mainly consisted of the receivables of sale of property, plant and equipment and miscellaneous payments on behalf of the related parties. D. Payables to related parties

(a) Accounts payable

ables to related parties Accounts payable
MECL MECE MECH MEVN Luxshare-ICT (Vietnam) Others Other payables MECE MEST MECL Others	December31,2020 3,767,983 $ 2,420,239 754,255 208,719 93,618 8,983 7,253,797 $ December 31,2020 53,536 $ 19,067 14,363 - 86,966 $	December31,2019 1,761,651 $ 2,987,747 451,901 - - 183,601 5,384,900 $ December 31,2019 1,834 $ 5,286 - 4 7,124 $

			1,834 $ 5,286 - 4
			7,124 $

(b) Other payables

The other payables arise mainly from accounts receivable collected and miscellaneous payment made on behalf of the related parties.

~72~

E. Property transactions

(a) Acquisition of property, plant and equipment Year ended December 31, 2020: None.

MECL

Year ended December 31, 2019 $ 2,585

(b) Disposal of property, plant and equipment

MECL METC MECE MESG Total	Disposal proceeds Gain(loss) on disposal - $ - $ - - - - 24 24 24 $ 24 $ 2020	Disposal proceeds Gain(loss) on disposal 10,008 $ 477 $ 2,316 271 64 64 - - 12,388 $ 812 $ 2019	Disposal proceeds Gain(loss) on disposal 10,008 $ 477 $ 2,316 271 64 64 - - 12,388 $ 812 $ 2019
			477 $ 271 64 - 812 $

F. Loans to/from related parties

Loans to related parties

(a) Ending balance

Please refers to table 13(1).

(b) Interest income

Year ended December 31, 2020: None.

BTTT

Year ended December 31, 2019 $ 385

The loans to BTTT are repayable monthly within 1 year after loans are granted, and carried an interest at 0.98% per annum for the year ended December 31, 2019.

G. Endorsements and guarantees provided to related parties Please refer to table 13(1)B.

H. Key management compensation

Please refer to table 13(1)B. 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 $

8. PLEDGED ASSETS

aares an oer sor-er employee benefits Post-employment benefits Share-based payments PLEDGED ASSETS	$ $	80,622 $ 493 20,659 101,774 $	117,777 247 18,635 136,659
Pledged asset	Book	value	Purpose
	December 31,2020	December 31,2019
Financial assets at amortised cost	12,200 $	- $	Project guarantee

~73~

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

		December 31,2020		December 31,2019
Property, plant and equipment	$	75,705	$	191,828
Intangible assets		7,412		2,442
	$	83,117	$	194,270

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

A. In view of the industrial characteristics and future development status and considering the external environment changes, the Company’s capital management objective 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 following year.

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

December 31, 2020 and 2019 were as follows:
December 31, 2020 Total debt $ 15,545,665 Total assets 27,317,361 Debt ratio 57%	December 31,2019
	$ 10,191,324 23,025,301 44%

(2) Financial instruments

A. Financial instruments by category

~74~

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 Financial assets at amortised cost Accounts receivable (including accounts receivable due from related parties) Other receivables (including other receivables due from related parties) Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Short-term borrowings Accounts payable (including accounts payable to related parties) Other payables (including other payables to related parties) Lease liability Corporate bonds payable (including current portion) Guarantee deposits received	December31,2020 105,387 $ 1,446,582 $ 232,060 1,678,642 $ 322,770 $ 866,600 10,388,880 37,264 2,687 11,618,201 $ December 31, 2020 30,047 $ 1,954,640 7,441,773 472,679 4,200 2,203,801 1,017 12,108,157 $	December31,2019
		38,214 $
		2,516,603 $ 90,550 2,607,153 $
		4,038,861 $ - 4,601,685 61,283 2,854 8,704,683 $
		December31,2019
		11,799 $ 89,940 5,488,782 505,902 7,974 2,229,959 1,017
		8,335,373 $

~75~

B. Financial risk management policies
(a) The Company’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) The Company’s treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’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 Company operates internationally and is exposed to exchange rate risk arising from the transactions of the Company used in various functional currency, primarily with respect to the USD, RMB and HKD. Exchange rate 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 Company hedges foreign exchange rate by using forward exchange contracts. However, the Company 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 Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~76~

