MERRY — Audit Report / Information 2022

Dec 21, 2022

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2022 AND 2021

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

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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

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

Opinion

We have audited the accompanying consolidated balance sheets of Merry Electronics Co., Ltd. and its subsidiaries (the “Group”) as at December 31, 2022 and 2021, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to the Other matter section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

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

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Key audit matters for the Group’s 2022 consolidated financial statements are stated as follows:

Cut-off on sales revenue from distribution warehouse

Description

Refer to Note 4(32) for accounting policy on revenue recognition.

The Group recognizes revenue upon delivery or pick-up of goods (the transfer of control of ownership) by customers at warehouses. Warehouse sales revenue constitutes 30% of total operating revenue for the year ended December 31, 2022. The Group’s revenue recognition is based on inventory movement records of warehouses based on the reports provided by warehouse custodians or bill of lading reports recorded on network platform. As the hubs are located in various locations and there are numerous custodians, the frequency and contents of statements provided by custodians vary, and customers are from different places, the process of revenue recognition contains numerous manual procedures, which would potentially result in inaccurate timing of revenue recognition and the discrepancy between physical inventory quantities in the hubs and quantities per accounting records. Thus, we consider the cut-off on sales revenue from distribution warehouses a key audit matter.

How our audit addressed the matter

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

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

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

• (b) Verifying the internal control of warehouse distribution (checked the terms of transaction / timing of ownership transfer and dates of supporting documents and verifying transactions recognized 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 warehouses recognized during a specific period before and after the period-end, including verifying delivery schedule of distribution warehouses and ensuring the movements of inventories contained in the statements and cost of goods sold had been recognized in the appropriate period;

• C. Performed physical inventory count observation or confirmed the inventory quantities with hub

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custodian and agreed the results to accounting records.

Valuation of inventories

Description

Refer to Note 4(13) for accounting policies on inventory valuation, Note 5(1) for significant accounting estimates and assumptions related to inventory valuation, and Note 6(7) for details of allowance for inventory valuation losses. As of December 31, 2022, the balances of inventories and allowance for inventory valuation losses were NT$5,234,460 thousand and NT$323,883 thousand, respectively.

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

How our audit addressed the matter

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

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

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

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

• D. Obtained the net realizable value of each kind of inventory and checked whether the applied calculation logic was in agreement with all inventories, tested the supporting documents related to the estimation basis for net realizable 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.

Other matter - audits of other independent auditors

We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for under the equity method that are included in the consolidated financial statements and disclosures in Note 13. Those financial statements were audited by other independent auditors, whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on reports of the other independent auditors. The balance of these investments accounted for under equity method amounted to

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NT$39,582 thousand and NT$42,728 thousand, constituting 0.12% and 0.13% of total assets as of December 31, 2022 and 2021, respectively, and comprehensive income (loss) was (NT$3,146) thousand and (NT$7,084) thousand, constituting (0.19%) and (1.91%) of total comprehensive income for the years then ended.

Other matter - parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Merry Electronics Co., Ltd. as at and for the years ended December 31, 2022 and 2021.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 Standards on Auditing of 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

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influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

• D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

E.

F.

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

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in

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internal control that we identify during our audit.

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

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

Wang, Yu-chuan

Liu, Mei-Lan

For and on behalf of PricewaterhouseCoopers, Taiwan February 23, 2023

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

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 6(4) 6(5)(6) 7(2) 7(2) 6(7) 6(8) 6(2) 6(3) 6(4) and 8 6(9) 6(10) 6(11) 6(12) 6(30)	December 31, 2022 AMOUNT % $ 6,923,268 21 389,181 1 251,448 1 185,601 1 8,709,698 26 61,771 - 87,327 - 118,270 - 4,910,577 15 286,170 1 21,923,311 66 27,284 - 526,509 2 110,200 - 5,028,458 15 4,147,903 12 293,554 1 1,102,943 3 160,015 1 108,454 - 11,505,320 34 $ 33,428,631 100	December 31, 2021	December 31, 2021
		AMOUNT $ 6,923,268 389,181 251,448 185,601 8,709,698 61,771 87,327 118,270 4,910,577 286,170 21,923,311 27,284 526,509 110,200 5,028,458 4,147,903 293,554 1,102,943 160,015 108,454 11,505,320 $ 33,428,631	AMOUNT $ 4,841,969 339,000 110,695 1,029,073 9,365,119 38,201 399,763 554,654 5,146,042 352,887 22,177,403 25,395 1,010,291 3,853 4,699,769 3,951,003 200,224 1,376,179 210,689 207,818 11,685,221 $ 33,862,624	%
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 1170 Accounts receivable, net 1180 Accounts receivable due from related parties, net 1200 Other receivables 1210 Other receivables - related parties 130X Inventories 1470 Other current assets 11XX Current Assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXX Total assets				14 1 - 3 28 - 1 2 15 1
				65
				- 3 - 14 12 - 4 1 1
				35
				100

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December 31, 2022 December 31, 2021 Notes AMOUNT % AMOUNT % 6(14) $ 2,146,851 6 $ 3,738,289 11 6(2) 10,137 - 3,020 - 6(24) 370,035 1 874,000 3 5,015,885 15 5,709,582 17 7(2) 4,198,902 13 3,633,296 11 6(15) 1,194,443 4 1,142,503 3 7(2) 82,414 - 66,814 - 313,322 1 209,887 1 6(17) 451,919 1 170,074 - 6(24) 233,412 1 246,964 1 106,639 - 71,623 - 14,123,959 42 15,866,052 47 6(24) 650,862 2 - - 6(16) 2,953,838 9 2,925,589 9 6(17) 904,528 3 1,388,581 4 6(30) 1,534,222 5 1,349,989 4 140,904 - 66,004 - 6(18) 37,619 - 82,477 - 26,413 - 29,309 - 6,248,386 19 5,841,949 17 20,372,345 61 21,708,001 64 6(20) 2,177,827 7 2,165,100 7 6(21) 4,720,866 14 4,646,623 13 6(22) 2,265,932 7 2,152,834 6 748,930 2 269,144 1 3,355,328 10 3,349,676 10 6(23) ( 996,446) ( 3) ( 969,246) ( 3 ) 12,272,437 37 11,614,131 34 783,849 2 540,492 2 13,056,286 39 12,154,623 36 9 11 $ 33,428,631 100 $ 33,862,624 100

Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2130 Current contract liabilities 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2320 Current portion of long-term borrowings 2365 Current refund liabilities 2399 Other current liabilities, others 21XX Current Liabilities Non-current liabilities 2527 Non-current contract liabilities 2530 Corporate bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2640 Accrued pension liabilities 2670 Other non-current liabilities, others 25XX Non-current liabilities 2XXX Total Liabilities Equity attributable to owners of parent Share capital 3110 Share capital - common stock Capital reserve 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

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

Items

Year ended December 31 2022 2021 Notes AMOUNT % AMOUNT % 6(24) and 7(2) $ 35,398,690 100 $ 36,182,719 100 6(7) and 7(2) ( 30,846,138) ( 87) ( 31,807,621) ( 88) 4,552,552 13 4,375,098 12 6(28)(29) ( 467,211) ( 1) ( 409,076) ( 1) ( 1,224,345) ( 4) ( 1,161,045) ( 3) ( 1,800,730) ( 5) ( 1,699,476) ( 5) 12(2) 12,854 - ( 6,944) - ( 3,479,432) ( 10) ( 3,276,541) ( 9) 1,073,120 3 1,098,557 3 6(25) 66,266 - 40,992 - 6(26) and 7(2) 488,213 1 324,198 1 6(27) 318,148 1 ( 51,420) - ( 105,635) - ( 84,329) - 6(9) 208,914 1 254,175 1 975,906 3 483,616 2 2,049,026 6 1,582,173 5 6(30) ( 427,970) ( 1) ( 291,083) ( 1) $ 1,621,056 5 $ 1,291,090 4

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 gain (loss) 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit(loss) of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

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

Items

Year ended December 31 2022 2021 Notes AMOUNT % AMOUNT % 6(18) $ 11,395 - $ 2,558 - 6(3)(23) ( 361,602) ( 1) ( 747,219) ( 2) 62 - 452 - 6(30) ( 1,310) - ( 1,408) - ( 351,455) ( 1) ( 745,617) ( 2) 6(23) 397,730 1 ( 171,657) ( 1) 6(23) ( 5,628) - ( 1,279) - 6(23) 83,321 - ( 41,760) - 6(30) ( 85,747) - 40,360 - 389,676 1 ( 174,336) ( 1) $ 38,221 - ($ 919,953) ( 3) $ 1,659,277 5 $ 371,137 1 $ 1,455,398 4 $ 1,128,485 3 165,658 1 162,605 1 $ 1,621,056 5 $ 1,291,090 4 $ 1,445,320 4 $ 214,586 1 213,957 1 156,551 - $ 1,659,277 5 $ 371,137 1 6(31) $ 6.81 $ 5.40 6(31) $ 6.07 $ 4.88

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 Unrealized gains(losses) from investments in equity instruments measured at fair value through other comprehensive income, net 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive 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 Unrealized gains (losses) from investments in debt instruments measured at fair value through other comprehensive income, net 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax relating to the components of other comprehensive income 8360 Components of other comprehensive income that will be reclassified to profit or loss 8300 Total other comprehensive income (loss) for the year 8500 Total comprehensive income for the year Profit, attributable to: 8610 Owners of parent 8620 Non-controlling interest Total Profit Comprehensive income, attributable to: 8710 Owners of the parent 8720 Non-controlling interest Total Comprehensive Income 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 consolidated financial statements.

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Year 2021 Balance at January 1, 2021 Profit for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) Appropriation and distribution of 2020 retained earnings Legal reserve Cash dividends Issuance of common stock Proceeds from issuance of convertible bonds Share-based payment Recognition of change in equity of associates in proportion to the Group's ownership Changes in ownership of subsidiaries Acquisition of non-controlling interests in a subsidiary Balance at December 31, 2021 Year 2022 Balance at January 1, 2022 Profit for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) Appropriation and distribution of 2021 retained earnings Legal reserve Special reserve Cash dividends Share-based payment Recognition of change in equity of associates in proportion to the Group's ownership Acquisition of non-controlling interests in a subsidiary Balance at December 31, 2022	Notes						Equitya	Equitya	ttributable to owners	of	theparent						Non-controlling interest		Total equity
			Share capital - common stock	a	Capital surplus, dditionalpaid-in capital				Retained Earnings				Financial statements translation differences of foreign operations		Total
							Legal reserve		Special reserve		Unappropriated retained earnings
	6(22) 6(19) 6(21) 6(21) 6(21) 6(22) 6(19) 6(21) 4(3)		$ 2,093,332 - - - - - 60,000 - 11,768 - - - $ 2,165,100 $ 2,165,100 - - - - - - 12,727 - - $ 2,177,827		$ 3,960,123 - - - - - 376,314 96,857 90,289 7,205 729 115,106 $ 4,646,623 $ 4,646,623 - - - - - - 57,551 16,692 - $ 4,720,866		$ 2,006,040 - - - 146,794 - - - - - - - $ 2,152,834 $ 2,152,834 - - - 113,098 - - - - - $ 2,265,932		$ 269,144 - - - - - - - - - - - $ 269,144 $ 269,144 - - - - 479,786 - - - - $ 748,930		$ 3,433,731 1,128,485 2,498 1,130,983 ( 146,794 ) ( 1,068,244 ) - - - - - - $ 3,349,676 $ 3,349,676 1,455,398 9,178 1,464,576 ( 113,098 ) ( 479,786 ) ( 866,040 ) - - - $ 3,355,328		$ 9,326 - ( 916,397 ) ( 916,397 ) - - - - ( 62,175 ) - - - ($ 969,246 ) ($ 969,246 ) - ( 19,256 ) ( 19,256 ) - - - ( 7,944 ) - - ($ 996,446 )		$ 11,771,696 1,128,485 ( 913,899 ) 214,586 - ( 1,068,244 ) 436,314 96,857 39,882 7,205 729 115,106 $ 11,614,131 $ 11,614,131 1,455,398 ( 10,078 ) 1,445,320 - - ( 866,040 ) 62,334 16,692 - $ 12,272,437		$ 499,047 162,605 ( 6,054 ) 156,551 - - - - - - - ( 115,106 ) $ 540,492 $ 540,492 165,658 48,299 213,957 - - - - - 29,400 $ 783,849		$ 12,270,743 1,291,090 ( 919,953 ) 371,137 - ( 1,068,244 ) 436,314 96,857 39,882 7,205 729 - $ 12,154,623 $ 12,154,623 1,621,056 38,221 1,659,277 - - ( 866,040 ) 62,334 16,692 29,400 $ 13,056,286

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

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

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

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

Year ended December 31 Notes 2022 2021 $ 2,049,026 $ 1,582,173 6(10)(28) 507,804 438,832 6(11)(28) 107,114 155,039 6(12)(28) 148,859 132,216 12(2) ( 12,854 ) 6,944 6(27) 161,766 - 100,310 77,165 6(11) 5,325 7,165 7,885 ( 909 ) 6(9) ( 208,914 ) ( 254,175 ) 6(19) 62,334 44,195 6(27) 12,241 8,859 6(27) - 13,720 6(25) ( 66,266 ) ( 40,992 ) 6(26) ( 14,341 ) ( 10,787 ) ( 856 ) ( 904 ) 2,082 23,692 ( 1,594 ) ( 4,037 ) 762,143 3,210,656 751,909 ( 101,271 ) 356,438 ( 1,444,697 ) 74,249 345,879 ( 772,341 ) ( 646,449 ) 594,208 ( 499,848 ) 140,400 ( 236,592 ) 15,595 12,551 146,265 247,340 ( 14,798 ) ( 96,104 ) 8,544 ( 87,589 ) ( 33,528 ) ( 2,886 ) 4,889,005 2,879,186 68,025 43,170 14,341 10,787 ( 93,604 ) ( 77,182 ) ( 194,595 ) ( 196,016 ) 4,683,172 2,659,945

(Continued)

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

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Increase in financial assets mandatorily measured at fair value through profit or loss Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Increase in financial assets at amortised cost - current Decrease in financial assets at amortised cost - current Increase in financial assets at amortised cost - non - current Decrease in financial assets at amortised cost - non - current Acquisition 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 Proceeds from disposal of intangible assets Decrease in other non-current financial assets Decrease in guarantee deposits paid Net cash flows from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Repayment of principal portion of lease liabilities Increase in long-term borrowings Decrease in long-term borrowings Proceeds from issuing corporate bonds Redemption of corporate bonds Decrease in other non-current liabilities Cash dividends paid Change in non-controlling interests Proceeds from issuance of shares Net cash flows (used in) from financing activities Effect of change in foreign currency exchange Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Year ended December 31 Notes 2022 2021 ( $ 51,244 ) ( $ 281,395 ) 6(3) ( 444 ) ( 188,340 ) 6(3) - 83,970 ( 31,570 ) ( 1,010,238 ) 889,421 839,871 ( 318,694 ) ( 3,853 ) 212,077 - 6(9) ( 19,650 ) - 6(32) ( 596,303 ) ( 1,240,205 ) 6(32) 7,300 189,681 6(32) ( 28,855 ) ( 86,774 ) - 7,614 2,420 47,992 2,121 10,170 66,579 ( 1,631,507 ) 6(33) ( 1,569,848 ) 491,660 6(33) ( 106,426 ) ( 170,657 ) 71,965 956,296 ( 370,868 ) ( 200,000 ) 6(16)(33) - 3,015,000 6(33) - ( 2,231,900 ) 6(33) ( 3,569 ) ( 15,357 ) 6(33) ( 866,040 ) ( 1,068,213 ) 4(3) 29,400 ( 364,914 ) 6(20) - 432,000 ( 2,815,386 ) 843,915 146,934 ( 77,347 ) 2,081,299 1,795,006 4,841,969 3,046,963 $ 6,923,268 $ 4,841,969

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

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MERRY ELECTRONICS CO., LTD AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(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, repairing, sales of electric appliance and audiovisual electric products, telecommunication equipment and apparatus, computers and computing peripheral equipment, restrained telecom radio frequency equipment, medical appliances, as well as electronic parts and components; planning, design as well as output of service items’ equipment; production as well as marketing management consultant of service items’ relevant business. The Company’ shares were listed on the Taipei Exchange since August 1998 and transferred to the Taiwan Stock Exchange starting September 2000 with approval. The Company merged with its subsidiaries, Huges Hi-Tech Inc. and Biotest Medical Corporation, on September 1, 2005 and October 29, 2021, respectively. The Company was the surviving company while Huges Hi-Tech Inc. and Biotest Medical Corporation were the dissolved companies.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were reported for issuance by the Board of Directors on February 23, 2023.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Impact on the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) that came into effect as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by FSC and became effective from 2022 are as follows:

are as follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts— cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018–2020	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition

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and financial performance based on the Group’s assessment.

