MERRY - Interim / Quarterly Report 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REVIEW REPORT

SEPTEMBER 30, 2020 AND 2019

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

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INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

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

Introduction

We have reviewed the accompanying consolidated balance sheets of Merry Electronics Co., Ltd. and subsidiaries (the “Group”) as at September 30, 2020 and 2019, and the related consolidated statements of comprehensive income for the three months and nine months ended, as well as the related consolidated statements of changes in equity and of cash flows for the nine months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As explained in Notes 4(3) and 6(8), the financial statements of certain insignificant consolidated subsidiaries and certain investments accounted for using the equity method were not reviewed by independent auditors. Those statements reflect total assets of NT$3,758,054 thousand and NT$1,807,155 thousand, constituting 12% and 6% of the consolidated total assets, and total liabilities

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of NT$1,023,723 thousand and NT$426,088 thousand, constituting 5% and 3% of the consolidated total liabilities as at September 30, 2020 and 2019, respectively, and total comprehensive income (loss) of (NT$18,268) thousand, (NT$49,104) thousand, (NT$52,775) thousand and (NT$20,094) thousand, constituting (7%), (6%), 14% and (1%) of the consolidated total comprehensive income for the three months and nine months then ended, respectively.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and certain investments accounted for using the equity method been reviewed by independent auditors, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at September 30, 2020 and 2019, and of its consolidated financial performance for the three months and nine months then ended, and its consolidated cash flows for the nine months then ended in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

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Wang, Yu-Chuan

`L` iu, Mei-Lan

For and on behalf of PricewaterhouseCoopers, Taiwan

October 29, 2020

------------------------------------------------------------------------------------------------------------------------------------------------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’ review 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

SEPTEMBER 30, 2020, DECEMBER 31, 2019 AND SEPTEMBER 30, 2019 (Expressed in thousands of New Taiwan dollars) (The balance sheets as of September 30, 2020 and 2019 are reviewed, not audited)

Assets	Notes	September 30, 2020 AMOUNT % `$` `4,191,857 14` `68,240` `-` `196,950` `1` `873,000` `3` `9` `-` `8,971,285 29` `36,843` `-` `416,267` `1` `741,541` `2` `4,160,838 13` `591,194` `2` `20,248,024 65` `24,305` `-` `1,380,222` `4` `3,562` `-` `4,104,327 13` `3,112,037 10` `387,906` `1` `1,427,478` `5` `231,310` `1` `403,762` `1` `11,074,909 35` `$` `31,322,933 100`	December 31, 2019 AMOUNT % `$` `6,589,863` `26` `16,913` `-` `202,077` `1` `-` `-` `451` `-` `5,448,381` `21` `12,934` `-` `49,485` `-` `385,368` `2` `2,117,532` `8` `270,473` `1` `15,093,477` `59` `21,301` `-` `2,533,407` `10` `-` `-` `3,951,152` `15` `2,285,093` `9` `155,434` `1` `1,502,776` `6` `151,674` `-` `101,256` `-` `10,702,093` `41` `$` `25,795,570` `100`	September 30, 2019
		AMOUNT `$` `4,191,857` `68,240` `196,950` `873,000` `9` `8,971,285` `36,843` `416,267` `741,541` `4,160,838` `591,194` `20,248,024` `24,305` `1,380,222` `3,562` `4,104,327` `3,112,037` `387,906` `1,427,478` `231,310` `403,762` `11,074,909` `$` `31,322,933`	AMOUNT `$` `6,589,863` `16,913` `202,077` `-` `451` `5,448,381` `12,934` `49,485` `385,368` `2,117,532` `270,473` `15,093,477` `21,301` `2,533,407` `-` `3,951,152` `2,285,093` `155,434` `1,502,776` `151,674` `101,256` `10,702,093` `$` `25,795,570`	AMOUNT % `$` `5,312,446` `19` `236,078` `1` `205,964` `1` `-` `-` `-` `-` `9,485,273` `34` `15,555` `-` `142,812` `-` `133,244` `-` `2,245,566` `8` `231,578` `1` `18,008,516` `64` `21,301` `-` `2,416,277` `9` `-` `-` `3,764,627` `13` `2,021,157` `7` `150,038` `1` `1,486,324` `5` `92,491` `-` `135,139` `1` `10,087,354` `36` `$` `28,095,870` `100`
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1120 Current financial assets at fair value through other comprehensive income 1136 Current financial assets at amortised cost 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable due from related parties, net 1200 Other receivables 1210 Other receivables - related parties 130X Inventories 1470 Other current assets 11XX Current Assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Non-current financial assets at fair value through other comprehensive income 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	6(1) 6(2) 6(3) 6(4) 7(1) 6(2) 7(1) 6(6) 6(7) and 7(1) 6(2) 6(3) 6(8) 6(9) 6(10) 6(11) 6(30) 6(12)

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2020, DECEMBER 31, 2019 AND SEPTEMBER 30, 2019

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of September 30, 2020 and 2019 are reviewed, not audited)

					September 30, 2020	September 30, 2020		December 31, 2019	December 31, 2019		September 30,	2019
	Liabilities and Equity	Notes			AMOUNT	%		AMOUNT	%		AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(13)		`$`	`2,606,664`	`9`	`$`	`470,890`	`2`	`$`	`2,509,544`	`9`
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current				`12,418`	`-`		`11,799`	`-`		`7,549`	`-`
2150	Notes payable				`74`	`-`		`74`	`-`		`459`	`-`
2170	Accounts payable				`6,208,351`	`20`		`2,773,441`	`11`		`3,865,901`	`14`
2180	Accounts payable - related	7(1)
	parties				`3,827,899`	`12`		`3,920,251`	`15`		`4,035,219`	`14`
2200	Other payables	6(2)(14)			`1,621,334`	`5`		`973,026`	`4`		`925,981`	`3`
2220	Other payables - related parties	7(1)			`68,963`	`-`		`137,703`	`-`		`24,365`	`-`
2230	Current income tax liabilities	6(30)			`337,353`	`1`		`258,597`	`1`		`260,341`	`1`
2300	Other current liabilities	6(15)			`1,283,755`	`4`		`417,964`	`2`		`312,021`	`1`
21XX	Current Liabilities				`15,966,811`	`51`		`8,963,745`	`35`		`11,941,380`	`42`
	Non-current liabilities
2530	Corporate bonds payable	6(16)			`2,196,107`	`7`		`2,229,959`	`9`		`2,400,100`	`9`
2540	Long-term borrowings	6(17)			`436,142`	`1`		`62,000`	`-`		`-`	`-`
2570	Deferred income tax liabilities	6(30)			`984,831`	`3`		`956,478`	`4`		`901,696`	`3`
2580	Non-current lease liabilities				`142,280`	`1`		`88,694`	`-`		`84,375`	`-`
2640	Accrued pension liabilities				`86,110`	`-`		`86,295`	`-`		`70,413`	`-`
2670	Other non-current liabilities,	6(8)
	others				`32,403`	`-`		`410,007`	`2`		`415,347`	`2`
25XX	Non-current liabilities				`3,877,873`	`12`		`3,833,433`	`15`		`3,871,931`	`14`
2XXX	Total Liabilities				`19,844,684`	`63`		`12,797,178`	`50`		`15,813,311`	`56`
	Equity attributable to owners of
	parent
	Share capital	6(20)
3110	Share capital - common stock				`2,093,519`	`7`		`2,086,684`	`8`		`2,070,661`	`7`
	Capital surplus	6(21)
3200	Capital surplus				`3,968,435`	`13`		`3,870,105`	`15`		`3,646,125`	`13`
	Retained earnings	6(22)
3310	Legal reserve				`2,006,040`	`6`		`1,745,768`	`7`		`1,745,768`	`6`
3320	Special reserve				`269,144`	`1`		`269,144`	`1`		`269,144`	`1`
3350	Unappropriated retained
	earnings				`2,858,517`	`9`		`3,834,442`	`15`		`3,312,514`	`12`
	Other equity interest	6(23)
3400	Other equity interest		`(`		`209,692) (`	`1)`		`1,027,834`	`4`		`1,074,110`	`4`
31XX	Equity attributable to
	owners of the parent				`10,985,963`	`35`		`12,833,977`	`50`		`12,118,322`	`43`
36XX	Non-controlling interest				`492,286`	`2`		`164,415`	`-`		`164,237`	`1`
3XXX	Total equity				`11,478,249`	`37`		`12,998,392`	`50`		`12,282,559`	`44`
3X2X	Total liabilities and equity			`$`	`31,322,933`	`100`	`$`	`25,795,570`	`100`	`$`	`28,095,870`	`100`

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

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

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

(UNAUDITED)

Items	Notes	Three months ended September 30	Three months ended September 30
		2020	2019
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 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 period

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

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

(UNAUDITED)

Items	Notes	Three months ended September 30	Three months ended September 30
		2020	2019
Other comprehensive income (loss) Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8316 Unrealised gain (loss) on valuation of financial assets at fair value through other comprehensive income 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income (loss) that will not be reclassified to profit or loss 8310 Components of other comprehensive income (loss) that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8367 Unrealised gain (loss) from investments in debt instruments measured at fair value through other comprehensive income, net 8370 Total share of other comprehensive income (loss) of associates and joint ventures accounted for under equity method that will be reclassified to profit or loss 8399 Income tax relating to the components of other comprehensive income (loss) 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Total other comprehensive income (loss) for the period 8500 Total comprehensive income (loss) for the period Profit (loss), 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 (Loss) 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 NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

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

		Equitya	ttributable to owners	theparent			Non-controlling interest	Total equity
Share capital - common stock	Capital surplus, additionalpaid-in capital		Retained Earnings		Financial statements translation differences of foreign operations	Total
		Legal reserve	Special reserve	Unappropriated retained earnings
`$` `1,996,625` `-` `-` `-` `-` `-` `40,000` `35,707` `(` `1,671 )` `-` `-` `-` `$` `2,070,661` `$` `2,086,684` `-` `-` `-` `-` `-` `4,135` `2,700` `-` `-` `-` `-` `$` `2,093,519`	`$` `2,789,111` `-` `-` `-` `-` `-` `408,000` `471,578` `(` `27,971 )` `-` `5,407` `-` `$` `3,646,125` `$` `3,870,105` `-` `-` `-` `-` `-` `52,460` `43,274` `-` `2,499` `97` `-` `$` `3,968,435`	`$` `1,539,341` `-` `-` `-` `206,427` `-` `-` `-` `-` `-` `-` `-` `$` `1,745,768` `$` `1,745,768` `-` `-` `-` `260,272` `-` `-` `-` `-` `-` `-` `-` `$` `2,006,040`	`$` `269,144` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `269,144` `$` `269,144` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `269,144`	`$` `3,189,563` `2,082,255` `-` `2,082,255` `(` `206,427 )` `(` `1,751,419 )` `-` `-` `-` `(` `722 )` `-` `(` `736 )` `$` `3,312,514` `$` `3,834,442` `743,957` `3,366` `747,323` `(` `260,272 )` `(` `1,608,376 )` `-` `-` `145,400` `-` `-` `-` `$` `2,858,517`	`$` `147,032` `-` `820,924` `820,924` `-` `-` `-` `-` `105,432` `722` `-` `-` `$` `1,074,110` `$` `1,027,834` `-` `(` `1,110,510` `)` `(` `1,110,510` `)` `-` `-` `-` `18,384` `(` `145,400` `)` `-` `-` `-` `($` `209,692` `)`	`$` `9,930,816` `2,082,255` `820,924` `2,903,179` `-` `(` `1,751,419 )` `448,000` `507,285` `75,790` `-` `5,407` `(` `736 )` `$` `12,118,322` `$` `12,833,977` `743,957` `(` `1,107,144 )` `(` `363,187 )` `-` `(` `1,608,376 )` `56,595` `64,358` `-` `2,499` `97` `-` `$` `10,985,963`	`$` `148,611` `(` `17,958 )` `8,532` `(` `9,426 )` `-` `-` `-` `-` `-` `-` `-` `25,052` `$` `164,237` `$` `164,415` `(` `12,551 )` `(` `10,438 )` `(` `22,989 )` `-` `-` `-` `-` `-` `-` `-` `350,860` `$` `492,286`	`$` `10,079,427` `2,064,297` `829,456` `2,893,753` `-` `(` `1,751,419` `)` `448,000` `507,285` `75,790` `-` `5,407` `24,316` `$` `12,282,559` `$` `12,998,392` `731,406` `(` `1,117,582` `)` `(` `386,176` `)` `-` `(` `1,608,376` `)` `56,595` `64,358` `-` `2,499` `97` `350,860` `$` `11,478,249`

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 NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense (property, plant and equipment)

Depreciation expense - right-of-use assets

Amortisation

Expected credit impairment (gain) loss

Compensation cost of employee restricted shares

Gain on financial assets or liabilities at fair value through
profit or loss

Losses on disposals of investments

Share of profit of associates and joint ventures accounted for
using equity method

Interest income

Dividend income

Deferred income of government's compensation
Loss on disposal of property, plant and equipment

Finance costs
Interest expense-lease liability

Effect of change in foreign currency exchange
Changes in operating assets and liabilities
Changes in operating assets
Increase in financial assets liabilities mandatorily measured
at fair value through profit or loss

Notes receivable
Accounts receivable (including related parties)
Other receivables (including related parties)
Inventories
Prepayments
Other current assets
Financial assets mandatorily measured at fair value through
profit or loss - non-current
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Contract liabilities
Other current liabilities
Cash (outflow) inflow generated from operations
Interest received
Dividend income
Interest paid
Income taxes paid
Net cash flows (used in) from operating activities Nine months ended September 30
Notes
2020
2019
$
933,407 $
2,707,728
6(9)(28)
246,861
156,760
6(10)(28)
85,289
55,080
6(11)(28)
100,556
99,300
12(2)
(
359 )
18,415
6(19)
64,398
77,322
6(2)
(
3,216 ) (
8,366 )
6(27)
333
-
6(8)
(
184,187 ) (
432,905 )
6(25)
(
32,842 ) (
48,661 )
6(26)
(
12,738 ) (
73,975 )
(
3,946 ) (
549 )
6(27)
954
1,940
39,169
48,283
6(10)
4,720
1,193
(
40,615 ) (
24,975 )
6(33)
(
47,187 ) (
63,807 )
442
904
(
3,597,284 ) (
911,202 )
(
402,741 )
529,537
(
2,071,310 )
810,796
-
53,271
(
338,475 )
23,746
(
3,004 ) (
3,127 )
3,462,019 (
1,376,042 )
(
71,653 ) (
385,658 )
218,681 (
294,612 )
(
67,072 ) (
13,089 )
330,468
80,901
16,799 (
16,020 )
(
1,372,533 )
1,012,188
33,130
47,973
12,738
73,975
(
16,301 ) (
20,700 )
(
118,329 ) (
446,164 )
(
1,461,295 )
667,272

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through other
comprehensive income
Acquisition of financial assets at amortised cost – current
Proceeds from disposal of financial assets at fair value through
other comprehensive income

Acquisition of financial assets at amortised cost – non-current
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets

(Increase) decrease in other non - current financial assets
(Increase) decrease in guarantee deposits paid
Effects of cash changes in consolidated entities
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings

Increase (decrease) in other non-current liabilities

Repayment of principal portion of lease liabilities

Proceeds from long-term borrowings
Repayments of long-term borrowings
Cash dividends paid
Change in non-controlling interests

Cancellation of restricted employee shares
Proceeds from issuance of shares

Net cash flows from (used in) financing activities
Effect of change in foreign currency exchange
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period Nine months ended September 30
Notes
2020
2019
( $
30,000 ) $
-
(
873,000 )
-
6(33)
206,987
65,323
(
3,562 )
-
6(33)
(
1,281,878 ) (
286,496 )
14,669
83,746
6(33)
(
24,893 ) (
46,198 )
(
18,034 )
2,822
(
33,604 )
5,830
- (
4,425 )
(
2,043,315 ) (
179,398 )
6(34)
2,139,932 (
2,231,012 )
6(34)
27,490 (
3,070 )
6(10)(34)
(
160,549 ) (
54,056 )
436,323
-
(
62,000 )
-
(
1,608,376 ) (
1,751,419 )
4(3)
350,860
-
(
40 ) (
1,532 )
6(20)
-
448,000
1,123,640 (
3,593,089 )
(
17,036 ) (
94,468 )
(
2,398,006 ) (
3,199,683 )
6,589,863
8,512,129
$
4,191,857 $
5,312,446

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 NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

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

1. HISTORY AND ORGANISATION

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

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

These consolidated financial statements were reported to the Board of Directors on October 29, 2020.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

(2)

New Standards, Interpretations and Amendments
Effective date by
International Accounting
Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition
of material’
January 1, 2020
Amendments to IFRS 3, ‘Definition of a business’
January 1, 2020
Amendments to IFRS 9, IAS 39 and IFRS 7 ,‘Interest rate
benchmark reform’
January 1, 2020
Amendments to IFRS 16, ‘Covid-19 related rent concessions’
June 1, 2020(Note)
Note: Earlier application from January 1, 2020 is allowed by FSC.
Except for the following, the above standards and interpretations have no significant impact to
the Group’s financial condition and financial performance based on the Group’s assessment.
Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted

by the Group

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

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	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption	January 1, 2021
from applying IFRS 9’

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

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

by the Group

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

IFRSs as endorsed by the FSC are as follows:
	Effective date by
	International Accounting
New Standards,Interpretations and Amendments	Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’	January 1, 2022
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of	To be determined by
assets between an investor and its associate or joint venture’	International
	Accounting Standards
	Board
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17, 'Insurance contracts'	January 1, 2023
Amendments to IAS 1, ‘Classification of liabilities as current or non-current’	January 1, 2023
Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’	January 1, 2022
Amendments to IAS 37, ‘Onerous contracts`-` cost of fulfilling a contract’	January 1, 2022
Annual improvements to IFRS Standards 2018-2020	January 1, 2022
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘ Interest Rate Benchmark Reform— Phase 2’	January 1, 2021

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 adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2019, except for the compliance statement, basis of preparation, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

A. The consolidated financial statements of the Group have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.
B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2019.