		December 31,2020	December 31,2020
Foreign currency amount (In thousands)	Exchange rate	Book value (NTD)		Sensitivityanalysis
			Degree of variation	Effects on profit or loss	Effect on other comprehensive income
	28.4800 4.3370 3.6730 21.5600 35.0200 0.2763 28.4800 28.4800 28.4800	269,664 $ 12,017 738 8,582 101 10 10,443,563 $ 854,400 $ 227,840 $	3% 3% 3% 3% 3% 3% 3% 3% 3%	8,090 $ 361 22 257 3 - 313,307 $ 25,632 $ 6,335 $	$ - - - - - - $ - $ - $ -

~77~

		December 31,2020	December 31,2020
Foreign currency amount (In thousands)	Exchange rate	Book value (NTD)		Sensitivityanalysis
			Degree of variation	Effects on profit or loss	Effect on other comprehensive income
- $ - - 177,602 $ 1,112,284 615,456 109,087 303,736,667 48,000 $ 230,692 $ 213,075 - $ -	28.4800 29.8000 4.3800 28.4800 3.6730 0.9556 4.3770 0.0012 28.4800 28.4800 4.3770 28.4800 29.8000	15,357 $ 10,517 442 5,058,111 $ 4,085,419 588,130 477,474 364,484 1,367,040 $ 6,570,121 $ 932,629 19,979 $ 10,068	3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	- $ - - - $ - - - - 41,011 $ 197,104 $ 27,979 - $ -	$ - - - $ 151,743 122,563 17,644 14,324 10,935 $ - $ - - $ - -

~78~

		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
	29.9800 4.3050 3.8490 22.2800 29.9800 3.8490 29.9800 1.0098 29.9800	1,308,957 $ 182,674 4,080 8,867 4,711,147 $ 266 $ 89,940 6,488 $ 8,994	3% 3% 3% 3% 3% 3% 3% 3% 3%	$ 39,269 5,480 122 266 141,334 $ 8 $ - $ - -	$ - - - - $ - - $ 2,728 $ 195 270

~79~

	December31,2019	December31,2019
Foreign currency amount (in thousands) 700 $ 144,447 $ 942,409 549,051 109,239 3,000 $ 155,776 $ 197,913	Book value Exchangerate (NTD) 29.9800 20,986 $ 29.9800 4,330,511 $ 3.8490 3,627,334 1.0098 554,432 4.3050 470,272 29.9800 89,940 $ 29.9800 4,670,164 $ 4.3050 852,015		Sensitivity analysis
		Degree of variation 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss 630 $ - $ - - - 2,698 $ 140,105 $ 25,560	Effect on other comprehensive income
				- $ 129,915 $ 108,820 16,633 14,108 - $ - $ -

~80~

Total exchange (loss) gain, including realised and unrealized, arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2020 and 2019 amounted to $169,910 thousand and $73,253 thousand, respectively.

Price risk

i. The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.
ii. The Company’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 the years ended December 31, 2020 and 2019 would have increased 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 $43,398 thousand and $75,498 thousand, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

i. The Company’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% or with all other variables held constant, profit, net of tax for the years ended December 31, 2020 and 2019 would have decreased/increased by $5,509 thousand and $180 thousand, respectively. The main factor is that changes in interest expense result from floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Company 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 Company 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 Company

~81~

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 Company signs with banks and financial institutions after all documents are examined by counsel or legal advisor profession. The Company periodically checks the credit rating, conditions and quality of service as well as transactions. According to the Company’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 Company adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days.
iv. The Company adopts the following assumption 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 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 Company classifies customers’ accounts receivable and contract assets in accordance with geographic area. The Company applies the simplified approach using provision matrix to estimate expected credit loss under the provision matrix basis.
vii. The Company wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Company will continue executing the recourse procedures to secure their rights.
viii. The Company used the forecastability to 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:

~82~

December 31,2020 Expected loss rate Total book value Loss allowance December 31,2019	Notpast due 0.01% 10,091,321 $ 1,024) ($ Not past due
		1.56% 12,684 $ 198) ($ Up to 30 days	26.34% 3,151 $ 830) ($ 31 to 60 days
	0.01% 4,455,759 $ 394) ($	1.28% 6,431 $ 82) ($	33.11% 7,471 $ 2,474) ($
Expected loss rate Total book value Loss allowance

ix. Movements in relation to the Company applying the simplified approach to provide loss allowance for accounts receivable are as follows:

llowance for accounts receivable are as follows:
At January 1_IAS 39 Provision for impairment At December 31 At January 1 Provision for impairment At December 31	2020 Accounts receivable
	3,166 $ 1,015
	4,181 $
	2019
	Accounts receivable
	1,959 $ 1,207
	3,166 $