(2) Impact on new issuances of or amendments to IFRSs that came into effect as endorsed by the FSC but not yet adopted by the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2023 are as follows:

	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
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 12, ‘Deferred tax related to assets and liabilities	January 1, 2023
arising from a single transaction’

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

(3) Impact on IFRS 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:

New Standards,Interpretations and Amendments

Effective date by International Accounting Standards Board

Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ Amendments to IFRS 16, ‘Lease liability in a sale and leaseback’ IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, 'Insurance contracts' Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 – comparative information' Amendments to IAS 1, ‘Classification of liabilities as current or non- current’ Amendments to IAS 1, ‘Non-current liabilities with covenants’

To be determined by International Accounting Standards Board January 1, 2024 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2024 January 1, 2024

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the

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Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

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

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

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

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

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

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

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

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

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

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

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

• B. Subsidiaries included in the consolidated financial statements:

Name of Name of Main business investor subsidiary activities MEHO MERRY ELECTRONICS (HK) CO., LTD. ("MEST") Sales of the same products as the Company. MEHO MERRY ELECTRONICS (THAILAND) CO., LTD. ("METC") The same main business as the Company. MEHO MERRY ELECTRONICS (U.S.A.) CO., LTD. ("MECA") Agency selling microphone and security system manufactured by affiliates. MEHO DANNY DYNAMICS LIMITED ("DDBV") Equity investments. MEHO MERRY ELECTRONICS (SINGAPORE) PTE. LTD. ("MESG") Manufacturing of other electronic components and circuit board. MEHO MERRY HEALTHCARE CO., LTD. ("MHKY") Sales of medical device. MEHO ASIAN ELITE INTERNATIONAL LTD. ("MSCS") Manufacturing and sales of speaker and amplifier. MEHO Indigo Enterprise Inc. ("INSA") Equity investments.		December 31,2022 December 31,2021 Description 100.00% 100.00% 99.99% 99.99% 99.90% 99.90% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% NOTE 1 100.00% 100.00% NOTE 1 Ownership(%)
		December 31,2022
		100.00% 99.99% 99.90% 100.00% 100.00% 100.00% 100.00% 100.00%

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

Name of Name of Main business Ownership(%)
investor subsidiary activities December 31, 2022 December 31, 2021 Description
----- End of picture text -----

MEHO	MERRY &	Manufacturing of	51.00%	51.00%
	LUXSHARE	speaker system and
	(VIETNAM) CO.,	microphone for
	LTD. (MEVN)	consumer electronics
		used.
MEHO	MUtek Electronics	Manufacturing and	51.00%	-	NOTE 3
	Co., Ltd. (MUTT)	application service of
		electrical appliances
		and audiovisual
		electronic products.
MEHO	Merry Capital Inc.	Equity investments.	100.00%	-	NOTE 4
	(MCTT)
MEST	MERRY	The same main	100.00%	100.00%
	ELECTRONICS	business as the
	(SHENZHEN)CO.,	Company.
	LTD. ("MECL")
DDBV	Universal Capital	Equity investments.	100.00%	100.00%
	Investment
	Limited
	("UCMU")
DDBV	MERRYTECH (HK)	Equity investments.	100.00%	100.00%
	CO.LIMITED
	("MTHK")
INSA	Merry Electronics	Develop-to-order	100.00%	100.00%	NOTE 2、
	North America	and appearance			NOTE 6
	Inc.(MENA)	design of speaker
		and amplifier.
MENA	Sonavox Canada	Equity investments.	-	100.00%	NOTE 2
	Holding.
	("SOCA")
MENA	Seas Fabrikker	Manufacturing and	100.00%	100.00%
	("SENM")	sales of speaker
		monomer.
MHKY	FULICARE	Sales of medical	96.01%	96.01%
	CO., LTD.	device.
	("FUSA")
FUSA	Fulicare Medical	Manufacturing of	100.00%	100.00%
	Instruments	medical device.
	(Suzhou)Co.,Ltd
	("FUSZ")
FUSA	Fulicare Medical	Manufacturing of	100.00%	100.00%
	Instruments	medical device.
	(Xiamen)Co.,Ltd
	("FUXM")

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

Name of Name of Main business Ownership(%)
investor subsidiary activities December 31, 2022 December 31, 2021 Description
----- End of picture text -----

FUSA	Xiamen Etimbre	Research and	100.00%	100.00%
	Hearing Technology	development,
	Co. LTD	manufacturing as
	("ETCX")	well as sales of
		hearing aid, hearing
		device and acoustics
		equipment.
FUSZ	Austar Hearing	Research and	99.50%	99.50%
and	Science And	development,
FUSA	Technology（Xiamen)	manufacturing as
	Co. , Ltd	well as sales of
	("ASCX")	hearing aid, hearing
		device and acoustics
		equipment.
ASCX	Xiamen Laiyate	Research and	100.00%	100.00%
	Medical Devices Co. ,	development as well
	Ltd	as technical sales of
	("LACX")	software functions
		for hearing aid.
MESG	Merry Electronics	Research and	100.00%	-	NOTE 5
	Sdn Bhd	development of
	("MEMP")	microphone, receiver
		and speaker.

• Note 1: On July 1, 2018, the Group acquired 70% share interest for cash of NTD 402,072 thousand in Asian Elite International Ltd. and Indigo Group from third parties, Newood Consultancy Limited and Keen Star Holding Limited, and agreed to acquire the remaining 30% equity interest on the maturity date of the three-year period after the settlement date in accordance with the related contract. After the three-year period matured, on June 30, 2021, the Company paid USD 13,200 thousand (approximately NTD 364,914 thousand) to acquire the remaining 30% of the Company's shares with a carrying amount of NTD 115,106 thousand (shown as investment accounted for using equity method), and holding 100% of the total shares, please refer to Note 13, Tables (8) and (9) in the consolidated financial statements for the year ended December 31, 2021. The registration of ownership was completed on August 23, 2021 and July 5, 2021, respectively.

• Note 2: On May 25, 2022, the subsidiaries between Sonavox Canada Inc. and Sonavox Canada Holding had a merger, which was resolved by the respective Board of Directors, and Sonavox Canada Inc. was the surviving company, with the record date of merger on May 26, 2022. The registration was completed.

• Note 3: On July 30, 2020, it was proposed that a new joint venture named MUtek Electronics

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Co., Ltd. would be set up by the Company and Universal Global Scientific Industrial Co., Ltd. as resolved by the Board of Directors. The Company will invest for an amount not exceeding NTD 198,900 thousand, and the paid-in capital of the newly established company was NTD 60,000 thousand. The Company and Universal Global Scientific Industrial Co., Ltd. invested NTD 30,600 thousand and NTD 29,400 thousand in exchange for 51% and 49% ownership, respectively. It is resolved that the record date of the establishment is dated May 12, 2022. The registration was completed.

• Note 4: On July 28, 2022, the establishment of Merry Capital Inc. was resolved by the Board of Directors. The investment is amounting to NTD 8,000 thousand, with 100% ownership. The registration was completed.

• Note 5: On October 27, 2022, the investment of Merry Electronics Sdn Bhd was resolved. The investment is amounting to MYR 2,400 thousand, with 100% ownership. The registration was completed.

• Note 6: On December 12, 2022, the Group changed the name of the subsidiary, Sonavox Canada Inc. (‘SOCV’), to Merry Electronics North America Inc.(‘MENA’), and the registration for the change had been completed.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: None.

• E. Significant restrictions:

None.

• F. Subsidiaries that have non-controlling interests that are material to the Group:

As of December 31, 2022 and 2021, the non-controlling interest amounted to $ 783,849 thousand and $ 540,492 thousand, respectively. The information of non-controlling interest and respective subsidiaries is as follows:

subsidiaries is	as follows:
Name of subsidiary	Principal place of business Vietnam	Amount Ownership (%) Amount Ownership (%) $ 726,429 49% $ 505,236 49% Non-controllinginterest December31,2022 December31,2021
		Amount $ 726,429	Amount $ 505,236
MEVN				49%

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Summarised financial information of the subsidiaries:

Balance sheets

Balance sheets
			MEVN
		December	31, 2022	December	31, 2021
Current assets		$	1,139,436	$	1,421,722
Non-current assets			1,135,700		1,066,965
Current liabilities	(		596,979)	(	1,234,600)
Non-current liabilities	(		190,065)	(	222,994)
Total net assets		$	1,488,092	$	1,031,093

Statements of comprehensive income

Statements of comprehensive income
Statements of cash flows Revenue Profit before income tax Income tax (expense) benefit Profit for the period from continuing operations Profit for the period Total comprehensive income for the period Comprehensive income attributable to non-controlling interest Net cash provided by operating activities Net cash used in investing activities Net cash provided by financing activities Effect of exchange rates on cash and cash equivalents Decrease in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period
		Year ended December 31, 2022
		Year ended December 31, 2022
	211,377 $ 287,626) ( 1,605 10,605 64,039) ( 141,199 77,160 $		130,459 $ 422,168) ( 269,686 12,139) ( 34,162) ( 175,361 141,199 $

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(4) Foreign currency translation

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

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized 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 retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized 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 recognized 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 recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

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

• B. Translation of foreign operations

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

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

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

  • iii. All resulting exchange differences are recognized 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 Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

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

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

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

  • (a) Assets arising from operating activities that are expected to be realized, 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 realized within twelve months from the balance sheet date;

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

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

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

  • (b) Liabilities arising mainly from trading activities;

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

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

• (6) Cash equivalents

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

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

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized 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 recognized and derecognized using trade date accounting.

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

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

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

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

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

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

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

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

  • (a) The changes in fair value of equity investments that were recognized 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 recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

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

• (9) Financial assets at amortized cost

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

• (10) Accounts and notes receivable

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

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

• (11) Impairment of financial assets

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

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impairment provision for lifetime ECLs.

(12) Derecognition of financial assets

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

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

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

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

• (13) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labor, 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 realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(14) Investments accounted for using equity method / associates

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

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

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

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

• E. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the

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associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• (15) Joint operation and investment accounted for using equity method joint ventures Investment of joint arrangements are classified as joint operations or joint ventures based on its contractual rights and obligations.

• A. Joint operation

  • For the interest in a joint operation, the Group recognizes direct interest in (and other shares of) the joint operation’s assets, liabilities, revenue and expense which are included in the financial statements.

• B. Investment accounted for using equity method – joint ventures The Group accounts for its interest in a joint venture using equity method. Unrealized profits and losses arising from the transactions between the Group and its joint venture are eliminated to the extent of the Group’s interest in the joint venture. However, when the transaction provides evidence of a reduction in the net realizable value of current assets or an impairment loss, all such losses shall be recognized immediately. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture together with any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.

• (16) Property, plant and equipment

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

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. 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

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are as follows:
Buildings, structures and equipment	5 ~ 60 years
Machinery and equipment	2 ~ 12 years
Transportation equipment	5 ~ 12 years
Office equipment	3 ~ 10 years
Others	1 ~ 10 years

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

• A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low value assets, lease payments are recognized 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 amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

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

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

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

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

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

• (18) Intangible assets

• A. Computer software

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

• B. Goodwill

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

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

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(19) Impairment of non-financial assets

• A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized 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 amortized historical cost would have been if the impairment had not been recognized.

• B. The recoverable amounts of goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use are evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized 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. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

• (20) Borrowings

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

(21) 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.

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

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

• (a) Hybrid (combined) contracts; or

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

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

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

• (23) Convertible bonds payable

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

  • (a) The embedded call options and put options are recognized 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 recognized 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 recognized 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 amortized in profit or loss as an adjustment to ‘ finance costs ’ over the period of circulation using the effective interest method.

  • (c) The embedded conversion options which meet the definition of an equity instrument are initially recognized 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’.

(24) Derecognition of financial liabilities

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

(25) Non-hedging and embedded derivatives

• Non-hedging derivatives are initially recognized 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 recognized in profit

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or loss.

(26) Provisions

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

• (27) 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 recognized as expense in that period when the employees render service.

• B. Pensions

• (a) Defined contribution plans

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

• (b) Defined benefit plans

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

  • ii. Remeasurements arising on defined benefit plans are recognized 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 recognized 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

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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.

• (28) 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 recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized 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 recognized as compensation cost over the vesting period.

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

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

(29) Income tax

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

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

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

• E. A deferred tax asset shall be recognized 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.

• (30) Share capital

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

• (31) Dividends

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

• (32) Revenue recognition

Sales of goods

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

~33~

criteria for acceptance have been satisfied.

• B. The furniture is often sold with volume discounts based on aggregate sales over a 12-month period. Revenue from these sales is recognized 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 recognized 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 recognized 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 30~120 days. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.

• C. A receivable is recognized 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.

(33) Government grants

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

(34) Business combinations

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

• B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of

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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 recognized 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 recognized directly in profit or loss on the acquisition date.

• (35) Operating segments

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

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

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

(1) Critical accounting estimates and assumptions

• A. Impairment assessment of goodwill

The impairment assessment of goodwill relies on the Group’s subjective judgement, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. As of December 31, 2022, the Group recognized goodwill, net of impairment loss, amounting to $769,912 thousand.

• B. Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date and writes down the cost of inventories to the net realizable 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, 2022, the carrying amount of inventories was $4,910,577 thousand.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
	December 31, 2022		December	31, 2021
Cash on hand and revolving funds	$	2,006	$	1,084
Checking accounts and demand deposits		6,794,522		4,820,098
Time deposits		126,739		20,787
Short-term paper		1		-
	$	6,923,268	$	4,841,969

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

• B. Due to the Group’s application to the government for the Taiwan industry innovation platform program, restricted cash and cash equivalents were classified as financial assets at amortized cost. Details are provided in Note 8.

• C. As of December 31, 2022 and 2021, time deposits maturing in excess of three months were all classified as current financial assets at amortized cost. Please refer to Note 6 (4).

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

Items		December 31,2022	December	31,2021
Current items:
Financial assets mandatorily measured
at fair value through profit or loss
- Funds	$	100,000	$	50,000
- Forward exchange contract		7,076		1,247
- Call options of convertible bonds		-		600
- Stocks		-		179
- Bonds		280,000		280,000
Valuation adjustment		2,105		6,974
	$	389,181	$	339,000
Non-current items:
- Funds	$	29,350	$	27,863
Valuation adjustment	(	2,066)	(	2,468)
	$	27,284	$	25,395
Items		December 31,2022	December	31,2021
Current items:
Financial liabilities held for trading
- Forward exchange contract	$	10,137	$	3,020

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

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	Years ended December31,	Years ended December31,
	2022	2021
Net gains on financial assets (liabilities)
at fair value through profit or loss	9,929) ($	65,461 $

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

==> picture [470 x 208] intentionally omitted <==

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

December 31, 2022
Contract amount
Derivative instruments (Notional principal) Contract period Contract price
Forward foreign exchange 2022/12/05~
contract to sell USD 24,000 thousand 2023/01/30 NTD 30.368~30.625
Forward foreign exchange 2022/11/07~
contract to buy USD 31,000 thousand 2023/12/29 NTD 29.488~31.901
December 31, 2021
Contract amount
Derivative instruments (Notional principal) Contract period Contract price
Forward foreign exchange 2021/12/24~
contract to sell USD 20,000 thousand 2022/01/28 NTD 27.679~27.752
Forward foreign exchange 2021/11/02~
USD 50,000 thousand NTD 27.568~27.717
contract to buy 2022/12/08
----- End of picture text -----

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

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

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

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

in Note 12(2). Financial assets at fair value through other comprehensive income
Items December 31,2022 Current items: Debt instruments Bonds 144,625 $ Valuation adjustment -through profit or loss 8,925 -through other comprehensive income 2,687) ( 150,863 Equity instruments Stocks 106,080 $ Valuation adjustment -through other comprehensive income 5,495) ( 100,585 Total 251,448 $	December 31,2021
	- $ - -
	-
	106,080 $ 4,615
	110,695
	110,695 $

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==> picture [490 x 243] intentionally omitted <==

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

Items December 31, 2022 December 31, 2021
Non-current items:
Debt instruments
Bonds $ - $ 144,625
Valuation adjustment
-
-through profit or loss ( 6,225)
-through other comprehensive income - 2,941
-
141,341
Equity instruments
Listed stocks 936,494 936,494
Unlisted stocks 80,280 78,143
1,016,774 1,014,637
Valuation adjustment
-through other comprehensive income ( 490,265) ( 145,687)
526,509 868,950
Total $ 526,509 $ 1,010,291
----- End of picture text -----

• A. The Group has elected to classify equity and debt investments that are considered to be strategic investments or steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $777,957 thousand and $1,120,986 thousand as on December 31, 2022 and 2021, respectively.

• B. During the year ended December 31, 2021, the Group repurchased bond investments at fair value of $83,970 thousand due to the maturity of bonds and resulted in cumulative losses on disposal amounting to $5,580 thousand (shown as other gains and losses).

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

Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income Debt instruments at fair value through other comprehensive income Fair value change recognised in profit or loss Fair value change recognised in other comprehensive income Cumulative other comprehensive income reclassified to profit or loss Reclassified due to derecognition Interest income recognised in profit or loss		Years endedDecember31,
	2022 2021 361,602) ($ 747,219) ($ 15,150 $ 110 $ 5,628) ($ 6,859) ($ - $ 5,580 $ 5,831 $ 5,790 $

• D. As of December 31, 2022 and 2021, 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

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• the financial assets at fair value through other comprehensive income held by the Group were $777,957 thousand and $1,120,986 thousand, respectively.

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

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

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

(4) Financial assets at amortized cost

Financial assets at amortized cost
Items Current items: Time deposits with the maturity date over 3 months Non-current items: Time deposits with the maturity date over 3 months Pledged time deposits	December 31, 2022		December 31,2021
	185,601 $ 110,200 $ - 110,200 $		1,029,073 $ - $ 3,853 3,853 $

• A. Amounts recognized in profit or loss in relation to financial assets at amortized cost are listed below:

below:
	Years ended	December	31,
	2022		2021
Interest income	15,005 $	$	12,398

• B. As of December 31, 2022 and 2021, 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 amortized cost held by the Group was $295,801 and $1,032,926, respectively.