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(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(b) Financial assets and liabilities at fair value through other comprehensive income measured at fair value.
(c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the 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.

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(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

Basis for preparation for the current period financial statements and the 2019 consolidated financial statements is the same.

B. Subsidiaries included in the consolidated financial statements:

Name of investor	Name of subsidiary	Main business activities		Ownership(%)	Ownership(%)	September 30,2019	Description
				September 30,2020	December 31,2019
MEHO MEHO MEHO MEHO MEHO MEHO MEHO MEHO MEHO	Merry Electronics (HK) Co., Ltd. ("MEST") Merry Electronics (Thailand) Co.,Ltd. ("METC") Merry Electronics (U.S.A.) Co.,Ltd. ("MECA") Danny Dynamics Limited ("DDBV") Merry Electronics (Singapore) Pte.Ltd. ("MESG") Merry Healthcare Co., Ltd. ("MHKY") Asian Elite International Ltd. ("MSCS") Indigo Enterprise Inc. ("INSA") Biotest Medical Corporation ("BTTT")	Sales of the same products as the Company. The same main business as the Company. Agency selling microphone and security system manufactured by affiliates. Equity investments. Manufacturing of other electronic components and circuit board. Sales of medical device. Manufacturing and sales of speaker and amplifier. Equity investments. Manufacturing of medical device.		100.00% 99.99% 99.90% 100.00% 100.00% 100.00% 70.00% 70.00% 100.00%	100.00% 99.99% 99.90% 100.00% 100.00% 100.00% 70.00% 70.00% 100.00%	100.00% 99.90% 99.90% 100.00% 100.00% 100.00% 70.00% 70.00% 100.00%	NOTE 1 NOTE 1 NOTE 1 NOTE 2 NOTE 1`、4`

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

Ownership(%)
Name of Name of Main business September December September
investor subsidiary activities 30, 2020 31, 2019 30, 2019 Description
----- End of picture text -----

Name of investor	Name of subsidiary	Main business activities	September 30,2020	December 31,2019	September 30,2019	Description
	MERRY &	Manufacturing of
MEHO	LUXSHARE (VIETNAM) CO., LTD. ("MEVN")	speaker system and microphone for consumer	51.00%	-	-	NOTE 7`、`2
		electronics used.
	Merry Electronics	The same main
MEST	(Shenzhen)Co.,	business as the	100.00%	100.00%	100.00%
	Ltd. ("MECL")	Company.
	Universal Capital	Equity investments.
	Investment
DDBV	Limited		100.00%	100.00%	100.00%	NOTE 1
	("UCMU")
	Merrytech (HK)	Equity investments.
DDBV	Co.Limited		100.00%	100.00%	100.00%
	("MTHK")
	Sonavox Canada	Develop-to-order
INSA	Inc.	and appearance	100.00%	100.00%	100.00%
	("SOCV")	design of speaker
		and amplifier.
	Sonavox Canada	Equity investments.
SOCV	Holding.		100.00%	100.00%	100.00%	NOTE 1
	("SOCA")
	Seas Fabrikker	Manufacturing and
SOCA	("SENM")	sales of speaker	100.00%	100.00%	100.00%	NOTE 1
		monomer.
	Fulicare	Sales of medical
MHKY	Co., Ltd. ("FUSA")	device.	97.12%	95.94%	95.72%	NOTE 1`、`5
	Fulicare Medical	Manufacturing of
	Instruments	medical device.
FUSA	(Suzhou)Co.,Ltd		100.00%	100.00%	100.00%	NOTE 1
	("FUSZ")
	Fulicare Medical	Manufacturing of
FUSA	Instruments (Xiamen) Co.,Ltd	medical device.	100.00%	100.00%	100.00%	NOTE 1`、`3
	("FUXM")

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Name of investor	Name of subsidiary	Main business activities	September 30,2020	December 31,2019	September 30,2019	Description
	Xiamen Etimbre	Research and
	Hearing	development,
	Technology	manufacturing as
FUSA	Co.LTD ("ETCX")	well as sales of hearing aid, hearing	100.00%	100.00%	100.00%	NOTE 1`、`6
		device and
		acoustics
		equipment.
	Austar Hearing	Research and
	Science And	development,
	Technology	manufacturing as
FUSZ、 FUSA	(Xiamen) Co., Ltd ("ASCX")	well as sales of hearing aid, hearing	99.50%	99.50%	99.50%	NOTE 1
		device and
		acoustics
		equipment.
	Austar Hearing	Manufacturing of
	Science And	hearing aid and
ASCX	Technology	acoustics for	100.00%	100.00%	100.00%	NOTE 1
	(Zhangzhou) Co.,	rehabilitation
	Ltd.("ASCZ")	device.
	Xiamen Laiyate	Research and
	Medical Devices	development as
ASCX	Co., Ltd ("LACX")	well as technical sales of software	100.00%	100.00%	100.00%	NOTE 1
		functions for
		hearing aid.

Note 1: The financial statements of the entity as of and for the nine months ended September 30, 2020 and 2019 were not reviewed by the independent auditors as the entity did not meet the definition of a significant subsidiary.
Note 2: The financial statements of the entity as of and for the nine months ended September 30, 2020 were not reviewed by the independent auditors as the entity did not meet the definition of a significant subsidiary.
Note 3: The Group established the subsidiary, Fulicare Medical Instruments (Xiamen) Co., Ltd., on June 10, 2019.
Note 4: In July 2019, Biotest Medical Corp. was merged with the Group.
Note 5: In February 2020, March 2020, June 2020 and August 2020, the Group increased its capital in FUSA by cash amounting to USD 76 thousand (NTD 2,238 thousand), USD 4 million (NTD 116,400 thousand), USD 963 thousand (NTD 28,026 thousand) and USD

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3 million (NTD 87,300 thousand), respectively.

Note 6: In October 2019, the Board of Directors of the Group during its meeting resolved to undergo an organisational restructuring. Fulicare CO., Ltd. acquired a 100% equity interest in ETCX from FUCS amounting to RMB 500 thousand (NTD 2,308 thousand). On June 18, 2020, Fulicare CO., Ltd. increased its capital by cash amounting to USD 566 thousand (NTD 16,748 thousand).
Note 7: On February 27, 2020, the Board of Directors of the Group approved to establish a joint venture, MERRY & LUXSHARE (VIETNAM) CO., LTD., with Luxshare-ICT through investments amounting to USD 12,240 thousand (NTD 366,710 thousand) and USD 11,760 thousand (NTD 350,860 thousand), which resulted in acquiring 51% and 49% of the joint venture equity interests, respectively. The joint venture was established on May 9, 2020.
C. Subsidiaries not included in the consolidated financial statements:
None.
D. Adjustments for subsidiaries with different balance sheet dates:
None.
E. Significant restrictions:

None.

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

(4) Financial assets at amortised cost

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

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

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

(6) Employee benefits

Pensions

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed accordingly.

(7) Income tax

The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

There was no significant change in the reporting period. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2019.

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
	September30,2020		December 31, 2019		September 30, 2019
Cash on hand and revolving funds	$	836	$	723	$	556
Checking accounts and demand
deposits		3,726,287		4,445,967		4,212,076
Time deposits		344,734		774,145		419,120
Short-term securities		120,000		1,369,028		680,694
	$	4,191,857	$	6,589,863	$	5,312,446

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Group has no cash and cash equivalents pledged to others.
C. The Group’s time deposits with maturity over 3 months had been classified as current financial assets at amortised cost and non-current financial assets at amortised cost.

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

Items		September30,2020		December31,2019		September30,2019
Current items: Financial assets mandatorily measured at fair value through profit or loss - Funds - Non-hedging derivatives - Stocks - Call options of convertible bonds - Profit instruments Valuation adjustment Non-current items: - Funds Items		50,000 $ 16,316 - 670 - 1,254 68,240 $ 24,305 $ September30,2020		- $ 14,138 169 2,290 - 316 16,913 $ 21,301 $ December31,2019		- $ 14,119 169 3,955 217,500 335 236,078 $ 21,301 $ September30,2019
Current items: Financial liabilities held for trading - Non-hedging derivatives		12,418 $		11,799 $		7,549 $

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

or loss are listed below:
Net gains on financial assets (liabilities) at fair value through profit or loss Net gains on financial assets (liabilities) at fair value through profit or loss	Three months ended September 30,
	2020	2019

	2020	2019
	55,613 $	44,348 $

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

Derivativeinstruments		September 30,2020

Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to buy Forward foreign exchange contract to buy Derivativeinstruments

Forward foreign exchange contract to sell Forward foreign exchange contract to buy Derivativeinstruments
		Contract amount (Notionalprincipal) USD59,800thousand USD 128,800thousand
Forward foreign exchange contract to sell Forward foreign exchange contract to buy

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

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accounted for under hedge accounting.

C. As of September 30, 2020, December 31, 2019 and September 30, 2019, the collectible payments for settled transactions amounted to $325,133 thousand (shown as other receivable), $0 thousand and $1,010 thousand, respectively. As of September 30, 2020, December 31, 2019 and September 30, 2019, the Group had no outstanding payments for settled transactions amounting to $325,438 thousand (shown as other payables), $0 and $0 thousand, respectively.
D. The Group has no financial assets at fair value through profit or loss pledged to others as collateral.
E. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

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

Items	September30,2020	September30,2020	September30,2020	December31,2019	December31,2019	September30,2019	September30,2019
Current items:
Debt instruments
Bonds		$	89,550	$	119,854	$	120,712
Valuation adjustment	(		1,879)		867		4,460
			87,671		120,721		125,172
Equity instruments
Stocks			106,080		76,080		76,080
Valuation adjustment			3,199		5,276		4,712
			109,279		81,356		80,792
		$	196,950	$	202,077	$	205,964
Non-current items:
Equity instruments
Listed stocks		$	748,154	$	775,130	$	748,154
Emerging stocks			-		-		40,106
Unlisted stocks			63,785		64,182		64,636
			811,939		839,312		852,896
Valuation adjustment			571,259		1,697,071		1,566,357
Accumulated impairment	(		2,976)	(	2,976)	(	2,976)
		$	1,380,222	$	2,533,407	$	2,416,277

A. The Group has elected to classify equity and debt investments that are considered to be strategic investments or steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $1,577,172, $2,735,484 and $2,622,241 as at September 30, 2020, December 31, 2019 and September 30, 2019, respectively.
B. During the nine months ended September 30, 2020, the Group repurchased bond investments at fair value of $30,274 thousand due to the maturity of bonds and resulted in cumulative losses on disposal amounting to $333 thousand (shown as other gains and losses). Aiming to satisfy its capital needs, the Company sold $172,377 thousand of equity investments at fair value and resulted in cumulative gains on disposal amounting to $145,400 thousand (transferred from other equity interest to unappropriated retained earnings) during the nine months ended September 30, 2020.

During the nine months ended September 30, 2019, the Group redeemed the debt investment

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at fair value of $50,833 thousand due to the maturity of bonds and resulted in cumulated gain on disposal amounting to $833 thousand (shown as other gains and losses). Aiming to satisfy its capital needs, the Company sold $7,032 thousand of equity investment at fair value and resulted in cumulative losses on disposal amounting to $722 thousand (transferred from other equity interest to unappropriated earnings) during the year ended December 31, 2019.

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

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

Three months ended September 30,
2020 2019
Equity instruments at fair value through other
comprehensive income
Fair value change recognised in other
comprehensive income ($ 173,001) $ 177,628
Cumulative (gains) losses reclassified to
retained earnings due to derecognition ($ 57,822) $ -
Debt instruments at fair value through other
comprehensive income
Fair value change recognised in other
comprehensive income ($ 1,614) ($ 194)
Cumulative other comprehensive (loss)
income reclassified to profit or loss
- -
Reclassified due to derecognition $ $
Interest income recognised in profit or loss $ 274 $ 1,199
Nine months ended September 30,
2020 2019
Equity instruments at fair value through other
comprehensive income
Fair value change recognised in other
($ 980,467) $ 961,022
comprehensive income
Cumulative (gains) losses reclassified to
($ 145,400) $ 722
retained earnings due to derecognition
Debt instruments at fair value through other
comprehensive income
Fair value change recognised in other
comprehensive income ($ 3,079) $ 2,049
Cumulative other comprehensive (loss)
income reclassified to profit or loss
Reclassified due to derecognition $ 333 ($ 833)
Interest income recognised in profit or loss $ 1,733 $ 3,850
----- End of picture text -----

D. As at September 30, 2020, December 31, 2019 and September 30, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Group was $1,577,172 thousand, $2,735,484 thousand and $2,622,241 thousand, respectively.

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E. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.
F. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).
G. The counterparties of the Company’s investments in debt instruments have good credit quality; those debt securities are all rated as investment grade.

(4) Accounts receivable

quality; those debt securities are all rated as investment grade. Accounts receivable
September30,2020 December31,2019 September30,2019 Accounts receivable 9,000,142 $ 5,477,888 $ 9,512,100 $ Less: Allowance for uncollectible accounts 28,857) ( 29,507) ( 26,827) ( 8,971,285 $ 5,448,381 $ 9,485,273 $ A. The aging analysis of accounts receivable is as follows: September30,2020 December31,2019 September30,2019 Not past due 8,945,138 $ 5,425,988 $ 9,349,371 $ Up to 30 days 27,123 11,003 139,524 31 to 90 days 1,902 19,593 1,644 91 to 180 days 1,324 8,674 8,032 Over 180 days 24,655 12,630 13,529 9,000,142 $ 5,477,888 $ 9,512,100 $	September30,2019
	9,485,273 $
		September30,2019
		9,349,371 $ 139,524 1,644 8,032 13,529
		9,512,100 $

The above aging analysis was based on past due date.

B. As of September 30, 2020, December 31, 2019, September 30, 2019, and January 1, 2019, the balances of receivables (including notes receivable) from contracts with customers amounted to $9,000,151 thousand, $5,478,339 thousand, $9,512,100 thousand and $8,584,256 thousand, respectively.
C. The Group does not hold any collateral as security.
D. The Company entered into a factoring agreement which has no right of recourse with Bank of America. As of September 30, 2020, there were no accounts receivable that were expected to be transferred (reclassified as financial assets at fair value through other comprehensive income). Please refer to Note 6(5) for information on transfers of financial assets.
E. Information relating to credit risk of accounts receivable is provided in Note 12(2).
(5) Transfer of financial assets

Transferred financial assets that are derecognised in their entirety

On October 2, 2019, the Group entered into a factoring agreement with Bank of America to sell its accounts receivable. Under the agreement, the Group is not obligated to bear the default risk of the transferred accounts receivable, but is liable for the losses incurred on any business dispute. The Group does not have any continuing involvement in the transferred accounts receivable. Thus, the Group derecognised the transferred accounts receivable. As of September 30, 2020, there was no amount that had been past due.

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(6) Inventories

Inventories
Cost Raw materials 1,404,800 $ Work in progress 1,255,620 Finished goods 1,625,683 4,286,103 $ Cost Raw materials 872,722 $ Work in progress 224,109 Finished goods 1,203,373 2,300,204 $ Cost Raw materials 845,843 $ Work in progress 387,889 Finished goods 1,145,937 2,379,669 $ The cost of inventories recognised as expense for the Cost of goods sold $ Gain on reversal of slow-moving inventories and decline in market value ( Loss on scrapping inventory Gain on physical inventory ( $ Cost of goods sold $ (Gain on reversal of) loss on slow-moving inventories and decline in market value ( Loss on scrapping inventory Loss (gain) on physical inventory $	Cost 1,404,800 $ 1,255,620 1,625,683 4,286,103 $ Cost 872,722 $ 224,109 1,203,373 2,300,204 $			Allowance for valuation loss 62,923) ($ 7,327) ( 55,015) ( 125,265) ($ Allowance for valuation loss 105,167) ($ 6,245) ( 71,260) ( 182,672) ($ September30,2020 December31,2019 September 30, 2019	Bookvalue
					1,341,877 $ 1,248,293 1,570,668
					4,160,838 $ Bookvalue 767,555 $ 217,864 1,132,113
					2,117,532 $

					Book value
					736,323 $ 377,326 1,131,917
					2,245,566 $
				2020
		$ ( ( $
			$

				2020
		$ ( $		18,975,252 57,407) 28,420 343 18,946,608
			$

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The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the three months and nine months ended September 30, 2020 and three months ended September 30, 2019.