For provisioned loss in 2020 and 2019, the impairment losses arising from customers’ contracts are $1,015 thousand and $1,207 thousand, respectively.

x. There was no impairment on investments in debt instruments measured at fair value through other comprehensive income after the Company’s evaluation.
xi. For investments in debt instruments at fair value through other comprehensive income, the credit rating levels are presented below:

~83~

Financial assets at fair value through other comprehensive income Group 1 Financial assets at fair value through other comprehensive income Group 1	12 months 232,060 $	Significant increase Impairment of in credit risk credit - $ - $ December31,2020 December 31, 2019 Life time	Significant increase Impairment of in credit risk credit - $ - $ December31,2020 December 31, 2019 Life time	Total 232,060 $
	12 months 90,550 $	Significant increase in credit risk - $ Life time	Impairment of credit - $	Total
				90,550 $

Group 1: Debt instruments designated as investment grade.

(c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. Company 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 Company’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 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. As of December 31, 2020 and 2019, the Company has $6,673,250 thousand and $8,316,340 thousand undrawn borrowing facilities, respectively.

~84~

Non-derivative financial liabilities:

Non-derivative financial

liabilities:

Short-term
borrowings
Accounts payable
Accounts payable
to related parties
Other payables
Other payables to
related parties
Lease labilities
Other current
liabilities
Long-term borrowings
Bonds payable
Forward exchange
contracts
December 31,2020
Derivative financial
liabilities
Non-derivative financial

3 months
Between
Between
Less than
and 1
1 and 2
2 and 5
Over 5
3months
year
years
years
years
1,368,830
$ 587,600
$ -
$ -
$ -
$ 1,956,430
$ 95,324
92,652
-
-
-
187,976
7,253,797
-
-
-
-
7,253,797
383,542
2,171
-
-
-
385,713
86,966
-
-
-
-
86,966
767
2,235
1,090
177
-
4,269
10,086
-
-
-
-
10,086
828
2,531
84,284
635,779
87,718
811,140
-
2,231,900
-
-
-
2,231,900
30,047
-
-
-
-
30,047
3 months
Between
Between
Less than
and 1
1 and 2
2 and 5
Over 5
3months
year
years
years
years
90,198
$ -
$ -
$ -
$ -
$ 90,198
$ 76,812
27,070
-
-
-
103,882
5,384,900
-
-
-
-
5,384,900
498,116
662
-
-
-
498,778
7,124
-
-
-
-
7,124
2,533
4,653
830
-
-
8,016
9,074
-
-
-
-
9,074
-
-
-
2,289,500
-
2,289,500
11,799
-
-
-
-
11,799
Total
liabilities:
Total

Short-term
borrowings
Accounts payable
Accounts payable
to related parties
Other payables
Other payables to
related parties
Lease labilities
Other current
liabilities
Bonds payable
Forward exchange
contracts
Derivative financial
liabilities
December 31,2019

~85~

(3) Fair value

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 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 Company’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 Company’s investment in certain derivative instruments and equity investment is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in certain derivative instruments and equity investment without active market and investment property is included in Level 3.
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, short-term 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 are as follows:

~86~

December 31,2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Debt securities -Forward exchange contracts -Funds -Call options of convertible bonds Financial assets at fair value through other comprehensive income -Equity securities -Debt securities 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 $ - - - 44,320 - 71,234 $ 446 - $	Total
				26,468 $ - 26,316 52,157 1,446,582 232,060 446
				1,784,029 $
				30,047 $

~87~

December 31,2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Debt securities -Forward exchange contracts -Funds -Call options of convertible bonds Financial assets at fair value through other comprehensive income -Equity securities -Debt securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts	Level 1 485 $ - - - 2,485,433 90,550 2,576,468 $ - - $	Level 2 - $ - 14,138 - - - 14,138 $ - 11,799 $	Level 3 21,301 $ - - - 31,170 - 54,761 $ 2,290 - $	Total
				21,786 $ - 14,138 - 2,516,603 90,550 2,290
				2,645,367 $
				11,799 $

D. The methods and assumptions the Company used to measure fair value are as follows:
(a) The instruments the Company used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

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

(b) 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.
(c) Forward exchange contracts are usually valued based on the current forward exchange rate.