• C. Information relating to credit risk of financial assets at amortized cost is provided in Note 12(2). The counterparties of the Group’s investments in certificates of deposits are financial institutions with high credit quality, so the Group expects that the probability of counterparty default is remote.

• D. Details of the Group’s financial assets at amortized cost pledged to others as collateral are provided in Note 8.

(5) Accounts receivable

in Note 8. Accounts receivable
	December 31,2022		December	31,2021
Accounts receivable	$	8,731,145	$	9,400,544
Less: Allowance for uncollectible accounts	(	21,447)	(	35,425)
	$	8,709,698	$	9,365,119

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

Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December 31,2022 8,524,130 $ 9,115,474 $ 177,174 159,214 15,153 112,412 4,853 1,445 9,835 11,999 8,731,145 $ 9,400,544 $ December 31,2021

The above aging analysis was based on past due date.

• B. As of December 31, 2022 and 2021, and January 1, 2021, the balances of receivables (including notes receivable) from contracts with customers amounted to $8,709,698 thousand, $9,365,119 thousand and $12,441,418 thousand, respectively.

• C. The Group took out a credit insurance on the accounts receivable since December 2020. The insurance company audits the amount and pays 90% of the amount when the default occurred. As of December 31, 2022 and 2021, the insured accounts receivable amounted to $8,322,395 thousand and $9,116,623 thousand, respectively.

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

• E. The Group entered into a factoring agreement which has no right of recourse with ING BANK N.V., TAIPEI BRANCH and Bank of America on July 19, 2021 and October 2, 2019, respectively. As of December 31, 2022 and 2021, there were no accounts receivable that were outstanding and expected to be transferred (reclassified as financial assets at fair value through other comprehensive income). Please refer to Note 6(6) for information on transfer of financial assets.

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

• (6) Transfer of financial assets

• A. Transferred financial assets that are derecognized in their entirety

  • None for December 31, 2022 and 2021.

• B. Transferred financial assets that are not derecognized in their entirety

  • i. On July 19, 2021, the Group entered into a factoring agreement with ING BANK N.V., TAIPEI BRANCH to sell its accounts receivable. In accordance with the agreement, the Group transferred first 90% of accounts receivable and has obligated to provide partial guarantees for the default risk of the transferred accounts receivable. Therefore, the Group has not derecognized the accounts receivable sold in their entirety and may not pledge these accounts receivable to a third party.

  • ii. As of December 31, 2022 and 2021, the related information of the transferred accounts receivable sold that the Group continuously recognized to the extent of continuing involvement were as follows:

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December 31,2022 Total carrying amount of the original assets before transferring 1,206,473 $ Carrying amount of the assets continuously recognized 120,647	December 31,2021 1,572,403 $ 157,240

(7) Inventories

Cost Allowance for valuation loss Raw materials 1,689,950 $ 137,852) ($ Work in progress 432,220 13,370) ( Finished goods 3,112,290 172,661) ( 5,234,460 $ 323,883) ($ December 31,2022 Cost Allowance for valuation loss Raw materials 2,232,480 $ 110,135) ($ Work in progress 501,417 14,359) ( Finished goods 2,637,211 100,572) ( 5,371,108 $ 225,066) ($ December 31, 2021	Cost Allowance for valuation loss Raw materials 1,689,950 $ 137,852) ($ Work in progress 432,220 13,370) ( Finished goods 3,112,290 172,661) ( 5,234,460 $ 323,883) ($ December 31,2022 Cost Allowance for valuation loss Raw materials 2,232,480 $ 110,135) ($ Work in progress 501,417 14,359) ( Finished goods 2,637,211 100,572) ( 5,371,108 $ 225,066) ($ December 31, 2021	Book value 1,552,098 $ 418,850 2,939,629 4,910,577 $
	Cost Allowance for valuation loss 2,232,480 $ 110,135) ($ 501,417 14,359) ( 2,637,211 100,572) ( 5,371,108 $ 225,066) ($	Bookvalue 2,122,345 $ 487,058 2,536,639 5,146,042 $

The cost of inventories recognized as expense for the year :

The cost of inventories recognized as expense for the	year :	year :
Other current assets Cost of goods sold Loss on scrapping inventory Loss on slow-moving inventories and decline in market value Loss on physical inventory Tax refund receivable (including input tax) Prepayment for purchases Others	2022 2021 $ 30,602,914 $ 31,633,791 144,326 42,703 98,817 111,759 81 19,368 $ 30,846,138 $ 31,807,621 Years endedDecember31, December 31,2022 December 31,2021 124,759 $ 244,568 $ 12,914 9,545 148,497 98,774 286,170 $ 352,887 $
	2022 $ 30,602,914 144,326 98,817 81 $ 30,846,138 December 31,2022 124,759 $ 12,914 148,497 286,170 $
		$ 31,807,621
		December 31,2021
		244,568 $ 9,545 98,774
		352,887 $

(8) Other current assets

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(9) Investments accounted for using equity method

Investments accounted for using equity method
A. Details are as follows： At January 1 Increase in investments accounted for using equity method Share of profit or loss of investments accounted for using the equity method Changes in capital surplus Changes in other equity items Changes in retained earnings Credit balance of investments accounted for using the equity method transferred to non-current liabilities At December 31 Associates with significant influence Merry Electronics(Suzhou) Co., Ltd. (MECE) Associates with insignificant influence Merry Electronics (Huizhou)Co., Ltd. (MECH) Guangdong Luxshare & Merry Electronics Co.,Ltd. (MEDG) Leohab Enterprise Co., Ltd. (LEOHAB) CDIB-Mac Limited Partnership (MAC FUND) Merry Electronics (Shanghai)Co., Ltd. (MECS) Subtotal Add: Credit balance of investments accounted for using the equity method transferred to non-current liabilities		2022 4,699,769 $ 19,650 208,914 16,692 83,321 62 50 5,028,458 $ Years ended December 31,2022	2021 4,479,708 $ - 254,175 7,205 41,760) ( 452 11) ( 4,699,769 $ December31, December 31,2021
	3,251,933 $ 1,311,066 407,293 39,582 18,584 1,109) ( 5,027,349 1,109 5,028,458 $		3,172,561 $ 1,107,434 377,046 42,728 - 1,059) ( 4,698,710 1,059 4,699,769 $

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

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

Years ended December 31,
Investee 2022 2021
MECE $ 7,574 $ 49,946
MECH 184,874 199,204
MEDG 24,753 7,008
LEOHAB ( 7,222) ( 1,976)
MAC FUND ( 1,066) -
MECS 1 ( 7)
$ 208,914 $ 254,175
----- End of picture text -----

• C. Associates

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

Company name Principal place of business MECE Mainland China	Shareholding ratio	Shareholding ratio	Nature of relationship	Methods of measurement
	December 31,2022	December 31,2021
	49.00%	49.00%	Holding more than 20% of voting right of stockholders	Equity method

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

Balance sheet

ollows: Balance sheet
			MERRY ELECTRONICS(SUZHOU)CO.,LTD
			December 31, 2022			December31,2021
Current assets		$	4,984,442		$	4,500,794
Non-current assets			5,534,283			6,007,307
Current liabilities	(		3,594,226)	(		3,860,498)
Non-current liabilities	(		57,220)	(		55,549)
Total net assets		$	6,867,279		$	6,592,054
Share in associate's net assets		$	3,364,967		$	3,230,106
Realized (unrealized) loss
from upstream and
sidestream transactions	(		113,034)	(		57,545)
Carrying amount of the associate		$	3,251,933		$	3,172,561

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Statement of comprehensive income

	MERRY ELECTRONICS(SUZHOU)CO.,LTD	MERRY ELECTRONICS(SUZHOU)CO.,LTD
	Years ended	December31
	2022	2021
Revenue	8,914,602 $	10,219,029 $
Profit for the period from
continuing operations	128,700 $	79,195 $
Total comprehensive income	128,700 $	79,195 $

• (c) The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below:

Share of profit of associates and joint ventures accounted for using the equity method Other comprehensive income (loss), net of tax Total comprehensive income	2022 2021 201,340 $ 204,229 $ 22,160 12,890) ( 223,500 $ 191,339 $ Years endedDecember31	2022 2021 201,340 $ 204,229 $ 22,160 12,890) ( 223,500 $ 191,339 $ Years endedDecember31
		191,339 $

(Remainder of page intentionally left blank)

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(10) Property, plant and equipment

					Year ended	Year ended	Year ended	December31,	2022	2022
													Effect of foreign
													currency
Cost	Openingbalance				Additions			Reductions		Transfers		exchange differences			Endingbalance
Land	$	790,477		$	-		$	-	$	-		$	2,198		$	792,675
Land improvements		543			17			-		-			39			599
Buildings and structures		1,484,904			13,609	(		12,763)		226,598			61,861			1,774,209
Machinery		2,785,124			256,438	(		62,058)		81,033			106,426			3,166,963
Transportation equipment		21,063			765	(		3)		-			308			22,133
Office equipment		276,950			22,904	(		25,229)		21,432			6,626			302,683
Others		241,388			50,139	(		14,802)		1,883			7,445			286,053
Unfinished construction		208,125			155,419	(		1,128)	(	238,564)			516			124,368
		5,808,574		$	499,291	($		115,983)	$	92,382		$	185,419			6,469,683
Accumulated depreciation
Land improvements	($	543)		$	-		$	-	$	-	($		38)	($		581)
Buildings and structures	(	508,737)	(		73,910)			12,763		-	(		14,435)	(		584,319)
Machinery	(	1,031,903)	(		366,058)			51,506		-	(		31,123)	(		1,377,578)
Transportation equipment	(	14,329)	(		1,915)			1		-	(		207)	(		16,450)
Office equipment	(	189,640)	(		33,066)			24,288		-	(		4,555)	(		202,973)
Others	(	112,419)	(		32,855)			7,884		-	(		2,489)	(		139,879)
	(	1,857,571)	($		507,804)		$	96,442	$	-	($		52,847)	(		2,321,780)
	$	3,951,003													$	4,147,903

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Year ended December 31, 2021

Cost Openingbalance Additions Land 794,952 $ - $ Land improvements 621 - Buildings and structures 1,284,577 70,101 Machinery 2,366,092 748,819 Transportation equipment 30,451 1,704 Office equipment 279,929 23,821 Others 247,668 62,982 Unfinished construction 272,471 156,156 5,276,761 1,063,583 $ Accumulated depreciation Land improvements 621) ($ - $ Buildings and structures 467,206) ( 61,623) ( Machinery 811,707) ( 315,048) ( Transportation equipment 20,392) ( 2,732) ( Office equipment 171,656) ( 32,108) ( Others 110,441) ( 27,321) ( 1,582,023) ( 438,832) ($ 3,694,738 $	Reductions Transfers - $ - $ - - 12,617) ( 193,104 277,069) ( 14,179 10,768) ( - 25,724) ( 4,414 68,448) ( 3,346 4,088) ( 215,043) ( 398,714) ($ - $ - $ - $ 6,062 - 74,450 - 8,581 - 10,985 - 23,662 - 123,740 $ - $	Effect of foreign currency exchange differences Endingbalance 4,475) ($ 790,477 $ 78) ( 543 50,261) ( 1,484,904 66,897) ( 2,785,124 324) ( 21,063 5,490) ( 276,950 4,160) ( 241,388 1,371) ( 208,125 133,056) ($ 5,808,574 78 $ 543) ($ 14,030 508,737) ( 20,402 1,031,903) ( 214 14,329) ( 3,139 189,640) ( 1,681 112,419) ( 39,544 $ 1,857,571) ( 3,951,003 $

A. The Group had no borrowing costs capitalized as part of property, plant and equipment. B. The Group had no property, plant and equipment pledged to others as collateral.

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－ (11) Leasing arrangements lessee

• A. The Group leases various assets including land, buildings, machinery and equipment as well as business vehicles. Rental contracts are typically made for periods of 1 to 45 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 short-term leased premises of the Group are the office and dormitory.

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

Land Buildings Machinery and equipment Transportation equipment Office equipment Other equipment	December 31,2022 Carryingamount $ 86,854 202,878 2,392 1,287 109 34 293,554 $		December 31,2021
			Carryingamount
			$ 85,403 108,327 3,851 2,538 105 - 200,224 $

Land Buildings Machinery and equipment Transportation equipment Office equipment Other equipment	Years ended	2021 Depreciation charge December 31	2021 Depreciation charge December 31
	2022 Depreciation charge
	$ 4,904 99,280 1,430 1,261 162 77 107,114 $		$ 4,773 147,160 1,467 1,323 160 156 155,039 $

• D. For the years ended December 31, 2022 and 2021, the additions to right-of-use assets were $196,666 thousand and $49,468 thousand, respectively.

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

Items affecting profit or loss Interest expense on lease liabilities	Years ended December31	Years ended December31
	2022 5,325 $	2021 7,165 $

For the years ended December 31, 2022 and 2021, the Group’s total cash outflow for leases were $111,751 thousand and $177,822 thousand, respectively.

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(12) Intangible assets

Year ended December 31, 2022

Cost Openingbalance Additions Goodwill 931,678 $ - $ Computer software 590,844 30,741 Customer relationship 326,550 - Trademarks 61,481 - Technical skills 115,748 - Others 38,093 6,014 Sub-total 2,064,394 36,755 $ Accumulated amortization Computer software 406,530) ($ 71,145) ($ Customer relationship 153,503) ( 44,064) ( Trademarks 18,885) ( 5,518) ( Technical skills 81,024) ( 23,150) ( Others 28,273) ( 4,982) ( Sub-total 688,215) ($ 148,859) ($ Accumulated Impairment loss Goodwill - $ 161,766) ($ Total 1,376,179 $		Reductions
		- $ 133 - - - - 133 $ - $ - - - - - $ - $

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Year ended December 31, 2021

Cost Openingbalance Additions Reductions Goodwill 937,379 $ - $ 5,701) ($ Computer software 500,570 101,078 10,624) ( Customer relationship 326,550 - - Trademarks 61,481 - - Technical skills 115,748 - - Others 41,805 5,387 9,000) ( Sub-total 1,983,533 106,465 $ 25,325) ($ Accumulated amortization Computer software 356,307) ($ 53,136) ($ 3,010 $ Customer relationship 109,439) ( 44,064) ( - Trademarks 13,367) ( 5,518) ( - Technical skills 57,874) ( 23,150) ( - Others 28,456) ( 6,348) ( 6,500 Sub-total 565,443) ( 132,216) ($ 9,510 $ Total 1,418,090 $

Endingbalance - $ 931,678 $ 180) ( 590,844 - 326,550 - 61,481 - 115,748 99) ( 38,093 279) ($ 2,064,394 97) ($ 406,530) ($ - 153,503) ( - 18,885) ( - 81,024) ( 31 28,273) ( 66) ($ 688,215) ( 1,376,179 $ Effect of foreign currency exchange differences

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A. Details of amortization in intangible assets are as follows:

Operating costs Selling expenses Administrative expenses Research and development expenses	2022 2021 $ 9,981 $ 10,861 12,063 11,875 81,663 67,047 45,152 42,433 148,859 $ 132,216 $ Years ended December 31

• B. As of December 31, 2022, the Group merged with Huges Hi-Tech Inc on September 1, 2005. Thus, the transaction generated goodwill in the amount of $139,735 thousand. The goodwill from business combination shall be tested annually at least for impairment in accordance with IAS 36.

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

The cash flow projections are based on financial budgets approved by the management covering a five-year period, the Company is committed to developing and taking bluetooth orders and estimates a 10% year-on-year growth in sales as the Company will launch new products and improve its technology.

Management determined budgeted gross margin based on past performance and their expectations of market development. The weighted average growth rates used are consistent with the projection included in industry reports. The discount rate of 1.49% used was pre-tax and reflected specific risks relating to the relevant operating segments.

• C. As of December 31, 2022, the goodwill arose from acquiring Asian Elite International Ltd. and Indigo Enterprise Inc. amounting to $581,644 thousand due to the benefits from production technology and market channel such as smart speakers of the companies that expected to be merged. The goodwill from business combination shall be tested annually at least for impairment in accordance with IAS 36.

• As of December 31, 2022, the recoverable amount of all cash-generating units calculated using the value-in-use did not exceed their carrying amount, so an impairment loss to goodwill was recognized amounting to $161,766 thousand. The goodwill after the recognition of impairment loss amounted to $419,878 thousand. The key assumptions used for value-in-use calculations are as follows:

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking smart speaker orders, it expects 7.71% to 62% year-on-year growth in sales through the launching of new products and improving its technologies during this period.

Management determined budgeted gross margin based on past performance and its expectations

of market development. The weighted average growth rate used are consistent with the

~50~

• 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.

• D. As of December 31, 2022, the goodwill arose from acquiring Austar Hearing Science And Technology （ Xiamen) Co., Ltd. amounting to $210,299 thousand due to the benefits from production technology and market channel such as smart speakers of the companies that are expected to be merged. The goodwill from business combination shall be tested annually at least for impairment in accordance with IAS 36.

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

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking smart speaker orders, it expects 3% to 20.71% year-on-year growth in sales through the launching of new products and improving its technologies during this period.

• Management determined budgeted gross margin based on past performance and its expectations of market development. The weighted average growth rates used are consistent with the projection included in industry reports. The discount rate of 14.98% used was pre-tax and reflected specific risks relating to the relevant operating segments.

• E. The Group had no intangible assets pledged to others as collaterals.