(7) Other current assets

The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the three months and nine months ended September 30, 2020 and three months ended September 30, 2019. (7) Other current assets	The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the three months and nine months ended September 30, 2020 and three months ended September 30, 2019. (7) Other current assets	The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the three months and nine months ended September 30, 2020 and three months ended September 30, 2019. (7) Other current assets	The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the three months and nine months ended September 30, 2020 and three months ended September 30, 2019. (7) Other current assets	The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the three months and nine months ended September 30, 2020 and three months ended September 30, 2019. (7) Other current assets
September 30, 2020 December 31, 2019 September30,2019 Tax refund receivable (including input tax) $ 359,651 139,180 $ 146,370 $ Prepayment for purchases 15,589 14,689 19,087 Contract assets 36,437 31,585 - Others 179,517 85,019 66,121 $ 591,194 270,473 $ 231,578 $ (8) Investments accounted for using the equity method A. Details are as follows`：` September30,2020 December31,2019 September30,2019 Associates with significant influence Merry Electronics(Suzhou) Co., Ltd. (MECE) 2,830,435 $ 2,842,636 $ 2,677,480 $ Associates with insignificant influence Merry Electronics (Huizhou)Co., Ltd. 825,501 666,377 642,528 Guangdong Luxshare & Merry Electronics Co., Ltd. (MEDG) 367,861 376,606 372,417 Leohab Enterprise Co., Ltd. (LEOHAB) 80,530 66,395 71,451 Merry Electronics (Shanghai)Co., Ltd. (MECS) 1,062) ( 862) ( 751 Subtotal 4,103,265 3,951,152 3,764,627 Add: Credit balance of investments accounted for using the equity ethod transferred to non-current liabilities 1,062 - - 4,104,327 $ 3,951,152 $ 3,764,627 $
	A. Details are as follows`：` Associates with significant influence Merry Electronics(Suzhou) Co., Ltd. (MECE) Associates with insignificant influence Merry Electronics (Huizhou)Co., Ltd. Guangdong Luxshare & Merry Electronics Co., Ltd. (MEDG) Leohab Enterprise Co., Ltd. (LEOHAB) Merry Electronics (Shanghai)Co., Ltd. (MECS) Subtotal Add: Credit balance of investments accounted for using the equity ethod transferred to non-current liabilities
		2,830,435 $ 825,501 367,861 80,530 1,062) ( 4,103,265 1,062 4,104,327 $	2,842,636 $ 666,377 376,606 66,395 862) ( 3,951,152 - 3,951,152 $	2,677,480 $ 642,528 372,417 71,451 751 3,764,627 -
				3,764,627 $

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

Three months ended September 30,

			Three months en	d	ed	September 30,
Investee			2020			2019
MECE	($		23,285)		$	171,887
MECH			87,282			40,013
MEDG	(		11)			4,000
LEOHAB			3,303			1,195
MECS			-	(		8)
		$	67,289		$	217,087
			Nine months ended			September 30,
Investee			2020			2019
MECE		$	13,155		$	326,963
MECH			164,668			135,762
MEDG	(		7,062)	(		33,565)
LEOHAB			13,639			4,076
MECS	(		213)	(		331)
		$	184,187		$	432,905

C. Associates

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

Principal Company place of September December September Nature of Methods of name business 30, 2020 31, 2019 30, 2019 relationship measurement MECE Mainland 49.00% 49.00% 49.00% Holding more Equity method China than 20% of voting right of stockholders

(Remainder of page intentionally left blank)

~26~

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

Balance sheet

follows: Balance sheet
			MERRY ELECTRONICS (SUZHOU) CO.,LTD.
		September30,2020 December31,2019			September30,2019
Current assets		$	3,648,938 $	4,547,442		$	4,435,725
Non-current assets			6,443,503	6,646,976			6,985,858
Current liabilities	(		4,036,518) (	5,034,091)	(		4,567,085)
Non-current liabilities	(		67,787) (	225,852)	(		1,185,846)
Total net assets		$	5,988,136 $	5,934,475		$	5,668,652
Share in associate`'`s net assets		$	2,934,187 $	2,907,893		$	2,777,640
Realised (unrealised) loss
from upstream and
sidestream transactions	(		103,752) (	65,257)	(		100,160)
Carrying amount of the
associate		$	2,830,435 $	2,842,636		$	2,677,480
Statement of comprehensive income
			MERRY ELECTRONICS	(SUZHOU)	CO., LTD.
			Three months ended September			30,
			2020	2019
Revenue	$		2,680,567	$			3,902,754
Profit for the period
from continuing operations	$		32,717	$			421,406
Total comprehensive income	$		32,717	$			421,406
			MERRY ELECTRONICS	(SUZHOU)	CO.,LTD.
			Nine months ended September		30,
			2020	2019
Revenue	$		6,860,327	$			7,940,405
Profit for the period from
continuing operations	$		105,408	$			699,668
Total comprehensive income	$		105,408	$			699,668

~27~

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

Three months ended September 30,

			Three months en	d	ed	September 30,
			2020			2019
Share of profit of associates and joint
ventures accounted for using the
equity method	$		90,574	$		45,200
Other comprehensive income (loss),
net of tax			16,973	(		39,530)
Total comprehensive income		$	107,547		$	5,670
			Nine months ended			September 30,
			2020			2019
Share of profit of associates and joint
ventures accounted for using the		$	171,032		$	105,942
equity method
Other comprehensive loss,
net of tax	(		6,451)	(		24,913)
Total comprehensive income		$	164,581		$	81,029

Note: Partial investments accounted for using the equity method are share of profit (loss) of associates and joint ventures recognised based on unaudited (unreviewed) financial statements prepared by associates.

(Remainder of page intentionally left blank)

~28~

(9) Property, plant and equipment

Nine months ended September 30, 2020

Cost
Openingbalance
Additions
Reductions
Transfers
Land
596,275
$ -
$ -
$ -
$ Land improvements
656
-
-
-
Buildings and
structures
1,016,760
59,344
3,438)
(
51,400)
(
Machinery
1,472,017
525,377
26,960)
(
1,917
Transportation
equipment
30,774
358
1,006)
(
-
Office equipment
242,600
43,915
8,935)
(
555)
(
Others
136,073
92,247
6,222)
(
1,733)
(
Unfinished construction
132,528
503,425
-
83,174)
(
3,627,683
1,224,666
$ 46,561)
($ 134,945)
($ Accumulated depreciation
Land improvements
580)
($ 72)
($ -
$ -
$ Buildings and
structures
439,193)
(
70,950)
(
3,438
51,400
Machinery
636,595)
(
137,028)
(
17,993
90)
(
Transportation
equipment
17,024)
(
3,085)
(
972
-
Office equipment
161,280)
(
19,216)
(
6,665
252
Others
87,918)
(
16,510)
(
1,870
435
1,342,590)
(
246,861)
($ 30,938
$ 51,997
$ 2,285,093
$

Effect of foreign
currency
exchange differences
Endingbalance
3,168)
($ 593,107
$ 55)
(
601
27,287)
(
993,979
30,822)
(
1,941,529
340)
(
29,786
3,794)
(
273,231
2,339)
(
218,026
5,862)
(
546,917
73,667)
($ 4,597,176
51
$ 601)
($ 6,644
448,661)
(
10,782
744,938)
(
200
18,937)
(
2,261
171,318)
(
1,439
100,684)
(
21,377
$ 1,485,139)
(
3,112,037
$

~29~

Nine months ended September 30, 2019

Cost Openingbalance Additions Land 594,180 $ - $ Land improvements 619 - Buildings and structures 1,011,569 64,366 Machinery 1,207,962 160,194 Transportation equipment 32,873 1,500 Office equipment 225,472 10,979 Others 126,302 8,484 Unfinished construction 3,578 23,378 3,202,555 268,901 $ Accumulated depreciation Land improvements 423) ($ 98) ($ Buildings and structures 397,541) ( 25,489) ( Machinery 562,733) ( 102,046) ( Transportation equipment 16,165) ( 3,200) ( Office equipment 147,023) ( 17,019) ( Others 90,479) ( 8,908) ( 1,214,364) ( 156,760) ($ 1,988,191 $	Reductions Transfers - $ - $ - - 91,879) ( 39,440 35,763) ( - 928) ( - 2,585) ( 86) ( 2,448) ( - - 1,094) ( 133,603) ($ 38,260 $ - $ - $ 16,442 33,361) ( 26,787 - 928 - 2,247 4 1,513 - 47,917 $ 33,357) ($	Effect of foreign currency exchange differences Endingbalance 2,491 $ 596,671 $ 44 663 2,355 1,025,851 18,780) ( 1,313,613 608) ( 32,837 2,369) ( 231,411 2,296) ( 130,042 407) ( 25,455 19,570) ($ 3,356,543 32) ($ 553) ($ 7,132 432,817) ( 9,955 628,037) ( 360 18,077) ( 1,790 160,001) ( 1,973 95,901) ( 21,178 $ 1,335,386) ( 2,021,157 $

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

~30~

`－` (10) Leasing arrangements lessee

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

September 30, 2020 December 31, 2019 September 30, 2019

	September 30,2020	September 30,2020		December 31,2019	December 31,2019	September 30,2019
Land Buildings Machinery and equipment Transportation equipment (Business vehicles) Office equipment Other equipment Land Buildings Machinery and equipment Transportation equipment (Business vehicles) Office equipment Other equipment Land Buildings Machinery and equipment Transportation equipment (Business vehicles) Office equipment Other equipment	Carrying amount			Carrying amount		Carrying amount


			2020		2019 Depreciationcharge
		Depreciationcharge

		2020			2019 Depreciation charge
		Depreciation charge
		2,886 $ 80,115 1,036 1,121 131 - 85,289 $			2,582 $ 47,080 3,288 1,593 130 407 55,080 $

C. For the three months and nine months ended September 30, 2020 and 2019, the additions to right-of-use assets were $242,626 thousand, $12,280 thousand, $327,235 thousand and $29,765 thousand, respectively.

~31~

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

==> picture [429 x 141] intentionally omitted <==

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

Three months ended September 30,
2020 2019
Items affecting profit or loss
Interest expense on lease liabilities $ 3,199 $ 460
Nine months ended September 30,
2020 2019
Items affecting profit or loss
$ 4,720 $ 1,193
Interest expense on lease liabilities
----- End of picture text -----

E. For the nine months ended September 30, 2020 and 2019, the Group’s total cash outflow for leases were $160,549 thousand and $54,056 thousand, respectively.

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~32~

(11) Intangible assets

Nine months ended September 30, 2020

Cost
Openingbalance
Additions
Reductions
Goodwill
937,379
$ -
$ -
$ Computer software
457,428
23,439
860)
(
Customer relationship
326,550

-
-
Trademarks
61,481

-
-
Know-how
115,748

-
-
Others
37,295
2,894
-
Subtotal
1,935,881

26,333
$ 860)
($ Accumulated amortisation
Computer software
304,302)
($ 40,094)
($ 36
$ Customer relationship
65,679)
(
33,048)
(
-
Trademarks
7,598)
(
4,139)
(
-
Know-how
34,671)
(
17,362)
(
-
Others
20,855)
(
5,913)
(
-
Subtotal
433,105)
(
100,556)
($ 36
$ Total
1,502,776
$

Effect of foreign currency
exchange differences
Endingbalance
-
$ 937,379
$ 766)
(
479,241
-
326,550
-
61,481
-
115,748
173)
(
40,016
939)
($ 1,960,415
663
$ 343,697)
($ 304

98,423)
(
250)
(
11,987)
(
54)
(
52,087)
(
25

26,743)
(
688
$ 532,937)
(
1,427,478
$

~33~

Nine months ended September 30, 2019

		Nine months endedSeptember30,2019
Cost Openingbalance Goodwill 931,678 $ Patents 7,027 Computer software 149,690 Customer relationship 326,550 Trademarks 61,481 Know-how 115,748 Subtotal 1,592,174 Accumulated amortisation Patents 100) ($ Computer software 4,160) ( Customer relationship 21,582) ( Trademarks 2,298) ( Know-how 11,792) ( Subtotal 39,932) ( Total 1,552,242 $		First-time merger effects Additions Transfers 14,901 $ - $ - $ - 2,946 17,201 - 14,862 247,450 - - - - - - - - - 14,901 $ 17,808 $ 264,651 $ - $ 2,726) ($ 17,201) ($ - 42,026) ( 247,450) ( - $ 33,048) ( - - $ 4,139) ( - - 17,361) ( - - $ 99,300) ($ 264,651) ($	Effect of foreign currency exchange differences Endingbalance - $ 946,579 $ 120 27,294 137) ( 411,865 - 326,550 - 61,481 - 115,748 17) ($ 1,889,517 5) ($ 20,032) ($ 154) ( 293,790) ( 518 54,112) ( 111 6,326) ( 220 28,933) ( 690 $ 403,193) ( 1,486,324 $

~34~

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

Operating costs Selling expenses Administrative expenses Research and development expenses Operating costs Selling expenses Administrative expenses Research and development expenses		2020 2019 $ 3,702 $ 3,269 2,686 3,331 15,761 16,571 10,604 9,833 $ 32,753 $ 33,004 2020 2019 $ 11,700 $ 9,849 9,244 10,541 47,133 50,026 32,479 28,884 $100,556 $ 99,300 Three months ended September 30, Nine months ended September 30,

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

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

The cash flow projections are based on financial budgets approved by the management covering a five-year period, the Company estimates a 10% year-on-year growth in sales as the Company will launch new products and improve its technology from 2020 to 2024, the estimation is based on the assumption that the Company is committed to developing and taking bluetooth orders and the experience of sale growths of 5%, 94%, 84%, 34% and (3%) from 2015 to 2019, respectively.

Management determined budgeted gross margin based on past performance and their expectations of market development. The weighted average growth rates used are consistent with the projection included in industry reports. The discount rate of 16.03% used was pre-tax and reflected specific risks relating to the relevant operating segments.

C. As of September 30, 2020, the goodwill arose from acquiring Asian Elite International Ltd. and Indigo Enterprise Inc. amounting to $581,644 thousand due to the benefits from production technology and market channel such as smart speakers of the companies that are expected to be merged. The goodwill from business combination shall be tested annually at least for impairment in accordance with IAS 36.

~35~

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 projection included in industry reports. The discount rate of 14.06% used was pre-tax and reflected specific risks relating to the relevant operating segments.

D. As of September 30, 2020, the goodwill arose from acquiring Austar Hearing Science and Technology （ Xiamen) Co. , Ltd. amounting to $210,299 thousand due to the benefits from production technology and market channel such as smart speakers of the company that are expected to be merged. The goodwill from business combination shall be tested for impairment at least annually in accordance with IAS 36.

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking smart speaker orders, it expects 28%, 18%, 13%, 13% and 13% year-on-year growth in sales from 2020 to 2024 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 13.68% used was pre-tax and reflected specific risks relating to the relevant operating segments.

E. As of September 30, 2020, the Group merged with Biotest Medical Corp. and generated goodwill in the amount of $5,701 thousand. Because the merged company has many certificates in manufacturing of medical instruments, the Group expects that the acquisition will expand the market of health care personal sound amplification products. The goodwill from business combination shall be tested for impairment at least annually in accordance with IAS 36.

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

The cash flow projections are based on financial budgets approved by the management covering a five-year period. As the Company is committed to developing and taking hearing aids product orders, it expects 0%, 0%, 88%, 41% and 2% year-on-year growth in sales from 2020 to 2024

~36~

through the launching of new products and improving its technologies during this period.

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 used of 3.12% was pre-tax and reflected specific risks relating to the relevant operating segments.

(12) Other non-current assets

September 30, 2020 December 31, 2019 September 30, 2019

Prepayments for property, plant and equipment (including intangible asset) Refundable deposits Others	323,750 $ 51,181 28,831 403,762 $	72,863 $ 17,577 10,816 101,256 $	108,566 $ 21,490 5,083
			135,139 $

(13) Short-term borrowings

Type ofborrowings Bank borrowings Credit loan Type ofborrowings Bank borrowings Credit loan Type of borrowings Bank borrowings Credit loan	September30,2020 2,606,664 $ December 31, 2019 470,890 $ September30,2019 2,509,544 $	Interestraterange 0%`～`4.57% Interestraterange 2.14%`～`4.79% Interest rate range 0.64%`～`2.85%	Collateral
			None Collateral
			None Collateral
			None

A. Interest expense recognised in profit or loss amounted to $3,703 thousand, $4,398 thousand, $16,410 thousand and $19,800 thousand for the three months and nine months ended September 30, 2020 and 2019, respectively.
B. The Group provided endorsements and guarantees for the credit loans as of September 30, 2020.

(Remainder of page intentionally left blank)

~37~

(14) Other payables

Other payables
Payroll payable Other accrued expenses Other payables-financial liabilities Payables on equipment (Including intangible assets) Employee bonus payable Others Compensation due to directors and supervisors	September30,2020 427,075 $ 376,573 325,438 190,125 168,059 113,886 20,178 1,621,334 $	December31,2019 308,353 $ 183,922 - 77,958 219,531 114,870 68,392 973,026 $	September30,2019
			299,794 $ 161,306 - 38,120 242,467 127,640 56,654
			925,981 $

(15) Other current liabilities

Other current liabilities
Contract liability Agreed liabilities on acquisition of subsidiaries (Note) Current lease liability Other current liabilities, others	September30,2020 668,882 $ 402,072 148,210 64,591 1,283,755 $	December31,2019 338,414 $ - 30,119 49,431 417,964 $	September30,2019
			224,064 $ - 26,062 61,895
			312,021 $

Note: On July 1, 2018, the Group agreed to pay contract liabilities 3 years after the date of settlement. In accordance with the relevant contracts, the Group had recognised 30% of subsequent equity investment obligations.

(16) Bonds payable

September 30, 2020 Bonds payable 2,231,900 $ Less: Discount on bonds payable 35,793) ( 2,196,107 $	December31,2019 September30,2019 2,289,500 $ 2,472,600 $ 59,541) ( 72,500) ( 2,229,959 $ 2,400,100 $

A. The details of the second domestic unsecured convertible bonds issued by the Company on December 11, 2018 are as follows:
(a) The terms of the second domestic unsecured convertible bonds issued by the Company are as follows:
- i. The competent authority has approved the Company’s second issuance of domestic unsecured corporate bonds. 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.