~88~

(d) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Company’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs In accordance with the Company’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.
F. The following chart is the movement of Level 3 for the years ended December 31, 2020 and 2019:

			2020			2019
At January 1		$	54,761		$	63,913
Additions during the year			5,167			-
Merged and transferred to subsidiary during the year (Note)			-	(		5,220)
Recovery of capital reduction during the year			-	(		7,830)
Gains recognised in profit or loss	(		1,844)	(		1,910)
Gains/losses recognised in other
comprehensive income			13,150			5,808
At December 31		$	71,234		$	54,761

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:

~89~

Equity securities Private equity funds in venture capital Call options of convertible bonds Equity securities Private equity funds in venture capital Call options of convertible bonds	Fair value at December 31, 2020	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	44,320 $ 26,468 446 Fair value at December 31, 2019	Market comparable companies Net asset value Binary tree convertible bond valuation model Valuation technique	Price to book ratio multiple N/A Risk-free interest rate Stock price Volatility Significant unobservable input	15,818 $ 26,468 0.0544% 146.5 32.86% Range (weighted average)	The higher the multiplier, the higher the fair value N/A The higher the risk- free interest rate, the lower the fair value The higher the stock price, the higher the fair value The higher the stock price volatility, the higher the fair value Relationship of inputs to fair value
	31,170 $ 21,301 2,290	Market comparable companies Net asset value Binary tree convertible bond valuation model	Price to book ratio multiple N/A Risk-free interest rate Stock price Volatility	313 $ 21,786 $ 0.4816% 167.5 32.97%	The higher the multiplier, the higher the fair value N/A The higher the risk- free interest rate, the lower the fair value The higher the stock price, the higher the fair value The higher the stock price volatility, the higher the fair value

H. The Company 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:

~90~

December 31, 2020 Recognised in profit Recognised in other or loss comprehensive income

Financial assets Call options of convertible bonds Equity securities	Input	Change Favourable change ±20bp - $ ±10% 446 ±5% 223 ±10% - ±5% - 669 $	Unfavourable change	Favourable change	Favourable change	Unfavourable change
	Risk-free interest rate Stock price Volatility Stock price Volatility		- $ 223) ( 223) ( - - 446) ($		- $ - - 4,432 - 4,432 $	- $ - - 4,432) ( - 4,432) ($

Financial assets Call options of convertible bonds Equity securities	Input	Change	Favourable change Unfavourable change Favourable change Unfavourable change - $ - $ - $ - $ 1,603 1,145) ( - - 2,290 229) ( - - - - 3,117 3,117) ( - - - - 3,893 $ 1,374) ($ 3,117 $ 3,117) ($ December 31, 2019 Recognised in profit or loss Recognised in other comprehensive income	Favourable change Unfavourable change Favourable change Unfavourable change - $ - $ - $ - $ 1,603 1,145) ( - - 2,290 229) ( - - - - 3,117 3,117) ( - - - - 3,893 $ 1,374) ($ 3,117 $ 3,117) ($ December 31, 2019 Recognised in profit or loss Recognised in other comprehensive income	Favourable change Unfavourable change Favourable change Unfavourable change - $ - $ - $ - $ 1,603 1,145) ( - - 2,290 229) ( - - - - 3,117 3,117) ( - - - - 3,893 $ 1,374) ($ 3,117 $ 3,117) ($ December 31, 2019 Recognised in profit or loss Recognised in other comprehensive income	Favourable change Unfavourable change Favourable change Unfavourable change - $ - $ - $ - $ 1,603 1,145) ( - - 2,290 229) ( - - - - 3,117 3,117) ( - - - - 3,893 $ 1,374) ($ 3,117 $ 3,117) ($ December 31, 2019 Recognised in profit or loss Recognised in other comprehensive income
			Favourable change		Unfavourable change
	Risk-free interest rate Stock price Volatility Stock price Volatility	±20bp ±10% ±5% ±10% ±5%		- $ 1,603 2,290 - - 3,893 $	- $ 1,145) ( 229) ( - - 1,374) ($

(4) Assessment of impact of COVID-19

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

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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 NT$300 million or 20% of paid-in capital or more: None.
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: 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.

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

Not applicable.