(13) Impairment of non-financial assets

• A. The Group recognized impairment loss for the years ended December 31, 2022 and 2021 amounting to $161,766 thousand and $0 thousand, respectively. Details of such loss are as follows :

follows :
Goodwill		2022 2021 Recognized through profit or loss Recognized through profit or loss 161,766 $ - $ YearendedDecember31,2022
		2022 Recognized through profit or loss
		161,766 $		- $

B. Please refer to Note 6 (12) for the impairment to intangible assets.

(14) Short-term borrowings

Short-term borrowings
Type of borrowings Bank borrowings Credit loan Secured borrowings Type of borrowings Bank borrowings Credit loan	December 31,2022 2,102,771 $ 44,080 2,146,851 $ December31,2021 3,738,289 $	Interest rate range 1.60%~5.25% 3.95% Interest rate range 0.00%～4.00%	Collateral
			None Patents Collateral
			None

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• A. Interest expense recognized in profit or loss amounted to $47,409 thousand and $30,431 thousand for the years ended December 31, 2022 and 2021, respectively.

• B. The Group provided endorsements and guarantees for the credit loans as of December 31, 2022 and 2021.

(15) Other payables

and 2021. Other payables
		December 31, 2022			December 31, 2021
Payroll and bonus payable		$	399,878		$	403,284
Employee compensation payable			163,655			99,764
Payables on equipment
(Including intangible assets)			106,217			200,531
Directors’ remuneration payable			40,299			21,976
Others			484,394			416,948
		$	1,194,443		$	1,142,503
Bonds payable
		December 31, 2022			December31,2021
Bonds payable		$	3,000,000		$	3,000,000
Less: Discount on bonds payable	(		46,162)	(		74,411)
Total		$	2,953,838		$	2,925,589

(16) Bonds payable

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

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

  • iii. The conversion price of the bonds is set up based on the pricing model in the terms of the

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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 11, 2021, the conversion price of convertible bonds was $125.9 per share.

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

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

• (b) As of December 11, 2021, the bonds amounting to $768,100 thousand (face value) had been converted into 5,299 thousand shares of common stock. After the issuance of the convertible bonds, if the number of common shares increases, the Company shall adjust the conversion price to $125.9 per share in line with the formula of the issuance article.

• B. The details of the third domestic unsecured convertible bonds issued by the Company on August 11, 2021 are as follows:

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

• i. The Company issued $3,015,000 thousand, 0% third domestic unsecured convertible bonds, as approved by the regulatory authority. The bonds mature three years from the issue date August 11, 2021 to August 11, 2024 and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on August 11, 2021.

• ii. The bondholders have the right to ask for conversion of the bonds into common shares of the Company at any time during the period from the date after three months of the bonds issued to the maturity date by notifying the Taiwan Depository & Clearing Corporation through the dealer to the Company, except for (i) the stop transfer period as specified in the terms of the bonds or the laws/regulations; (ii) the book closure date of the issuance of bonus shares, and of cash dividends, the period between the date that is 15 business days before the book closure date of a capital increase to the ex-right date; (iii) the period between the record date of a capital reduction and the prior day before the commencement of stock trading after stocks are repurchased; (iv) the period from the commencement date of the cessation of conversion of the share certificate and the prior day before the commencement

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date of trading of the new share certificate. 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 specified in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. As of December 31, 2022, the conversion price was $110.6 (in dollars) per share.

  - iv. The Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any time after the following events occur: (i) the closing price of the Company common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after three months 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, the Company has the right to redeem the convertible bonds in accordance with the Article 18 of the terms of issuance and conversion 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, 2022, there were no bonds (face value) converted into common stock.

• C. Regarding the issuance of convertible bonds, the equity conversion options amounting to $96,857 thousand were separated from the liability component and were recognized 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 recognized 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. (Remainder of page intentionally left blank)

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- (17) Long term borrowings

Long-term borrowings
Type of borrowings	Borrowing period and repayment term	Interest rate range Collateral 0.68%~1.03% None 5.89% None 0.98%~2.40% None Interest rate range Collateral 0.30%～0.93% None 0.35%～1.20% None		December 31, 2022
Long-term bank borrowings Credit loan Credit loan Credit loan Less: Expiring within one year or one operating cycle Type of borrowings	Borrowing period is from 2020/2/20 to 2025/2/20; interest is repayable monthly, principal is repayable starting from 2022. (Notes 1 and 2) Borrowing period is 36 months starting from 2020/7/15 and extended every month ; principal is repayable starting from 2023 Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly, principal is repayable starting from 2022. Borrowing period and repayment term		258,889 $ 76,100 1,021,458 1,356,447 451,919) ( 904,528 $ December 31, 2021
Long-term bank borrowings Credit loan Credit loan Less: Expiring within one year or one operating cycle	Borrowing period is from 2020/2/20 to 2025/2/20; interest is repayable monthly, principal is repayable starting from 2022. (Notes 1 and 2) Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly, principal is repayable starting from 2022.		520,000 $ 1,038,655 1,558,655 170,074) ( 1,388,581 $

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Interest expense recognized in profit or loss amounted to $16,678 thousand and $7,640 thousand for the years ended December 31, 2022 and 2021, respectively.

Note 1: In November 2019, the Company entered into a long-term loan contract with Taipei Fubon

• Bank for the total amount of $338,889 thousand. As of December 31, 2022, the drawn amount was $158,889 thousand.

Aforementioned contract conditions:

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

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

• (b) Debt ratio (total liabilities/total equity)shall not be higher than 200%;

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

• (d) Net tangible assets shall not be less than 8 billion.

• Note 2: In February 2020, the Company entered into a long-term loan contract with JIHSUN BANK for the total amount of $300,000 thousand. As of December 31, 2022, 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.

(18) Pensions

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

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

	December	31,2022	December	31,2021
Present value of defined benefit obligations	$	80,364	$	122,613
Fair value of plan assets	(	42,745)	(	42,491)
Net defined benefit liability	$	37,619	$	80,122

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

Year ended December 31, 2022 Balance at January 1 Current service cost Interest (income) expense Past service cost Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid past pension Paid pension Balance at December 31 Year ended December 31, 2021 Balance at January 1 Current service cost Interest (income) expense Past service cost	Present value of defined benefit obligations	Present value of defined benefit obligations	Fair value of plan assets	Net defined benefit liability	Net defined benefit liability
	122,613 $ 428 832 1,470) ( 122,403 - 4,990) ( 3,586) ( 8,576) ( - 17,434) ( 16,029) ( 80,364 $ Present value of defined benefit obligations		42,491) ($ - 281) ( 840 41,932) ( 2,819) ( - - 2,819) ( 14,023) ( - 16,029 42,745) ($ Fair value of plan assets	80,122 $ 428 551 630) ( 80,471 2,819) ( 4,990) ( 3,586) ( 11,395) ( 14,023) ( 17,434) ( - 37,619 $ Net defined benefit liability
		127,292 $ 436 375 1,043 129,146	44,259) ($ - 130) ( 710 43,679) (		83,033 $ 436 245 1,753 85,467

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Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid past pension Paid pension Balance at December 31	Present value of defined benefit obligations	Fair value of plan assets	Net defined benefit liability
	- 249 4,722) ( 2,531 1,942) ( - 1,914) ( 2,677) ( 122,613 $	616) ( - - - 616) ( 873) ( - 2,677 42,491) ($	616) ( 249 4,722) ( 2,531 2,558) ( 873) ( 1,914) ( - 80,122 $

• (d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization 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 regarding to the utilization 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 are less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2022 and 2021 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

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

Discount rate Future salary increases	Years ended December31,	Years ended December31,	Years ended December31,
	2022		2021
	1.30% 3.00%		0.70% 3.00%

Future mortality rate was estimated based on the 6th Taiwan Standard Ordinary Experience Mortality Table.

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

==> picture [446 x 136] 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, 2022
Effect on present value of
defined benefit obligation ($ 1,897) $ 1,970 $ 1,933 ($ 1,870)
December 31, 2021
Effect on present value of
defined benefit obligation ($ 2,824) $ 2,932 $ 2,858 ($ 2,769)
----- 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 $2,252 thousand in 2023.

• (g) As of December 31, 2022, the weighted average duration of the retirement plan is 9 years. The analysis of timing of the future pension payment was as follows:

The analysis of timing of the future pension payment was as follows:
Within 1 year 1-2 year(s) 2-5 years Over 5 years	8,049 $ 2,860 16,380 63,444
	90,733 $

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

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

• (c) The subsidiary, METC, in Thailand is required to pay pension of up to 10 months of employee

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salaries to the employees upon their retirement. The pension liability is estimated annually based on the employees’ total salaries and expected service years in accordance with the regulations of the Thailand government.

• (d) The subsidiary, MEVN, in Vietnam is subject to related local regulation, which is required to contribute a statutory percentage of the employees’ monthly salaries and wages to the employees’ pension funds, and to pay it to the competent authority. Other than the monthly contributions, the Group has no further obligations.

• (e) The subsidiary, MEST, in Hong Kong is subject to related local regulation, which is required to enroll in mandatory provident fund schemes for employees and contribute a statutory percentage of the employees’ monthly salaries and wages to the employees’ pension funds, and to pay it to the competent authority. Other than the monthly contributions, the Group has no further obligations.

• (f) The subsidiary, MESG, in Singapore is subject to related local regulation, which is required to contribute a statutory percentage of the employees’ monthly salaries and wages to the employees’ pension funds, and to pay it to the competent authority. Other than the monthly contributions, the Group has no further obligations.

• (g) The subsidiary, MEMP, in Malaysia is subject to related local regulation, which is required to contribute a statutory percentage of the employees’ monthly salaries and wages to the employees’ pension funds, and to pay it to the competent authority. Other than the monthly contributions, the Group has no further obligations.

• (h) The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2022 and 2021 were $149,942 thousand and $141,601 thousand, respectively.

(19) Share-based payment

• A. For the years ended December 31, 2022 and 2021, the Group’s share-based payment arrangements were as follows:

arrangements were as follows:
Type of arrangement	Grant date	Quantity granted	Contract period	Vesting condition
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 The first restricted stocks to employees in 2020	2017.06.16 2017.12.29 2018.10.26 2019.11.02 2020.08.05 2021.05.31	458 units 196 units 878 units 813 units 387 units 416 units	3 years 3 years 3 years 3 years 3 years 3 years	Note Note Note Note Note Note

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Type of arrangement The second restricted stocks to employees in 2020 Cash capital increase reserved for employee preemption in 2021 The first restricted stocks to employees in 2021	Grant date 2021.07.30 2021.10.27 2022.07.29	Quantity granted 1,504 units 900 units 1,800 units	Contract period 3 years Vested immediately 3 years	Vesting condition Note - Note

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

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

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

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

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

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

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

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

At January 1 Restricted stocks vested At December 31	2022	2022	2021	2021
	No. of share (in thousands)	Weighted- average exercise price (in dollars)	No. of share (in thousands)	Weighted- average exercise price (in dollars)
	- -	$ 10 10 10	4 (4) -	$ 10 10 10
	-

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(b) The first restricted stocks to employees in 2017

	2022	2022	Weighted-	2021	2021	Weighted-
			average			average
	No. of share	exercise price		No. of share	exercise price
	(in thousands)		(in dollars)	(in thousands)		(in dollars)
At January 1	-	$	-	1	$	-
Restricted stocks vested	-		-	( 1)		-
At December 31	-		-	-		-

(c) The second restricted stocks to employees in 2017

The second restricted stocks to employees in 2017
Weighted- average exercise price (in dollars) At January 1 - $ - Restricted stocks vested - - Restricted shares retired - - At December 31 - - 2022 No. of share (in thousands)	2021
	No. of share (in thousands)	Weighted- average exercise price (in dollars)
	318 ( 5) ( 313) -	$ - - - -

(d) The first restricted stocks to employees in 2019

At January 1 Restricted shares retired At December 31	2022	2022	2021	2021
	No. of share (in thousands)	Weighted- average exercise price (in dollars)	No. of share (in thousands)	Weighted- average exercise price (in dollars)
	284 ( 284) -	- $ - -	545 ( 261) 284	- $ - -

(e) The second restricted stocks to employees in 2019

At January 1 Restricted shares retired At December 31	Weighted- average exercise price (in dollars) 244 - $ (118) - 126 - 2022 No. of share (in thousands)	2021	2021
	No. of share (in thousands)	No. of share (in thousands)	Weighted- average exercise price (in dollars)
	244 (118) 126	382 (138) 244	- $ - -

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(f) The first restricted stocks to employees in 2020

Weighted- average exercise price (in dollars) At January 1 416 - $ Restricted shares granted - - At December 31 416 - 2022 No. of share (in thousands)	Weighted- average exercise price (in dollars) - - $ 416 - 416 - 2021 No. of share (in thousands)

• (g) The second restricted stocks to employees in 2020

At January 1 Restricted stocks granted Restricted stocks vested Restricted shares retired At December 31	Weighted- average exercise price Weighted- average exercise price (in dollars) (in dollars) 1,473 - $ - - $ - - 1,504 - ( 342) - - - ( 78) - ( 31) - 1,053 - 1,473 - 2022 2021 No. of share (in thousands) No. of share (in thousands)	Weighted- average exercise price Weighted- average exercise price (in dollars) (in dollars) 1,473 - $ - - $ - - 1,504 - ( 342) - - - ( 78) - ( 31) - 1,053 - 1,473 - 2022 2021 No. of share (in thousands) No. of share (in thousands)
	No. of share (in thousands)	Weighted- average exercise price (in dollars)
	1,473 - ( 342) ( 78) 1,053	- $ - - - -

• (h) The first restricted stocks to employees in 2021

At January 1 Restricted stocks granted Restricted shares retired At December 31	2022	2022	2021
	No. of share (in thousands)	Weighted- average exercise price (in dollars)	Weighted- average exercise price (in dollars) - - $ - - - - - - No. of share (in thousands)
	- 1,800 (47) 1,753	- $ - - -

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

Type of arrangement 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 empolyees in 2019 The second restricted stocks to empolyees in 2019 The first restricted stocks to employees in 2020 The second restricted stocks to employees in 2020 Cash capital increase reserved for employees preemption in 2021 The first restricted stocks to employees in 2021	Grant date Stockprice 2017.06.16 187.0 2017.12.29 194.5 2018.10.26 139.5 2019.11.02 150.0 2020.08.05 169.0 2021.05.31 107.5 2021.07.30 111.0 2021.10.27 82.0 2022.07.29 80.7	Exercise price	Fair value per unit
		10.0 0 0 0 0 0 0 72.0 0	177.0 194.5 139.5 150.0 169.0 107.5 111.0 10.0 80.7

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

Equity-settled	Years ended December 31,	Years ended December 31,
	2022 62,334 $	2021
		44,195 $

(20) Share capital

• A. As of December 31, 2022, the Company’s authorized capital was $4,000,000 thousand, consisting of 400,000 thousand shares of ordinary stock (including 5,000 thousand shares reserved for employee stock options), and the paid-in capital was $2,180,521 thousand with a par value of $10 (in dollars) per share.

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

thousands):
	Years ended	December 31,
	2022	2021
At January 1	$ 216,510	$	209,333
Employee restricted shares retired	( 527)	(	743)
Employee restricted shares granted	1,800		1,920
Issuance of common stock for cash	-		6,000
At December 31	$217,783	$	216,510

(a) The Company retired 269 thousand employee restricted shares as resolved at the meeting of

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the Board of Directors on February 23, 2023 with the capital reduction effective date set on March 8, 2023. The capital reduction through retirement of employee restricted shares was not completed yet.

• (b) The Company retired 258 thousand employee restricted shares as resolved at the meeting of the Board of Directors on April 28, 2022, July 28, 2022 and October 27, 2022 with the capital reduction effective date set on May 6, 2022, July 28, 2022 and November 3, 2022, respectively. The capital reduction through retirement of employee restricted shares was completed.

• (c) On April 29, 2021, the Board of Directors of the Company resolved to issue employee restricted shares. The issuance was approved by the Competent Authority on October 22, 2021. The Company issued 1,800 thousand common shares with the effective date set on July 29, 2022. The subscription price is $0 per share. The registration was completed on August 19, 2022. The employee restricted shares issued are subject to certain transfer restrictions before their vesting conditions are qualified. Other than these restrictions, the rights and obligations of these shares issued are the same as other issued ordinary shares.

• (d) The Company retired 743 thousand employee restricted shares as resolved at the meeting of the Board of Directors on February 25, 2021, April 29, 2021, July 29, 2021, October 28, 2021 and February 24, 2022 with the capital reduction effective date set on March 8, 2021, May 3, 2021, October 28, 2021 and March 8, 2022, respectively. The capital reduction through retirement of employee restricted shares was completed.

• (e) On April 30, 2020, the Board of Directors of the Company resolved to issue employee restricted shares. The issuance was approved by the Competent Authority on September 29, 2020. The Company issued 2,000 thousand common shares with the effective date set on May 31, 2021 and July 30, 2021. The subscription price is $0 per share and the registration was completed on June 16, 2021 and August 25, 2021 for ordinary shares issued of 416 thousand shares and 1,504 thousand shares, respectively. The employee restricted shares issued are subject to certain transfer restrictions before their vesting conditions are qualified. Other than these restrictions, the rights and obligations of these shares issued are the same as other issued ordinary shares.

• (f) The Board of Directors on June 15, 2021 has resolved to increase capital by issuing common stock of 6,000 thousand shares, and the Board of Directors resolved to issue the common stock with the par value of $72 on September 17, 2021, the total raised amount was $432,000 thousand and the effective date was set on October 22, 2021. The proceeds have been collected and completed.

