MERRY - Interim / Quarterly Report 2021

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REVIEW REPORT June 30, 2021 AND 2020

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 on June 30, 2021 and 2020, and the related consolidated statements of comprehensive income for the three months and six months ended, as well as the related consolidated statements of changes in equity and of cash flows for the six 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$5,027,240 thousand and NT$3,580,960 thousand, constituting 16% and 14% of the consolidated total assets, and total liabilities

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of NT$2,252,802 thousand and NT$741,515 thousand, constituting 11% and 5% of the consolidated total liabilities as at June 30, 2021 and 2020, respectively, and reflect total revenue of NT$277,312 thousand, NT$241,712 thousand, NT$560,867 thousand and NT$416,901 thousand, constituting 3%, 4%, 4% and 4% of the consolidated revenues for the three months and six months then ended, respectively, and total comprehensive income (loss) of NT$106,408 thousand, NT$14,454 thousand, NT$130,688 thousand and (NT$34,507) thousand, constituting (394%), 3%, (89%) and 5% of the consolidated total comprehensive income for the three months and six 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 on June 30, 2021 and 2020, and of its consolidated financial performance for the three months and six months then ended, and its consolidated cash flows for the six 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.

Wang, Yu-Chuan

Liu, Mei-Lan

For and on behalf of PricewaterhouseCoopers, Taiwan July 29, 2021

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’ 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 JUNE 30, 2021, DECEMBER 31, 2020 AND JUNE 30, 2020

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of June 30, 2021 and 2020 were reviewed, not audited)

Notes	December 31, 2020 AMOUNT % `$` `3,046,963` `9` `78,919` `-` `195,179` `1` `866,600` `3` `12,441,418` `36` `273,532` `1` `71,086` `-` `705,555` `2` `3,791,659` `11` `708,638` `2` `22,179,549` `65` `26,468` `-` `1,573,153` `5` `4,479,708` `13` `3,694,738` `11` `356,010` `1` `1,418,090` `4` `156,125` `-` `271,507` `1` `11,975,799` `35` `$` `34,155,348` `100`	June 30, 2020	%
	AMOUNT `$` `3,046,963` `78,919` `195,179` `866,600` `12,441,418` `273,532` `71,086` `705,555` `3,791,659` `708,638` `22,179,549` `26,468` `1,573,153` `4,479,708` `3,694,738` `356,010` `1,418,090` `156,125` `271,507` `11,975,799` `$` `34,155,348`	AMOUNT `$` `6,242,503` `37,519` `171,042` `-` `5,121,032` `13,905` `71,835` `436,619` `2,645,490` `276,793` `15,016,738` `24,305` `1,620,032` `3,968,689` `2,407,905` `189,722` `1,447,381` `206,935` `183,158` `10,048,127` `$` `25,064,865`
6 (1) 6 (2) 6 (3) 8 6 (4) 7 (2) 7 (2) 6 (6) 6 (7) and 7 (2) 6 (3) 6 (3) 6 (8) 6 (9) 6 (10) 6 (11) 6 (30) 6 (12)			`25` `-` `1` `-` `20` `-` `-` `2` `11` `1`
			`60`
			`-` `6` `16` `9` `1` `6` `1` `1`
			`40`
			`100`

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2021, DECEMBER 31, 2020 AND JUNE 30, 2020

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of June 30, 2021 and 2020 were reviewed, not audited) June 30, 2021 December 31, 2020 Liabilities andEquity Notes AMOUNT % AMOUNT % Current liabilities 2100 Short-term borrowing 6 (13) `$` `5,477,130` `17` `$` `3,271,489` `10` 2120 Financial liabilities at fair value through profit or loss - current 6 (2) `5,342` `-` `30,047` `-` 2150 Notes payable `2,614` `-` `-` `-` 2170 Accounts payable `4,659,848` `15` `6,466,930` `19` 2180 Accounts payable - related parties 7 (2) `2,298,963` `7` `4,167,477` `12` 2200 Other payables 6 (2)(14) `2,427,033` `8` `1,601,184` `5` 2220 Other payables - related parties 7 (2) `142,651` `-` `54,269` `-` 2230 Current income tax liabilities 6 (30) `103,433` `-` `268,961` `1` 2300 Other current liabilities 6 (15)(16)、 7 (2) `3,356,362` `11` `3,799,911` `11` 21XX Current Liabilities `18,473,376` `58` `19,660,268` `58` Non-current liabilities 2530 Bonds payable 6 (16) `-` `-` `-` `-` 2540 Long-term borrowings 6 (17) `1,067,891` `3` `807,419` `2` 2570 Deferred income tax liabilities 6 (30) `1,177,121` `4` `1,169,790` `4` 2580 Non-current lease liabilities `72,719` `-` `115,044` `-` 2640 Accrued pension liabilities `83,805` `-` `85,701` `-` 2670 Other non-current liabilities 6 (8) `44,608` `-` `46,383` `-` 25XX Non-current liabilities `2,446,144` `7` `2,224,337` `6` 2XXX Total liabilities `20,919,520` `65` `21,884,605` `64` Equity attributable to owners of parent Share capital 6 (20) 3110 Common stock `2,096,826` `7` `2,093,332` `6` Capital surplus 6 (21) 3200 Capital surplus `4,106,945` `12` `3,960,123` `11` Retained earnings 6 (22) 3310 Legal reserve `2,006,040` `6` `2,006,040` `6` 3320 Special reserve `269,144` `1` `269,144` `1` 3350 Unappropriated retained earnings `2,497,624` `8` `3,433,731` `10` Other equity interest 6 (23) 3400 Other equity interest `(` `335,667 ) (1)` `9,326` `1` 31XX Equity attributable to owners of the parent `10,640,912` `33` `11,771,696` `35` 36XX Non-controlling interest `460,420` `2` `499,047` `1` 3XXX Total equity `11,101,332` `35` `12,270,743` `36` Significant contingent liabilities and unrecognized contract commitments 9 Significant events after the balance sheet date 11 3X2X Total liabilities and equity `$` `32,020,852` `100` `$` `34,155,348` `100`	June 30, 2020	June 30, 2020
	AMOUNT `$` `665,760` `10,052` `74` `3,468,110` `2,136,947` `2,606,598` `40,767` `274,315` `783,588` `9,986,211` `2,245,051` `108,411` `979,106` `97,213` `86,075` `421,349` `3,937,205` `13,923,416` `2,085,514` `3,853,551` `2,006,040` `269,144` `2,406,887` `13,856` `10,634,992` `506,457` `11,141,449` `$` `25,064,865`	%
Current liabilities 2100 Short-term borrowing 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2300 Other current liabilities 21XX Current Liabilities Non-current liabilities 2530 Bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2640 Accrued pension liabilities 2670 Other non-current liabilities 25XX Non-current liabilities 2XXX Total liabilities Equity attributable to owners of parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity		`3` `-` `-` `14` `9` `10` `-` `1` `3`
		`40`
		`9` `1` `4` `-` `-` `2`
		`16`
		`56`
		`8` `15` `8` `1` `10` `-`
		`42`
		`2`
		`44`
		`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 THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

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

(UNAUDITED)

Items	Notes	Three months ended June 30	Three months ended June 30		Six months ended June 30	Six months ended June 30
		2021	2020		2021	2020
				%
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 (loss) 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 the equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period	6 (24) and 7 (2) 6 (6) and 7 (2) 6 (28)(29) 12 (2) 6 (25) 6 (26) 6 (27) 6 (8) 6 (30)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

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

Notes	Three months ended June 30	Three months ended June 30	Three months ended June 30	Three months ended June 30		Six months ended June 30	Six months ended June 30	Six months ended June 30	Six months ended June 30
	2021		% ( 1) - - ( 1) ( 1) - - - ( 1) ( 2) - 2 - 2 ( 1) 1 - 0.54 0.52	2020		2021	% ( 1) - - ( 1) ( 1) - - - ( 1) ( 2) ( 1) 1 - 1 ( 1) - ( 1) 0.64 0.63	2020
	AMOUNT ( $ 79,608) - 70 ( 79,538) ( 79,842) ( 337) ( 40,919) 24,566 ( 96,532) ( $ 176,070) ( $ 27,029) $ 111,217 37,824 $ 149,041 ( $ 69,648) 42,619 ( $ 27,029) $ $			AMOUNT $ 211,305 - ( 11) 211,294 ( 41,951) ( 1,253) ( 62,098) 21,351 ( 83,951) $ 127,343 $ 426,190 $ 302,768 ( 3,921) $ 298,847 $ 424,999 1,191 $ 426,190 $	%	AMOUNT ($ 188,528) - ( 1,043) ( 189,571) ( 125,008) 807 ( 75,746) 40,500 ( 159,447) ($ 349,018) ($ 146,494) $ 132,137 70,387 $ 202,524 ($ 222,973) 76,479 ($ 146,494) $		AMOUNT ($ 807,466) 3,366 528 ( 803,572) ( 116,212) ( 1,132) ( 103,828) 44,259 ( 176,913) ($ 980,485) ($ 641,074) $ 350,149 ( 10,738) $ 339,411 ($ 632,256) ( 8,818) ($ 641,074) $ $
6 (3)(23) 6 (30) 6 (23) 6 (23) 6 (23) 6 (30) 6 (31) 6 (31)
		$		$		$			$