~38~

ii. The creditors have the right to ask for conversion of the bonds into common shares of the Company by Taiwan Depository & Clearing Corporation through Securities Firms during the period from the date after three months of the bonds issue to the maturity date, except for (i) the stop transfer period for common shares as specified in the terms of the bonds or the laws/regulations; (ii) the Company’s book closure date of stock dividends, book closure date of cash dividends, the period between the date that is 15 business days before the book closure date of a capital increase to the ex-right date; (iii) the period between the record date of a capital reduction and the prior day before the commencement of share trading after shares are repurchased. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.
iii. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms. As of September 30, 2020, the conversion price of convertible bonds was $132.8 per share.
iv. The Company may repurchase all the bonds outstanding in cash at the bonds’ face value, based on the Company’s redemption rights to the bonds under Article 18 of the terms of issuance and conversion, after the following events occur: (i) the closing price of the Company common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after three month of the bonds issue to 40 days before the maturity date, or (ii) the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after three months of the bonds issue to 40 days before the maturity date.
v. Under the terms of issuance and conversion, all bonds redeemed (including bonds repurchased from the securities trading markets), matured and converted are retired and not to be sold or re-issued; the conversion rights attached to the bonds are also extinguished.
(b) As of September 30, 2020, the bonds totalling $768,100 thousand (face value) had been converted into 5,299 thousand shares of common stock. After the issuance of the convertible bonds, if the number of common shares increases, the Company shall adjust the conversion price to $132.8 per share in line with the formula of the issuance article.
B. Regarding the issuance of convertible bonds, the equity conversion options amounting to $99,191 thousand were separated from the liability component and were recognised in ‘capital surplus - share options’ in accordance with IAS 32. The call options embedded in bonds payable were separated from their host contracts and were recognised in ‘financial assets at fair value through profit or loss’ in net amount in accordance with IFRS 9 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts.

~39~

- (17) Long term borrowings

Type of Borrowing period borrowings and repayment term Interest rate range Collateral September 30, 2020 Long-term bank borrowings Unsecured Borrowing period is from borrowings 2020/2/20 to 2027/2/19; interest is repayable 0.30%~1.00% None $ 436,142 monthly; principal is repayable starting from 2023. Type of Borrowing period borrowings and repayment term Interest rate range Collateral December 31, 2019 Long-term bank borrowings Secured Borrowing period is from borrowings 2019/12/30 to 2024/12/15; interest is repayable Promissory 0.63% $ 62,000 monthly; principal is Note repayable in 36 installments from 2022/1/15.

September 30, 2019: None.

A. In November 2019, the Company entered into a long-term loan contract with Taipei Fubon Bank for the total amount of $400 million. As of September 30, 2020, the drawn amount was $125,000 thousand.

Aforementioned contract conditions:

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

audited/reviewed financial statements shall be checked semi-annually:
(a) Current ratio shall not be lower than 100%;
(b) Debt ratio shall not be higher than 160%;
(c) Interest coverage ratio shall not be lower than 10.
B. In February 2020, the Company entered into a long-term loan contract with JIHSUN BANK for the total amount of $300 million. As of September 30, 2020, the drawn amount was $100,000 thousand.

Aforementioned contract conditions:

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

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

~40~

(a) Current ratio shall not be lower than 100%;
(b) Debt ratio shall not be higher than 250%;
(c) Tangible assets shall be maintained at least $8 billion.

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

(18) Pensions

A. (a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 5.1% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions for the deficit by next March.
(b) The pension costs under defined contribution pension plans of the Group for the three months and nine months ended September 30, 2020 and 2019 were $290 thousand, $277 thousand, $870 thousand and $832 thousand, respectively.
(c) The Company expects to pay contribution for pension plan amounting to $5,049 thousand in 2021.
B. (a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) The subsidiaries, MECL, MSCS, ASCX, ETCX, ASCZ, LACX, FUXM and FUSZ, in mainland China have set up a defined contribution plan. Monthly contribution to an

~41~

independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.

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

  - (d) The pension costs under defined contribution pension plans of the Group for the three months and nine months ended September 30, 2020 and 2019 were $28,626 thousand, $33,582 thousand, $66,723 thousand and $99,536 thousand, respectively.

(19) Share-based payment
A. For the nine months ended September 30, 2020 and 2019, the Group’s share-based payment arrangements were as follows:

arrangements were as follows:
Type ofarrangement	Grant date	Quantity granted	Contract period	Vesting conditions
Restricted stocks to employees Restricted stocks to employees Restricted stocks to employees Restricted stocks to employees Restricted stocks to empolyee Restricted stocks to empolyee	2016.12.21 2017.06.16 2017.12.29 2018.10.26 2019.11.02 2020.08.05	1,542 units 458 units 196 units 878 units 813 units 387 units	3 years 3 years 3 years 3 years 3 years 3 years	Note Note Note Note Note Note

Note: Depending on the 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%.

~42~

(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 first restricted stocks to employees in 2016

At January 1 Restricted stocks vested Employee restricted shares retired At September 30	No. of share (inthousands) Weighted- average exercise price (indollars) No. of share (in thousands) Weighted- average exercise price (in dollars) - $ - 542 $ 10 - - ( 4) 10 - - ( 20) 10 - - 518 10 2020 2019
	No. of share (inthousands)
	- - -
	-

(b) The second restricted stocks to employees in 2016

At January 1 Restricted stocks vested Employee restricted shares retired At September 30	Weighted- average exercise price Weighted- average exercise price (indollars) (indollars) 160 10 $ 294 10 $ ( 146) 10 - - ( 4) 10 ( 134) 10 10 10 160 10 2020 2019 No. of share (in thousands) No. of share (in thousands)
	No. of share (in thousands)
	160 ( 146) ( 4) 10

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(c) The first restricted stocks to employees in 2017

	2020	2020	2019	2019
		Weighted-			Weighted-
		average			average
	No. of share	exercise price No. of share		exercise price
	(in thousands)	(in dollars) (in thousands)			(indollars)
At January 1	108	$ -	164	$	-
Restricted stocks vested	-	- (	49)		-
Employee restricted
shares retired	( 50)	- (	5)		-
At September 30	58	-	110		-

(d) The second restricted stocks to employees in 2017

At January 1 Restricted stocks vested Employee restricted shares retired At September 30	Weighted- average exercise price Weighted- average exercise price (indollars) (in dollars) 598 $ - 862 $ - ( 5) - - - ( 46) - (9) - 547 - 853 - 2020 2019 No. of share (in thousands) No. of share (in thousands)
	No. of share (in thousands)
	598 ( 5) ( 46) 547

(e) The first restricted stocks to employees in 2019

2020	2020	2019
No. of share (in thousands)	Weighted- average exercise price (indollars)	Weighted- average exercise price (indollars) - $ - - - - - - - No. of share (in thousands)
813 - ( 17) 796	$ - - - -

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(f) The second restricted stocks to employees in 2019

2020	2020	No. of share (in thousands) Weighted- average exercise price (in dollars) - - $ - - - - - - 2019	No. of share (in thousands) Weighted- average exercise price (in dollars) - - $ - - - - - - 2019
No. of share (in thousands)	Weighted- average exercise price (in dollars)	No. of share (in thousands)
- 387 -	- $ - - -	- - -	- $ - - -
387		-

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

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

Equity-settled Equity-settled		Three months ended September 30,	Three months ended September 30,
		2020 2019 24,416 $ 29,621 $ Nine months ended September 30,

		2020 64,398 $	2019 77,322 $

(20) Share capital

A. As of September 30, 2020, the Company’s authorised capital was $4,000,000 thousand, consisting of 400,000 thousand shares of ordinary stock (including 5,000 thousand shares

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reserved for employee stock options), and the paid-in capital was $2,089,384 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):
	Ninemonths ended September30,
	2020	2019
At January 1	$ 208,668	$ 199,663
Employee restricted shares retired	( 117)	(	168)
Employee restricted shares granted	387		-
Conversion of convertible bonds	414		3,571
Issuance of common stock for cash	-		4,000
At September 30	$209,352	$ 207,066

(a) The Company retired 642,100 employee restricted shares as resolved at the meeting of the Board of Directors on February 27, 2020 and July 30, 2020 with the capital reduction effective date set on February 29, 2020 and August 4, 2020. The capital reduction through retirement of employee restricted shares was completed.
(b) On April 25, 2019 and July 26, 2019, the Board of Directors of the Company resolved to retire employee restricted share of 164,300 shares. The effective dates for the capital reduction were April 30, 2019 and July 31, 2019. The capital reduction through retirement of employee restricted shares was completed.
(c) On December 11, 2018, the Company issued the 2[nd] unsecured convertible bonds. As of September 30, 2020, the face value of those convertible bonds amounted to $768,100 thousand, which had been converted into 5,299 thousand common shares. Please refer to Note 6(16) for further information.
(d) In 2019, the Company increased its capital in cash amounting to $448,000 thousand equivalent to 4 million shares with an issuance price at $112 per share and premium at $411,993 thousand. The effective date for the capital increase was set on January 18, 2019. The registration of the capital increase was completed on February 13, 2019.
(e) On April 25, 2019, the Board of Directors of the Company resolved to issue employee restricted shares (please refer to Note 6(19)). The issuance was approved by the Competent Authority on September 16, 2019. The Company issued 1,200 thousand common shares with the effective date set on November 2, 2019 and August 5, 2020. The subscription price is $0 per share and the registration was completed on November 29, 2019 and August 27, 2020. 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.

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(21) Capital surplus

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

			2020	2020
Share premium	Share option		Employee restricted stocks		Others	Total
$ 3,501,426 - 29,804 - 55,019 - -	$101,750 - - - ( 2,559) - -		$ 236,457 61,533 ( 26,540) ( 18,259) - - -		$ 30,472 - ( 3,264) - - 2,499 97 $29,804	3,870,105 $ 61,533 - ( 18,259) 52,460 2,499 97 $ 3,968,435
$ 3,586,249		$ 99,191		$253,191

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			2019	2019		Total
Share premium	Share option		Employee restricted stocks		Others
$ 2,376,147 10,052 - 495,016 411,993 -	$137,319 - - ( 23,438) ( 3,993) -		$ 256,324 ( 10,052) ( 27,971) - - -		$ 19,321 - - - - 5,407 $24,728	2,789,111 $ - ( 27,971) 471,578 408,000 5,407 $ 3,646,125
$ 3,293,208		$109,888		$218,301

(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. After the provision or reversal of special reserve, the appropriation of the remaining earnings along with the unappropriated earnings of prior years shall be proposed by the Board of Directors and approved by the shareholders. According to the dividend policy adopted by the Board of Directors, 30% to 80% of the Company’s accumulated distributable earnings shall be appropriated as dividends, and cash dividends shall account for at least 5% of the total dividends distributed.
B. The Company’s dividend policy is summarised below: as the Company operates in a volatile business environment and is in the stable growth stage, the residual dividend policy is adopted taking into consideration the Company’s financial structure, operating results and future expansion plans. In order to encourage employees and operation team, if the Company has any profit for the current year, the Company shall set aside 5% to 10% as employees’ compensation and no more than 2% as directors’ and supervisors’ remuneration.The employees’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.

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C. The Board of Directors may fully or partially appropriate dividends and bonuses in the form of cash by a resolution adopted by the majority vote at its meeting attended by two-thirds of the total number of directors, and then reported to the shareholders. Situations other than that shall be approved by the shareholders at their meeting.
D. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.
E. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
(b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land. As of September 30, 2020, the balance of capital surplus as aforementioned was $269,144 thousand.
F. The Company distributed cash dividends amounting to $7.7 and $8.6 (in dollars) per share, respectively, as resolved at the meeting of Board of Directors on June 19, 2020 and June 19, 2019. The abovementioned distribution of earnings for the years ended December 31, 2019 and 2018 was in agreement with those amounts proposed by the Board of Directors on February 27, 2020 and February 26, 2019.

(Remainder of page intentionally left blank)

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(23) Other equity items

Other equity items
2020	Exchange differences on translation of foreign financial statements	Unrealised gain (loss) from investments in debt instruments measured at fair value through other comprehensive income	Unrealised gain (loss) from investments in equity instruments measured at fair value through other comprehensive income		Cost of unearned employee compensation Total ($ 204,926) $ 1,027,834 ( 65,403) ( 65,403) 64,398 64,398 19,389 19,389 - ( 983,546) - 931 - 333 - ( 145,400) - ( 122,657) - 24,530 - ( 36,909) - 6,808 ($186,542) ($209,692)
At January 1 Issuance of restricted shares to employees Amortisation of employee restricted stocks Employee restricted shares retired Revaluation - gross Revaluation - tax Revaluation transferred to profit or loss - gross Revaluation transferred to retained earnings - gross Currency translation differences: - Group - Tax on Group - Associates - Tax on associates At September 30	($ 456,833) - - - - - - - ( 122,657) 24,530 ( 36,909) 6,808 ($ 585,061)	$ 867 - - - ( 3,079) - 333 - - - - -	$ 1,688,726 - - - ( 980,467) 931 - ( 145,400) - - - -
		($1,879)		$ 563,790

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2019	Exchange differences on translation of foreign financial statements	Unrealised gain (loss) from investments in debt instruments measured at fair value through other comprehensive income	Unrealised gain (loss) from investments in debt instruments measured at fair value through other comprehensive income	Unrealised gain (loss) from investments in equity instruments measured at fair value through other comprehensive income	Unrealised gain (loss) from investments in equity instruments measured at fair value through other comprehensive income	Cost of unearned employee compensation Total ($ 223,900) $ 147,032 77,322 77,322 28,110 28,110 - 963,071 - ( 16,627) - ( 833) - 722 - ( 51,515) - 10,303 - ( 106,293) - 22,818 ($118,468) $1,074,110	Total
At January 1 Amortisation of employee restricted stocks Employee restricted shares retired Revaluation - gross Revaluation - tax Revaluation transferred to profit or loss - gross Revaluation transferred to retained earnings - gross Currency translation differences: - Group - Tax on Group - Associates - Tax on associates At September 30	($ 242,186) - - - - - - ( 51,515) 10,303 ( 106,293) 22,818 ($ 366,873)	$ 3,244 - - 2,049 - ( 833) - - - - -		$ 609,874 - - 961,022 ( 16,627) - 722 - - - -
			$4,460		$1,554,991		$1,074,110

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(24) Operating revenue

Revenue from contracts with customers Revenue from contracts with customers	2020 2019 10,136,154 $ 10,101,028 $ 2020 2019 21,758,018 $ 27,796,551 $ Three months ended September 30, Nine months ended September 30,

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:

Three months ended September 30, 2020

Total segment revenue Revenue from internal segment transactions Revenue from external customer contracts Main Region Europe US Mainland China Taiwan Others			Electronic	devices	devices
Total segment revenue Revenue from internal segment transactions Revenue from external customer contracts Main Region Europe US Mainland China Taiwan Others			Electronic	devices
	Taiwan Shenzhen Singapore 17,042,996 $ 7,835,139 $ 3,624,433 $ 5,398) ( 7,490,576) ( 27,123) ( 17,037,598 344,563 3,597,310 7,700,195 85,496 2,664,366 8,172,590 650 772,975 314,239 247,554 - 642,244 2,544 - 208,330 8,319 159,969 17,037,598 $ 344,563 $ 3,597,310 $

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Three months ended September 30, 2019

						Electronic	Electronic	devices	devices
			Taiwan		Shenzhen			Singapore			Others			Total
Total segment revenue		$	8,843,983	$	4,017,433		$		924,951	$	456,985		$	14,243,352
Revenue from internal
segment transactions	(		21,456)	(	3,949,240)		(		4,651)	(	166,977)	(		4,142,324)
Revenue from external
customer contracts			8,822,527			68,193			920,300		290,008			10,101,028
Main Region
Europe			3,170,461			34,158			827,979		24,870			4,057,468
US			5,233,621	(		10)			85,673		174,429			5,493,713
Mainland China	(		73,688)			32,048			-		90,063			48,423
Taiwan			76,363			1,058			-		487			77,908
Others			415,770			939			6,648		159			423,516
		$	8,822,527	$		68,193	$		920,300	$	290,008		$	10,101,028
			Ninemonths ended September30,2019
						Electronic		devices
			Taiwan		Shenzhen			Singapore			Others			Total
Total segment revenue		$	23,158,631	$	12,870,577		$		3,529,709	$	1,280,164		$	40,839,081
Revenue from internal
segment transactions	(		43,563)	(	12,599,251)		(		18,731)	(	380,985)	(		13,042,530)
Revenue from external
customer contracts			23,115,068			271,326			3,510,978		899,179			27,796,551
Main Region
Europe			8,963,785			101,556			3,205,427		62,064			12,332,832
US			11,758,160			1,091			264,400		469,133			12,492,784
Mainland China			1,248,029			150,963			-		367,336			1,766,328
Taiwan			316,764			13,558			-		487			330,809
Others			828,330			4,158			41,151		159			873,798
		$	23,115,068	$		271,326	$		3,510,978	$	899,179		$	27,796,551
. Contract assets and liabilities`：`
(a) The Group has recognised the following revenue-related contract assets (shown in other
current assets) and	liabilities (shown				in	other current			liabilities):
	September30,			2020		December		31,2019 September30,2019					January1,2019
Contract assets		36,437 $				$		31,585 $			-			- $
Contract liabilities		668,882 $				$	338,414 $				224,064			143,163 $

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

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

the period`：`
Revenue recognised that was included in the contract liability balance at the beginning of the period Revenue recognised that was included in the contract liability balance at the beginning of the period Interest income Interest income from bank deposits Interest income from financial assets at fair value through other comprehensive income Interest income from bank deposits Interest income from financial assets at fair value through other comprehensive income Other income Rent income Dividend income Government grants Other income	2020 2019 5,974 $ 12,415 $ 2020 2019 173,689 $ 141,202 $ Threemonths ended September30, Ninemonths ended September30, 2020 2019 6,186 $ 14,810 $ 274 1,199 6,460 $ 16,009 $ Threemonths ended September30, Nine months ended September 30,
	2020	2019 48,661 $ 3,850 52,511 $ 2019 2,142 $ 73,757 28,432 6,852 111,183 $ September 30,
	31,109 $ 1,733
	32,842 $
	Three months ended