(21) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the

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Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

reserve is insufficient.
At January 1 Restricted stocks issued Restricted stocks vested Restricted stocks retired Recognition of change in equity of associates in proportion to the Company’s ownership At December 31 At January 1 Proceeds from issuing shares Proceeds from issuing shares - Employee stock options issued Proceeds from issuing shares - Employee stock options exercised Issuance of convertible bonds Redeemed of convertible bonds at maturity Restricted stocks issued Restricted stocks vested Restricted stocks retired Recognition of change in equity of associates in proportion to the Company’s ownership Changes in ownership interests in subsidiaries Acquisition of subsidiaries in non-controlling interests At December 31	Share premium $ 4,035,505 - 34,512 - - $ 4,070,017 Share premium	Share option $ 96,857 - - - - $ 96,857	Employee restricted stocks $ 267,825 127,260 ( 34,512) ( 69,709) - $290,864 2022 2021	Others $ 246,436 - - - 16,692 $263,128
		Share option	Employee restricted stocks
	$ 3,665,902 372,000 - 4,314 - - - ( 6,711) - - - - $4,035,505	$ 99,191 - 4,314 ( 4,314) 96,857 ( 99,191) - - - - - - $ 96,857	$ 170,825 - - - - - 192,464 6,711 ( 102,175) - - - $267,825

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(22) Retained earnings

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, after deduction of mandatory income tax, shall first be used to offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve until the legal reserve equals the paid-in capital. After the provision or reversal of special reserve, the appropriation of the remaining earnings along with the unappropriated earnings of prior year shall be proposed by the Board of Directors and approved by the shareholders. The Board of Directors may, based on financial, business and operating perspectives, propose a distribution of earnings within an amount at least 30% of the new distributable earnings and not more than 80% of the accumulated distributable earnings for the current period. The dividends shall be preferably distributed in the form of cash, and can be appropriated in the shares. The ratio of cash dividends shall account for at least 30% of the total dividends distributed. All or partial of dividend and bonus that are distributed in the form of cash will be resolved and reported to the shareholders if more than 2/3 of the directors attend the Board of Directors’ meeting and more than 1/2 of the directors present at the meeting have agreed.

• 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 expansion plans. In order to encourage employees and operation team, if the Company has any profit for the current year, the Company shall set aside 5% to 10% as employees’ compensation and no more than 2% as directors’ and supervisors’ remuneration. The employees’ compensation shall be distributed in the form of stock and cash by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors and report it in the shareholders’ meeting. Employees entitled to receive stock or cash as compensation include employees of subsidiaries of the company meeting certain specific requirements.

• C. 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.

• D. (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. In Accordance with Ruling No.1010051600 issued by Securities and Futures Bureau of the FSC on November 21, 2012, “unearned employee compensation” under employee restricted stock is not an unrealized item, and therefore is not required to set aside the special reserve. As of December 31, 2022, the special reserve set aside based on the above regulation amounted to $479,786 thousand.

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• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed 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, 2022, the balance of capital surplus as aforementioned was $269,144 thousand.

• (c) As of December 31, 2022 and 2021, the balance of special reserve was $748,930 thousand and $269,144 thousand, respectively.

• E. The Company distributed earnings for the years ended December 31, 2021 and 2020 as resolved at the shareholders’ meeting on June 15, 2022 and July 21, 2021, respectively, are as follows:

Amount Dividends per share Amount Dividends per share Legal reserve 113,098 $ 146,794 $ Special reserve 479,786 - Cash dividends 866,040 4.0 $ 1,068,244 5.16 $ 1,458,924 $ 1,215,038 $ 2021 2020 Years ended December 31,	Amount Dividends per share Amount Dividends per share Legal reserve 113,098 $ 146,794 $ Special reserve 479,786 - Cash dividends 866,040 4.0 $ 1,068,244 5.16 $ 1,458,924 $ 1,215,038 $ 2021 2020 Years ended December 31,	Amount Dividends per share Amount Dividends per share Legal reserve 113,098 $ 146,794 $ Special reserve 479,786 - Cash dividends 866,040 4.0 $ 1,068,244 5.16 $ 1,458,924 $ 1,215,038 $ 2021 2020 Years ended December 31,
	2020
	Amount 146,794 $ - 1,068,244 1,215,038 $	Dividends per share
		5.16 $

The abovementioned distribution of earnings for the years ended December 31, 2021 and 2020 was in agreement with those amounts proposed by the Board of Directors on February 24, 2022 and February 25, 2021, respectively.

• F. The Company distributed earnings for the year ended December 31, 2022 as resolved at the Board of Directors on February 23, 2023 is as follows:

of Directors on February 23, 2023 is as follows:
Legal reserve Special reserve Cash dividends		Year ended December31,2022
		Amount 146,458 $ 19,256 981,235 1,146,949 $	Dividendsper share
			4.5 $

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(23) Other equity items

)Other equity items
At January 1 Issuance of restricted shares to employees Amortisation of employee restricted stocks Employee restricted shares retired Revaluation - gross Revaluation - tax - Group - Tax on Group - Associates - Tax on associates At December 31 At January 1 Issuance of restricted shares to employees Amortisation of employee restricted stocks Employee restricted shares retired Revaluation - gross Revaluation - tax Revaluation transferred to profit or loss - gross Currency translation differences: - Group - Tax on Group - Associates - Tax on associates At December 31	Exchange differences on translation of foreign financial statements 605,572) ($ - - - - - 349,431 69,886) ( 83,321 15,861) ( 258,567) ($	Unrealized gains (losses) from investments in debt instruments measured at fair value through other comprehensive income 2,941 $ - - - 5,628) ( - - - - - 2,687) ($	Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 2022	Cost of unearned employee compensation Total 220,316) ($ 969,246) ($ 145,260) ( 145,260) ( 62,334 62,334 74,982 74,982 - 367,230) ( - 969 - 349,431 - 69,886) ( - 83,321 - 15,861) ( 228,260) ($ 996,446) ($
			146,299) ($ - - - 361,602) ( 969 - - - - 506,932) ($ 2021
	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from investments in debt instruments measured at fair value through other comprehensive income	Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income
	438,569) ($ - - - - - - 165,603) ( 33,120 41,760) ( 7,240 605,572) ($	4,220 $ - - - 6,859) ( - 5,580 - - - - 2,941 $	601,816 $ - - - 747,219) ( 896) ( - - - - - 146,299) ($

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(24) Operating revenue

Revenue from contracts with customers

	Years ended	December 31,	December 31,
	2022		2021
$	35,398,690	$	36,182,719

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines and geographical regions:

==> picture [507 x 250] intentionally omitted <==

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

Year ended December 31, 2022
Electronic devices
Taiwan Shenzhen Singapore Vietnam Others Total
Total segment
$ 25,903,833 $ 11,342,312 $ 7,707,271 $ 3,949,401 $ 4,971,623 $ 53,874,440
revenue
Revenue from
internal segment
transactions ( 15,146) ( 10,971,711) - ( 3,668,273) ( 3,820,620) ( 18,475,750)
Revenue from
external customer
contracts 25,888,687 370,601 7,707,271 281,128 1,151,003 35,398,690
Main region
-
Europe 11,598,015 113,216 5,755,073 242,687 17,708,991
US 12,400,282 - 1,951,609 - 534,890 14,886,781
Mainland China 245,985 257,383 - - 337,224 840,592
Taiwan 1,428,321 2 - - 302 1,428,625
Others 216,084 - 589 281,128 35,900 533,701
$ 25,888,687 $ 370,601 $ 7,707,271 $ 281,128 $ 1,151,003 $ 35,398,690
----- End of picture text -----

		Year ended December 31,2021	Year ended December 31,2021
Total segment revenue Revenue from internal segment transactions Revenue from external customer contracts Main region Europe US Mainland China Taiwan Others			Electronic devices

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B. Contract assets and liabilities ：

(a) The Group has recognized the following revenue-related contract assets and liabilities:

Contract assets Contract liabilities Refund liabilities	December 31, 2022 December 31, 2021 - $ - $ 1,020,897 $ 874,000 $ 233,412 $ 246,964 $	January1,2021
		43,363 $
		627,002 $
		343,164 $

• (b) Revenue recognized that was included in the contract liability balance at the beginning of the period ：

period：
Interest income Revenue recognized that was included in the contract liability balance at the beginning of the period Interest income from bank deposits Interest income from financial assets at fair value through other comprehensive income	2022 2021 236,156 $ 236,588 $ Years ended December31, Years ended December 31,
	2022 60,435 $ 5,831 66,266 $	2021
		35,202 $ 5,790
		40,992 $

(25) Interest income

(26) Other income

Other income nterest income from bank deposits nterest income from financial assets at fair value through other comprehensive income	60,435 $ 35,202 $ 5,831 5,790 66,266 $ 40,992 $
Compensation income (Note) Government grants Sample income Dividend income Rent income Other income	Years ended December 31,
	2022 2021 226,939 $ - $ 171,173 165,730 42,597 78,396 14,341 10,787 9,029 5,682 24,134 63,603 488,213 $ 324,198 $

Notes: The Group had compensation agreement with Luxshare Limited, and recognized compensation income for the year ended December 31, 2022. Please refer to Note 7 (2).

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(27) Other gains and losses

Other gains and losses
			Years ended	December	31,
			2022		2021
Foreign exchange gain (loss)		$	507,858	($		66,414)
Impairment loss on goodwill	(		161,766)			-
Losses on disposals of property,
plant and equipment	(		12,241)	(		8,859)
Net (losses) gains on financial assets/liabilities
at fair value through profit or loss	(		9,929)			65,461
Losses on disposals of investments (Note1、2)			-	(		13,720)
Other gains and losses	(		5,774)	(		27,888)
		$	318,148	($		51,420)

Note1: On October 28, 2021, the Group merged with the subsidiary, Biotest Medical Corporation, which was resolved by the respective Board of Directors, and the Company was the surviving company, with the record date of merger on October 29, 2021. The losses on disposals of investments for the year ended December 31, 2021 amounted to $8,140 thousand. Note2: Please refer to Note 6 (3).

(28) Expenses by nature

investments for the year ended December Note2: Please refer to Note 6 (3). Expenses by nature	31, 2021 amounted to $8,140 thousand.	31, 2021 amounted to $8,140 thousand.
Employee benefit expense Employee benefit expense Depreciation charge - property, plant and equipment Depreciation charge - right-of-use assets Amortization charge Wages and salaries Share-based payments Labor and health insurance fees Pension costs Directors’ remuneration Other personnel expenses Total	Years ended December 31,
	2022 2021 3,342,556 $ 3,364,588 $ 507,804 438,832 107,114 155,039 148,859 132,216 4,106,333 $ 4,090,675 $ Years ended December 31,	2021
		3,364,588 $ 438,832 155,039 132,216
		4,090,675 $
	2022 2,847,549 $ 67,231 69,251 150,291 41,439 166,795 3,342,556 $	2021
		2,896,886 $ 49,027 68,491 144,035 22,096 184,053
		3,364,588 $

(29) Employee benefit expense

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

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

Company are as follows:
		Years ended	December	31,
		2022		2021
Employees’ compensation	$	161,197	$	95,231
Directors’ and supervisors’ remuneration		40,299		21,976
	$	201,496	$	117,207

The abovementioned amounts were recognized in wages and salaries and were accrued at 8% and 6.5% for employees’ compensation and 2% and 1.5% for directors’ remuneration for the years ended December 31, 2022 and 2021, respectively, based on the distributable profit of the year.

Employees’ compensation and directors’ and supervisors’ remuneration of 2021 as resolved at the Board of Directors’ meeting were in agreement with those amounts recognized in the profit or loss of 2021.

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.

(30) Income tax

A. Income tax expense

(a) Components of income tax expense:

Current tax: Current tax on profits for the year Tax on undistributed surplus earnings Prior year income tax overestimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	2022 2021 307,300 $ 142,582 $ - 12,645 (27,180) 28,731) ( 280,120 126,496 147,850 164,587 427,970 $ 291,083 $ Years ended December 31,

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

follows:
			Years ended December 31,
			2022			2021
Exchange differences changes on translation
of foreign financial statements - the Group		($	69,886)		$	33,120
Exchange differences changes on translation
of foreign financial statements
- associates		(	15,861)			7,240
Changes in fair value of financial assets
at fair value through other
comprehensive income			969	(		896)
Remeasurement of defined benefit
obligations		(	2,279)	(		512)
		($	87,057)	$		38,952
Reconciliation between income tax expense and	accounting profit
			Years ended December			31,
			2022			2021
Current tax:
Tax calculated based on profit	$		580,844		$	470,054
before tax and statutory tax rate
Expenses disallowed by tax regulation			2,470			2,909
Tax exempt income by tax regulation	(		93,532)	(		87,580)
Temporary differences not recognised
as deferred tax assets			32,065			-
Effect from investment tax credits	(		66,568)	(		77,804)
Tax on undistributed surplus earnings			-			12,645
Prior year income tax overestimation	(		27,180)	(		28,731)
Others	(		129)	(		410)
Income tax expense	$		427,970		$	291,083

B. Reconciliation between income tax expense and accounting profit

(Remainder of page intentionally left blank)

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

Deferred tax assets: - Temporary differences: Unrealized exchange loss Income tax expense Remeasurement of defined benefit obligations Allowance for bad debts Accumulated unused compensated absences Allowance for inventory valuation losses and loss for obsolete and slow- moving inventories Unrealized gain on valuation of financial instruments Amortisation of discounts on corporate bonds Cumulative translation adjustment of long-term equity investments Investment tax credits Others Total - Deferred tax liabilities Unrealized exchange gain Gain on overseas long-term investment Cumulative translation adjustment of long-term equity investments Adjustment of land value increment tax Unrealized gain on valuation of financial instruments Others Total			2022	2022
		January 1, 2022	Recognized in profit or loss	Recognized in other comprehensive income		December 31, 2022
	4,927 $ - 17,441 7,513 7,801 28,551 - 20,523 74,933 49,000 210,689 $ - $ 1,288,219) ( - 800) ( 16,091) ( 44,879) ( 1,349,989) ($		4,313) ($ 9,849 - 477) ( 178 14,617 172 5,202 - 1,310 26,538 $ 2,800) ($ 188,250) ( - - 324 16,338 174,388) ($	- $ - 2,279) ( - - - - - 74,933) ( - 77,212) ($ - $ - 10,814) ( - 969 - 9,845) ($	614 $ 9,849 15,162 7,036 7,979 43,168 172 25,725 - 50,310 160,015 $ 2,800) ($ 1,476,469) ( 10,814) ( 800) ( 14,798) ( 28,541) ( 1,534,222) ($

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2021

								Recognized in	Recognized in
									other
			January 1,		Recognized in			comprehensive		December 31,
			2021		profit or loss				income			2021
Deferred tax assets:
- Temporary differences:
Unrealized exchange loss		$	20,463	($		15,536)		$	-		$	4,927
Remeasurement of defined
benefit obligations			17,953			-	(		512)			17,441
Allowance for bad debts			6,388			1,125			-			7,513
Accumulated unused
compensated absences			7,640			161			-			7,801
Allowance for inventory
valuation losses and loss
for obsolete and slow-
moving inventories			9,812			18,739			-			28,551
Amortisation of discounts
on corporate bonds			13,060			7,463			-			20,523
Cumulative translation
adjustment of long-term
equity investments			34,573			-			40,360			74,933
Others			46,236			2,764			-			49,000
Total		$	156,125		$	14,716		$	39,848		$	210,689
- Deferred tax liabilities
Gain on overseas long-term
investment	($		1,098,345)	($		189,874)		$	-	($		1,288,219)
Adjustment of land value
increment tax	(		800)			-			-	(		800)
Unrealized gain on
valuation of financial
instruments	(		14,874)	(		321)	(		896)	(		16,091)
Others	(		55,771)			10,892			-	(		44,879)
Total	($		1,169,790)	($		179,303)	($		896)	($		1,349,989)

• D. Expiration dates of unused tax losses and amounts of unrecognized deferred tax assets are as follows:

follows:
	December 31,2022
Year incurred	Amount filed/ assessed	Unused amount	Unrecognized deferred tax assets	Expiry year
2022	Amount filed	63,274 $	- $	2032

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• E. The amounts of deductible temporary difference that are not recognized as deferred tax assets are as follows:

• December 31, 2022 December 31, 2021

• Deductible temporary differences $ 160,325 $ -

• F. The investment in Merry Electronics (HK) Co., Ltd. and Merry Electronics (U.S.A.) Co., Ltd., of which the undistributed earnings of the investee company were used as permanent investment and were not distributed, and the losses were not compensated before 2020. Therefore, no deferred income tax arising from the difference between the carrying amount of the long-term equity investments and its tax bases had been recognized. However, for the profit from the abovementioned reinvested companies, based on the overall operation planning, the earnings arising from these companies after 2001 are intended to be distributed and repatriated. Accordingly, deferred income tax liabilities and assets arising from this portion of earnings or losses are recognized since 2001.

• G. The Company’s income tax returns through 2020 have been assessed and approved by the Tax Authority.

• H. Merry Healthcare Co., Ltd. Taiwan Branch’s (CAYMAN) income tax returns through 2020 have been assessed and approved by the Tax Authority.

• I. Fulicare Co., Ltd., TAIWAN BRANCH income tax returns through 2020 have been assessed and approved by the Tax Authority.