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

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Notes Six months ended June 2020 Balance at January 1,2020 Profit (loss) for the period Other comprehensive income for the period Total comprehensive income (loss) for the period Appropriation and distribution of 2019 retained earnings 6 (22) Legal reserve Cash dividends Share-based payment 6 (19) Disposal of investments in equity instruments measured at fair value 6 (3) Recognition of change in equity of associates in proportion to the Group’s ownership Changes in ownership interests in subsidiaries Acquired non-controlling interests in subsidiaries Balance at June 30, 2020 Six months ended June 2021 Balance at January 1,2021 Profit (loss) for the period Other comprehensive income for the period Total comprehensive income (loss) for the period Appropriation and distribution of 2020 retained earnings 6 (22) Cash dividends Share-based payments 6 (19) Recognition of change in equity of associates in proportion to the Group’s ownership Acquired non-controlling interests in subsidiaries Balance at June 30, 2021	MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (Expressed in thousands of New Taiwan dollars, except earnings per share amounts) (UNAUDITED) Equity attributable to owners of the parent Share capital - common stock Capital surplus- additional paid-in capital Legal reserve Special reserve Unappropriated Retained earnings $ 2,086,684 $ 3,870,105 $ 1,745,768 $ 269,144 $ 3,834,442 - - - - 350,149 - - - - 3,366 - - - - 353,515 - - 260,272 - ( 260,272 ) - - - - ( 1,608,376 ) ( 1,170 ) ( 18,259 ) - - - - - - - 87,578 - 1,683 - - - - 22 - - - - - - - - $ 2,085,514 $ 3,853,551 $ 2,006,040 $ 269,144 $ 2,406,887 $ 2,093,332 $ 3,960,123 $ 2,006,040 $ 269,144 $ 3,433,731 - - - - 132,137 - - - - - - - - - 132,137 - - - - ( 1,068,244 ) 3,494 31,036 - - - - 680 - - - - 115,106 - - - $ 2,096,826 $ 4,106,945 $ 2,006,040 $ 269,144 $ 2,497,624		MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (Expressed in thousands of New Taiwan dollars, except earnings per share amounts) (UNAUDITED) Equity attributable to owners of the parent	MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (Expressed in thousands of New Taiwan dollars, except earnings per share amounts) (UNAUDITED) Equity attributable to owners of the parent	MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (Expressed in thousands of New Taiwan dollars, except earnings per share amounts) (UNAUDITED) Equity attributable to owners of the parent	MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (Expressed in thousands of New Taiwan dollars, except earnings per share amounts) (UNAUDITED) Equity attributable to owners of the parent		Total Non- Controlling interest $ 12,833,977 $ 164,415 350,149 ( 10,738 ) ( 982,405 ) 1,920 ( 632,256 ) ( 8,818 ) - - ( 1,608,376 ) - 39,942 - - - 1,683 - 22 - - 350,860 $ 10,634,992 $ 506,457 $ 11,771,696 $ 499,047 132,137 70,387 ( 355,110 ) 6,092 ( 222,973 ) 76,479 ( 1,068,244 ) - 44,647 - 680 - 115,106 ( 115,106 ) $ 10,640,912 $ 460,420	Total equity $ 12,998,392 339,411 ( 980,485 ) ( 641,074 ) - ( 1,608,376 ) 39,942 - 1,683 22 350,860 $ 11,141,449 $ 12,270,743 202,524 ( 349,018 ) ( 146,494 ) ( 1,068,244 ) 44,647 680 - $ 11,101,332
					(UNAUDITED) Equity attributable to ow
				Legal reserve $ 1,745,768 - - - 260,272 - - - - - - $ 2,006,040 $ 2,006,040 - - - - - - - $ 2,006,040		Special reserve Unappropriated Retained earnings $ 269,144 $ 3,834,442 - 350,149 - 3,366 - 353,515 - ( 260,272 ) - ( 1,608,376 ) - - - 87,578 - - - - - - $ 269,144 $ 2,406,887 $ 269,144 $ 3,433,731 - 132,137 - - - 132,137 - ( 1,068,244 ) - - - - - - $ 269,144 $ 2,497,624	Other equity interest $ 1,027,834 - ( 985,771 ) ( 985,771 ) - - 59,371 ( 87,578 ) - - - $ 13,856 $ 9,326 - ( 355,110 ) ( 355,110 ) - 10,117 - - ($ 335,667 )

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 SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

(Reviewed, Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax

Adjustments

Adjustments to reconcile profit (loss)

Depreciation expense-property, plants and equipment
Depreciation expense - right-of-use assets

Amortization

Expected credit impairment gain

Compensation cost of employee restricted shares

Loss (gain) on financial assets or liabilities at fair
value through profit or loss

Loss on disposal 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

Unrealized foreign exchange losses

Effect of exchange rate changes

Changes in operating assets and liabilities

Changes in operating assets

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

Other current assets

Changes in operating liabilities

Accounts payable

Accounts payable - related parties

Other payables

Other payables - related parties

Contract liabilities

Refund liabilities

Other current liabilities

Other non-current liabilities

Cash (outflow) inflow generated from operations
Interest received

Dividend received

Interest paid

Income taxes paid

Net cash inflows (outflows) generated from (used
in) operating activities Six months ended June 30
Notes
2021
2020

$
207,002 $
482,163

6 (9)(28)
218,380
166,391
6 (10)(28)
87,016
37,078
6 (11)(28)
64,110
67,803
12 (2)
(
8,262 ) (
1,694 )
6 (19)
44,647
39,982

(
8,248 )
5,139
6 (3)(27)
5,580
333
6(8)
(
196,903 )
(
116,898 )
6 (25)
(
19,394 ) (
26,382 )
6 (26)
(
1,096 )
-

(
453 ) (
3,720 )
6 (27)
3,674
589

30,288
27,799
6 (10)
4,770
1,521

20,009
8,337

(
74,995 ) (
20,328 )

6 (32)
(
4,037 )
(
34,251 )

-
451

5,134,843
266,638

182,328 (
74,948 )

(
586,990 ) (
573,255 )

200,153 (
16,610 )

(
1,745,388 )
779,743

(
1,851,213 ) (
1,761,261 )

(
323,836 )
21,672

88,523 (
95,070 )

76,361
342,089

(
113,081 )
-

(
18,171 )
2,665

2,112
-

1,417,729 (
474,024 )

12,457
26,277

1,096
-

(
29,523 ) (
12,259 )

(
151,576 ) (
117,916 )

1,250,183
(
577,922 )

(Continued)

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

(Reviewed, Unaudited)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in financial assets mandatorily measured at fair
value through profit or loss
Acquisition of financial assets at amortized cost- current
Proceeds from disposal of financial assets at fair value
through other comprehensive income
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(Increase) decrease in other non - current assets
(Increase) decrease in guarantee deposits paid
Acquisition of non-controlling interests in Subsidiary
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings

Increase (decrease) in other non-current liabilities

Repayment of principal portion of lease liabilities

Proceeds from long-term borrowings
Repayment of long-term borrowings
Change in non-controlling interests
Cancellation of restricted employee shares
Net cash inflows generated from financing activities
Effect of change in foreign currency exchange
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period Six months ended June 30
Notes
2021
2020
6 (32)
($
280,000 )
$
-
(
3,853 )
-
6 (32)
83,970
138,720
6 (32)
(
531,296 )
(
393,317 )
43,070
25,875
6 (32)
(
40,451 )
(
9,818 )
1,681
(
17,556 )
6,287
(
22,001 )
(
364,914 )
-
(
1,085,506 )
(
278,097 )
6 (33)
2,289,280
212,184
6 (33)
(
5,248 )
14,467
6 (10)(33)(
105,927 )
(
51,602 )
282,478
108,510
-
(
62,000 )
4 (3)
-
350,860
-
(
40 )
2,460,583
572,379
(
21,014 )
(
63,720 )
2,604,246
(
347,360 )
3,046,963
6,589,863
$
5,651,209
$
6,242,503

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 SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(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 July 29, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

New Standards, Interpretations and Amendments Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9” Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2” Amendments to IFRS 16 “COVID-19-Related Rent Concessions after June 30, 2021”	Effective date by International Accounting Standards Board January 1, 2021 January 1, 2021 April 1, 2021 (Note)

Note: The FSC permitted early adoption started from 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.