(25) Interest income

(26) Other income

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Rent income $ Dividend income Government grants Other income $ Other gains and losses Losses on disposals of property, plant and equipment Foreign exchange (loss) gain Gains on financial assets / liabilities at fair value through profit or loss Other gains and losses Losses on disposals of property, plant and equipment (Loss) gain on disposals of investments Foreign exchange (loss) gain Gains on financial assets / liabilities at fair value through profit or loss Other gains and losses Expenses by nature Employee benefit expense Depreciation charge - property, plant and equipment Depreciation charge - right-of-use assets Amortisation charge	2020 2019 5,660 6,137 $ 12,738 73,975 117,927 87,077 45,900 29,426 182,225 196,615 $ Ninemonths ended September30, 2020 2019 365) ($ 717) ($ 77,995) ( 79,176 24,720 30,310 2,141) ( 4,773) ( 55,781) ($ 103,996 $ Three months endedSeptember30, Nine months endedSeptember30,	2020 2019 5,660 6,137 $ 12,738 73,975 117,927 87,077 45,900 29,426 182,225 196,615 $ Ninemonths ended September30, 2020 2019 365) ($ 717) ($ 77,995) ( 79,176 24,720 30,310 2,141) ( 4,773) ( 55,781) ($ 103,996 $ Three months endedSeptember30, Nine months endedSeptember30,
	2020 954) ($ 333) ( 98,117) ( 55,613 6,215) ( 50,006) ($ Three months ended	2019 1,940) ($ 935 89,412 44,348 13,395) ( 119,360 $ 2019 774,813 $ 30,240 12,920 33,004 850,977 $ September 30,
	2020 980,733 $ 80,470 48,211 32,753 1,142,167 $

(27) Other gains and losses

(28) Expenses by nature

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(29)	Employee benefit expense Depreciation charge - property, plant and equipment Depreciation charge - right-of-use assets Amortisation charge Employee benefit expense Wages and salaries Share-based payments Labour and health insurance fees Pension costs Other personnel expenses Wages and salaries Share-based payments Labour and health insurance fees Pension costs Other personnel expenses		2020 2019 2,193,675 $ 2,233,848 $ 246,861 156,760 85,289 55,080 100,556 99,300 2,626,381 $ 2,544,988 $ Ninemonths ended September30, Threemonths ended September30,	2020 2019 2,193,675 $ 2,233,848 $ 246,861 156,760 85,289 55,080 100,556 99,300 2,626,381 $ 2,544,988 $ Ninemonths ended September30, Threemonths ended September30,
			2020 2019 876,157 $ 658,643 $ 24,416 29,621 14,554 15,336 28,916 33,859 36,690 37,354 980,733 $ 774,813 $ Ninemonths ended September30,

			2020 1,929,065 $ 64,398 45,274 67,593 87,345 2,193,675 $	2019 1,902,027 $ 77,322 45,302 100,368 108,829 2,233,848 $

employees, respectively. For the nine months ended September 30, 2020, there were 5 non-employee directors. For the period from January 1, 2019 to June 19, 2019, there were 3 non-employee directors. After reelecting directors on June 19, 2020, there were 5 non-employee directors until September 30, 2020.

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

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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:
Employees’ compensation Directors’ and supervisors’ remuneration Employees’ compensation Directors’ and supervisors’ remuneration	Threemonths ended	September30,
	2020 2019 29,580 $ 72,656 $ 9,860 24,219 39,440 $ 96,875 $ Ninemonths ended September30,

	2020 60,534 $ 20,178 80,712 $	2019 169,962 $ 56,654 226,616 $

The abovementioned amounts were recognised in wages and salaries.

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

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(30) Income tax

A. Income tax expense
(a) Components of income tax expense:

e tax ome tax expense Components of income tax expense:
Current tax: Current tax on profits for the period Prior year income tax overestimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	Three months ended September 30,
	2020 2019 88,806 $ 166,504 $ 7) ( 161) ( 88,799 166,343 29,550) ( 102,055 59,249 $ 268,398 $

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				Ninemonths ended September30,	Ninemonths ended September30,	Ninemonths ended September30,	Ninemonths ended September30,
				2020		2019
Current tax:
Current tax on profits for the period			$	188,092	$	398,052
Tax on undistributed surplus earnings				36,704			4,764
Prior year income tax underestimation				260			14,388
Total current tax				225,056		417,204
Deferred tax:
Origination and reversal of temporary
differences	(			23,055)		226,227
Income tax expense			$	202,001	$	643,431
(b) The income tax (charge)/credit relating to components of other comprehensive						income is as
follows:
				Three months endedSeptember30,
				2020		2019
Exchange differences changes on translation
of foreign financial statements - the Group	($			904)	($		26,243)
Exchange differences changes on translation
of foreign financial statements
- associates				13,825	(		28,345)
Changes in fair value of financial assets
at fair value through other
comprehensive income	(			403)			16,627
		$		12,518	($		37,961)
				Nine months endedSeptember			30,
				2020		2019
Exchange differences changes on translation
of foreign financial statements - the Group	($			24,530)	($		10,303)
Exchange differences changes on translation
of foreign financial statements
- associates	(			6,808)	(		22,818)
Changes in fair value of financial assets
at fair value through other
comprehensive income	(			931)			16,627
	($			32,269)	($		16,494)

B. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority.
C. Merry Healthcare Co., Ltd. Taiwan Branch’s (CAYMAN) income tax returns through 2017 have been assessed and approved by the Tax Authority.
D. Biotest Medical Corporation’s income tax returns through 2017 have been assessed and approved by the Tax Authority.

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(31) Earnings per share

)Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 393,808 $ 206,877 1.90 $ 393,808 206,877 - 200 5,951 16,575 - 518 399,759 $ 224,170 1.78 $ Three months ended September30,2020
		1.90 $ 1.78 $

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Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares		Amount aftertax Weighted average number of ordinary shares outstanding (shareinthousands) Earnings per share (in dollars) 890,067 $ 204,864 4.34 $ 890,067 204,864 - 477 5,515 17,937 - 901 895,582 $ 224,179 3.99 $ Threemonths ended September30,2019	Amount aftertax Weighted average number of ordinary shares outstanding (shareinthousands) Earnings per share (in dollars) 890,067 $ 204,864 4.34 $ 890,067 204,864 - 477 5,515 17,937 - 901 895,582 $ 224,179 3.99 $ Threemonths ended September30,2019	Amount aftertax Weighted average number of ordinary shares outstanding (shareinthousands) Earnings per share (in dollars) 890,067 $ 204,864 4.34 $ 890,067 204,864 - 477 5,515 17,937 - 901 895,582 $ 224,179 3.99 $ Threemonths ended September30,2019	Amount aftertax Weighted average number of ordinary shares outstanding (shareinthousands) Earnings per share (in dollars) 890,067 $ 204,864 4.34 $ 890,067 204,864 - 477 5,515 17,937 - 901 895,582 $ 224,179 3.99 $ Threemonths ended September30,2019
				204,864 204,864 477 17,937 901 224,179	4.34 $ 3.99 $
		895,582 $

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Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 743,957 $ 206,695 3.60 $ 743,957 206,695 - 706 19,490 16,483 - 536 763,447 $ 224,420 3.40 $ Nine months endedSeptember30,2020	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 743,957 $ 206,695 3.60 $ 743,957 206,695 - 706 19,490 16,483 - 536 763,447 $ 224,420 3.40 $ Nine months endedSeptember30,2020	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 743,957 $ 206,695 3.60 $ 743,957 206,695 - 706 19,490 16,483 - 536 763,447 $ 224,420 3.40 $ Nine months endedSeptember30,2020	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 743,957 $ 206,695 3.60 $ 743,957 206,695 - 706 19,490 16,483 - 536 763,447 $ 224,420 3.40 $ Nine months endedSeptember30,2020
			206,695 206,695 706 16,483 536 224,420	3.60 $ 3.40 $
	763,447 $

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Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 2,082,255 $ 203,251 10.24 $ $ 2,082,255 203,251 - 1,318 19,924 19,485 - 901 2,102,179 $ 224,955 9.34 $ Nine monthsendedSeptember30,2019	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 2,082,255 $ 203,251 10.24 $ $ 2,082,255 203,251 - 1,318 19,924 19,485 - 901 2,102,179 $ 224,955 9.34 $ Nine monthsendedSeptember30,2019	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 2,082,255 $ 203,251 10.24 $ $ 2,082,255 203,251 - 1,318 19,924 19,485 - 901 2,102,179 $ 224,955 9.34 $ Nine monthsendedSeptember30,2019	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 2,082,255 $ 203,251 10.24 $ $ 2,082,255 203,251 - 1,318 19,924 19,485 - 901 2,102,179 $ 224,955 9.34 $ Nine monthsendedSeptember30,2019	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share(in dollars) 2,082,255 $ 203,251 10.24 $ $ 2,082,255 203,251 - 1,318 19,924 19,485 - 901 2,102,179 $ 224,955 9.34 $ Nine monthsendedSeptember30,2019
			203,251 203,251 1,318 19,485 901 224,955		10.24 $ 9.34 $
	2,102,179 $

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

(32) Business combinations
A. On July 31, 2019, the Group acquired 94.2% of ordinary shares of Biotest Medical Corporation in cash amounting to $9,420 thousand and obtained control over the company. The company has multiple certifications in medical device manufactured. As a result of the acquisition, the Group is expected to increase its presence in the market and expand its market of personal sound amplifier.
B. The following table summarises the consideration paid for Biotest Medical Corporation and the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets at the acquisition date:

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		July 31,2019
Purchase consideration
Cash paid	$	9,420
Fair value of equity interest in Biotest Medical Corporation
held before the business combination		5,220
		14,640
Fair value of the identifiable assets acquired and liabilities assumed
Cash		4,995
Prepayments		57,209
Other current assets		60
Intangible assets		9,000
Refundable deposits		61
Notes payable	(	386)
Other payables	(	62,000)
Indentified net assets		8,939
Goodwill	$	5,701
Cash outflow generated from acquisitions
		BTTT
Cash paid	($	9,420)
Add: Carrying amount of cash when acquired		4,995
Effect of cash from business combination	($	4,425)

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

(33) Supplemental cash flow information

A. Investing activities with partial cash payments

pplemental cash flow information Investing activities with partial cash payments
Purchase of property, plant and equipment Add: Opening balance of payable on equipment Ending balance of prepayments for equipment Less: Beginning balance of prepayments for equipment Ending balance of payable on equipment Cash paid during the period	Ninemonths ended September30,
	2020 2019 1,141,718 $ 273,886 $ 77,958 48,588 292,689 25,730 41,911) ( 23,588) ( 188,576) ( 38,120) ( 1,281,878 $ 286,496 $

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2020 2019 Purchase of intangible assets 26,333 $ 17,808 $ Add: Opening balance of payable - 2,652 Ending balance of prepayments 31,061 82,836 Less: Opening balance of prepayments 30,952) ( 32,046) ( Ending balance of payable 1,549) ( - Change in non-controlling interests - 25,052) ( Cash paid during the period 24,893 $ 46,198 $ Ninemonths ended September30, B. Financial assets at fair value through profit or loss 2020 2019 Change in financial assets at fair value through profit or loss 47,492 $ 62,797 $ Add: Uncollected proceeds from disposal during the period 325,133 1,010 Less: Unpaid purchases during the period 325,438) ( - Net cash flows used during the period 47,187 $ 63,807 $ Ninemonths ended September30, C. Financial assets at fair value through other comprehensive income 2020 2019 Disposal of financial assets at fair value through other comprehensive income 202,651) ($ 65,323) ($ Less: Collected proceeds from prior period disposal 4,336) ( - Net cash flows received during the period 206,987) ($ 65,323) ($ Ninemonths ended September30, D. Financing activities with no cash flow effects: 2020 2019 Convertible bonds being converted to common stocks 4,135 $ 35,707 $ Ninemonths ended September30,	2020 2019 Purchase of intangible assets 26,333 $ 17,808 $ Add: Opening balance of payable - 2,652 Ending balance of prepayments 31,061 82,836 Less: Opening balance of prepayments 30,952) ( 32,046) ( Ending balance of payable 1,549) ( - Change in non-controlling interests - 25,052) ( Cash paid during the period 24,893 $ 46,198 $ Ninemonths ended September30, B. Financial assets at fair value through profit or loss 2020 2019 Change in financial assets at fair value through profit or loss 47,492 $ 62,797 $ Add: Uncollected proceeds from disposal during the period 325,133 1,010 Less: Unpaid purchases during the period 325,438) ( - Net cash flows used during the period 47,187 $ 63,807 $ Ninemonths ended September30, C. Financial assets at fair value through other comprehensive income 2020 2019 Disposal of financial assets at fair value through other comprehensive income 202,651) ($ 65,323) ($ Less: Collected proceeds from prior period disposal 4,336) ( - Net cash flows received during the period 206,987) ($ 65,323) ($ Ninemonths ended September30, D. Financing activities with no cash flow effects: 2020 2019 Convertible bonds being converted to common stocks 4,135 $ 35,707 $ Ninemonths ended September30,	2020 2019 Purchase of intangible assets 26,333 $ 17,808 $ Add: Opening balance of payable - 2,652 Ending balance of prepayments 31,061 82,836 Less: Opening balance of prepayments 30,952) ( 32,046) ( Ending balance of payable 1,549) ( - Change in non-controlling interests - 25,052) ( Cash paid during the period 24,893 $ 46,198 $ Ninemonths ended September30, B. Financial assets at fair value through profit or loss 2020 2019 Change in financial assets at fair value through profit or loss 47,492 $ 62,797 $ Add: Uncollected proceeds from disposal during the period 325,133 1,010 Less: Unpaid purchases during the period 325,438) ( - Net cash flows used during the period 47,187 $ 63,807 $ Ninemonths ended September30, C. Financial assets at fair value through other comprehensive income 2020 2019 Disposal of financial assets at fair value through other comprehensive income 202,651) ($ 65,323) ($ Less: Collected proceeds from prior period disposal 4,336) ( - Net cash flows received during the period 206,987) ($ 65,323) ($ Ninemonths ended September30, D. Financing activities with no cash flow effects: 2020 2019 Convertible bonds being converted to common stocks 4,135 $ 35,707 $ Ninemonths ended September30,	2020 2019 Purchase of intangible assets 26,333 $ 17,808 $ Add: Opening balance of payable - 2,652 Ending balance of prepayments 31,061 82,836 Less: Opening balance of prepayments 30,952) ( 32,046) ( Ending balance of payable 1,549) ( - Change in non-controlling interests - 25,052) ( Cash paid during the period 24,893 $ 46,198 $ Ninemonths ended September30, B. Financial assets at fair value through profit or loss 2020 2019 Change in financial assets at fair value through profit or loss 47,492 $ 62,797 $ Add: Uncollected proceeds from disposal during the period 325,133 1,010 Less: Unpaid purchases during the period 325,438) ( - Net cash flows used during the period 47,187 $ 63,807 $ Ninemonths ended September30, C. Financial assets at fair value through other comprehensive income 2020 2019 Disposal of financial assets at fair value through other comprehensive income 202,651) ($ 65,323) ($ Less: Collected proceeds from prior period disposal 4,336) ( - Net cash flows received during the period 206,987) ($ 65,323) ($ Ninemonths ended September30, D. Financing activities with no cash flow effects: 2020 2019 Convertible bonds being converted to common stocks 4,135 $ 35,707 $ Ninemonths ended September30,	2020 2019 Purchase of intangible assets 26,333 $ 17,808 $ Add: Opening balance of payable - 2,652 Ending balance of prepayments 31,061 82,836 Less: Opening balance of prepayments 30,952) ( 32,046) ( Ending balance of payable 1,549) ( - Change in non-controlling interests - 25,052) ( Cash paid during the period 24,893 $ 46,198 $ Ninemonths ended September30, B. Financial assets at fair value through profit or loss 2020 2019 Change in financial assets at fair value through profit or loss 47,492 $ 62,797 $ Add: Uncollected proceeds from disposal during the period 325,133 1,010 Less: Unpaid purchases during the period 325,438) ( - Net cash flows used during the period 47,187 $ 63,807 $ Ninemonths ended September30, C. Financial assets at fair value through other comprehensive income 2020 2019 Disposal of financial assets at fair value through other comprehensive income 202,651) ($ 65,323) ($ Less: Collected proceeds from prior period disposal 4,336) ( - Net cash flows received during the period 206,987) ($ 65,323) ($ Ninemonths ended September30, D. Financing activities with no cash flow effects: 2020 2019 Convertible bonds being converted to common stocks 4,135 $ 35,707 $ Ninemonths ended September30,
			2020 2019 202,651) 65,323) ($ 4,336) - 206,987) 65,323) ($ Ninemonths ended September30,



			2020 4,135 $	2019 35,707 $

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(34) Changes in liabilities from financing activities

																										Liabilities
													Long-									Other non				from
	Short-term				Lease			Convertible					term				Dividends					-	current			financing
	borrowings				liability				bond			borrowings						payable				liabilities				activities-
At January 1, 2020	$	470,890			118,813 $			$	2,229,959			$	62,000				$			-		$	496,302		$	3,377,964
Changes in cash
flow from financing
activities		2,139,932		(	160,549)						-		374,323			(	1,608,376)						27,490			772,820
Additions			-				-				-				-		1,608,376							-		1,608,376
Impact of changes
in foreign exchange
rate	(	4,158)				271					-	(		181)						-	(		323)		(	4,391)
Changes in other
non-cash items			-		331,955			(		33,852)					-					-	(		404,956)		(	106,853)
At September 30, 2020	$	2,606,664			290,490 $			$	2,196,107			$	436,142				$			-		$	118,513		$	5,647,916
																				Other			non -	Liabilities from
		Short-term					Lease			Convertible					Dividends						current				financing
		borrowings				liability					bond				payable					liabilities				activities-gross
At January 1, 2019		$	4,753,434			$			-	$	2,882,721				$			-		$	489,545			$		8,125,700
Changes in cash flow from
financing activities		(	2,231,012)			(	54,056)						-	(	1,751,419)				(				3,070)	(		4,039,557)
Additions					-				-				-		1,751,419								-			1,751,419
Impact of changes in foreign
exchange rate		(	12,878)						55				-					-	(				166)	(		12,989)
Changes in other non-cash
items					-		164,438			(	482,621)							-	(				549)	(		318,732)
At September 30, 2020		$	2,509,544			$	110,437			$	2,400,100				$			-		$	485,760			$		5,505,841

(35) Government grants

A. For the year ended December 31, 2016, the subsidiary, MECL, entered into a subsidy agreement with Economy, Trade and Information Commission of Shenzhen Municipality, which agreed to subsidise the Company with the maximum of RMB 3 million to purchase equipment and computer software during the period from April 2016 to April 2018. As of September 30, 2020, the Company received RMB 3 million (shown as other non-current liabilities) ； however, RMB 648 thousand (NTD 2,766 thousand) has still not yet been recognised as grants revenue.
B. For the year ended December 31, 2019, the subsidiary, MECL, applied for Entrepreneur Research and Development Funding Plan from the Science and Technology Innovation Committee of Shenzhen Municipality for the subsidies amounting to RMB 1,744 million thousand (NTD 7,999 thousand).
C. For the year ended December 31, 2018, the subsidiary, MECL, applied for the first batch of the Longhua District Enterprise R&D Investment Funding from Longhua District Science and Technology Innovation Bureau for the total subsidies amounting to RMB 3,282 thousand (NTD 13,965 thousand).
D. For the nine months ended September 30, 2020, the subsidiary, MECL, received the electricity subsidy for enterprises in advanced and high-tech manufacturing amounting to RMB 1,035 thousand (NTD 4,402 thousand) from Shenzhen Power Supply Co., Ltd.