15. INITIAL APPLICATION OF IFRSs

Not applicable.

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MERRY ELECTRONICS CO., LTD. STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020

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

Statement 1 Item Cash on hand Cash in banks Checking accounts Demand deposits Foreign exchange deposits USD EUR RMB HKD SGD JPY Description	Amount 242 $ 2,417 28,999 269,664 101 12,017 738 8,582 10 322,770 $

Statement 1,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF TRADE RECEIVABLES DECEMBER 31, 2020

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

Statement 2 Client Name	Summary		Amount	Note
A B C Others			5,811,200 $ 1,829,071 1,312,522 1,152,311 10,105,104 $	The balance of each customer has not exceeded 5% of the accounts receivable

Statement 2,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF INVENTORIES DECEMBER 31, 2020

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

Statement 3

Statement 3
		Amount
Item	Description	Cost	Net	Realizable Value	Note
Finished goods	$	1,007,280	$	996,997	Net realisable
Raw materials		15,201		15,201	value Replacement
		1,022,481	$	1,012,198	cost
Less: Allowance for	(	18,393)
slow-moving	$	1,004,088
inventories and
valuation loss

Statement 3,Page1

MERRY ELECTRONICS CO., LTD.

STATEMENT OF FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 4

Statement 4
Name	Shares (in thousand shares) Fair Value Shares (in thousand shares) Amount 1,054 26,976 $ - - $ 12,091 648,164 1,814 - 5,723 99,990 - - 2,781 27,811 - - 324 2,976 - - 683 6,425 - - 169 2,123 - - 75 8,772 - - - - 356 10,437 - - 5,000 144,625 823,237 155,062 1,614,986 1,620 2,976) ( - 2,435,247 $ 156,682 $ BeginningBalance Addition	Decrease		Shares (in thousand shares) Amount Pledged as collateral Note EndingBalance
		Shares (in thousand shares)	Amount	Shares (in thousand shares)
6679.TW 4943.TW 3290.TW FUJITER Semiconductor CO., LTD. NETVOX TECHNOLOGY CO., LTD. EVER THAI AGRIPRODUCT CO., LTD. SUNSINO SME Development Co., Ltd. Linsation Intelligent Technology Limited MERRY FULING CO., LTD., TAIWAN XS218687550 Add: Valuation adjustment Less: Accumulated impairment		1,054) ( 26,976) ($ - - - - 655) ( - - - - - - - - - - - - - 26,976) ( 1,081,490) ( - 1,108,466) ($		- - $ None 13,905 648,164 None 5,723 99,990 None 2,126 27,811 None 324 2,976 None 683 6,425 None 169 2,123 None 75 8,772 None 356 10,437 None 5,000 144,625 951,323 535,116 2,976) ( 1,483,463 $

Statement 4,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 5

Statement 5
Name	BeginningBalance		Addition		Decrease	EndingBalance		Market Value or Net Assets Value		Pledged as collateral Note
	Number of shares (in thousand)	Amount	Number of shares (in thousand)	Amount	Number of shares (in thousand) Amount	Number of shares (in thousand) Percentage of Ownership	Amount	Unit Price (in dollars)	Total Amount
MERRY ELECTRONICS (HK) CO., LTD. 25,658 3,627,334 $ DANNY DYNAMICS LIMITED 48,005 2,838,996 LEOHAB ENTERPRISE CO., LTD. 13,395 66,395 MERRY ELECTRONICS (U.S.A.) CO., LTD. 999 36,408 MERRY ELECTRONICS (SINGAPORE) PTE., LTD. 800 660,634 MERRY ELECTRONICS (THAILAND) CO., LTD. 5,060 554,432 MERRY HEALTHCARE CO., LTD. 20,902 541,594 GUANGDONG LUXSHARE & MERRY ELECTRONICS CO., LTD. - 376,606 Suzhou Meisheng Electronics Co.,Ltd. - 93,666 INDIGO ENTERPRISE INC - 794,473 BIOTEST MEDICAL CORPORATION 9,000 27,792 MERRY & LUXSHARE (VIETNAM) CO., LTD. - - 9,618,330 $ Note: It is a limited company without shares.			- - - - - - 8,040 - - - - -	458,085 $ 307,442 - - 467,499 3,698 177,033 - 10,969 - - 364,484 1,789,210 $	- - $ - - 8,409) ( 16,583) ( - 9,035) ( - - - - - - - 3,767) ( - - - 38,306) ( - 6,140) ( - - 73,831) ($	25,658 100% 48,005 100% 4,986 21% 999 99.9% 800 100% 5,060 99.99% 28,942 100% - 49% - 70% - 70% 9,000 100 - 51	4,085,419 $ 3,146,438 49,812 27,373 1,128,133 558,130 718,627 372,839 104,635 756,167 21,652 364,484 11,333,709 $	159.23 65.54 9.99 27.40 1,410.17 110.30 24.83 - - - 2.41 -	4,085,419 $ 3,146,438 49,812 27,373 1,128,133 558,130 718,627 372,839 104,635 756,167 21,652 364,484 11,333,709 $	None None None None None None None None Note None Note None Note None None Note