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(2) Impact on 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 FSC effective from 2022 are as follows:

New Standards, Interpretations and Amendments Amendments to IFRS 3 “'Reference to the Conceptual Framework” Amendments to IAS 16“Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract” Annual Improvements to IFRS Standards 2018–2020	Effective date by International Accounting Standards Board January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

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

(3) Impact on IFRS issued by IASB but not yet endorsed by the FSC

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

New Standards, Interpretations and Amendments
Amendments to IFRS 10 and IAS 28, “Sale or contribution of
assets between an investor and its associate or joint venture”
IFRS 17 “Insurance contracts”
Amendments to IFRS 17 “Insurance contracts”
Amendments to IAS 1 “Classification of liabilities as current or
non-current”
Amendments to IAS 1 “The disclosure of accounting policies“
Amendments to IAS 8 “The definition of accounting estimates“
Amendments to IAS 12 “Deferred tax related to assets and
liabilities arising from a single transaction”

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

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, 2020, 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.

~12~

(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, 2020.

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(b) Financial assets and liabilities at fair value through other comprehensive income measured at fair value.
(c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with 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.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

Basis for preparation for the current period financial statements and the 2020 consolidated financial statements is the same.

B. Subsidiaries included in the consolidated financial statements:

Name of investor MEHO MEHO MEHO MEHO	Name of subsidiary Main business Activities Merry Electronics (HK) Co., Ltd. (MEST) Sales of the same products as the Company. Merry Electronics (Thailand) Co., Ltd. (METC) The same main business as the Company. Merry Electronics (U.S.A.) Co., Ltd. ("MECA") Agency selling microphone and security system manufactured by affiliates. Danny Dynamics Limited ("DDBV") Equity investments.	Ownership (%)	Ownership (%)	June 30, 2020	Description
		June 30, 2021	December 31, 2020 100.00% 99.99% 99.90% 100.00%
		100.00% 99.99% 99.90% 100.00%		100.00% 99.99% 99.90% 100.00%	NOTE 1 NOTE 1

~13~

Name of investor MEHO MEHO MEHO MEHO MEHO MEHO MEST DDBV DDBV INSA SOCV SOCA MHKY FUSA FUSA	Name of subsidiary Main business Activities Merry Electronics (Singapore) Pte.Ltd. ("MESG") Manufacturing of other electronic components and circuit board. Merry Healthcare Co., LTD. (“MHKY”) Sales of medical device. Asian Elite International Ltd. (“MSCS”) Manufacturing and sales of speaker and amplifier. Indigo Enterprise Inc. ("INSA") Equity investments. Biotest Medical Corporation (“BTTT”) Manufacturing of medical device. MERRY & LUXSHARE (VIETNAM) CO., LTD. ("MEVN") Manufacturing of speaker system and microphone for consumer electronics used. Merry Electronics (Shenzhen)Co., Ltd. ("MECL") The same main business as the Company. Universal Capital Investment ("UCMU") Equity investments. Merrytech (HK) Co., Limited ("MTHK") Equity investments. Sonavox Canada Inc. ("SOCV") Develop-to-order and appearance design of speaker and amplifier. Sonavox Canada Holding. ("SOCA") Equity investments. Seas Fabrikker ("SENM") Manufacturing and sales of speaker monomer. Fulicare Co., Ltd. ("FUSA") Sales of medical device. Fulicare Medical Instruments (Suzhou) Co., Ltd. ("FUSZ") Sales of medical device. Fulicare Medical Instruments Manufacturing of medical device.	Ownership (%)	Ownership (%)	June 30, 2020	Description
		June 30, 2021	December 31, 2020 100.00% 100.00% 70.00% 70.00% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 97.12% 100.00% 100.00%
		100.00% 100.00% 100.00% 100.00% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 97.12% 100.00% 100.00%		100.00% 100.00% 70.00% 70.00% 100.00% 51.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 96.64% 100.00% 100.00%	NOTE 1 NOTE 1, 5 NOTE 5 NOTE 1 NOTE 1, 4 NOTE 1 NOTE 1 NOTE 1 NOTE 1, 2 NOTE 1 NOTE 1

~14~

Name of investor FUSA FUSZ and FUSA ASCX ASCX	Name of subsidiary Main business Activities (Xiamen) Co., Ltd. ("FUXM") Xiamen Etimbre Hearing Technology Co., Ltd. ("ETCX") Research and development, manufacturing as well as sales of hearing aid, hearing device and acoustics equipment. Austar Hearing Science And Technology (Xiamen) Co., Ltd. ("ASCX") Research and development, manufacturing as well as sales of hearing aid, hearing device and acoustics equipment. Austar Hearing Science And Technology (Zhangzhou) Co., Ltd. ("ASCZ") Manufacturing of hearing aid and acoustics for rehabilitation device. Xiamen Laiyate Medical Devices Co., Ltd. ("LACX") Research and development as well as technical sales of software functions for hearing aid.	Ownership (%)	Ownership (%)	June 30, 2020	Description
		June 30, 2021	December 31, 2020 100.00% 99.50% 100.00% 100.00%
		100.00% 99.50% 100.00% 100.00%		100.00% 99.50% 100.00% 100.00%	NOTE 1, 3 NOTE 1 NOTE 1 NOTE 1

Note 1: The financial statements of the entity as of and for the six months ended June 30, 2021 and 2020 were not reviewed by the independent auditors as the entity did not meet the definition of a significant subsidiary.
Note 2: 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 4,000 thousand (NTD 116,400 thousand), USD 963 thousand (NTD 28,026 thousand) and USD 3,000 thousand (NTD 87,300 thousand), respectively.
Note 3: The Group increased its capital in ETCX by cash amounting to USD 566 thousand (NTD 16,748 thousand).
Note 4: 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.
Note 5: The Group acquired 70% of ordinary shares of Asian Elite International Ltd. and Indigo Enterprise Inc. in cash from 3[rd] party Newood Consultancy Limited and Keen Star

~15~

Holding Limited, with an agreement of acquisition of the remaining 30% ordinary shares by the Group after 3 years from the trading date. The payment has been made amounting to USD 13,200 thousand (NTD 364,914 thousand) on June 30, 2021 in exchange for the remaining 30% ordinary shares. The total shareholding is 100%, and the business registration is still in progress as of July 29, 2021. Please refer to Table 7 and Table 8 in Note 13.

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) 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.

(5) Income tax

The interim period income tax expense is recognized 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.

5. 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, 2020.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits Short-term securities		June 30, 2021 $ 1,193 5,363,410 216,606 70,000 $ 5,651,209	December 31, 2020 $ 1,073 3,032,069 13,821 - $ 3,046,963		June 30, 2020 $ 3,802 4,215,235 640,217 1,383,249 $ 6,242,503

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 cash and cash equivalents that are in restricted use due to the application of Taiwan Industry Innovation Platform Program (TIIP). Such restricted assets had been classified as financial assets at amortized cost. Please refer to Note 8.
C. The Group’s time deposits with maturity over 3 months had been classified as current financial assets at amortized cost.