(Remainder of page intentionally left blank)

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(31) Earnings per share

Earnings per share
Basic earningsper share Profit attributable to ordinary shareholders of the parent Diluted earningsper share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earningsper share Profit attributable to ordinary shareholders of the parent	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 1,455,398 $ 213,834 6.81 $ $ 1,455,398 213,834 - 2,188 23,079 27,125 - 432 1,478,477 $ 243,579 6.07 $ Year ended December 31,2022 Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 1,128,485 $ 208,855 5.40 $ Year ended December 31,2021
	Amount after tax 1,128,485 $		Weighted average number of ordinary shares outstanding (share in thousands)
			208,855		5.40 $

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==> picture [480 x 360] intentionally omitted <==

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

Year ended December 31, 2021
Weighted average
number of ordinary
shares outstanding Earnings per
Amount after tax (share in thousands) share (in dollars)
Diluted earnings per share
Profit attributable to
ordinary shareholders
of the parent $ 1,128,485 208,855
Assumed conversion of
all dilutive potential
ordinary shares
Employees’ compensation - 1,132
Convertible bonds 31,870 27,763
Employee restricted shares - 263
Profit attributable to ordinary
shareholders of the parent
plus assumed conversion
of all dilutive potential
ordinary shares $ 1,160,355 238,013 $ 4.88
The number of weighted-average outstanding shares is included for assumed conversion of all
dilutive potential ordinary shares at the calculation of diluted earnings per share, based on the
assumption that employees’ compensation will be all distributed in the form of shares.
----- End of picture text -----

(32) Supplemental cash flow information

A. Investing activities with partial cash flow effects

			Years ended	December 31	December 31	December 31
			2022			2021
Purchase of property, plant and equipment		$	591,673		$	1,063,583
Add:
Beginning balance of payable on equipment			199,508			356,594
Ending balance of prepayments for
equipment			14,975			104,024
Less:
Beginning balance of prepayments for
equipment	(		104,024)	(		84,488)
Ending balance of payable on equipment	(		105,829)	(		199,508)
Cash paid during the year		$	596,303		$	1,240,205

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			Years ended	December31,	December31,	December31,
			2022			2021
Purchase of intangible assets		$	36,888		$	106,465
Add:
Beginning balance of payable			1,023			4,344
Ending balance of prepayments			5,756			14,424
Less:
Beginning balance of prepayments	(		14,424)	(		37,436)
Ending balance of payable	(		388)	(		1,023)
Cash paid during the year		$	28,855		$	86,774
			Years ended	December31
			2022			2021
Disposal of property, plant and equipment	($		7,300)	($		266,115)
Add:
Uncollected proceeds from disposal
during the year			-			76,434
Cash received during the year	($		7,300)	($		189,681)

(33) Changes in liabilities from financing activities

At January 1, 2022 Changes in cash flow from financing activities Additions Impact of changes in foreign exchange rate Amortisation of discounts on corporate bonds Changes in other non-cash items At December 31, 2022 At January 1, 2021 Changes in cash flow from financing activities Additions Redemption of corporate bond Impact of changes in foreign exchange rate Amortisation of discounts on corporate bonds Changes in capital surplus Changes in other non-cash items At December 31, 2021	Short-term borrowings	Lease liability	Convertible bond	Long-term borrowings (including those matured within one year)	Dividends payable	Other non- current liabilities	Liabilities from financing activities-gross
	3,738,289 $ 1,569,848) ( - 56,423 - 78,013) ( 2,146,851 $ Short-term borrowings	112,601 $ 106,426) ( 196,666 1,257 - 4,338 208,436 $ Lease liability	2,925,589 $ - - - 28,249 - 2,953,838 $ Convertible bond	1,558,655 $ 298,903) ( - 18,682 - 78,013 1,356,447 $ Long-term borrowings (including those matured within one year)	- $ 866,040) ( 866,040 - - - - $ Dividends payable	29,309 $ 3,569) ( - 1,478 - 805) ( 26,413 $ Other non- current liabilities	8,364,443 $ 2,844,786) ( 1,062,706 77,840 28,249 3,533 6,691,985 $ Liabilities from financing activities-gross
	3,271,489 $ 491,660 - - 24,860) ( - - - 3,738,289 $	261,656 $ 170,657) ( 49,468 - 5,096) ( - - 22,770) ( 112,601 $	2,203,801 $ - 3,015,000 2,231,900) ( - 39,093 96,857) ( 3,548) ( 2,925,589 $	807,419 $ 756,296 - - 5,060) ( - - - 1,558,655 $	- $ 1,068,213) ( 1,068,244 - - - - 31) ( - $	46,382 $ 15,357) ( - - 800) ( - - 916) ( 29,309 $	6,590,747 $ 6,271) ( 4,132,712 2,231,900) ( 35,816) ( 39,093 96,857) ( 27,265) ( 8,364,443 $

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(34) Government grants

• A. For the year ended December 31, 2022:

• i. The subsidiary, MECL, received the subsidy for technology improvement amounting to RMB 5,000 thousand (NTD 22,130 thousand) from Industry and Information Technology Bureau of Shenzhen Municipality in January 2022.

• ii. The subsidiary, MECL, received the subsidy for insurance premium for the year ended June 30, 2021 amounting to RMB 2,580 thousand (NTD 11,420 thousand) from Shenzhen Commerce Bureau in May 2022.

• iii. The subsidiary, MECL, received the subsidy for Enterprise Technology Transformation Support Project amounting to RMB 4,180 thousand (NTD 18,697 thousand) from Shenzhen Industry and Information Bureau in September 2022.

• iv. The subsidiary, MECL, received the subsidy for Peak Carbon Dioxide Emissions Support Project amounting to RMB 4,070 thousand (NTD 17,985 thousand) from Shenzhen Industry and Information Bureau in October 2022.

• v. The subsidiary, MECL, received the subsidy for Technology Transformation Project amounting to RMB 5,000 thousand (NTD 22,094 thousand) from Shenzhen Industry and Information Bureau in September 2022.

• B. For the year ended December 31, 2021:

• i. The subsidiary, FUXM, received the first rental subsidy for biomedicine corporate amounting to RMB 3,254 thousand (NTD 14,116 thousand) from Industry and Information Technology Bureau of Haicang District, Xiamen Municipality in August 2021.

• ii. The subsidiary, MECL, received the employment subsidy amounting to RMB 2,476 thousand (NTD 10,741 thousand) from Longhua Branch, Human Resource Bureau of Shenzhen Municipality in June 2021.

• iii. The subsidiary, MECL, received the subsidy for stable growth in industry development amounting to RMB 5,000 thousand (NTD 21,690 thousand) from Industry and Information Technology Bureau of Shenzhen Municipality in June 2021.

• iv. The subsidiary, MECL, received the capacity expansion subsidy amounting to RMB 9,363 thousand (NTD 40,617 thousand) from Industry and Information Technology Bureau of Shenzhen Municipality in June 2021.

• v. The subsidiary, MECL, received the subsidy for corporate technology center establishment and corporate technology improvement support amounting to RMB 2,420 thousand (NTD 10,498 thousand) from Industry and Information Technology Bureau of Shenzhen Municipality in August 2021.

• vi. MEHO received the subsidy for AI smart noise cancellation MIC platform development amounting to NTD 12,200 thousand.

• C. The rest of the subsidies are not disclosed due to their amounts being less than 5% of the total government grants.

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Name

MERRY ELECTRONICS(SUZHOU)CO.,LTD (MECE) MERRY ELECTRONICS (HUIZHOU)CO.,LTD. (MECH) LEOHAB ENTERPRISE CO.,LTD.(LEOHAB) Merry Fuling Co., Ltd. Taiwab Branch (MHNCTW) BESKYTTE HUANG & CO Luxshare Precision Limited Luxshare Precision Industry Co., Ltd Luxshare Electronic Technology (Kunshan) Co., Ltd. Lanto Electronic Limited Dongguan Luxshare Precision Industry Co., Ltd. Luxshare Precision Industry (Chuzhou), Ltd. Luxshare Co., Ltd.

Relationship Affiliated company Affiliated company Affiliated company Other related party

Other related party Other related party (Note 1) Other related party (Note 1) Other related party (Note 1) Other related party (Note 1) Other related party (Note 1) Other related party (Note 1) Other related party (Note 1)

Note 1: A corporate director of the Group’s subsidiary, MEVN, and the entity both belong to Luxshare group.

(2) Significant related party transactions

A. Operating revenue

te 1: A corporate director of the Group’s subsidiary, group. nificant related party transactions Operating revenue Luxshare Co., Ltd.	MEVN, and the entity both belong to Luxshare Other related party (Note 1)	MEVN, and the entity both belong to Luxshare Other related party (Note 1)
Sales of goods: Luxshare Precision Limited Affiliated company Other related party Total	Years ended December 31,
	2022 281,050 $ 26,138 6,955 314,143 $	2021
		4,520 $ 100,971 16,378
		121,869 $

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

B. Purchases

to 3%. The credit terms to related parties are 60 end of month to the third parties. Purchases	to 120 days end of month and 30 to 120 days	to 120 days end of month and 30 to 120 days
Purchases of goods MECE MECH Other related party Total	Years ended December 31,
	2022 8,369,958 $ 5,320,670 63,132 13,753,760 $	2021
		9,703,369 $ 5,499,519 123,301
		15,326,189 $

The associates are manufacturers for the Group’s products and the prices are based on the different

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product’s profitability and adjusted annually as there is no comparable transaction for the goods purchased from the third parties. The payment terms are 60 to 65 days end of month and 30 to 120 days end of month to the third parties.

C. Receivables from related parties

days end of month to the third parties. Receivables from related parties
Accounts receivable Other related party Affiliated company Total Other receivables MECH Affiliated company Total	December 31,2022 61,692 $ 79 61,771 $ 118,270 $ - 118,270 $	December 31,2021
		9,929 $ 28,272
		38,201 $
		554,437 $ 217
		554,654 $

Other receivables as of December 31, 2022 and 2021, mainly were the purchases of raw materials on behalf of MECH and MECE.

D. Payables to related parties

Accounts payable MECE MECH Other related party Affiliated company Total Other payables Affiliated company	December31,2022 3,182,757 $ 1,003,565 12,580 - 4,198,902 $ 82,414 $	December31,2021 2,322,390 $ 1,282,350 28,554 2 3,633,296 $ 66,814 $

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

E. Equipment payables

company. Equipment payables
roperty transactions a) Acquisition of property, plant and equipment: Other related party Affiliated company	December31,2022 December31,2021 $ 834 $- Years ended December 31,	December31,2021
		$-
	2022 77,451 $	2021
		22,224 $

F. Property transactions

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

(b) Disposal of property, plant and equipment:

MECH		Years ended December 31,	Years ended December 31,	Years ended December 31,	Years ended December 31,	Years ended December 31,	Years ended December 31,
		2022			2021
		Disposal proceeds	Gain (loss) on disposal		Disposal proceeds		Gain (loss) on disposal
		1,681 $	235) ($		198 $		152 $

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G. Royalty expenses

Royalty expenses
	Years ended	December 31,
	2022	2021
BESKYTTE HUANG & CO	- $	2,134 $
Other income
	Years ended	December 31,
	2022	2021
Luxshare Co., Ltd.	226,939 $	- $

H. Other income

Other revenue is the billing to Luxshare Co., Ltd. for the compensation. It was fully collected as of December 31, 2022.

(3) Key management compensation

December 31, 2022. Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments	Years ended December 31,
	2022 2021 98,157 $ 61,832 $ 343 508 30,234 19,862 128,734 $ 82,202 $

8. PLEDGED ASSETS

PLEDGED ASSETS employee benefits Post-employment benefits Share-based payments	98,157 $ $ 343 30,234 128,734 $ $	61,832 508 19,862 82,202
Pledged asset Time deposits (pledge) (shown as financial assets at amortized cost)	December31,2022 December 31, 2021 - $ 3,853 $ Bookvalue	Purpose
		Project guarantee

1. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

2. COMMITMENTS

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

10.SIGNIFICANT DISASTER LOSS Property, plant and equipment	December 31, 2022 39,774 $	December 31,2021
		186,694 $

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

• A. On November 23, 2022, the Board of Directors of the Group’s investee, Concraft Holding Co., Ltd, resolved that, in order to strengthen and enhance net asset per share, it intended to offset accumulated deficits through a capital reduction, and the expected amount of the capital reduction was NT$696,672 thousand with a proportion at 44.54%. The effective date was set on February 22, 2023. The change of registration of the aforementioned capital reduction to offset accumulated deficits had not been completed. The capital was reduced based on the shareholders’ ownership and had no effects on the gain (loss) on the carrying amount of shares held by the Group.

• B. Refer to Note 6(22)F. for details of the appropriation of 2022 retained earnings.

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12. OTHERS

(1) Capital management

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

The Company monitors capital by reassessing debt ratios periodically. The debt ratios as at December 31, 2022 and 2021 were as follows:

The Company’s capital management is to ensure it has sufficient financial resource and operating plans to meet operational capital for future needs, capital expenditure, research and development expense, obligation repayment and dividend distribution within the next year. The Company monitors capital by reassessing debt ratios periodically. The debt ratios as at December 31, 2022 and 2021 were as follows:	The Company’s capital management is to ensure it has sufficient financial resource and operating plans to meet operational capital for future needs, capital expenditure, research and development expense, obligation repayment and dividend distribution within the next year. The Company monitors capital by reassessing debt ratios periodically. The debt ratios as at December 31, 2022 and 2021 were as follows:
Financial instruments A. Financial instruments by category December 31, 2022 December 31, 2021 Total debt 20,372,345 $ 21,708,001 $ Total assets 33,428,631 33,862,624 Debt ratio 61% 64% December31,2022 December31,2021 Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss 416,465 $ 364,395 $ Financial assets at fair value through other comprehensive income Designation of equity instrument 627,094 $ 979,645 $ Qualifying equity instrument 150,863 141,341 777,957 $ 1,120,986 $ Financial assets at amortized cost/Loans and receivables Cash and cash equivalents 6,923,268 $ 4,841,969 $ Financial assets at amortized cost 295,801 1,032,926 Accounts receivable (including due from related parties) 8,771,469 9,403,320 Other receivables (including due from related parties) 205,597 954,417 Guarantee deposits paid 59,608 60,953 16,255,743 $ 16,293,585 $
A.
	364,395 $
	979,645 $ 141,341
	1,120,986 $
	4,841,969 $ 1,032,926 9,403,320 954,417 60,953
	16,293,585 $

(2) Financial instruments

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December 31, 2022 December 31, 2021

==> picture [461 x 229] intentionally omitted <==

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

Financial liabilities
Financial liabilities at fair value
through profit or loss
Financial liabilities held for trading $ 10,137 $ 3,020
Short-term borrowings 2,146,851 3,738,289
Accounts payable (including
payable to related parties) 9,214,787 9,342,878
Other accounts payable (including
payable to related parties) 1,276,857 1,209,317
Lease liabilities 208,436 112,601
Corporate bonds payable 2,953,838 2,925,589
Long-term borrowings (including those
maturing within one year) 1,356,447 1,558,655
Gurantee deposits received 4,725 23,516
$ 17,172,078 $ 18,913,865
----- End of picture text -----

B. Financial risk management policies

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

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

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

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

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

• ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. Exchange rate risk is measured through a forecast of highly probable USD expenditures. Forward foreign exchange contracts are adopted to minimize the volatility of the exchange rate affecting cost of forecast inventory purchases.

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

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

• (Remainder of page intentionally left blank)

~87~

Foreign currency: functional currency) inancial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD USD : RMB USD : THB Receivables USD：NTD USD：RMB USD：THB Non-monetary items USD：NTD Investments Accounted for Using Equity Method USD：NTD HKD：NTD RMB：NTD inancial liabilities Non-monetary items Bank loan USD：NTD USD：RMB USD：CAD RMB：NTD Payables RMB：NTD USD：NTD USD：RMB Current financial investments at fair value through other comprehensive income			December 31,2022	December 31,2022
	Foreign currency amount (In thousands)	Exchange rate	Book value (NTD)		Sensitivityanalysis
				Degree of variation	Effects on profit or loss	Effect on other comprehensive income
	107,122 $ 54,641 8,229 6,924 32,957 241,758 $ 111,650 21,302 5,000 $ 105,892 $ 332,646 92,399 16,000 $ 10,000 2,600 42,950 235,688 $ 272,072 49,601	30.71 4.41 7.80 6.97 34.35 30.71 6.97 34.35 30.71 30.71 3.94 4.41 30.71 6.97 0.74 4.41 4.41 30.71 6.97	3,289,717 $ 240,858 252,713 212,636 1,012,109 7,424,389 $ 3,428,772 654,184 153,550 $ 3,251,933 $ 1,309,957 407,293 491,360 $ 307,100 79,846 189,324 1,038,913 $ 8,355,331 1,523,247	3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	98,691 $ 7,226 7,581 6,379 30,363 222,732 $ 102,863 19,626 - $ - $ - - 14,741 $ 9,213 2,395 5,680 31,167 $ 250,660 45,697	- $ - - - - - $ - - 4,607 $ 97,558 $ 39,299 12,219 - $ - - - - $ - -

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Foreign currency: functional currency) inancial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD USD : RMB USD : THB Receivables USD：NTD USD：RMB USD：THB Non-monetary items USD：NTD Investments Accounted for Using Equity Method USD：NTD HKD：NTD RMB：NTD inancial liabilities Non-monetary items Bank loan USD：NTD USD：RMB USD：CAD RMB：NTD Payables RMB：NTD USD：NTD USD：RMB Current financial investments at fair value through other comprehensive income			December 31,2021	December 31,2021
	Foreign currency amount (In thousands)	Exchange rate	Book value (NTD)		Sensitivityanalysis
				Degree of variation	Effects on profit or loss	Effect on other comprehensive income
	46,037 $ 73,582 7,950 18,831 9,761 299,362 $ 105,211 19,788 5,000 $ 114,616 $ 311,743 86,797 15,000 $ 50,402 2,600 25,213 190,261 256,850 58,443	27.68 4.34 7.80 6.37 33.16 27.68 6.37 33.16 27.68 27.68 3.55 4.34 27.68 6.37 0.78 4.34 4.34 27.68 6.37	1,274,304 $ 319,640 220,056 521,242 270,184 8,286,340 $ 2,912,240 547,732 138,400 $ 3,172,561 $ 1,106,375 377,046 415,200 $ 1,395,127 71,968 109,525 826,494 7,109,608 1,617,702	3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	38,229 $ 9,589 6,602 15,637 8,106 248,590 $ 87,367 16,432 - $ - $ - - 12,456 $ 41,854 2,159 3,286 24,795 213,288 48,531	- $ - - - - - $ - - 4,152 $ 95,177 $ 33,191 11,311 - $ - - - - - -

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Total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2022 and 2021, amounted to a gain of $507,858 thousand and a loss of ($66,414) thousand, respectively.