Statement 5,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 6

Statement 6
Item	BeginningBalance		Addition	Decrease	Transfer	Ending	Balance	Collateral
	Initial Cost	Revaluation Increment				Initial Cost	Revaluation Increment
Note:“Property,Plant and Equipement”:Please refer to Note 6(8)

(Remainder of page intentionally left blank)

Statement 6,Page1

MERRY ELECTRONICS CO., LTD.

STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT

FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 7

Item Beginning Balance Addition Decrease Ending Balance Note

Note:“Property,Plant and Equipement”:Please refer to Note 6(8).

(Remainder of page intentionally left blank)

Statement 7,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2020

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

Statement 8

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Range of Interest
Nature Description Ending Balance Contract Period Rate Collateral Note
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Unsecured borrowings Standard Chartered Hong Kong Unsecured borrowings HSBC Bank (Taiwan) Unsecured borrowings Mizuho Bank	587,600 $ 2020.09.11- 2021.03.10 0.00% None 1,139,200 2020.10.14- 2021.03.18 0.53%-0.63% None 227,840 2020.10.22- 2021.03.18 0.63%-0.66% None 1,954,640 $

Statement 8,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF OTHER CURRENT LIABILITIES DECEMBER 31, 2020

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

Statement 9

Item Description Amount Note

Note : “Other Current Liabilities”Please refer to Note 6(14).

Statement 9,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF LONG-TERM BORROWINGS DECEMBER 31, 2020

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

Statement 10

Statement 10
Creditor	Description	Amount Contract Period 100,000 $ 2020.2.20-2025.2.20 220,000 2020.2.20-2025.2.20 300,000 2020.2.20-2027.2.19 79,950 2020.3.30-2025.3.15 100,000 2020.2.20-2025.2.15 799,950 $	Interest Rate	Collateral	Note
Jih Sun International Bank Taipei Fubon Bank Taishin International Bank E.SUN Commercial Bank Chang Hwa Bank	Unsecured borrowings Unsecured borrowings Unsecured borrowings Unsecured borrowings Unsecured borrowings		0.30%~0.40% 0.37% 0.40% 0.35% 0.50%	None None None None None	Note Note

Note : Please refer to Note 6(16) for information on restrictive loan covenants.

Statement 10,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF BONDS PAYABLE DECEMBER 31, 2020

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

Statement 11

Statement 11
Merry Electronics Co.,Ltd. The Second Domestic unsecured convertible Fubon Securities Co.,Ltd 2018.12.11 Less: Current portion of corporate bonds payable Bonds Name Trustee Issuance Date	Issuance Date	Interest Payment Date	Coupon Rate	Amount	Amortized with cash by bond's face value at maturity None Repayment Term Collateral Note
				Total Issuance Amount Repayment Paid Ending Balance Unamortize d Premiums (Discounts) Carrying Amount 3,000,000 $ 768,100 $ 2,231,900 $ 28,099) ($ 2,203,801 $ 2,203,801) ( - $
		2021.12.11	0.00%

Statement 11,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF DEFERRED TAX LIABILITIES DECEMBER 31, 2020

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

Statement 12

Item Description

Amount

Note

Note:“Deferred Tax Liabilities”:Please refer to Note 6(29).