~16~

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

Items Current items: Financial assets mandatorily measured at fair value through profit or loss -Funds -Non-hedging derivatives -Call options of convertible bonds -Bonds Valuation adjustment Total Non-current items: Funds Items Current items: Financial liabilities held for trading		June 30,2021 $ 50,000 10,230 - 280,000 5,517 $ 345,747 $ 26,468 June 30,2021 $ 5,342	December 31, 2020 $ 50,000 26,316 446 - 2,157 $ 78,919 $ 26,468 December 31, 2020 $ 30,047	June 30, 2020 $ 30,000 6,235 458 - 826 $ 37,519 $ 24,305 June 30, 2020 $ 10,052

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit 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 June 30 2021 2020 $ 23,364 $ 15,364 Six months ended June 30 2021 2020 $ 53,641 $ 30,893

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:

Derivative instruments Forward foreign exchange contract to sell Forward foreign exchange contract to buy				June 30, 2021
		Contract amount (Notional principal) USD 11,800 thousand USD 30,800 thousand

~17~

Derivative instruments Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to buy Forward foreign exchange contract to buy Derivative instruments Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to sell Forward foreign exchange contract to buy Forward foreign exchange contract to buy			December 31, 2020
		Contract amount (Notional principal) USD 70,000 thousand USD 3,000 thousand USD 8,189 thousand USD 84,000 thousand USD 8,205 thousand	Contract period 2020/12/03~ 2021/01/29 2020/12/22~ 2021/01/07 2020/08/28~ 2021/03/01 2020/12/03~ 2021/03/09 2020/08/28~ 2021/03/01 June 30, 2020
		Contract amount (Notional principal) USD 34,700 thousand USD 8,000 thousand USD 9,631 thousand USD 46,700 thousand USD 9,662 thousand

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

C. As of June 30, 2021, December 31, 2020 and June 30, 2020, the collectible payments for settled transactions amounted to $0 thousand, $0 thousand and $3,775 thousand, respectively. As of June 30, 2021, December 31, 2020 and June 30, 2020, the Group had outstanding payments for settled transactions amounting to $0 thousand (shown as other payables), $306 thousand 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).

~18~

(3)	Financial assets at fair value through other comprehensive income Items June 30, 2021 December 31, 2020 Current items: Debt instruments Bonds $ - $ 89,550 Valuation adjustment - (3,735) - 85,815 Equity instruments Stocks 106,080 106,080 Valuation adjustment 3,872 3,284 109,952 109,364 $ 109,852 $ 195,179 Items June 30, 2021 December 31, 2020 Non-current items: Debt instruments Bonds $ 144,625 $ 144,625 Valuation adjustment (298) 1,620 144,327 146,245 Items June 30, 2021 December 31, 2020 Equity instruments Listed stocks $ 748,154 $ 748,154 Unlisted stocks 73,523 73,884 821,677 822,038 Valuation adjustment 414,363 604,870 1,236,040 1,426,908 Total $ 1,380,367 $ 1,573,153	June 30, 2020 $ 89,550 (265) 89,285 76,080 5,677 81,757 $ 171,042 June 30, 2020 $ - - - June 30, 2020 $ 757,777 64,073 821,850 798,182 1,620,032 $ 1,620,032

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 $1,490,319 thousand, $1,768,332 thousand and $1,791,074 thousand as on June 30, 2021, December 31, 2020 and June 30, 2020, respectively.
B. During the six months ended June 30, 2021, the Group repurchased bond investments at fair value of $83,970 thousand due to the maturity of bonds and resulted in cumulative losses on disposal amounting to $5,580 thousand (shown as other gains and losses).
C. During the six months ended June 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 $104,931 thousand of equity investments at fair value and resulted in cumulative gains on disposal amounting to $87,578 thousand (transferred from other equity interest to unappropriated retained earnings) during the six months ended June 30, 2020.
D. As of June 30, 2021 and 2020, the Group disposed stocks of the public companies and the amounts to be collected were $0 thousand and $821 thousand.
E. Amounts recognized in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

~19~

Equity instruments at fair value through othercomprehensive income Fair value change recognized in other comprehensive income Cumulative (gains) losses reclassified to retained earnings due to derecognition Debt instruments at fair value through other comprehensive income Fair value change recognized through profit or loss Fair value change recognized in other comprehensive income Cumulative other comprehensive (loss) income reclassified to profit or loss Reclassified due to derecognition Interest income recognized in profit or loss	Three months ended June 30 2021 2020 ($ 79,608) $ 211,305 $- ($ 38,510) $ 570 $- ($ 5,917) ($ 1,253) $ 5,580 $- $ 1,501 $ 676
	2021 ($ 79,608) $- $ 570 ($ 5,917) $ 5,580 $ 1,501

Equity instruments at fair value through
othercomprehensive income
Fair value change recognized in other
comprehensive income
Cumulative (gains) losses reclassified to
retained earnings due to derecognition
Debt instruments at fair value through other
comprehensive income
Fair value change recognized through
profit or loss
Fair value change recognized in other
comprehensive income
Cumulative other comprehensive (loss)
income reclassified to profit or loss
Reclassified due to derecognition
Interest income recognized in profit or
loss

Three months ended June 30
2021
2020
($ 79,608)
$ 211,305
$-
($ 38,510)
$ 570
$-
($ 5,917)
($ 1,253)
$ 5,580
$-
$ 1,501
$ 676

2021

($ 79,608)
$-
$ 570
($ 5,917)
$ 5,580
$ 1,501

Equity instruments at fair value through othercomprehensive income Fair value change recognized in other comprehensive income Cumulative (gains) losses reclassified to retained earnings due to derecognition Debt instruments at fair value through other comprehensive income Fair value change recognized through profit or loss Fair value change recognized in other comprehensive income Cumulative other comprehensive (loss) income reclassified to profit or loss Reclassified due to derecognition Interest income recognized in profit or loss	Six months ended June 30 2021 2020 ($ 188,528) ($ 807,466) $- ($ 87,578) $ 1,010 $- ($ 4,773) ($ 1,465) $ 5,580 $ 333 $ 3,149 $ 1,459
	2021 ($ 188,528) $- $ 1,010 ($ 4,773) $ 5,580 $ 3,149

Six months ended June 30
2021
2020
($ 188,528)
($ 807,466)
$-
($ 87,578)
$ 1,010
$-
($ 4,773)
($ 1,465)
$ 5,580
$ 333
$ 3,149
$ 1,459

2021

($ 188,528)
$-
$ 1,010
($ 4,773)
$ 5,580
$ 3,149

F. As on June 30, 2021, December 31, 2020 and June 30, 2020, 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 $1,490,319 thousand, $1,768,332 thousand and $1,791,074 thousand, respectively.

~20~

G. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.
H. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12 (2).
I. 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	ment grade.
June 30, 2021 December 31, 2020 Accounts receivable $ 7,491,287 $ 12,471,094 Less: Allowance for doubtful accounts ( 20,147) ( 29,676) $ 7,471,140 $ 12,441,418 A. The aging analysis of accounts receivable is as follows: June 30, 2021 December 31, 2020 Not past due $ 7,238,657 $ 12,401,873 Up to 30 days 149,113 38,897 31 to 90 days 92,676 6,066 91 to 180 days 2,831 24,136 Over 180 days 8,010 122 $ 7,491,287 $ 12,471,094	December 31, 2020	June 30, 2020 $ 5,148,085 ( 27,053) $ 5,121,032 June 30, 2020 $ 5,056,543 62,163 12,927 1,364 15,088 $ 5,148,085

The above aging analysis was based on past due date.

B. As of June 30, 2021, December 31, 2020, June 30, 2020, and January 1, 2020, the balances of receivables (including notes receivable) from contracts with customers amounted to $7,471,140 thousand, $12,441,418 thousand, $5,121,032 thousand and $5,448,381 thousand, respectively.
C. The Group insured against its accounts receivable since December, 2020, which the insured amount has been reviewed and granted by the insurance company. If bad debts occur, the insurance company will settle the claim up to 90% of the insured amount. As of June 30, 2021, December 31, 2020 and June 30, 2020, the balance of insured accounts receivable amounted to $5,622,391 thousand, $10,360,837 thousand and $0 thousand, respectively.
D. The Group does not hold any collateral as security.
E. The Company entered into a factoring agreement which has no right of recourse with Bank of America. As of June 30, 2021, 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.
F. Information relating to credit risk of accounts receivable is provided in Note 12 (2).
(5) Transfer of financial assets Transferred financial assets that are derecognized 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 derecognized the transferred accounts receivable. As of June 30, 2021, there was no amount that had been past due.