Price risk

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

• ii. The Group’s investments in equity securities comprise shares and open-end funds issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 3% with all other variables held constant, post-tax profit for years ended December 31, 2022 and 2021 would have increased/decreased by $819 thousand and $769 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 $18,813 thousand and $29,389 thousand, respectively, as a result of other comprehensive income classified as available-for-sale equity investment and equity investment at fair value through other comprehensive income.

Cash flow and fair value Interest rate risk

• i. The Group’s borrowings and investment in debt instruments are measured at amortized cost, fair value through profit or loss and fair value through other comprehensive income. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.

• ii. If the borrowing interest rate had increased/decreased by 0.25% with all other variables held constant, profit (loss), net of tax for the years ended December 31, 2022 and 2021 would have increased/decreased by $7,007 thousand and $10,594 thousand, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.

• iii. If the debt instruments interest rate had increased/decreased by 0.25% with all other variables held constant, profit (loss), net of tax for the years ended December 31, 2022 and 2021 would have increased/decreased by $1,066 thousand and $957 thousand, respectively. The main factor is that changes in interest expense result in floating-rate debt instruments.

(b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms,

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and the contract cash flows of debt instruments stated at amortized cost, at fair value through profit or loss and at fair value through other comprehensive income.

• ii. In accordance with the internal and explicit credit policy, each operating entities within the Group shall conduct management and credit risk analysis for each new customer before setting the terms and conditions for payment and delivery. The internal risk control system assesses the credit quality of the customer by taking into account its financial position, past experience and other factors. The limits of individual risks are set by the Board of Directors according to internal or external ratings, and the use of credit limits is regularly monitored. The main credit risk comes from cash and cash equivalents and deposits with banks and financial institutions. It also comes from customers' credit risks and includes outstanding receivables. For banks and financial institutions, only good credit rating agencies will be accepted as trading counterparts.

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

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

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

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

• (ii) For investments in bonds that are traded over the counter, if any external credit rating agency rates these bonds as investment grade, the credit risk of these financial assets is low.

• vi. 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

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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.

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

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

• ix. The Group used the forecastability of adjust historical and timely information to assess the default possibility of accounts receivable. As of December 31, 2022 and 2021, the provision matrix is as follows:

December 31, 2022 Not past due Up to 30 days 31~90 days 91~180 days Over 180 days December 31, 2021 Not past due Up to 30 days 31~90 days 91~180 days Over 180 days	Expected loss rate		Total book value		Loss allowance 2,851 $ 522 3,386 4,853 9,835 21,447 $ Loss allowance
	0.03% 0.29% 22.35% 100.00% 100.00% Expected loss rate		8,524,130 $ 177,174 15,153 4,853 9,835 8,731,145 $ Total book value
	0.04% 3.10% 11.90% 100.00% 100.00%		9,115,474 $ 159,214 112,412 1,445 11,999 9,400,544 $		3,672 $ 4,929 13,380 1,445 11,999 35,425 $

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

			2022
		Accounts receivable
At January 1	$		35,425
Reversal of impairment loss	(		12,854)
Effect of foreign exchange	(		1,124)
At December 31	$		21,447

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		2021
	Accounts receivable
At January 1	$	29,676
Provision for impairment		6,944
Effect of foreign exchange	(	1,195)
At December 31	$	35,425

• xi. For the years ended December 31, 2022 and 2021, there was no loss allowance for investments in debt instruments at fair value through other comprehensive income.

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

Financial assets measured at amortized cost Group 1 Financial assets at fair value through other comprehensive income Group 2 Financial assets measured at amortized cost Group 1 Financial assets at fair value through other comprehensive income Group 2			December 31, 2022	December 31, 2022
	12 months 295,801 $ 150,863 $		Significant increase in credit risk Impairment of credit $- $ - $ - $- Lifetime December31,2021		Total
			Significant increase in credit risk
					295,801 $
					150,863 $
	12 months 1,032,926 $ 141,341 $		Significant increase in credit risk Impairment of credit $- $- - $ - $ Lifetime		Total
			Significant increase in credit risk
			$-		1,032,926 $
			- $		141,341 $

Group 1: Time deposits designated as investment grade. Group 2: Debt instruments designated as investment grade

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(c) Liquidity risk

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

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

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

• iv. The Group has $15,421,095 thousand and $12,839,195 thousand in undrawn borrowing facilities as of December 31, 2022 and 2021, respectively.

December 31,2022	Less than 3 months	Between 3 months and 1 year	Between 1 and 2years	Between 2 and 5years	Over 5 years	Total
Non-derivative financial liabilities Short-term borrowings Accounts payable Accounts payable -related parties Other payables (including related parties) Lease liabilities Bonds payable Long-term borrowings Derivative financial liabilities Forward exchange contracts	1,907,179 $ 4,087,608 3,412,184 1,239,866 22,586 - 68,553 10,137	260,524 $ 928,277 786,718 36,991 141,550 - 405,820 -	- $ - - - 15,699 3,000,000 458,559 -	- $ - - - 21,991 - 469,645 -	- $ - - - 22,612 - - -	2,167,703 $ 5,015,885 4,198,902 1,276,857 224,438 3,000,000 1,402,577 10,137

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

Between 3
Less than 3 months and 1 Between 1 Between 2 Over 5
December 31, 2021 months year and 2 years and 5 years years Total
Non-derivative financial
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Non-derivative financial
liabilities
Short-term borrowings	$	1,484,691	$	2,265,537	$	-	$	-	$	-	$	3,750,228
Accounts payable		4,832,757		876,825		-		-		-		5,709,582
Accounts payable		3,358,281		275,015		-		-		-		3,633,296
- related parties
Other payables		1,058,481		150,836		-		-		-		1,209,317
(including related parties)
Lease liabilities		22,567		25,587		15,605		28,027	27,946			119,732
Bonds payable		-		-		-	3,000,000			-		3,000,000
Long-term borrowings		7,872		110,169		460,842		930,460	12,506			1,521,849
Derivative financial liabilities
Forward exchange		440		2,580		-		-		-		3,020
contracts

(3) Fair value information

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

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

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

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

• B. Financial instruments not measured at fair value

• Except for those listed in the table below, financial instruments not measured at fair value include the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, long-term and short-term bank borrowings, notes payable, accounts payable and other payables are approximate to their fair values.

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Financial liabilities: Bonds payable Financial liabilities: Bonds payable	Bookvalue 2,953,838 $ Book value 2,925,589 $	Level 1 Level 2 - $ 2,879,204 $ December31,2022 Fairvalue Level 1 Level 2 - $ 2,882,806 $ December31,2021 Fairvalue	Level 3
			- $
			Level3
			- $

C.	The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities as at December 31, 2022 and 2021 is as follows: December 31,2022 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities - $ - $ 27,284 $ 27,284 $ -Bonds investments - - 280,000 280,000 -Forward exchange contracts - 7,076 - 7,076 -Fund 102,105 - - 102,105 Financial assets at fair value through other comprehensive income -Equity securities 230,211 - 396,883 627,094 -Debt securities - 150,863 - 150,863 Total 332,316 $ 157,939 $ 704,167 $ 1,194,422 $ Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts - $ 10,137 $ - $ 10,137 $	The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities as at December 31, 2022 and 2021 is as follows: December 31,2022 Level 1 Level 2 Level 3 Total Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities - $ - $ 27,284 $ 27,284 $ -Bonds investments - - 280,000 280,000 -Forward exchange contracts - 7,076 - 7,076 -Fund 102,105 - - 102,105 Financial assets at fair value through other comprehensive income -Equity securities 230,211 - 396,883 627,094 -Debt securities - 150,863 - 150,863 Total 332,316 $ 157,939 $ 704,167 $ 1,194,422 $ Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts - $ 10,137 $ - $ 10,137 $
		27,284 $ 280,000 7,076 102,105 627,094 150,863
		1,194,422 $
		10,137 $

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December 31,2021 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Bonds investments -Forward exchange contracts -Fund -Call options of convertible bonds Financial assets at fair value through other comprehensive income -Equity securities -Debt securities Total Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts	Level 1 232 $ - - 56,921 - 259,207 - 316,360 $ - $	Level 2 - $ - 1,247 - - - 141,341 142,588 $ 3,020 $	Level 3 25,395 $ 280,000 - - 600 720,438 - 1,026,433 $ - $	Total
				25,627 $ 280,000 1,247 56,921 600 979,645 141,341
				1,485,381 $
				3,020 $

• D. The methods and assumptions the Group used to measure fair value are as follows:

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

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

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

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

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

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current market conditions.

• E. For the years ended December 31, 2022 and 2021, 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, 2022 and 2021:

2021:
			Years ended	December31,
			2022		2021
At January 1		$	1,026,433	$	1,363,685
Added in the year			1,487		479,897
Losses recognised in profit or loss	(		198)	(	2,314)
Losses recognised in
other comprehensive income	(		323,555)	(	814,835)
At December 31		$	704,167	$	1,026,433

• 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:

Nonderivative equity instrument: Equity securities Private equity funds in venture capital Private placement shares (listed companies) Nonderivative debt instrument: Convertible bonds	Fair value at December 31, 2022 127,692 $ 27,284 269,191 280,000 $	Valuation technique Market comparable companies Net asset value Market price method Discounted cash flow method	Significant unobservable input Price to book ration multiple N/A Discount for lack of marketability Discount rate	Range (weighted average) Relationship of inputs to fair value 23,600 $ The higher the multiplier, the higher the fair value 27,284 N/A 20.5%~26.6% The higher the discount for marketability, the lower the fair value - The higher the discount rate, the lower the fair value

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

Fair value at Significant Range
December 31, unobservable (weighted Relationship of
2021 Valuation technique input average) inputs to fair value
----- End of picture text -----

	Dec	ember 31, 2021	Valuation technique	unobservable input		(weighted average)	Relationship of inputs to fair value
Nonderivative equity
instrument:
Equity securities	$	140,235	Market comparable companies	Price to book ration multiple	$	13,765	The higher the multiplier, the higher the fair value
Private equity
funds in venture		25,395	Net asset value	N/A		25,395	N/A
capital
Private placement				Discount for			The higher the discount for
shares (listed		580,203	Market price method	lack of		17.6%~18.3%	marketability, the lower the fair
companies)				marketability			value
Call options of			Binary tree	Risk-free			The higher the risk-free interest
convertible bonds		600	convertible bond	interest rate		0.4424%	rate, the lower the fair value
			valuation model
				Stock price		94.4	The higher the stock price, the
							higher the fair value
				Volatility			The higher the stock price
						30.94%	volatility, the higher the fair
							value
Nonderivative debt
instrument:
Convertible bonds	$	280,000	Discounted cash flow method	Discount rate		-	The higher the discount rate, the lower the fair value

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

Financial assets Equity securities	Input	Change		Favourable change Unfavourable Favourable change Unfavourable change - $ - $ 12,769 $ 12,769) ($ December 31, 2022 Recognised in profit or loss Recognised in other comprehensive income	Favourable change Unfavourable Favourable change Unfavourable change - $ - $ 12,769 $ 12,769) ($ December 31, 2022 Recognised in profit or loss Recognised in other comprehensive income	Favourable change Unfavourable Favourable change Unfavourable change - $ - $ 12,769 $ 12,769) ($ December 31, 2022 Recognised in profit or loss Recognised in other comprehensive income	Favourable change Unfavourable Favourable change Unfavourable change - $ - $ 12,769 $ 12,769) ($ December 31, 2022 Recognised in profit or loss Recognised in other comprehensive income	Favourable change Unfavourable Favourable change Unfavourable change - $ - $ 12,769 $ 12,769) ($ December 31, 2022 Recognised in profit or loss Recognised in other comprehensive income	Favourable change Unfavourable Favourable change Unfavourable change - $ - $ 12,769 $ 12,769) ($ December 31, 2022 Recognised in profit or loss Recognised in other comprehensive income
				Recognised in profit or loss
				Favourable change	Unfavourable			Favourable change	Unfavourable change
	Price to book ratio multiple	±10%		- $		- $		12,769 $	12,769) ($

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December 31, 2021

Input Financial assets Stock price Volatility Equity securities Price to book ratio multiple Total Call options of convertible bonds	Change Favourable change Unfavourable ±10% 300 $ 300) ($ ±5% 300 300) ( ±10% - - 600 $ 600) ($ Recognised in profit or loss	Favourable change Unfavourable change - $ - $ - - 14,024 14,024) ( 14,024 $ 14,024) ($ Recognised in other comprehensive income

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: None.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 4.

• F. Disposal of real estate reaching $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 5.

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

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

• J. Significant inter-company transactions during the reporting periods: Purchases or sales of goods from or to related parties reaching $100 million or more: Please refer to table 7.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 8.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 9.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 10.

(4) Major shareholders information

Major shareholders information: None.

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14. SEGMENT INFORMATION

(1) General information

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

(2) Measurement of segment information

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

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

• A. The segment information provided to the chief operating decision-maker for the reportable segments for the year ended December 31, 2022 is as follows:

		Taiwan		Shenzhen		Singapore		Vietnam		Others		Total
Revenue
Revenue from external customers	$	25,888,687	$	370,601	$	7,707,271	$	281,128	$	1,151,003	$	35,398,690
Inter-segment revenue		15,146		10,971,711		-		3,668,273		3,820,620		18,475,750
Revenue total	$	25,903,833	$	11,342,312	$	7,707,271	$	3,949,401	$	4,971,623	$	53,874,440
Segment profit (loss) before tax	$	1,813,472	$	114,661	$	718,313	$	358,303	($	38,474)	$	2,966,275
Segment profit
(loss) contains：
Interest revenue	$	38,955	$	23,859	$	1,199	$	191	$	2,062	$	66,266
Interest expense	(	51,772)	(	36,241)	(	397)	(	7,079)	(	10,146)	(	105,635)
Depreciation & amortization	(	77,630)	(	410,206)	(	7,736)	(	142,124)	(	126,081)	(	763,777)
Income tax (expense) benefit	(	358,074)		10,890	(	110,254)	(	35)		29,503	(	427,970)
Recognized investment profit
which is adopting equity method		930,299		-	(	259)		-	(	721,126)		208,914

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

• B. The segment information provided to the chief operating decision-maker for the reportable segments for the year ended December 31, 2021 is as follows:

		Taiwan		Shenzhen		Singapore		Vietnam		Others		Total
Revenue
Revenue from external customers	$	26,833,078	$	1,603,713	$	6,289,086	$	4,607	$	1,452,235	$	36,182,719
Inter-segment revenue		14,118		11,242,123		44		3,392,410		2,439,056		17,087,751
Revenue total	$	26,847,196	$	12,845,836	$	6,289,130	$	3,397,017	$	3,891,291	$	53,270,470
Segment profit (loss) before tax	$	1,347,877	$	293,628	$	435,095	$	349,137	($	129,056)	$	2,296,681
Segment profit
(loss) contains：
Interest revenue	$	23,326	$	16,068	$	-	$	253	$	1,345	$	40,992
Interest expense	(	52,066)	(	25,137)	(	630)	(	3,116)	(	3,380)	(	84,329)
Depreciation & amortization	(	69,776)	(	351,800)	(	8,925)	(	106,121)	(	189,465)	(	726,087)
Income tax (expense) benefit	(	219,392)		5,266	(	76,837)	(	3,154)		3,034	(	291,083)
Recognised investment profit
which is adopting equity method		989,544		-		-		-	(	735,369)		254,175

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

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

• D. The accounting policies of the operating segments are in agreement with the significant

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accounting policies summarized in Note 4. The Group’s segment profit (loss) is measured with the current profit (loss) before tax, which is used as a basis for the Group in assessing the performance of the operating segments.