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E. For the nine months ended September 30, 2020, the subsidiary, MECL, received the patent subsidy amounting to RMB 440 thousand (NTD 1,872 thousand) from Market Supervision Administration of Shenzhen Municipality.
F. For the nine months ended September 30, 2020, the Company, MEHO, applied for government subsidies for working capital and salary compensation from Industrial Development Bureau, Ministry of Economic Affairs for the total amount of NTD 45,442 thousand. As of September 30, 2020, the Company received subsidies amounting to NTD 44,751 thousand.
G. For the nine months ended September 30, 2020, the subsidiary, MEST, received the subsidy amounting to HKD 287 thousand (NTD 1,111 thousand) under the ‘Employment Support Scheme’ from the local government.
H. For the nine months ended September 30, 2020, the subsidiary, MECL, received the subsidy for technological transformation amounting to RMB 1,740 thousand (NTD 7,389 thousand) from Shenzhen Industrial and Information Technology Bureau.
I. For the nine months ended September 30, the subsidiary, MECL, received the subsidy for enterprise research and development amounting to RMB 1,401 thousand (NTD 5,950 thousand) from Science, Technology and Innovation Commission of Shenzhen Municipality.
J. For the nine months ended September 30, 2020, the subsidiary, MESG, received the subsidy amounting to USD 417 thousand (NTD 12,427 thousand) under the ‘Jobs Support Scheme’ from the local government.
K. For the nine months ended September 30, 2020, the subsidiary, SOCV, received the subsidy amounting to CAD 315 thousand (NTD 6,936 thousand) under the ‘Emergency Wage Subsidy Program’ from the local government.
L. For the nine months ended September 30, 2020, the subsidiary, MECL, received the subsidy amounting to RMB 520 thousand (NTD 2,211 thousand) under the stabilisation subsidy from the local government.

7. RELATED PARTY TRANSACTIONS

Name Relationship Merry Electronics (Suzhou) Co., Ltd. Affiliated company (MECE) Merry Electronics (Huizhou) Co., Ltd. Affiliated company (MECH) Merry Electronics (Shanghai) Co., Ltd. Affiliated company (MECS) Guangdong Luxshare & Merry Electronics Affiliated company Co., Ltd. (MEDG) Leohab Enterprise Co., Ltd. (LEOHAB) Affiliated company Neocene Technology Co., Ltd. (NEOCENE) Other related party (Note) Merry Fuling Co., Ltd. Other related party Taiwab Branch (MHNCTW) BESKYTTE HUANG & CO Other related party

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

~66~

(1) Significant related party transactions A. Operating revenue

gnificant related party transactions Operating revenue	gnificant related party transactions Operating revenue	gnificant related party transactions Operating revenue
2020 2019 Sales of goods: MECH 24,100 $ 7,208 $ MECE 1,015 4,672 MEDG - (36) Others 658 1,911 Total 25,773 $ 13,755 $ 2020 2019 Sales of goods: MECH 38,531 $ 17,983 $ MECE 2,863 21,605 MEDG - 32,835 Others 1,965 4,303 Total 43,359 $ 76,726 $ Three months endedSeptember30, Nine months ended September 30, The prices of goods sold to related parties are based on the different product’s profitability adjusted annually as there is no comparable transaction for the goods sold to the third part and the prices of purchases on behalf of related parties are based on the cost plus mark-ups ~ 3%. The credit terms to related parties are 60 days end of month and 30 to 120 days end month to the third parties. Purchases 2020 2019 Purchases of goods MECE 2,493,506 $ 3,818,916 $ MECH 1,979,529 971,350 MEDG - 346,558 MHNCTW - 6 Total 4,473,035 $ 5,136,830 $ 2020 2019 Purchases of goods MECE 6,425,654 $ 7,702,789 $ MECH 3,882,172 3,121,096 MEDG - 811,969 MHNCTW - 6 Total 10,307,826 $ 11,635,860 $ Threemonths ended September30, Ninemonths ended September30,
	2020 2019 2,493,506 $ 3,818,916 $ 1,979,529 971,350 - 346,558 - 6 4,473,035 $ 5,136,830 $ Ninemonths ended September30,	2019
		3,818,916 $ 971,350 346,558 6
		5,136,830 $
	2020 6,425,654 $ 3,882,172 - - 10,307,826 $	2019
		7,702,789 $ 3,121,096 811,969 6
		11,635,860 $

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

B. Purchases

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

~67~

to 120 days end of month to the third parties. C. Receivables from related parties

Receivables from related	parties
Accounts receivable MECE MECH Others Total Other receivables MECH MECE MEDG Others Total	September30,2020 9,948 $ 26,867 28 36,843 $ 732,543 $ 7,534 - 1,464 741,541 $	December31,2019 11,946 $ - 988 12,934 $ 328,449 $ 37,559 18,926 434 385,368 $	September30,2019 12,862 $ 581 2,112 15,555 $
			108,449 $ 5,124 19,237 434
			133,244 $

Other receivables as of September 30, 2020, December 31, 2019 and September 30, 2019 mainly were the purchases of raw materials on behalf of MECH, MECE and MEDG. D. Payables to related parties

Payables to related parties
Accounts payable MECE MECH Others Total Other payables MECE Others Total	September 30, 2020		December31,2019 September 30, 2019 3,074,208 $ 2,759,604 $ 579,327 989,168 266,716 286,447 3,920,251 $ 4,035,219 $ 91,481 $ 23,728 $ 46,222 637 137,703 $ 24,365 $
	1,876,664 $ 1,951,136 99 3,827,899 $ 58,070 $ 10,893 68,963 $

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

E. Property transactions

(a) Acquisition of property, plant and equipment:

Three months ended September 30,	Three months ended September 30,	Three months ended September 30,
2020	2019

2020		2019
- $ 4,495 4,495 $		398 $ - 398 $

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(b) Disposal of property, plant and equipment:

F.	Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal MECH 4,632 $ 386 $ - $ - $ Nine months ended September 30, 2020 2019 For the three months ended September 30, 2020 and 2019: None. Other current assets-temporary debits of other expenses 2020 2019 BESKYTTE HUANG & CO 1,100 $ - $ Nine months ended September 30,

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

Other income
BESKYTTE HUANG & CO	Nine months ended September 30,
	2020	2019
	1,031 $	- $

Other income mainly was the disposal of other assets recognized as expenses in prior year. (2) Key management compensation

2020 2019 BESKYTTE HUANG & CO 1,031 $ - $ Nine months ended September 30, Other income mainly was the disposal of other assets recognized as expenses in prior year. (2) Key management compensation	2020 2019 BESKYTTE HUANG & CO 1,031 $ - $ Nine months ended September 30, Other income mainly was the disposal of other assets recognized as expenses in prior year. (2) Key management compensation	2020 2019 1,031 $ - $ Nine months ended September 30, of other assets recognized as expenses in prior year.	2020 2019 1,031 $ - $ Nine months ended September 30, of other assets recognized as expenses in prior year.	2020 2019 1,031 $ - $ Nine months ended September 30, of other assets recognized as expenses in prior year.	2020 2019 1,031 $ - $ Nine months ended September 30, of other assets recognized as expenses in prior year.	2020 2019 1,031 $ - $ Nine months ended September 30, of other assets recognized as expenses in prior year.
2020 2019 Salaries and other short-term employee benefits 20,722 $ 31,570 $ Post-employment benefits 123 124 Share-based payments 9,675 4,492 30,520 $ 36,186 $ 2020 2019 Salaries and other short-term employee benefits 49,245 $ 102,708 $ Post-employment benefits 369 368 Share-based payments 20,659 13,476 70,273 $ 116,552 $ Three months ended September 30, Nine months ended September 30, PLEDGED ASSETS Pledged asset September30,2020 December31,2019 September30,2019 Purpose Financial assets at amortised cost - non-current 3,562 $ - $ - $ Project guarantee Bookvalue		2020 2019 20,722 $ 31,570 $ 123 124 9,675 4,492 30,520 $ 36,186 $ 2020 2019 49,245 $ 102,708 $ 369 368 20,659 13,476 70,273 $ 116,552 $ Three months ended September 30, Nine months ended September 30, Bookvalue


		2020 49,245 $ 369 20,659 70,273 $ Bookvalue			2019
					$
					$

	September30,2020 3,562 $		December31,2019 - $	September30,2019 - $		Purpose Project guarantee

8. PLEDGED ASSETS

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

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

	September	30, 2020	December	31,2019	September	30,2019
Property, plant and equipment	$	138,670	$	256,968	$	31,053
Intangible assets		59,420		186,405		87,027
	$	198,090	$	443,373	$	118,080

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

There was no significant change in the reporting period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2019.

(2) Financial instruments

A. Financial instruments by category

(Remainder of page intentionally left blank)

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September 30, 2020 December 31, 2019 September 30, 2019

Financial assets

Financial assets	September30,2020	December31,2019	September30,2019
Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Qualifying equity instrument Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Accounts receivable (including due from related parties) Other receivables (including due from related parties) Guarantee deposits paid Financial assets at amortised cost Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Short-term borrowings Notes payable Accounts payable (including payable to related parties) Other accounts payable (including payable to related parties) Lease liability Corporate bonds payable Long-term borrowings Guaratee deposits received	92,545 $ 1,489,501 $ 87,671 1,577,172 $ 4,191,857 $ 9,008,128 1,157,808 51,181 876,562 15,285,536 $ 12,418 $ 2,606,664 74 10,036,250 1,690,297 290,490 2,196,107 436,142 9,276 17,277,718 $	38,214 $ 2,614,763 $ 120,721 2,735,484 $ 6,589,863 $ 5,461,315 434,853 17,577 - 12,503,608 $ 11,799 $ 470,890 74 6,693,692 1,110,729 118,813 2,229,959 62,000 2,828 10,700,784 $	257,379 $
			2,497,069 $ 125,172
			2,622,241 $
			5,312,446 $ 9,500,828 276,056 21,490 -
			15,110,820 $
			7,549 $ 2,509,544 459 7,901,120 950,346 110,437 2,400,100 - 2,841
			13,882,396 $

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B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.
(b) Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. Such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
There was no significant change in the reporting period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2019, except for the items explained below:
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD, RMB and HKD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.
ii.The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, RMB, HKD and CAD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Remainder of page intentionally left blank)

~72~

		September	30,2020	Effects on profit or loss Effect on other comprehensive income 66,196 $ - $ 3,876 - 7,460 - 92 - 11,754 - 446 - 324 - 1,293 $ - $ 227,162 - 86,061 - 9,503 - 1,836 - - $ 2,562 $ Sensitivity analysis	Effects on profit or loss Effect on other comprehensive income 66,196 $ - $ 3,876 - 7,460 - 92 - 11,754 - 446 - 324 - 1,293 $ - $ 227,162 - 86,061 - 9,503 - 1,836 - - $ 2,562 $ Sensitivity analysis
Foreign currency amount (Inthousands)	Exchange rate	Book value (NTD)
			Degree of variation	Effects on profit or loss
75,826 $ 30,265 8,545 821 13,464 511 2,532 1,481 $ 260,208 98,581 10,885 2,879 2,935 $	29.10 4.27 7.75 3.75 6.82 31.49 1.14 7.75 29.10 6.82 31.49 0.73 29.10	2,206,537 $ 129,201 248,660 3,082 391,802 14,870 10,809 43,097 $ 7,572,053 2,868,707 316,754 61,208 85,409 $	3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	66,196 $ 3,876 7,460 92 11,754 446 324 1,293 $ 227,162 86,061 9,503 1,836 - $	- $ - - - - - - - $ - - - - 2,562 $

~73~

(Foreign currency: functional currency) Investments accounted for using the equity method USD：NTD $ HKD：NTD RMB：NTD Financial liabilities Non-monetary items Bank loan USD：NTD $ USD：RMB USD：CAD RMB：NTD Payables HKD：RMB $ RMB：NTD USD：NTD USD：RMB	(Foreign currency: functional currency) Investments accounted for using the equity method USD：NTD $ HKD：NTD RMB：NTD Financial liabilities Non-monetary items Bank loan USD：NTD $ USD：RMB USD：CAD RMB：NTD Payables HKD：RMB $ RMB：NTD USD：NTD USD：RMB	Foreign currency amount (Inthousands) Exchange rate 97,266 29.10 $ 219,616 3.75 86,170 4.27 33,000 29.10 $ 32,900 6.82 2,600 0.75 6,500 4.27 2,728 0.88 $ 128,929 4.27 217,104 29.10 48,021 6.82	Book value (NTD) Degree of variation September30,2020 2,830,435 3% $ 824,439 3% 367,861 3% 960,300 3% $ 957,390 3% 75,660 3% 27,749 3% 10,241 3% $ 550,398 3% 6,317,726 3% 1,397,411 3%	Book value (NTD) Degree of variation September30,2020 2,830,435 3% $ 824,439 3% 367,861 3% 960,300 3% $ 957,390 3% 75,660 3% 27,749 3% 10,241 3% $ 550,398 3% 6,317,726 3% 1,397,411 3%	Effects on profit or loss Effect on other comprehensive income Sensitivity analysis - 84,913 $ - 24,733 - 11,036 28,809 - $ 28,722 - 2,270 - 832 307 - $ 16,512 - 189,532 - 41,922 -
			2,830,435 824,439 367,861 960,300 957,390 75,660 27,749 10,241 550,398 6,317,726 1,397,411	3% $ 3% 3% 3% $ 3% 3% 3% 3% $ 3% 3% 3%

~74~

December 31, 2019

Foreign currency amount (In thousands)	Exchange rate	Book value (NTD)		Sensitivityanalysis	Sensitivityanalysis
			Degree of variation	Effects on profit or loss	Effect on other comprehensive income
45,571 $ 42,433 8,549 1,060 12,096 1,361 1,612 671 $ 157,140 43,517 3,478 2,435	29.9800 4.3050 7.7890 3.8490 6.9640 29.6890 1.1185 7.7890 29.9800 6.9640 29.6890 0.7432	1,366,219 $ 182,674 66,588 16,148 362,638 41,235 7,136 5,226 $ 4,711,057 1,304,640 104,270 54,252	3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	40,987 $ 5,480 1,998 484 10,879 1,237 214 157 $ 141,332 39,139 3,128 1,628	- $ - - - - - - $ - - - -

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December 31, 2019
Sensitivity analysis
Foreign
currency
amount Exchange Book value Degree of Effects on Effect on other
(Foreign currency: functional currency) (In thousands) rate (NTD) variation profit or loss comprehensive income
Non-monetary items
Current financial investments at
fair value through other
comprehensive income
USD ： NTD $ 3,033 29.9800 $ 90,929 3% $ - $ 2,728
Investments accounted for
using the equity method
USD ： NTD $ 94,818 29.9800 $ 2,842,636 3% $ - $ 85,279
HKD ： NTD 172,906 3.8490 665,514 3% - 19,965
RMB ： NTD 87,480 4.3050 376,601 3% - 11,298
Financial liabilities
Non-monetary items
Bank loan
USD ： NTD $ 3,000 29.9800 $ 89,940 3% $ 2,698 $ -
USD ： RMB 9,435 6.9640 282,861 3% 8,486 -
USD ： CAD 2,600 1.3040 77,948 3% 2,338 -
Payables
HKD ： RMB $ 5,671 0.8941 $ 5,070 3% $ 152 $ -
RMB ： NTD 197,913 4.3050 852,015 3% 25,560 -
USD ： NTD 155,831 29.9800 4,671,813 3% 140,154 -
USD ： RMB 22,426 6.9640 679,360 3% 20,381 -
----- End of picture text -----

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		September30,2019	September30,2019
Foreign currency amount (In thousands)	Exchange rate	Book value (NTD)		Sensitivityanalysis
			Degree of variation	Effects on profit or loss	Effect on other comprehensive income
29,529 $ 9,276 1,171 8,053 3,320 581 1,608 274,750 $ 750 101,897 2,759 2,236	31.0400 4.3500 3.9580 7.8423 7.1356 30.4165 1.0990 31.0400 7.8423 7.1356 30.4165 0.7239	916,580 $ 40,351 4,635 249,964 103,053 18,034 6,995 8,528,240 $ 23,280 3,162,883 85,639 50,243	3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	27,497 $ 1,211 139 7,499 3,092 541 210 255,847 $ 698 94,886 2,569 1,507	- $ - - - - - - $ - - -

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		September30,2019	September30,2019
Foreign currency amount (Inthousands)	Exchange rate	Book value (NTD)		Sensitivityanalysis
			Degree of variation	Effects on profit or loss	Effect on other comprehensiveincome
3,144 $ 86,259 $ 162,526 85,613 32,080 $ 13,298 209,690 $ 186,970 30,838 8,790	31.0400 31.0400 3.9580 4.3500 31.0400 7.1356 31.0400 4.3500 7.1356 0.9099	97,590 $ 2,677,480 $ 643,279 372,417 995,763 $ 412,770 6,508,778 $ 813,320 957,212 34,791	3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	- $ - $ - - 29,873 $ 12,383 195,263 $ 24,400 28,716 1,044	2,928 $ 80,324 $ 19,298 11,173 - $ - - $ - - -

Total exchange gain (loss), including realised and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the three months and nine months ended September 30, 2020 and 2019 amounted to a loss of $77,995 thousand, a gain of $79,176 thousand, a loss of $98,117 thousand, and a gain of $89,412 thousand, respectively.