~21~

(6) Inventories

Inventories
Raw materials Work in progress Finished goods Raw materials Work in progress Finished goods Raw materials Work in progress Finished goods	June 30, 2021		Book value $ 1,973,680 606,629 1,742,080 $ 4,322,389
	Cost $ 2,063,538 614,581 1,812,650 $ 4,490,769
	Cost $ 1,748,375 543,188 1,613,403 $ 3,904,966		Book value $ 1,682,967 534,870 1,573,822 $ 3,791,659 Book value $ 1,088,012 475,744 1,081,734 $ 2,645,490
	Cost $ 1,193,908 485,649 1,145,113	Allowance for valuation loss ($ 105,896) ( 9,905) ( 63,379) ($ 179,180)
	$ 2,824,670

The cost of inventories recognized as expense for the period:

The cost of inventories recognized as expense for	the period:
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 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	Three months	ended June 30 2020 $ 5,381,489 54,108 8,877 ( 179) $ 5,444,295 ended June 30
	2021 $ 7,412,489 ( 37,017) 9,677 17 $ 7,385,166 Six months
	2021 $ 14,261,386 55,073 20,351 ( 105)		2020 $ 10,053,660 ( 3,492) 14,074 362 $ 10,064,604

	$ 14,336,705

The Group reversed a previous inventory write-down because of the sale of certain written-down inventories by the Group for the three months ended June 30, 2021 and for the six months ended June 30, 2020.

~22~

(7) Other current assets

Tax refund receivable (including input tax) Prepayment for purchases Contract assets Others	June 30, 2021 $ 280,616 11,446 86,590 123,518 $ 502,170	December 31, 2020 $ 490,909 14,241 43,363 160,125 $ 708,638	June 30, 2020 $ 137,212 11,516 29,050 99,015 $ 276,793

(8) Investments accounted for using the equity method

Investments accounted for using the equity method	od
At January 1 $ Share of profit or loss of investments accounted for using the equity method Changes in capital Surplus Changes in other equity items ( Credit balance of investments accounted for using the equity method transferred to non- current liabilities ( At June 30 $ A. Details are as follows： June 30, 2021 Associates with significant influence Merry Electronics (Suzhou) Co., Ltd. (MECE) $ 3,176,288 Associates with insignificant influence Merry Electronics (Huizhou) Co., Ltd. (MECH) 1,005,522 Guangdong Luxshare & Merry Electronics Co., Ltd. (MEDG) 371,376 Leohab Enterprise Co., Ltd. (LEOHAB) 47,667 Merry Electronics (Shanghai)Co., Ltd. (MECS) ( 1,058) Subtotal 4,599,795 Add: Credit balance of investments accounted for using the equity method transferred to non-current liabilities 1,058 $ 4,600,853		Six months ended June 30 2021 2020 4,479,708 $ 3,951,152 196,903 116,898 - 1,101 75,746) ( 100,462) 12) - 4,600,853 $ 3,968,689 December 31, 2020 June 30, 2020 $ 3,146,355 $ 2,804,362 910,702 725,175 372,839 360,776 49,812 79,434 ( 1,070) ( 1,058) 4,478,638 3,968,689 1,070 - $ 4,479,708 $ 3,968,689
		2021 4,479,708 196,903 - 75,746) 12)
	$ ( (		$ ( $
		4,600,853

~23~

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

Investee MECE MECH MEDG LEOHAB MECS Investee MECE MECH MEDG LEOHAB MECS	Three months	Three months
	2021
	$ 43,917 48,478 297 529 -
	$ 93,221
	2021
	$ 80,437 109,905 4,366 2,202 ( 7)
	$ 196,903

C. Associates

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

Company name Principal place of business MECE Mainland of China	Shareholding ratio June 30, 2021 December 31, 2020 June 30, 2020 49.00% 49.00% 49.00%	Nature of relationship Holding more than 20% of voting right	Method of measurement Equity method
	June 30, 2021 December 31, 2020 49.00% 49.00%

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

Balance sheet

follows: Balance sheet
Current assets Non-current assets Current liabilities Non-current liabilities Total net assets Share in associate’s net assets Realized (unrealized) gain or loss from upstream and side stream transactions Carrying amount of the associate	$ ( (	MERRY ELECTRONICS (SUZHOU) CO., LTD. June 30, 2021 December 31, 2020 June 30, 2020 3,383,700 $ 4,958,305 $ 2,764,340 5,971,278 6,448,198 6,274,204 2,746,586) ( 4,794,701) ( 3,130,372) 39,632) ( 50,495) ( 53,483) 6,568,760 $ 6,561,307 $ 5,854,689 3,218,692 $ 3,215,041 $ 2,868,798 42,404) ( 68,686) ( 64,436) 3,176,288 $ 3,146,355 $ 2,804,362
		June 30, 2021 3,383,700 5,971,278 2,746,586) 39,632) 6,568,760 3,218,692 42,404) 3,176,288	December 31, 2020 $ 4,958,305 6,448,198 ( 4,794,701) ( 50,495) $ 6,561,307 $ 3,215,041 ( 68,686) ( $ 3,146,355
	$
	$ (
	$

~24~

Statement of comprehensive income

	MERRY ELECTRONICS (SUZHOU)	MERRY ELECTRONICS (SUZHOU)	MERRY ELECTRONICS (SUZHOU)	MERRY ELECTRONICS (SUZHOU)	CO., LTD.
		Three months ended June 30
		2021		2020
Revenue	$	2,093,050	$		1,899,982
Profit for the period from
continuing operations	$	29,780	($		26,177)
Total comprehensive income	$	29,780	($		26,177)
	MERRY ELECTRONICS (SUZHOU)				CO., LTD.
		Six months ended June 30
		2021		2020
Revenue	$	4,442,188	$		4,179,760
Profit for the period from
continuing operations	$	110,521	$		72,691
Total comprehensive income	$	110,521	$		72,691
The carrying amount of the Group’s interests in all individually immaterial					associates a
the Group’s share of the operating results are summarized below:
		Three months ended June 30
		2021		2020
Share of profit of associates and
joint ventures accounted for using
the equity method	$	49,304	$		55,764
Other comprehensive income
(loss), net of tax	(	11,536)	(		18,953)
Total comprehensive income	$	37,768	$		36,811
		Six months ended June 30
		2021		2020
Share of profit of associates and
joint ventures accounted for using
the equity method	$	116,466	$		80,458
Other comprehensive income
(loss), net of tax	(	21,062)	(		23,424)
Total comprehensive income	$	95,404	$		57,034

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

Note: Partial investments accounted for using the equity method are share of profit (loss) of associates and joint ventures recognized based on financial statements prepared by associates and not reviewed by independent auditors.

~25~

(9) Property, plant and equipment

			Six months ended June 30, 2021	Six months ended June 30, 2021
Cost Land Land improvements Buildings and structures Machinery Transportationequipment Office equipment Others Unfinished construction Total Accumulated depreciation Land improvements Buildings and structures Machinery Transportationequipment Office equipment Others Total	Opening balance $ 794,952 621 1,284,577 2,366,092 30,451 279,929 247,668 272,471 $ 5,276,761 ($ 621) ( 467,206) ( 811,707) ( 20,392) ( 171,656) ( 110,441) ($ 1,582,023) $ 3,694,738	$ $ $ ( ( ( ( (		Transfers $ - - 34,251 204 - - 2,524 ( 36,979) $- $ - - - - - - $-	Effect of foreign currency exchange difference ($ 3,006) ( 53) ( 29,424) ( 30,184) ( 374) ( 5,126) ( 3,079) ( 22) ($ 71,268) $ 53 12,310 17,636 263 3,034 1,634 $ 34,930	Ending balance $ 791,946 568 1,291,273 2,720,739 21,306 281,759 280,737 315,074 $ 5,703,402 ($ 568) ( 487,968) ( 905,933) ( 14,752) ( 181,778) ( 124,955) ($ 1,715,954) $ 3,987,448

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			Six months ended June 30, 2020	Six months ended June 30, 2020
Cost Land Land improvements Buildings and structures Machinery Transportationequipment Office equipment Others Unfinished construction Total Accumulated depreciation Land improvements Buildings and structures Machinery Transportationequipment Office equipment Others Total	Opening balance $ 596,275 656 1,016,760 1,472,017 30,774 242,600 136,073 132,528 $ 3,627,683 ($ 580) ( 439,193) ( 636,595) ( 17,024) ( 161,280) ( 87,918) ($ 1,342,590) $ 2,285,093	$ $		Transfers $ - - ( 51,400) 1,848 - ( 373) ( 1,848) - ($ 51,773) $ - 51,400 ( 435) - 252 435 $ 51,652	Effect of foreign currency exchange difference	Ending balance $ 594,598 627 986,542 1,682,268 29,211 265,398 148,131 108,462 $ 3,815,237 ($ 616) ( 434,104) ( 694,167) ( 17,666) ( 167,535) ( 93,244) ($ 1,407,332) $ 2,407,905
					($ 1,677) ( 29) ( 25,257) ( 40,247) ( 744) ( 5,174) ( 4,056) ( 6,088) ($ 83,272) $ 26 9,469 16,850 464 3,267 2,638 $ 32,714