(4) Reconciliation for segment income (loss)

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

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

operations is provided as follows:
			Years ended	December31,
			2022			2021
Adjusted revenue from reportable segments		$	53,874,440		$	53,270,470
Elimination of inter-segment revenue	(		18,475,750)	(		17,087,751)
Total consolidated operating revenue		$	35,398,690		$	36,182,719

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

			Years ended	December 31,	December 31,	December 31,
			2022			2021
Adjusted income from reportable		$	2,966,275		$	2,296,681
segments after income tax
Elimination of inter-segment income	(		917,249)	(		714,508)
Income from continuing operations
after income tax		$	2,049,026		$	1,582,173

(5) Information on products and services

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

Finished goods sales revenue Technical service revenue	Years ended December31,	Years ended December31,
	2022 35,380,239 $ 18,451 35,398,690 $	2021
		35,924,969 $ 257,750
		36,182,719 $

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(6) Geographical information

Geographical information for the years ended December 31, 2022 and 2021 is as follows:

		Year ended December 31,2022	Year ended December 31,2022	Year ended December 31,2022		Year ended December 31,2021	Year ended December 31,2021	Year ended December 31,2021
				Non-current				Non-current
		Revenue		assets		Revenue		assets
US	$	14,886,782	$	601	$	15,705,357	$	792
Netherlands		9,308,873		-		5,262,406		-
Switzerland		3,984,938		-		4,604,455		-
Denmark		3,481,839		-		4,691,057		-
China		840,592		1,603,173		2,297,721		1,582,216
Others		2,895,666		3,989,472		3,621,723		4,091,261
	$	35,398,690	$	5,593,246	$	36,182,719	$	5,674,269

(7) Major customer information

Major customer information of the Group for the years ended December 31, 2022 and 2021 is as follows:

A B C	Revenue % Segment 11,807,867 $ 33 Taiwan A 8,278,897 23 Taiwan B 3,987,686 11 Taiwan C 24,074,450 $ YearendedDecember31,2022	YearendedDecember31,2021	YearendedDecember31,2021	YearendedDecember31,2021
		Revenue 10,733,924 $ 9,224,122 4,570,613 24,528,659 $	% 30 25 13	Segment
				Taiwan Taiwan Taiwan

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Table 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Loans to others

Year ended December 31, 2022

Expressed in thousands of NTD (Except as otherwise indicated)

Interest rate Nature of loan (Note 3) Amount of transactions with the borrower Reason for short-term financing Allowance for doubtful accounts Maximum outstanding balance for the year ended December 31,2022 Balance at December 31, 2022 Actual amount drawn down No. Creditor Borrower General ledger account Is a related party	Collateral	Limit on loans granted to a single party (Note 2)	Ceiling on total loans granted (Note 1)	Note
	Item Value
1 MESG MENA Other receivables Y 122,840 $ 122,840 $ 39,923 $ 1.13 2 - $ Business operation - $ 2 MESG SENM Other receivables Y 46,065 46,065 15,355 3.52 2 - Business operation -	- - $ - -	2,235,934 $ 2,235,934	2,235,934 $ 2,235,934

Note 1: (1) The ceiling on MESG total loans to others is MESG’s net assets; for short-term financing, the limit to a single party is 40% of MESG’s net assets. (2) The restrictions in (1) shall not apply to short-term financing among affiliates in the group. The limit to a single party is MESG’s net assets.

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

(2) For MESG’s short-term financing, limit on loans granted for a single party is 40% of the net assets of MESG.

(3) The restrictions in (1)(2) shall not apply to short-term financing among affiliates in the group. The limit to a single party is MESG’s net assets.

Note 3: (1) For MESG’s business transactions.

(2) For short-term financing.

Table 1, Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Provision of endorsements and guarantees to others

Year ended December 31, 2022

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1) Endorser/ guarantor	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/ guarantee amount for the year ended December 31, 2022	Outstanding endorsement/ guarantee amount at December 31, 2022	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 MEHO 0 MEHO	MENA 2 SENM 2	9,817,950 $ 9,817,950	107,485 $ 30,710	107,485 $ -	79,846 $ -	- $ -	0.88% -	12,272,437 $ 12,272,437	Y Y	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

Table 3

Expressed in thousands of NTD

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) December 31, 2022

(Except as otherwise indicated)

Securities held by	Marketable securities(Note 1)	Relationship with the securities issuer	General ledger account		As of December 31,2022	Fair value(in thousands) Note
				Number of shares	Book value(in thousands) Ownership (%)
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company MEST MEST ASCX ASCX	Fund - 76324296A KGI Taiwan Multi-Asset Income Fund A TWD - Bond - UPAMC Wealthy Fund - Bond - SYNergy Private Placement (YDB8AA) - Fund - JAFCO - Stock - 2881B.TW - Stock - 2882B.TW - Stock - 5871A.TW - Bond - XS218687550 - Stock - 4943.TW - Stock - 3290.TWO - Stock - FUJITER Semiconductor CO.,LTD. - Stock - NETVOX TECHNOLOGY CO., LTD - Stock - EVER THAI AGRI-PRODUCT CO.,LTD. - Stock - SUNSINO SME Development Co., Ltd. - Stock - LINSATION Intelligent Technology Limited - Stock - MERRY FULING CO., LTD., TAIWAN BRANCH (SAMOA) - Stock - 6558.TW - Stock - Perfect Fortune Inc. - Stock - LOYAL WIRE& CABLE COMPANY LTD. - Stock - DeTing (Xiamen) Health Technology Co., Lt - Stock - Beijing Wanling Hearing Aids -		Financial assets mandatorily measured at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Valuation adjustment Non-current financial assets mandatorily measured at fair value through profit or loss Valuation adjustment Equity instruments measured at fair value through other comprehensive income - current Equity instruments measured at fair value through other comprehensive income - current Equity instruments measured at fair value through other comprehensive income - current Debt instrument measured at fair value through other comprehensive income - current Valuation adjustment Equity instruments measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income - non-current Equity instruments measured at fair value through other comprehensive income - non-current Valuation adjustment Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Valuation adjustment	5,015 50,000 $ - 5,000 50,000 - - 280,000 - 380,000 2,105 382,105 $ 925 29,350 $ 0.71% 2,066) ( 27,284 $ 683 40,980 $ - 585 35,100 - 300 30,000 - - 144,625 - 250,705 743 251,448 $ 13,905 648,164 $ 8.89% 5,723 99,990 5.75% 2,126 27,811 9.79% 324 2,976 1.32% 683 6,425 4.99% 169 2,123 0.36% 75 8,772 6.19% 356 10,437 19.00% 7,300 188,340 7.79% 995,038 564,252) ( 430,786 $ 2,126 8,374 $ 18.33% 1,159 8,072 18.33% - 441 10.00% - 4,849 19.64% 21,736 73,987 95,723 $		52,006 $ 50,099 280,000 382,105 $ 27,284 $ 39,273 $ 31,941 29,371 150,863 251,448 $ 142,331 $ 129,626 13,541 - 2,502 2,182 2,834 10,910 126,860 430,786 $ 69,565 $ 20,868 441 4,849 95,723 $

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

Table 3, Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Acquisition of real estate reaching $300 million or 20% of the Company's paid-in capital

Year ended December 31, 2022

Table 4

Expressed in thousands of NTD (Except as otherwise indicated)

If the counterparty is a related party, information as to

							If the counterparty is a related party, information as to	If the counterparty is a related party, information as to	If the counterparty is a related party, information as to	If the counterparty is a related party, information as to
Real estate acquired by	Real estate acquired	Date of the event	Transaction amount	Status of payment	Counterparty	Relationship with the counterparty	the last transaction of the real estate is disclosed below:				Basis or reference used in setting theprice	Reason for acquisition of real estate and status of the real estate	Other commitments
							Original owner who sold the real estate to the counterparty	Relationship between the original owner and the acquirer	Date of the original transaction	Amount
MEVN	Plant	May 11,2020	483,488 $	483,488 $	HOP LUC CONSTRUCTION JOINT STOCK COMPANY	None	-	-	-	- $	-	For business use	-

Table 4, Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

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

Year ended December 31, 2022

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationshipwith the counterparty			Transaction	Transaction	Differences in transaction terms compared to thirdpartytransactions(Note 1)	Differences in transaction terms compared to thirdpartytransactions(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 METC MESG MESG MESG Luxshare Co., Ltd.	MECH MEVN MECE MECL The Company MECL METC MECH MEVN	Investment accounted for using the equity method A subsidiary of the Company Investment accounted for using the equity method A subsidiary of the Company Parent Company A subsidiary of the Company A subsidiary of the Company Investment accounted for using the equity method A subsidiary of the Company	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases	2,931,295 $ 3,648,253 8,346,731 10,033,449 2,174,717 958,293 3,453,929 2,385,714 281,050	8% 10% 24% 28% 6% 3% 10% 7% 1%	60~65 days end of month after offsetting with accounts receivable 60~65 days end of month after offsetting with accounts receivable 60~65 days end of month after offsetting with accounts receivable 60~65 days end of month after offsetting with accounts receivable 60~120 days end of month after offsetting with accounts receivable 60~65 days end of month after offsetting with accounts receivable 60~65 days end of month after offsetting with accounts receivable 60~65 days end of month after offsetting with accounts receivable 60~65 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	528,027) ($ 724,931) ( 3,172,072) ( 3,372,620) ( 1,149,083) ( 291,985) ( 653,868) ( 474,310) ( 58,917) (	6% 8% 34% 37% 12% 3% 7% 5% 1%	(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 5, Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

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

December 31, 2022

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationshipwith the counterparty	Balance of accounts receivable due from relatedparty	Balance of accounts receivable due from relatedparty	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date (Note 2)	Allowance for doubtful accounts	Note
			General ledger account	Amount		Amount	Action taken
The Company MECL MECL METC MEVN MECE MECH MECH	METC The Company MESG MESG The Company The Company The Company MESG	A subsidiary of the Company Parent Company A subsidiary of the Company A subsidiary of the Company Parent Company Parent Company Parent Company A subsidiary of the Company	Accounts Receivable Accounts Receivable Accounts Receivable Accounts Receivable Accounts Receivable Accounts Receivable Accounts Receivable Accounts Receivable	1,149,083 $ 3,372,620 291,985 653,868 724,931 3,172,072 528,027 474,310	2.34 3.32 2.75 5.76 5.34 3.05 4.38 5.05	- $ - - - - - - -	- - - - - - - -	426,065 $ 1,291,169 57,202 635,739 383,343 2,189,986 250,761 308,474	- $ - - - - - - -	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1)

Note 1: Inter-company transactions between companies within the Group are eliminated. Note 2: The balance was as at February 23, 2023.

Table 6, Page1

Table 7

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Significant inter-company transactions during the reporting periods

Year ended December 31, 2022

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

						Transaction
Number (Note 1)	Companyname	Counterparty	Relationship (Note2)	General ledgeraccount	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 MECL METC METC	1 1 1 1 2 2 3 3 3 3	Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable	10,033,449 $ 3,372,620 3,648,253 724,931 2,174,717 1,149,083 958,293 291,985 3,453,929 653,868	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 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	28% 10% 10% 2% 6% 3% 3% 1% 10% 2%

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

1. Parent company is ‘0’.

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

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.

2. Subsidiary to parent company.

3. Subsidiary to subsidiary.

4. 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 7, Page1

Information on investees Year ended December 31, 2022

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Investor Table 8	Investee	Location	Main business activities	Initial investment amount	Shares held as at December 31,2022	Net profit (loss) of the investee for the year ended December 31,2022	Investment income (loss) recognised by the Company for the year ended December 31,2022 Note Expressed in thousands of NTD (Except as otherwise indicated)
				Balance as at December 31,2022 Balance as at December 31,2021	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 The Company The Company MESG MCTT DDBV DDBV MHKY INSA MENA SOCA	MEST DDBV LEOHAB ENTERPRISE CO.,LTD. MECA MESG METC MHKY INSA MEVN MUTT MCTT MAC FUND MEMP MAC FUND UCMU MTHK FUSA MENA SOCA SENM	HONG KONG British Virgin IS. Taichung City U.S.A SINGAPORE THAILAND CAYMAN SAMOA VIETNAM New Taipei City Taichung City Taipei City Malaysia Taipei City MAURITIUS HONG KONG SAMOA CANADA CANADA NORWAY	Sales of microphone, receiver and speaker General investment business Plastic injection molding and metal stamping Technique, marketing and after service Sales of microphone, receiver and speaker Microphone, components and product and sale of other electric products Sales of medical device General investment business Manufacture of microphone and speaker Electrical appliances and audiovisual electronic products General investment business General investment business Research and development of microphone, receiver and speaker General investment business 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	981,113 $ 981,113 $ 1,479,925 1,479,925 96,666 96,666 28,887 28,887 92,132 92,132 484,358 484,358 857,946 887,287 1,199,977 1,199,977 366,710 366,710 30,600 - 8,000 - 19,200 - 15,969 - 450 - 151 151 1,392,956 1,392,956 795,943 818,916 30 30 - 11,112 23 23	25,658 100.00% 4,865,770 $ 48,005 100.00% 3,252,126 4,986 21.00% 39,582 999 99.90% 35,080 800 100.00% 2,235,934 5,060 99.99% 687,094 27,992 100.00% 386,087 - 100.00% 558,203 - 51.00% 756,079 3,060 51.00% 27,676 800 100.00% 8,239 - 42.67% 18,158 - 100.00% 16,491 - 1.00% 426 5 100.00% - 48,000 100.00% 3,251,933 27,160 96.01% 386,998 - 100.00% 25,939) ( - - - - 100.00% 59,760	320,411 $ 63,064 34,392) ( 221 608,058 97,847 173,317) ( 76,667) ( 358,268 5,733) ( 239 2,443) ( 259) ( 2,443) ( - 63,064 173,496) ( 33,505) ( 6,893 4,831	259,773 $ (Note 1) 7,574 (Note 1) 7,222) ( 221 609,394 (Note 1) 98,928 (Note 1) 173,317) ( 76,667) ( 181,509 (Note 1) 2,924) ( 239 1,042) ( 259) ( 24) ( - (Note 2) - (Note 2) - (Note 2) - (Note 2) - (Note 2、 3) - (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. Note 3: Please refer to Note 4 (3).

Table 8, Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Table 9

Information on investees in Mainland China

Year ended December 31, 2022

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2022	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the year ended December 31,2022	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2022	Net income of investee for the year ended December 31,2022	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31,2022	Book value of investments in Mainland China as of December 31, 2022 (Note 5)	Accumulated amount of investment income remitted back to Taiwan as of December 31,2022 Note
					Remitted to Mainland China Remitted back to Taiwan
MEDG MSCS MECL MECE MECS Perfect Fortune Inc. LOYAL WIRE& CABLE COMPANY LTD. MECH FUSZ ETCX ASCX LACX	Research and development of sound equipment, earphones, mobile power supply, charging box, cable, connector, electronic components, plastic hardware, Manufacture of speaker and amplifier Microphone, receiver, speaker, security system, induction cooker and other electronic component Manufacture and sales of microphone, receiver and speaker International trade, transit trade and trading consulting; trading amongst companies in bonded area and trading agency in the area Electric wire, electric cable and other wire processing Electric wire, electric cable and other wire processing Manufacture and sales of microphone, receiver, speaker and mobile phone Manufacture of medical device Retail sales of hearing products Manufacture and sales of hearing aid, hearing device and acoustics equipment Research and development and technical sales of software for hearing aid use	881,600 $ 152,396 420,276 2,758,257 7,316 45,681 24,908 440,800 282,920 19,836 58,455 22,040	(Note 1) (Note 1) (Note 2) (Note 2) (Note 2) (Note 2、4) (Note 2、4) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)	452,564 $ 110,497 453,191 1,369,285 6,055 107,624 - 420,687 310,763 19,009 293,281 22,180	- $ - $ - - - - - - - - - - - - - - - - - - - - - -	452,564 $ 110,497 453,191 1,369,285 6,055 107,624 - 420,687 310,763 19,009 293,281 22,180	50,517 $ 9,080 125,551 128,700 2 26,035 10,913 400,142 2,190) ( 7,600) ( 80,959) ( 65) (	49.00% 100.00% 100.00% 49.00% 49.00% 18.33% 18.33% 49.00% 96.01% 96.01% 95.53% 95.53%	24,753 $ 9,080 125,551 7,574 1 - - 184,874 2,102) ( 7,297) ( 77,340) ( 62) (	407,293 $ 139,641 3,249,034 3,251,933 1,109) ( 69,562 20,867 1,311,066 243,545 23,899) ( 9,201 42,700	- $ - 2,282,120 (Note 3) 295,185 (Note 3) 40,321 4,125 - - (Note 3) - - - -

Table 9, Page1

Table 9

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Information on investees in Mainland China Year ended December 31, 2022

Expressed in thousands of NTD (Except as otherwise indicated)

Amount remitted from Taiwan Accumulated amount to Mainland China / Amount Accumulated amount Book value of Accumulated amount of remittance remitted back to Taiwan for the of remittance Ownership Investment income investments in of investment from Taiwan year ended December 31, 2022 from Taiwan Net income of held by the (loss) recognised by Mainland China income to Mainland to Mainland investee for the year Company the Company for as of remitted back to Investee in Main business Paid-in Investment China as of Remitted to Remitted back China as of ended (direct or the year ended December 31, 2022 Taiwan as of Mainland China activities capital method January 1, 2022 Mainland China to Taiwan December 31, 2022 December 31, 2022 indirect) December 31, 2022 (Note 5) December 31, 2022 Note FUXM Sales of medical device 306,943 (Note 2) 302,995 - - 302,995 ( 56,543) 96.01% ( 54,287) 79,673 - $ 3,868,131

• 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 31,2022 Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Merry Electronics Co., Ltd. 3,868,131 $ 3,757,859 $	7,363,462 $

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

Table 9, Page2

Table 10

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas

Year ended December 31, 2022

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in 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 31,2022	%	Balance at December 31,2022	Purpose	Maximum balance during the year ended December 31,2022	Balance at December 31,2022	Interest rate	Interest during the year ended December 31,2022
MECL MECL MECE MECH MECH	MEHO MESG MEHO MEHO MESG	10,033,449) ($ 958,293) ( 8,346,731) ( 2,931,295) ( 2,385,714) (	28% 3% 24% 8% 7%	- $ - - - -	- - - - -	3,372,620) ($ 291,985) ( 3,172,072) ( 528,027) ( 474,310) (	37% 3% 34% 6% 5%	- $ - - - -	- - - - -	- $ - - - -	- $ - - - -	- - - - -	- $ - - - -	- - - - -

Table 10, page1