Statement 12,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 13

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Item Quantity Amount Note
Telephone receivers/speakers 157,746 $ 9,931,771
Headset speakers 10,827 7,149,768
Wireless electronic products 6,455 9,387,776
Others 205,318 490,866
26,960,181
Less: Sales returns ( 9,831)
Sales discounts and allowances ( 45,324)
Net sales revenue 26,905,026
Technical service revenue 11,023
Operating revenue, net $ 26,916,049
----- End of picture text -----

Statement 13,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 14

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

Item Amount
Raw materials at beginning of year $ 1,136
Add: Raw materials purchased during the year 597,055
Less: Raw materials at end of year ( 15,201)
Used raw materials transferred to expenses ( 52)
Raw materials sold ( 582,965)
Finished goods cost ( 27)
Finished goods at beginning of year 874,580
Add: Finished goods cost purchased during the year 24,737,467
Less: Finished goods at end of year ( 1,007,280)
Finished goods used and transferred to ( 167)
expenses
Cost of sales 24,604,573
Cost of raw materials sales 582,965
Gain on reversal of inventories ( 41,567)
Operating costs $ 25,145,971
----- End of picture text -----

Statement 14,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 15

Statement 15
Item		Selling expenses	Administrative expenses			Research and development expense		Total	Note
Wages and salaries Freight Administrative service fee Insurance expense Service expense Material expense Other expenses		61,772 $ 31,111 47,351 7,123 - - 27,232 174,589 $		347,747 $ 265 13,426 24,660 38,970 - 90,880 515,948 $		434,394 $ 669 - 32,372 2,844 34,556 125,917 630,752 $		843,913 $ 32,045 60,777 64,155 41,814 34,556 244,029 1,321,289 $	The balance of each expense account has not exceeded 5% of the total expense

Statement 15,Page1

MERRY ELECTRONICS CO., LTD. STATEMENT OF FINANCE COST FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 16

Statement 16
Item	Description	Amount Note
Amortisation of discounts on	$	30,454
bonds
Accounts receivable financing		4,495
Bank borrowings		4,888
Lease liability		317
	$	40,154

(Remainder of page intentionally left blank)

Statement 16,Page1

MERRY ELECTRONICS CO., LTD.

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES BY FUNCTION

FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 17

Statement 17
Nature Function	Year ended December 31, 2020			Year ended December 31, 2019
	Classified as Operating Costs	Classified as Operating Expenses	Total	Classified as Operating Costs	Classified as Operating Expenses	Total
Employee Benefit Expense
Wages and salaries	$ 9,062	$ 694,136	$ 703,198	$ 14,944	$ 758,377	$ 773,321
Labour and health insurance fees	594	58,433	59,027	877	56,223	57,100
Pension costs	180	31,550	31,730	453	29,674	30,127
Directors'remuneration	-	26,380	26,380	-	69,276	69,276
Other personnel expenses	5,296	131,483	136,779	625	97,079	97,704
Depreciation Expense	876	24,933	25,809	923	26,836	27,759
Depletion Expense	-	-	-	-	-	-
Amortisation Expense	16,004	34,715	50,719	14,407	41,218	55,625

Note:

As at December 31, 2020 and 2019, the Company had 765 and 654 employees,including 5 and 5 non-employee directors, respectively.
A company whose stock is listed for trading on the stock exchange or over-the-counter securities exchange shall additionally disclose the following information ：
(1) Average employee benefit expense in current year was $1,225 thousand ((Total employee benefit expense of current year-Total directors’ remuneration of current year)/ (Number of employees of current year-Number of non-employee directors of current year)). Average employee benefit expense in previous year was $1,477 thousand ((Total employee benefit expense of previous year -Total directors’ remuneration of previous year)/ (Number of employees of previous year-Number of non-employee directors of previous year)).
(2) Average employee salaries in current year were $925 thousand (Total wages and salaries of current year/ (Number of employees of current year-Number of non-employee directors of current year)).
Average employee salaries in previous year were $1,192 thousand (Total wages and salaries of previous year/ (Number of employees of previous year-Number of non-employee directors of previous year).

Statement 17,Page1

MERRY ELECTRONICS CO., LTD.

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES BY FUNCTION (Cont.)