A. The Group has no property, plant and equipment that apply to capitalization of borrowing costs.

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

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

Land Buildings and structures Machinery and equipment Transportation equipment Office equipment Other equipment	June 30, 2021 Carrying amount $ 90,232 182,619 5,053 2,040 113 91 $ 280,148	December 31, 2020 June 30, 2020 Carrying amount Carrying amount $ 92,481 $ 32,061 254,778 148,733 5,810 5,911 2,701 2,793 220 224 20 - $ 356,010 $ 189,722

Land Buildings and structures Machinery and equipment Transportation equipment Office equipment Other equipment Land Buildings and structures Machinery and equipment Transportation equipment Office equipment Other equipment	Three months ended June 30 2021 2020 Depreciation charge Depreciation charge $ 1,155 $ 734 40,244 19,053 376 353 305 413 54 37 46 - $ 42,180 $ 20,590 Six months ended June 30 2021 2020 Depreciation charge Depreciation charge $ 2,375 $ 1,583 83,054 33,969 756 677 658 748 107 101 66 - $ 87,016 $ 37,078
	2021 Depreciation charge $ 2,375 83,054 756 658 107 66 $ 87,016

C.For the three months and six months ended June 30, 2021 and 2020, the additions to rightofuse assets were $23,409 thousand, $61,641 thousand, $30,824 thousand and $84,609 thousand, respectively.

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

Items affecting profit or loss Interest expense on lease liabilities Items affecting profit or loss Interest expense on lease liabilities	Three months ended June 30 2021 2020 $ 2,108 $ 887 Six months ended June 30 2021 2020 $ 4,770 $ 1,521
	2021 $ 4,770

E. For the three and six months ended June 30, 2021 and 2020, the Group’s total cash outflow for leases were $60,479 thousand, $25,636 thousand, $110,697 thousand and $54,644 thousand, respectively..

(Remainder of page intentionally left blank)

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(11) Intangible assets

Cost			Six months ended June 30, 2021	Six months ended June 30, 2021		Ending balance $ 937,379 525,310 326,550 61,481 115,748 42,863 $ 2,009,331 ($ 380,471) ( 131,471) ( 16,126) ( 69,449) ( 31,909) ($ 629,426) $ 1,379,905
	Opening balance	Additions	Reductions	Effect of foreign currency exchange difference $ - ( 270) - - - 18 ($ 252) ($ 213) - - - ( 4) ($ 217)
Goodwill Computer software Customer relationship Trademarks Know-how Others Total Accumulated amortization Computer software Customer relationship Trademarks Know-how Others Total	$ 937,379 500,570 326,550 61,481 115,748 41,805 $ 1,983,533 ($ 356,307) ( 109,439) ( 13,367) ( 57,874) ( 28,456) ($ 565,443) $ 1,418,090	$ - 26,623 - - - 1,040 $ 27,663 ($ 24,295) ( 22,032) ( 2,759) ( 11,575) ( 3,449) ($ 64,110)	$ - ( 1,613) - - - - ($ 1,613) 344 - - - - $ 344

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Cost			Six months ended June 30, 2020	Six months ended June 30, 2020
	Opening balance	Additions	Reductions	Effect of foreign currency exchange difference $ - ( 1,010) - - - ( 179) ($ 1,189) $ 700 1,100 11 630 25 $ 2,466
Goodwill Computer software Customer relationship Trademarks Know-how Others Total Accumulated amortization Computer software Customer relationship Trademarks Know-how Others Total	$ 937,379 457,428 326,550 61,481 115,748 37,295 $ 1,935,881 ($ 304,302) ( 65,679) ( 7,598) ( 34,671) ( 20,855) ($ 433,105) $ 1,502,776	$ - 11,179 - - - 776 $ 11,955 ($ 27,175) ( 22,032) ( 2,759) ( 11,575) ( 4,262) ($ 67,803)	$ - ( 860) - - - - ($ 860) 36 - - - - $ 36

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A. Details of amortization 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		Three months ended June 30 2021 2020 $ 1,425 $ 4,097 3,187 2,883 15,815 15,222 10,960 10,779 $ 31,387 $ 32,981 Six months ended June 30	Three months ended June 30 2021 2020 $ 1,425 $ 4,097 3,187 2,883 15,815 15,222 10,960 10,779 $ 31,387 $ 32,981 Six months ended June 30	Three months ended June 30 2021 2020 $ 1,425 $ 4,097 3,187 2,883 15,815 15,222 10,960 10,779 $ 31,387 $ 32,981 Six months ended June 30
		2021
		$ 1,425 3,187 15,815 10,960
		$ 31,387
		2021		2020 $ 7,998 6,558 31,372 21,875 $ 67,803
		$ 4,842 6,234 32,239 20,795
		$ 64,110

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. As the Company is committed to developing and taking blue tooth orders, it expects 10% year-on-year growth in sales through the launching of new products and improving its technologies during this period.

Management determined budgeted gross margin based on past performance and their expectations of market development. The weighted average growth rate used is consistent with the projection included in industry reports. The discount rate of 14.48% used was pre-tax and reflected specific risks relating to the relevant operating segments.

C. As of June 30, 2021, 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.

~32~

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 12%-25% year-on-year growth in sales through the launching of new products and improving its technologies during this period.

Management determined budgeted gross margin based on past performance and its expectations of market development. The weighted average growth rate used is consistent with the projection included in industry reports. The discount rate of 16.85% used was pre-tax and reflected specific risks relating to the relevant operating segments.

D. As of June 30, 2021, 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 hearing-aids 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 hearing-aids orders, it expects 3%-15% year-on-year growth in sales through the launching of new products and improving its technologies during this period.

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

(12) Other non-current assets

(13)	June 30, 2021 Prepayments for property, plant and equipment (including intangible asset) $ 155,266 Refundable deposits 64,523 Others 75,971 $ 295,760 Short-term borrowings Type of borrowings June 30, 2021 Bank borrowings Credit loan $ 5,477,130	December 31, 2020 $ 121,924 71,625 77,958 $ 271,507 Interest rate range 0%~4.00%	June 30, 2020 $ 116,373 38,931 27,854 $ 183,158 Collateral None

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Type of borrowings Bank borrowings Credit loan Type of borrowings Bank borrowings Credit loan	December 31, 2020 $ 3,271,489 June 30, 2020 $ 665,760	Interest rate range Collateral 0%~4.35% None Interest rate range Collateral 1.46%~4.57% None

A. Interest expense recognized in profit or loss amounted to $8,994 thousand, $6,205 thousand, $15,713 thousand and $12,707 thousand for the three months and six months ended June 30, 2021 and 2020, respectively.
B. The Group provided endorsements and guarantees for the credit loans as of June 30, 2021, December 31, 2020 and June 30, 2020.
(14) Other payables

Dividend payable Payables on equipment (Including intangible assets) Payroll and bonus payable Employee compensation payable Directors’ remuneration payable Others	June 30, 2021 $ 1,068,244 444,368 349,240 70,697 28,873 465,611 $ 2,427,033	December 31, 2020 $ - 360,938 466,806 127,027 25,575 620,838 $ 1,601,184	June 30, 2020 $ 1,608,376 96,512 262,466 234,650 78,710 325,884 $ 2,606,598

(15) Other current liabilities

Bonds payable-expiring within one year Contract liability Agreed liabilities on acquisition ofsubsidiaries (Note) Refund liabilities Current lease liability Other current liabilities - others	June 30, 2021 $ 2,218,375 702,629 - 230,067 116,328 88,963 $ 3,356,362	December 31, 2020 $ 2,203,801 627,002 402,072 343,164 146,612 77,260 $ 3,799,911	June 30, 2020 $ - 680,503 - - 57,540 45,545 $ 783,588

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 recognized 30% of subsequent equity investment obligations. Please refer to Note 4 (3).