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Price risk

i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise shares and open-end funds issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 3% with all other variables held constant, post-tax profit for the nine months ended September 30, 2020 and 2019 would have increased/decreased by $729 thousand and $654 thousand, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $44,685 thousand and $74,912 thousand, respectively, as a result of other comprehensive income classified as available-for-sale equity investment and equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

i. The Group’s borrowings are measured at amortised cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.
ii. If the borrowing interest rate had increased/decreased by 0.25% with all other variables held constant, profit (loss), net of tax for the nine months ended September 30, 2020 and 2019 would have increased/decreased by $4,564 thousand and $3,764 thousand, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortised cost, at fair value through profit or loss and at fair value through other comprehensive income.
ii. For banks and financial institutions, the Group transacts with a variety of banks and financial institutions, mainly domestic and overseas well-known financial institutions, to avoid concentration in any single counterparty and to minimise credit risk. The Group can only enter into the financial services and loan agreement provided by banks and financial institutions after being approved by the Board of Directors or authorised management according to the Company’s delegation of authorisation policy. To prevent legal risks, all the Group signs with banks and financial institutions after all documents are examined by counsel or legal advisor profession. The Group periodically checks the credit rating, conditions and quality of service as well as transactions. According to the Group’s operating condition, the credit limits and utilisation of credit limits are monitored on a regular basis and maintained within a reasonable range to ensure it meets the needs of the operation.
iii. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.
iv. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

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(i) If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
(ii) For investments in bonds that are traded over the counter, if any external credit rating agency rates these bonds as investment grade, the credit risk of these financial assets is low.
v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
(ii) The disappearance of an active market for that financial asset because of financial difficulties;
(iii) Default or delinquency in interest or principal repayments;
(iv) Adverse changes in national or regional economic conditions that are expected to cause a default.
vi. The Group classifies customers’ accounts receivable, contract assets in accordance with geographic area. The Group applies the modified approach using provision matrix to estimate expected credit loss under the provision matrix basis.
vii. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.
viii. The Group used the forecastability of adjust historical and timely information to assess the default possibility of accounts receivable, contract assets and lease payments receivable. As of September 30, 2020, December 31, 2019 and September 30, 2019, the provision matrix is as follows:

September 30, 2020
	0.03% 8,945,138 $ 2,657) ($ Not past due	3.49% 27,123 $ 946) ($ Up to 30days	5.52% 1,902 $ 105) ($ 31 to 60days	37.13% 1,324 $ 494) ($ 61 to 90 days
Expected loss rate Total book value Loss allowance December 31, 2019 Expected loss rate Total book value Loss allowance September 30, 2019
	0.06% 5,425,988 $ 3,489) ($ Not past due	13.94% 11,003 $ 1,534) ($ Up to 30days	3.85% 12,266 $ 472) ($ 31 to 60days	36.96% 7,327 $ 2,708) ($ 61 to 90days
	0.03% 9,349,371 $ 2,663) ($	1.24% 139,524 $ 1,737) ($	33.14% 851 $ 282) ($	73.61% 792 $ 583) ($
Expected loss rate Total book value Loss allowance

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

			2020
			Accounts receivable
At January 1		$	29,507
Reversal of impairment loss	(		359)
Effect of foreign exchange	(		291)
At September 30		$	28,857
			2019
			Accountsreceivable
At January 1		$	9,349
Provision for impairment			18,415
Effect of foreign exchange	(		937)
At September 30		$	26,827

For provisioned loss during the nine months ended September 30, 2020 and 2019, the (reversal of) impairment losses arising from customers’ contracts were a gain of $359 thousand and a loss of $18,415 thousand, respectively.

x. For the nine months ended September 30, 2020 and 2019, there was no loss allowance for investments in debt instruments at fair value through other comprehensive income.
xi. For investments in debt instruments at amortised cost and at fair value through other comprehensive income, the credit rating levels are presented below:

	September30,2020
12 months 87,671 $	Significant increase in credit risk Impairment of credit - $ - $ Lifetime December31,2019	Total 87,671 $ Total 120,721 $
	Significant increase in credit risk

12 months 120,721 $	Significant increase in credit risk Impairment of credit - $ - $ Lifetime
	Significant increase in credit risk
	- $

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September 30, 2019 Lifetime

Significant increase in Impairment 12 months credit risk of credit Total Financial assets at fair value through other comprehensive income - - Group 1 $ 125,172 $ $ $ 125,172

Group 1: Debt instruments designated as investment grade.

(c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. Group treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.
iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.
iv. The Group has $8,692,432 thousand, $10,698,351 thousand and $6,881,543 thousand in undrawn borrowing facilities as of September 30, 2020, December 31, 2019 and September 30, 2019, respectively.

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September30,2020 Non-derivative financial liabilities Short-term borrowings Notes payable Accounts payable Accounts payable-related parties Other payables (including related parties) Lease liabilities Other current liabilities Bonds payable Long-term borrowings Derivative financial liabilities Forward exchange contracts	Less than 3 months	Between 3 months and 1year Between 1 and 2 years 690,177 $ - $ - - 1,086,876 - 213,782 - 16,514 - 110,613 84,790 538 - - - 1,264 43,352 - -	Between 2 and 5 years	Over 5 years	Total
	1,918,723 $ 74 5,121,475 3,614,117 1,673,783 39,516 64,053 2,231,900 420 12,418		- $ - - - - 24,864 - - 352,694 -	- $ - - - - 34,111 - - 44,404 -	2,608,900 $ 74 6,208,351 3,827,899 1,690,297 293,894 64,591 2,231,900 442,134 12,418

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December31,2019 Non-derivative financial liabilities Short-term borrowings Notes payable Accounts payable Accounts payable -related parties Other payables (including related parties) Lease liabilities Other current liabilities Bonds payable Long-term borrowings Derivative financial liabilities Forward exchange contracts	Less than 3 months	Between 3 months and 1year Between 1 and 2 years 92,354 $ - $ - - 415,671 - 45 - 30,014 - 20,388 18,217 721 - - - 295 393 - -	Between 2 and 5 years	Over 5 years	Total
	397,574 $ 74 2,357,770 3,920,206 1,080,715 9,346 48,711 - 83 11,799		- $ - - - - 30,374 - 2,289,500 62,606 -	- $ - - - - 42,953 - - - -	489,928 $ 74 2,773,441 3,920,251 1,110,729 121,278 49,432 2,289,500 63,377 11,799

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September 30,2019	Less than 3 months	Between 3 months and 1year Between 1 and 2years 8,850 $ - $ - - 907,377 - 38,071 - 46,902 - 19,145 14,890 853 - - - - -	Between 2 and 5years	Over 5 years	Total
Non-derivative financial liabilities Short-term borrowings Notes payable Accounts payable Accounts payable -related parties Other payables (including related parties) Lease liabilities Other current liabilities Bonds payable Derivative financial liabilities Forward exchange contracts	2,504,623 $ 459 2,958,524 3,997,148 903,444 8,334 61,042 - 7,549		- $ - - - - 29,651 - 2,472,600 -	- $ - - - - 44,921 - - -	2,513,473 $ 459 3,865,901 4,035,219 950,346 116,941 61,895 2,472,600 7,549

(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, and derivative instruments with quoted market prices is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in certain derivative instruments and equity instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in certain derivative instruments, equity investment without active market and is included in Level 3.

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B. Financial instruments not measured at fair value Financial instruments not measured at fair value include the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable and other payables.
C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities as at September 30, 2020, December 31, 2019 and September 30, 2019 is as follows:

==> picture [459 x 324] intentionally omitted <==

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September 30, 2020 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
- -
-Equity securities $ $ $ 24,305 $ 24,305
- -
-Forward exchange contracts 16,316 16,316
-Fund 51,254 - - 51,254
-Call options of - - 670 670
convertible bonds
Financial assets at fair value
through other comprehensive
income
-
-Equity securities 1,365,743 123,758 1,489,501
-Debt securities 87,671 - - 87,671
Total $ 1,504,668 $ 16,316 $ 148,733 $ 1,669,717
Liabilities
Recurring fair value measurements
Financial liabilities at fair
value through profit or loss
-Forward exchange contracts $ - $ 12,418 $ - $ 12,418
----- End of picture text -----

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

December 31, 2019 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
-Equity securities $ 485 $ - $ 21,301 $ 21,786
- -
-Forward exchange contracts 14,138 14,138
- -
-Call options of 2,290 2,290
convertible bonds
Financial assets at fair value
through other comprehensive
income
-
-Equity securities 2,485,433 129,330 2,614,763
-Debt securities 120,721 - - 120,721
Total $ 2,606,639 $ 14,138 $ 152,921 $ 2,773,698
Liabilities
Recurring fair value measurements
Financial liabilities at fair
value through profit or loss
-Forward exchange contracts $ - $ 11,799 $ - $ 11,799
----- End of picture text -----

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September30,2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Forward exchange contracts -Profit instruments -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 1 504 $ - - - 2,367,677 125,172 2,493,353 $ - $	Level 2 - $ 14,119 - - - - 14,119 $ 7,549 $	Level3 21,301 $ - 217,500 3,955 129,392 - 372,148 $ - $	Total
				21,805 $ 14,119 217,500 3,955 2,497,069 125,172
				2,879,620 $
				7,549 $

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

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believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

E. For the nine months ended September 30, 2020 and 2019, there was no transfer between Level 1 and Level 2.
F. The following chart is the movement of Level 3 for the nine months ended September 30, 2020 and 2019:

At January 1 Added in the period Transferred as subsidiaries due to business combination for the period (Note) Proceeds collected from the capital reduction for the period Losses recognised in profit or loss (Losses) gains recognised in other comprehensive income At September 30	2020 2019 152,921 $ 165,242 $ 3,004 217,500 - 5,481) ( - 7,569) ( 1,620) ( 244) ( 5,572) ( 2,700 148,733 $ 372,148 $ Ninemonths ended September30,

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

(Remainder of page intentionally left blank)

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

Equity securities Private equity funds in venture capital Call options of convertible bonds	Fair value at September 30, 2020 76,837 $ 24,305 670	Valuation technique Market comparable companies Net asset value Binary tree convertible bond valuation model	Significant unobservable input Price to book ratio multiple N/A Risk-free interest rate Stock price Volatility	Range (weighted average) 5,818 $ 24,305 0.1133% 148.0 33.33%	Relationship of inputs to fairvalue
					The higher the multiplier, the higher the fair value N/A The higher the risk- free interest rate, the lower the fair value The higher the stock price, the higher the fair value The higher the stock price volatility, the higher the fair value

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Equity securities Private equity funds in venture capital Call options of convertible bonds	Fair value at December 31, 2019 81,689 $ 21,786 2,290	Valuation technique Significant unobservable input Market comparable companies Price to book ratio multiple Net asset value N/A Binary tree convertible bond valuation model Risk-free interest rate Stock price Volatility	Range (weighted average) 15,267 $ 21,786 0.4816% 167.5 32.97%	Relationship of inputs tofairvalue
				The higher the multiplier, the higher the fair value N/A The higher the risk- free interest rate, the lower the fair value The higher the stock price, the higher the fair value The higher the stock price volatility, the higher the fair value

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Equity securities Private equity funds in venture capital Profit instruments Call options of convertible bonds	Fair value at September 30,2019 82,392 $ 21,805 217,500 3,956	Valuation technique Market comparable companies Net asset value Net asset value Binary tree convertible bond valuation model	Significant unobservable input N/A N/A Due cash flow Risk-free interest rate Stock price Volatility	Range (weighted average) 15,703 $ 21,805 217,500 0.50% 152 42.81%	Relationship of inputs to fair value
					N/A N/A The higher the due cash flow, the higher the fair value The higher the risk-free interest rate, the lower the fair value The higher the stock price, the higher the fair value The higher the stock price volatility, the higher the fair value

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

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Nine months ended September 30, 2020

			Nine months ended September30,2020	eptember30,2020	eptember30,2020
Financial assets Call options of convertible bonds Equity securities Financial assets Call options of convertible bonds Equity securities Financial assets Call options of convertible bonds Equity securities Profit instruments	Input	Change	Favourable change Unfavourable change Favourable change Unfavourable change - $ - $ - $ - $ 893 223) ( - - 446 223) ( - - - - 7,684 7,684 1,339 $ 446) ($ 7,684 $ 7,684 $ Recognised in profit or loss Recognised in other comprehensive income Year ended December31,2019	Recognised in other comprehensive income
				Favourable change	Unfavourable change
	Risk-free interest rate Stock price Volatility Cash flow Input	±20bp ±10% ±5% ±10% Change
			Favourable change Unfavourable change - $ - $ 1,603 1,145) ( 2,290 229) ( - - 3,893 $ 1,374) ($ Recognised in profit or loss Favourable change Unfavourable change - $ - $ 3,214 1,236) ( 1,978 1,731) ( - - 2,175 2,175) ( 7,367 $ 5,142) ($ Ninemonths ended Recognised in profit or loss	Recognised in other comprehensive income
				Favourable change Unfavourable change - $ - $ - - - - 8,169 8,169 8,169 $ 8,169 $ Favourable change Unfavourable change - $ - $ - - - - 8,239 8,239 - - 8,239 $ 8,239 $ September30,2019 Recognised in other comprehensive income	Unfavourable change
	Risk-free interest rate Stock price Volatility Cash flow Input
				Favourable change
	Risk-free interest rate Stock price Volatility Cash flow Cash flow			- $ - - 8,239 - 8,239 $

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(4) Assessment of impact of COVID-19

The Group was adversely affected by the COVID-19 pandemic during the first three quarters of 2020. As a result, production of some of the Group’s factories came to a halt and orders were delayed. As of September 30, 2020, all factories have resumed operations. Additionally, although the Group’s sales orders from certain areas have declined because of the said pandemic, the Group’s overall business and financial position were not significantly impacted based on the Group’s assessment.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: Please refer to table 2.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 4.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 5.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 7.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(2).
J. Significant inter-company transactions during the reporting periods: Purchases or sales of goods from or to related parties reaching $100 million or more: Please refer to table 8.

(2) Information on investees

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

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 10.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 11.

(4) Major shareholders information

Major shareholders information: None.

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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 organisation is divided into Taiwan, Shenzhen, Suzhou 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 nine months ended September 30, 2020 is as follows:

Revenue Revenue from external customers Inter-segment revenue Revenue total Segment profit (loss)	Taiwan Shenzhen 17,037,598 $ 344,563 $ 5,398 7,490,576 17,042,996 $ 7,835,139 $ 743,957 $ 121,379) ($	Singapore Others 3,597,310 $ 778,547 $ 27,123 1,103,106 3,624,433 $ 1,881,653 $ 340,503 $ 219,124) ($	Total
			21,758,018 $ 8,626,203
			30,384,221 $
			743,957 $

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 nine months ended September 30, 2019 is as follows:

Revenue Revenue from external customer Inter-segment revenue Revenue total Segment profit (loss)	Taiwan 23,115,068 $ 43,563 23,158,631 $ 2,082,255 $	Shenzhen 271,326 $ 12,599,251 12,870,577 $ 138,874 $	Singapore Others 3,510,978 $ 899,179 $ 18,731 380,985 3,529,709 $ 1,280,164 $ 207,372 $ 346,246) ($	Total
				27,796,551 $ 13,042,530
				40,839,081 $
				2,082,255 $

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

C. The Group’s reportable operating segments are classified based on the operating regions.
D. The accounting policies of the operating segments are in agreement with the significant accounting policies summarised in Note 4. The Group’s segment profit (loss) is measured with

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the current profit (loss), which is used as a basis for the Group in assessing the performance of the operating segments.