FOR THE YEAR ENDED DECEMBER 31, 2020

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

Statement 17

(3) Adjustments of average employee salaries were -22.4% ((Average wages and salaries of current year - Average wages and salaries of previous year)/Average wages and salaries of previous year).
(4) The Company set up an audit committee and therefore, it has no supervisors.
(5) The Company’s Compensation Policy is as follows:
A. The directors’ and managers’ emoluments are distributed in accordance with ‘Director and Manager Remuneration Management Regulations’, except for the regulations stipulated in the laws or the Company’s Articles of Incorporation.
B. The directors’ and managers’ performance assessment and salary compensation, which is determined based on the general pay levels in the same industry, also take into consideration the correlation between the individual’s performance and the Company operational performance and future risk exposure.
C. The Remuneration Committee regularly assesses the degree to which performance goals for the directors and managers have been achieved, and sets the types and amounts of their individual salary compensation based on the results of the reviews conducted in accordance with the performance assessment standards. The annual report shall disclose the results of the individual performance assessments of the directors and managers and the connection between and reasonableness of the contents and amounts of their individual salary compensation and performance assessment results, and reports it at a shareholders’ meeting.
D. The managers’ compensation is conducted in accordance with the Company’s relevant management system such as ‘Employee Compensation Distribution Regulations’.
E. Directors’ emoluments include remuneration and transportation allowance.
F. Mangers’ and employees’ emoluments include salaries, bonuses, employee compensation, restricted stocks and employee stock ownership trust, etc.
G. Mangers’ and employees’ emoluments are calculated based on the general pay levels in the same industry, and by taking into account the individual work experience and performance, pervious salaries and individual performance assessed in accordance with the ‘Employee Performance Assessment Management Regulations’.
H. Directors’ and managers’ emoluments will be reviewed by the Remuneration Committee and resolved by the Board of Directors.

Statement 17,Page2

MERRY ELECTRONICS CO., LTD.

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

Loans to others

Year ended December 31, 2020

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

Table 2

MERRY ELECTRONICS CO., LTD.

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.

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
	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 16,563 - 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.

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.

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:

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

Table 5,Page1

Table 6

Expressed in thousands of NTD

MERRY ELECTRONICS CO., LTD.

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.

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

December 31, 2020

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31,2020(Note 1)	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date (Note 2)	Allowance for doubtful accounts
					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 Feburary 25, 2021.

Table 7,Page1

Table 8

MERRY ELECTRONICS CO., LTD.

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:

Parent company is ‘0’.
The subsidiaries are numbered in order starting from ‘1’.
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.
Subsidiary to parent company.
Subsidiary to subsidiary.
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. 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

Information on investees in Mainland China

Expressed in thousands of NTD (Except as otherwise indicated)

MERRY ELECTRONICS CO., LTD.

Year ended December 31, 2020

Table 10

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

MERRY ELECTRONICS CO., LTD.

Information on investees in Mainland China

Table 10

Expressed in thousands of NTD (Except as otherwise indicated)

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 (Note 1)
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.

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

AI assistant

MERRY — Audit Report / Information 2020

52085_rns_2020-12-16_b70bab6e-82d7-4472-8f9b-5e02cf8afeeb.pdf

MERRY ELECTRONICS CO., LTD.

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND INDEPENDENT AUDITORS’

REPORT

DECEMBER 31, 2020 AND 2019

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

Opinion

Basis for opinion

Key audit matters

Cut-off on sales revenue from distribution warehouse

Description

How our audit addressed the matter

Investments accounted for using equity method - valuation of inventories

Description

How our audit addressed the matter

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

Auditors’ responsibilities for the audit of the parent company only financial statements

E.

F.

MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

MERRY ELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2020 AND 2019

1. HISTORY AND ORGANISATION

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE PARENT COMPANY ONLY

FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

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”)

(3) IFRSs issued by IASB but not yet endorsed by the FSC

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Foreign currency translation

(4) Classification of current and non-current items

(5) Cash equivalents

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

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

(8) Financial assets at amortised cost

(9) Accounts and notes receivable

(10) Impairment of financial assets

(11) Derecognition of financial assets

(12) Inventories

(14) Property, plant and equipment

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

(16) Leased assets/ operating leases (lessee)

(18) Impairment of non-financial assets

(19) Borrowings

(20) Notes and accounts payable

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

(22) Convertible bonds payable

(23) Derecognition of financial liabilities

(24) Non-hedging and embedded derivatives

(25) Employee benefits

(28) Share capital

(29) Dividends

(30) Revenue recognition

(31) Government grants

(32) Business combinations

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

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

(4) Accounts receivable

(5) Transfer of financial assets

(6) Inventories

A. Subsidiaries:

(8) Property, plant and equipment

－ (9) Leasing arrangements lessee

(10) Intangible assets

MERRY Audit Report / Information 2020

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

`－` (9) Leasing arrangements lessee