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(16) Bonds payable

Bonds payable Less: Discount on bonds payable Sub-total Less: Expiring within one year	June 30, 2021 $ 2,231,900 (13,525) 2,218,375 (2,218,375) $-	December 31, 2020 $ 2,231,900 (28,099) 2,203,801 (2,203,801) $-	June 30, 2020 $ 2,289,500 (44,449) 2,245,051 - $ 2,245,051

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 and a coupon rate of 0%, cover a 3-year period of issuance and a circulation period from December 11, 2018 to December 11, 2021, and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on December 11, 2018.
- ii. The creditors have the right to ask for conversion of the bonds into common shares of the Company by Taiwan Depository & Clearing Corporation through Securities Firms during the period from the date after three months of the bonds issue to the maturity date, except for (i) the stop transfer period for common shares as specified in the terms of the bonds or the laws/regulations; (ii) the Company’s book closure date of stock dividends, book closure date of cash dividends, the period between the date that is 15 business days before the book closure date of a capital increase to the ex-right date; (iii) the period between the record date of a capital reduction and the prior day before the commencement of share trading after shares are repurchased. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.
- iii. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be reset based on the pricing model in the terms of the bonds on each effective date regulated by the terms. As of June 30, 2021, 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

~35~

from the securities trading markets), matured and converted are retired and not to be sold or reissued; the conversion rights attached to the bonds are also extinguished.

(b) As of June 30, 2021, the bonds amounting to $768,100 thousand (face value) had been converted into 5,299 thousand shares of common stock. After the issuance of the convertible bonds, if the number of common shares increases, the Company shall adjust the conversion price to $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 recognized in ‘capital surplus - share options’ in accordance with IAS 32 as of June 30, 2021. The call options embedded in bonds payable were separated from their host contracts and were recognized in ‘financial assets at fair value through profit or loss’ in net amount in accordance with IFRS 9 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts.

- (17) Long term borrowings

ong-term borrowings
Type of borrowings Long-term bank borrowings Credit loan Credit loan Less: Expiring within one year or one operating cycle	Borrowing period and repayment term Borrowing period is from 2020/2/20 to 2025/2/20; interest is repayable monthly; principal is repayable starting from 2022 Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly; principal is repayable starting from 2022	Interest rate range 0.30%~0.40% 0.35%~1.20%	Collateral None None		June 30, 2021 $ 320,000 780,670 1,100,670 (32,779) $ 1,067,891

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Type of borrowings Long-term bank borrowings Credit loan Credit loan Type of borrowings Long-term bank borrowings Credit loan	Borrowing period and repayment term Borrowing period is from 2020/2/20 to 2025/2/20; interest is repayable monthly Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly Borrowing period and repayment term Borrowing period is from 2020/2/20 to 2027/2/19; interest is repayable monthly; principal is repayable starting from 2022	Interest rate range 0.30%~0.40% 0.35%~0.50% Interest rate range 0.30%~1.00%	Collateral None None Collateral None	December 31, 2020
				$ 320,000 487,419 $ 807,419 June 30, 2020 $ 108,411
				$ $

A. In November 2019, the Company entered into a long-term loan contract with Taipei Fubon Bank for the total amount of $400,000 thousand. As of June 30, 2021, the drawn amount was $220,000 thousand.

Aforementioned contract conditions:

During the credit period, the following financial ratios shall be maintained and the audited / reviewed financial statements by independent auditors shall be checked semi-annually:
(a) Current ratio shall not be lower than 100%;
(b) Debt ratio shall not be higher than 200%;
(c) Interest coverage ratio shall not be lower than 10;
(d) Tangible assets shall not be lower than $8 billion.
B. In February 2020, the Company entered into a long-term loan contract with JIHSUN BANK for the total amount of $300,000 thousand. As of June 30, 2021, 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 by independent auditors shall be checked semi-annually:
(a) Current ratio shall not be lower than 100%;
(b) Debt ratio shall not be higher than 250%;

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

The compliance with the above financial ratio has no significant influence on the Company after the Company’s confirmation with the banks and evaluation.

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

(18) Pensions

A. (a) The Company has 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 contributes monthly an amount equal to 5.1% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. The Company also contributes monthly an amount equal to 8% of managers’ monthly salaries to the retirement fund. Also, the Company 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 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 six months ended June 30, 2021 and 2020 were $170 thousand, $290 thousand, $340 thousand and $580 thousand, respectively.
(c) The Company expects to pay contribution for pension plan amounting to $7,685 thousand in 2022.
B. (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) The subsidiaries, MECL, MSCS, ASCX, ETCX, ASCZ, LACX, FUXM and FUSZ, in Mainland China have set up a defined contribution plan. Monthly contribution to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.
(c) The subsidiary, METC, in Thailand is required to pay pension of up to 10 months of employee salaries to the employees upon their retirement. The pension liability is estimated annually based

~38~

on the employees’ total salaries and expected service years in accordance with the regulations of the Thailand government.

(d) The subsidiary, MEVN, in Vietnam is subject to related local regulation, which is required to contribute a statutory percentage of the employees’ monthly salaries and wages to the employees’ pension funds, and to pay it to the competent authority. Other than the monthly contributions, the Group has no further obligations.
(e) The pension costs under defined contribution pension plans of the Group for the three months and six months ended June 30, 2021 and 2020 were $35,389 thousand, $18,076 thousand, $72,116 thousand and $38,097 thousand, respectively.

(19) Share-based payment

A. For the six months ended June 30, 2021 and 2020, the Group’s share-based payment arrangements were as follows:

Type of arrangement The 2~~nd~~restricted stocks to employees in 2016 The 1strestricted stocks to employees in 2017 The 2ndrestricted stocks to employees in 2017 The 1strestricted stocks to employees in 2019 The 2ndrestricted stocks to employees in 2019 The 1strestricted stocks to employees in 2020	Grand date 2017/06/16 2017/12/29 2018/10/26 2019/11/02 2020/08/05 2021/05/31	Quantity granted 458 units 196 units 878 units 813 units 387 units 416 units	Contract period 3 years 3 years 3 years 3 years 3 years 3 years	Vesting condition 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%.
(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

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employees.

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

			2021			2020	2020
			Weighted-average				Weighted-average
	No. of share		exercise price		No. of share			exercise price
	(in thousands)			(in dollars)	(in thousands)			(in dollars)
At January 1	4		$	10		160	$	10
Restricted stocks	( 4)			10	(	146)		10
vested
Restricted
stocks retired		-		10	(	4)		10
At June 30		-		10		10		10
The first restricted	stocks to employees in 2017
			2021			2020
			Weighted-average				Weighted-average
	No. of share		exercise price		No. of share			exercise price
	(in thousands)			(in dollars)	(in thousands)			(in dollars)
At January 1	1		$	-		108	$	-
Restricted stocks	( 1)			-		-		-
vested
Restricted
stocks retired		-		-	(	50)		-
At June 30		-		-		58		-

(b) The first restricted stocks to employees in 2017
(c) The second restricted stocks to employees in 2017

At January 1 Restricted stocks vested Restricted stocks retired At June 30		2021 No. of share (in thousands) Weighted-average exercise price (in dollars) 318 $ - ( 5) - ( 17) - 296 -	2020 No. of share (in thousands) Weighted-average exercise price (in dollars) 598 $ - ( 5) - ( 46) - 547 -
		No. of share (in thousands) 318 ( 5) ( 17) 296	No. of share (in thousands) 598 ( 5) ( 46) 547

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(d) The first restricted stocks to employees in 2019

The first restricted stocks to employees in 2019
2021 No. of share (in thousands) Weighted-average exercise price (in dollars) At January 1 545 $ - Restricted stocks retired ( 29) - At June 30 516 - The second restricted stocks to employees in 2019 2021 No. of share (in thousands) Weighted-average exercise price (in dollars) At January 1 382 $ - Restricted stocks retired ( 20) - At June 30 362 - The first restricted stocks to employees in 2020 2021 No. of share (in thousands) Weighted-average exercise price (in dollars) At January 1 - $ - Restricted stocks granted 416 - At June 30 416 -	2020 No. of share (in thousands) Weighted-average exercise price (in dollars) 813 $ - ( 17) - 796 - 2020 No. of share (in thousands) Weighted-average exercise price (in dollars) - $ - - - - - 2020 No. of share (in thousands) Weighted-average exercise price (in dollars) - $ - - - - -
	No. of share (in thousands) - - -

The first restricted stocks to employees in 2019

2021
No. of share
(in thousands)
Weighted-average
exercise price
(in dollars)
At January 1
545
$ -
Restricted
stocks retired
( 29)
-
At June 30
516
-
The second restricted stocks to employees in 2019
2021
No. of share
(in thousands)
Weighted-average
exercise price
(in dollars)
At January 1
382
$ -
Restricted
stocks retired
( 20)
-
At June 30
362
-
The first restricted stocks to employees in 2020
2021
No. of share
(in thousands)
Weighted-average
exercise price
(in dollars)
At January 1
-
$ -
Restricted stocks
granted
416
-
At June 30
416
-