(4) Reconciliation for segment income (loss)

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

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

operations is provided as follows:
			Ninemonths ended		September30,
			2020		2019
Adjusted revenue from reportable segments		$	28,502,568	$	39,558,917
Adjusted revenue from other operating segments			1,881,653		1,280,164
Total operating segments			30,384,221		40,839,081
Elimination of inter-segment revenue	(		8,626,203)	(	13,042,530)
Total consolidated operating revenue		$	21,758,018	$	27,796,551

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

continuing operations is provided as follows:
Adjusted income from reportable segments after income tax Adjusted income from other operating segments after income tax Total operating segments Income from elimination of inter-segment revenue Income from continuing operations after income tax	Ninemonths ended September30,
		2019
		2,428,501 $ 285,005

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Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Loans to others

Nine months ended September 30, 2020

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance for the nine months ended September 30,2020	Balance at September 30, 2020	Actual amount drawn down	Interest rate	Nature of loan(Note 3)	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Limit on loans granted to a singleparty (Note 2)	Ceiling on total loans granted (Note 1) Note
													Item Value
0 0 1 2	MEHO MEHO ASCX MECL	BTTT METC ETCX ETCX	Other receivables Other receivables Other receivables Other receivables	Y Y Y Y	180,000 $ 200,000 4,269 8,538	38,000 $ 200,000 4,269 -	- - 4,269 -	- - - -	2 2 2 2	- $ - - -	Business operation Business operation Business operation Business operation	- $ - - -	- - $ - - - - - -	4,394,385 $ 4,394,385 34,848 898,452	4,394,385 $ 4,394,385 4,394,385 4,394,385

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

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

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

(2) For short-term financing.

Table 1,Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Table 2

Provision of endorsements and guarantees to others

Nine months ended September 30, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Number (Note 1)	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/ guarantee amount as of September 30, 2020	Outstanding endorsement/ guarantee amount at September 30, 2020	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided (Note 4)	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/ guarantor (Note 2)
0 0 0	MEHO MEHO MEHO	BTTT SENM SOCV	2 2 2	8,788,770 $ 8,788,770 8,788,770	1,700,000 $ 29,100 101,850	300,000 $ 29,100 101,850	- $ - 75,660	- $ - -	2.73% 0.26% 0.93%	10,985,963 $ 10,985,963 10,985,963	Y Y Y	N N N	N N N

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

(1)The Company is ‘0’.

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

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

(1)Having business relationship.

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

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

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

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

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

Table 2, Page 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) September 30, 2020

Table 3

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by Marketable securities(Note 1) Relationship with the securities issuer General ledger account		As ofSeptember30,2020	As ofSeptember30,2020
	Numberofshares	Bookvalue (inthousands)	Ownership (%)	Fairvalue (inthousands)
The Company 76324296A `-` Financial assets mandatorily measured at fair value through profit or loss Valuation adjustment The Company JAFCO `-` Non-current financial assets mandatorily measured at fair value through profit or loss The Company 2881B.TW `-` Equity instruments measured at fair value through other comprehensive income The Company 2882B.TW `-` Equity instruments measured at fair value through other comprehensive income The Company 5871A `-` Equity instruments measured at fair value through other comprehensive income The Company P18QNBF3F10306 `-` Equity instruments measured at fair value through other comprehensive income Valuation adjustment The Company Stock - 4943.TW `-` Measured at fair value through other comprehensive income - non-current The Company Stock - 3290.TW `-` Measured at fair value through other comprehensive income - non-current The Company Stock - FUJITER Semiconductor CO.,LTD. `-` Measured at fair value through other comprehensive income - non-current The Company Stock - NETVOX TECHNOLOGY CO., LTD `-` Measured at fair value through other comprehensive income - non-current The Company Stock - EVER THAI AGRI-PRODUCT CO.,LTD. `-` Measured at fair value through other comprehensive income - non-current The Company Stock - SUNSINO SME Development Co., Ltd. - Measured at fair value through other comprehensive income - non-current The Company Stock - LINSATION - Measured at fair value through other comprehensive income - non-current MEST Stock - Perfect Fortune Inc. - Measured at fair value through other comprehensive income - non-current MEST Stock - LOYAL WIRE& CABLE COMPANY LTD. - Measured at fair value through other comprehensive income - non-current Accumulated impairment Valuation adjustment	5,015 800 683 585 300 3,000 13,905 5,723 2,781 324 683 169 75 2,126 1,159	50,000 $ 1,254	- 0.71% - - - - 8.84% 5.75% 9.79% 1.32% 5.17% 0.36% 6.90% 18.33% 18.33%	51,254 $
				24,305 $
		51,254 $
		24,305 $
		40,980 35,100 30,000 89,550		42,688 36,621 29,970 87,671
		195,630 1,320		196,950 $
				1,176,342 80,122 16,563 - 6,425 2,123 8,772 60,273 29,602
		196,950 $
		648,164 99,990 27,812 2,976 6,425 2,123 8,772 7,982 7,695
		811,939 2,976) ( 571,259		1,380,222 $

		1,380,222 $

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

Table 3,Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

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

Nine months ended September 30, 2020

Investor Table 4	Marketable securities	General ledger account	Counterparty	Relationship with the investor	January1,2020 Balance as at	January1,2020 Balance as at	Addition	Addition		Disposal	Disposal		(Except as otherwise indicated) Balance as atSeptember30,2020 Expressed in thousands of NTD	(Except as otherwise indicated) Balance as atSeptember30,2020 Expressed in thousands of NTD
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Bookvalue	Gain (loss) on disposal	Number of shares	Amount
The Company	Stocks	Long-term investments accounted for using the equity method - MEVN	MERRY & LUXSHARE (VIETNAM) CO.,LTD.	A subsidiary	-	$ -	-	$ 366,710	-	$ -	$ -	$ -	-	$ 366,710

Note 1: Inter-company transactions between companies within the Group are eliminated.

Table 4,Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

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

Nine months ended September 30, 2020

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

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

the real estate is disclosed below:

Real estate acquired by	Real estate acquired	Date of the event	Transaction amount	Status of payment	Counterparty	Relationship with the counterparty		the real	estate is disclo	sed below:	Basis or reference used in setting the price	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	411,436	HOP LUC CONSTRUC- TION JOINT STOCK COMPANY	None	-	-	-	-	-	For business use	-

Table 5,Page1

Table 6

Expressed in thousands of NTD

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

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

Nine months ended September 30, 2020

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationshipwith the counterparty			Transaction	Transaction	Differences in transaction terms compared to third party transactions(Note 1)	Differences in transaction terms compared to third party transactions(Note 1)	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Note
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance (Note2)	Percentage of total notes/accounts receivable (payable)
The Company The Company The Company METC MESG MESG MESG	MECL MECE MECH The Company MECH METC MECL	Investment accounted for using the equity method Investment accounted for using the equity method A subsidiary of the Company Parent Company Investment accounted for using the equity method A subsidiary of the Company A subsidiary of the Company	Purchases Purchases Purchases Purchases Purchases Purchases Purchases	6,605,298 $ 6,318,358 2,497,649 465,770 1,384,234 919,808 857,565	30% 29% 11% 2% 6% 4% 4%	60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable 60 days end of month after offsetting with accounts receivable	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)	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	2,995,177) ($ ( 1,824,649) ( 1,287,085) ( 431,191) ( 663,940) ( 333,257) ( 399,782)	30% 18% 13% 4% 7% 3% 4%	(Note 3) (Note 3) (Note 3) (Note 3)

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

Table 6,Page1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

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

September 30, 2020

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at September 30,2020(Note 1)	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date (Note 2)	Allowance for doubtful accounts
					Amount	Action taken
The Company MECL MECL METC	METC The Company MESG MESG	A subsidiary of the Company Parent Company A subsidiary of the Company A subsidiary of the Company	$ 431,191 2,995,177 399,782 333,257	2.21 3.70 3.33 5.39	- $ - - -	- - - -	86,481 $ 1,274,385 145,086 159,358	- $ - - -

Note 1: Inter-company transactions between companies within the Group are eliminated. Note 2: The balance was as at October 26, 2020.

Table 7,Page1

Table 8

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Significant inter-company transactions during the reporting periods Nine months ended September 30, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

						Transaction
Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)
0 0 1 1 2 2 2 2	MEHO MEHO METC METC MESG MESG MESG MESG	MECL MECL MEHO MEHO MECL METC MECL METC	1 1 2 2 3 3 3 3	Purchases Accounts payable Purchases Accounts payable Purchases Purchases Accounts payable Accounts payable	$ 6,605,298 2,995,177 465,770 431,191 857,565 919,808 399,782 333,257	The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The balance shown was net of receivables as agreed by both parties	30% 10% 2% 1% 4% 4% 1% 1%

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.):

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

Table 8,Page1

Information on investees Nine months ended September 30, 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Table 9 Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at September 30,2020	Shares held as at September 30,2020	Shares held as at September 30,2020	Net profit (loss) of the investee for the nine months ended September 30,2020	Expressed in thousands of NTD (Except as otherwise indicated) Investment income (loss) recognised by the Company for the nine months ended September 30,2020 Note	Expressed in thousands of NTD (Except as otherwise indicated) Investment income (loss) recognised by the Company for the nine months ended September 30,2020 Note
				Balance as at September 30,2020	Balance as at December 31,2019	Number of shares (in thousand shares)	Ownership (%)	Book value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company DDBV DDBV MHKY INSA SOCV SOCA	MEST DDBV LEOHAB ENTERPRISE CO.,LTD. MECA MESG METC MHKY INSA BTTT MEVN UCMU MTHK FUSA SOCV SOCA SENM	HONG KONG British Virgin IS. Taichung City U.S.A SINGAPORE THAILAND CAYMAN SAMOA Taichung City VIETNAM MAURITIUS HONG KONG SAMOA CANADA CANADA NORWAY	General investment business Plastic injection molding and metal stamping Technique, marketing and after service Sales of microphone, receiver and speaker Sales of medical device General investment business Sales of medical device Manufacture of microphone and speaker General investment business General investment business General investment business Sale and development of speaker and power amplifier General investment business Manufacture and sales of speaker monomer Microphone, components and product and sale of other electric products Sales of microphone, receiver and speaker	981,113 $ 1,479,925 96,666 28,887 92,132 484,358 887,287 865,832 14,640 366,710 151 1,392,956 818,916 30 11,112 23	981,113 $ 1,479,925 96,666 28,887 92,132 484,358 648,129 865,832 14,640 - 151 1,392,956 579,758 30 11,112 23	25,658 48,005 7,338 999 800 5,060 24,979 - 9,000 - 5 48,000 - - - -	100.00 100.00 30.91 99.90 100.00 99.99 100.00 70.00 100.00 51.00 100.00 100.00 97.12 100.00 100.00 100.00	3,452,088 $ 2,830,543 80,530 36,284 973,840 528,731 740,024 763,569 26,247 357,320 - 2,830,435 754,807 37,553 62,443 49,425	121,379) ($ 55,378 44,126 968 340,503 21,365 36,951) ( 42,849) ( 1,545) ( 1,787) ( 693 54,684 21,681) ( 10,466) ( 4,381 4,625	132,458) ($ 16,883 13,639 967 340,503 22,179 36,951) ( 29,995) ( 1,545) ( 912) ( - - - - - -	(Note 1) (Note 1) (Note 1) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2) (Note 2)

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

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

Table 9,Page1

Table 10

Expressed in thousands of NTD (Except as otherwise indicated)

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Information on investees in Mainland China

Nine months ended September 30, 2020

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January1, 2020	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the nine months ended September 30, 2020	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the nine months ended September 30, 2020	Accumulated amount of remittance from Taiwan to Mainland China as of September 30, 2020	Net income of investee for the nine months ended September 30, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the nine months ended September 30, 2020	Book value of investments in Mainland China as of September 30, 2020 (Note 5)	Accumulated amount of investment income remitted back to Taiwan as of September 30, 2020	Note
					Remitted to Mainland China	Remitted back to Taiwan
MECL MECE MECS Perfect Fortune Inc. LOYAL WIRE& CABLE COMPANY LTD. MECH FUSZ MEDG MSCS ETCX	Manufacture of medical device Manufacture of speaker and amplifier Retail sales of hearing products Manufacture and sales of microphone, receiver and speaker Electric wire, electric cable and other wire processing Electric wire, electric cable and other wire processing Microphone, receiver, speaker, security system, induction cooker and other electronic component International trade, transit trade and trading consulting; trading amongst companies in bonded area and trading agency in the area Research and development of sound equipment, earphones, mobile power supply, charging box, cable, connector, electronic components, plastic hardware, mould and antenna Manufacture and sales of microphone, receiver, speaker and mobile phone	407,023 $ 2,671,280 7,085 43,546 125,275 426,900 273,999 853,800 147,590 19,211	(Note 2) (Note 2) (Note 2) (Note 2、4) (Note 2、4) (Note 2) (Note 2) (Note 1) (Note 1) (Note 2)	453,191 $ 1,369,285 6,055 107,624 - 420,687 310,763 452,564 79,728 2,237	- $ - - - - - - - - 16,772	- $ - - - - - - - - -	453,191 $ 1,369,285 6,055 107,624 - 420,687 310,763 452,564 79,728 19,009	282,874) ($ 105,408 434) ( 6,743 3,340 334,074 4,337) ( 14,425) ( 7,378 2,311) (	100.00% 49.00% 49.00% 18.33% 18.33% 49.00% 97.12% 49.00% 70.00% 97.12%	282,874) ($ 13,155 213) ( - - 164,668 4,197) ( 7,062) ( 5,164 1,809) (	2,246,129 $ 2,830,435 1,062) ( 60,271 29,601 825,501 287,640 367,861 97,639 9,299	2,282,120 $ 295,185 40,321 4,125 - - - - - -	(Note 3) (Note 3) (Note 3)

Table 10,Page1

Table 10

Expressed in thousands of NTD (Except as otherwise indicated)

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Information on investees in Mainland China

Nine months ended September 30, 2020

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January1, 2020	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the nine months ended September 30, 2020	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the nine months ended September 30, 2020	Accumulated amount of remittance from Taiwan to Mainland China as of September 30, 2020	Net income of investee for the nine months ended September 30, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the nine months ended September 30, 2020	Book value of investments in Mainland China as of September 30, 2020 (Note 5)	Accumulated amount of investment income remitted back to Taiwan as of September 30, 2020	Note
					Remitted to Mainland China	Remitted back to Taiwan
ASCX LACX FUXM ASCZ	Manufacture and sales of hearing aid, hearing device and acoustics equipment Sales of medical device Manufacture of hearing aid and acoustics for rehabilitation device Research and development and technical sales of software for hearing aid use	56,611 21,345 17,076 297,264	(Note 2) (Note 2) (Note 2) (Note 2)	275,537 22,180 17,744 94,845	- - - 208,150	- - - -	275,537 22,180 17,744 302,995 3,837,362 $	16,572 795) ( 1,195) ( 10,426) (	96.63% 96.63% 96.63% 97.12%	15,819 775) ( 1,151) ( 10,050) (	72,595 29,709 28,836 246,935	- $ - - -

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 reviewed 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 September 30,2020	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Merry Electronics Co., Ltd.	$ 3,837,362	$ 3,727,090	$ 6,591,578

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

Table 10,Page2

Table 11

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas Nine months ended September 30, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Investeein Mainland China	Counterparty	Sale(purchase)	Sale(purchase)	Propertytransaction	Propertytransaction	Accounts receivable(payable)	Accounts receivable(payable)	Provision of endorsements/guarantees or collaterals	Provision of endorsements/guarantees or collaterals		Financing	Financing		Others
		Amount	%	Amount	%	Balance at September 30,2020	%	Balance at September30,2020	Purpose	Maximum balance during the nine months ended September 30,2020	Balance at September 30,2020	Interestrate	Interest during the nine months ended September 30,2020
MECL MECL MECE MECH MECH	MEHO MESG MEHO MEHO MESG	$ 6,605,298 857,565 6,318,358 2,497,649 1,384,234	30% 4% 29% 11% 6%	- - - - -	- - - - -	$ 2,995,177 399,782 1,824,649 1,287,085 663,940	30% 4% 18% 13% 7%	- $ - - - -	- - - - -	- $ - - - -	- $ - - - -	- - - - -	- $ - - - -	- - - - -

Table 11,page1

AI assistant

MERRY — Interim / Quarterly Report 2020

52085_rns_2020-12-16_6c0be682-da9f-4d6c-a516-f3e9ba5ed7c0.pdf

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Wang, Yu-Chuan

L iu, Mei-Lan

For and on behalf of PricewaterhouseCoopers, Taiwan

October 29, 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2020, DECEMBER 31, 2019 AND SEPTEMBER 30, 2019

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

1. HISTORY AND ORGANISATION

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

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(2) Basis of preparation

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

B. Subsidiaries included in the consolidated financial statements:

(4) Financial assets at amortised cost

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

(6) Employee benefits

(7) Income tax

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

(6) Inventories

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

C. Associates

(9) Property, plant and equipment

Nine months ended September 30, 2019

－ (10) Leasing arrangements lessee

(11) Intangible assets

Nine months ended September 30, 2020

Nine months ended September 30, 2019

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

(12) Other non-current assets

(13) Short-term borrowings

(14) Other payables

(15) Other current liabilities

(16) Bonds payable

- (17) Long term borrowings

(18) Pensions

(c) The first restricted stocks to employees in 2017

(d) The second restricted stocks to employees in 2017

(20) Share capital

(21) Capital surplus

(22) Retained earnings

(23) Other equity items

(24) Operating revenue

Three months ended September 30, 2020

(26) Other income

(27) Other gains and losses

(28) Expenses by nature

(30) Income tax

(31) Earnings per share

(33) Supplemental cash flow information

(34) Changes in liabilities from financing activities

7. RELATED PARTY TRANSACTIONS

(1) Significant related party transactions A. Operating revenue

B. Purchases

(b) Disposal of property, plant and equipment:

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

10. SIGNIFICANT DISASTER LOSS

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

12. OTHERS

(1) Capital management

(2) Financial instruments

MERRY Interim / Quarterly Report 2020

`L` iu, Mei-Lan

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

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

`－` (10) Leasing arrangements lessee