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

No. of share
(in thousands)
-
-
-

(e) The second restricted stocks to employees in 2019

(f) The first restricted stocks to employees in 2020

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 2~~nd~~restricted stocks to employees in 2016 The 1strestricted stocks to employees in 2017 The 2ndrestricted stocks to employees in 2017 The 1strestricted stocks to employees in 2019 The 2ndrestricted stocks to employees in 2019 The 1strestricted stocks to employees in 2020	Grand date 2017/06/16 2017/12/29 2018/10/26 2019/11/02 2020/08/05 2021/05/31	Stock price 187.0 194.5 139.5 150.0 169.0 107.5	Exercise price 10 0 0 0 0 0	Fair value per unit 177 194.5 139.5 150.0 169.0 107.5

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

Equity-settled Equity-settled	Three months ended June 30 2021 2020 $ 23,974 $ 22,445 Six months ended June 30 2021 2020 $ 44,647 $ 39,982
	2021 $ 44,647

(20) Share capital

A. As of June 30, 2021, the Company’s authorized capital was $4,000,000 thousand, consisting of 400,000 thousand shares of ordinary stock (including 5,000 thousand shares reserved for employee stock options), and the paid-in capital was $2,096,936 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):

At January 1 Employee restricted shares retired Employee restricted shares granted At June 30	2021 209,333 ( 66) 416 209,683	2020 208,668 ( 117) - 208,551

(a) The Company repurchased 11,000 employee restricted shares based on the original issue price due to employee’s resignation which forfeits the vested shares as resolved at the meeting of the Board of Directors on July 29, 2021.
(b) The Company retired 74,000 employee restricted shares as resolved at the meeting of the Board of Directors on February 25, 2021 and April 29, 2021 with the capital reduction effective date set on March 8, 2021 and May 3, 2021. The capital reduction through retirement of employee restricted shares was completed.
(c) The Company retired 642,000 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.
(d) On December 11, 2018, the Company issued the 2[nd] unsecured convertible bonds. As of June 30, 2021, the face value of those convertible bonds amounted to $768,100 thousand, which had been converted into 5,299 thousand common shares. Please refer to Note 6 (16) for further information.
(e) 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 common shares are issued in batch amounting to 813 thousand shares and 387 thousand shares, respectively. The registration was completed on November 29, 2019 and August 27, 2020. The

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employee restricted shares issued are subject to certain transfer restrictions before their vesting conditions are qualified. Other than these restrictions, the rights and obligations of these shares issued are the same as other issued ordinary shares.

(f) On April 30, 2020, 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 29, 2020. The Company issued 2,000 thousand common shares with the effective date set on May 31, 2021 and July 30, 2021. The subscription price is $0 per share and the common shares are issued in batch amounting to 416 thousand shares and 1,504 thousand shares, respectively. The registration for the 416 thousand shares was completed on June 16, 2021, while the registration for the 1,504 thousand shares is still in progress. The employee restricted shares issued are subject to certain transfer restrictions before their vesting conditions are qualified. Other than these restrictions, the rights and obligations of these shares issued are the same as other issued ordinary shares.
(21) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized 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.

2021

At January 1 Restricted stocks issued Restricted stocks vested Restricted stocks retired Recognition of change in equity of associates in proportion to the Company’s ownership Acquisition of non- controlling interests in Subsidiary At June 30	Share premium $ 3,665,902 - ( 6,711) - - - $ 3,659,191	Share option $ 99,191 - - - - - $ 99,191	Employee restricted stocks $ 170,825 40,560 6,711 ( 9,524) - - $ 208,572	Others $ 24,205 - - - 680 115,106 $ 139,991	Total $ 3,960,123 40,560 - ( 9,524) 680 115,106 $ 4,106,945

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2020

At January 1 Restricted stocks vested Restricted stocks retired Recognition of change in equity of associates in proportion to the Company’s ownership Changes in ownership interests in subsidiaries At June 30	Share premium $ 3,501,426 29,804 - - - $ 3,531,230	Share option $101,750 - - - - $101,750	Employee restricted stocks $ 236,457 ( 26,540) ( 18,259) - - $ 191,658	Others $ 30,472 ( 3,264) - 1,683 22 $ 28,913	Total $ 3,870,105 - ( 18,259) 1,683 22 $ 3,853,551

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

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reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

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

(b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate- 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land. As of June 30, 2021, the balance of capital surplus as aforementioned was $269,144 thousand.

F. The Company distributed cash dividends amounting to $5.16 (in dollars) per share and $7.7 (in dollars) per share as resolved at the shareholders’ meeting on July 21, 2021 and June 19, 2020. The abovementioned distribution of earnings for the years ended December 31, 2020 and 2019 was in agreement with those amounts proposed by the Board of Directors on February 25, 2021 and February 27, 2020.

(Remainder of page intentionally left blank)

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(23) Other equity items

ther equity items
2021 At January 1 Restricted stocks issued Amortization of employee restricted stocks Restricted stocks retired Revaluation – gross Revaluation – tax Revaluation transferred to profit or loss – gross Currency translation differences: -Group -Tax on Group -Associates -Tax on associates At June 30 2020 At January 1 Amortization of employee restricted stocks Restricted stocks 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 June 30	Exchange differences on translation of foreign financial statements ($ 438,569) - - - - - - ( 131,100) 26,220 ( 75,746) 14,280 ($ 604,915) Exchange differences on translation of foreign financial statements ($ 456,883) - - - - - - ( 118,132) 23,626 ( 103,828) 20,633 ($ 634,534)	Unrealized gain (loss) from investments in debt instruments measured at fair value through other comprehensive income $ 4,220 - - - ( 4,773) - 5,580 - - - - $ 5,027 Unrealized gain (loss) from investments in debt instruments measured at fair value through other comprehensive income $ 867 - - ( 1,465) - 333 - - - - - ($ 265)	Unrealized gain (loss) from investments in equity instruments measured at fair value through other comprehensive income $ 601,816 - - - ( 188,528) ( 1,043) - - - - - $ 412,245 Unrealized gain (loss) from investments in equity instruments measured at fair value through other comprehensive income $ 1,688,726 - - ( 807,466) 528 - ( 87,578) - - - - $ 794,210	Cost of unearned employee compensation ($ 158,141) ( 44,720) 44,647 10,190 - - - - - - - ($ 148,024) Cost of unearned employee compensation ($ 204,926) 39,982 19,389 - - - - - - - - ($ 145,555)	Total
					$ 9,326 ( 44,720) 44,647 10,190 ( 193,301) ( 1,043) 5,580 ( 131,100) 26,220 ( 75,746) 14,280 ($ 335,667) Total
					$ 1,027,834 39,982 19,389 ( 808,931) 528 333 ( 87,578) ( 118,132) 23,626 ( 103,828) 20,633 $ 13,856

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(24) Operating revenue

erating revenue
Revenue from contracts with customers Revenue from contracts with customers	Three months ended June 30 2021 2020 $ 8,168,668 $ 6,445,201 Six months ended June 30 2021 2020 $ 15,903,460 $ 11,621,864
	2021 $ 15,903,460

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 June 30, 2021	Three months ended June 30, 2021	Three months ended June 30, 2021
Total segment revenue Revenue from internal segment transactions Revenue from external customer contracts Main Region Europe US Mainland China Taiwan Others		Electronic	devices	Others $ 1,268,440 ( 912,069) 356,371 73,429 164,896 108,188 1,782 8,076 $ 356,371
	Taiwan Shenzhen Singapore $ 5,903,473 $ 3,057,745 $ 1,298,918 ( 2,308) ( 2,445,531) - 5,901,165 612,214 1,298,918 2,491,204 34,275 1,073,562 3,063,221 - 189,530 131,314 566,158 - 181,020 11,781 - 34,406 - 35,826 $ 5,901,165 $ 612,214 $ 1,298,918 Six months ended June 30, 2021
Total segment revenue Revenue from internal segment transactions ( Revenue from external customer contracts Main Region Europe US Mainland China Taiwan Others		Electronic	devices	Others $ 3,126,255 2,464,823) 661,432 149,440 294,858 200,224 3,416 13,494 $ 661,432
	Taiwan $ 11,381,622 57,982) 11,323,640 5,249,231 5,384,700 249,741 386,451 53,517 $11,323,640	Shenzhen $ 5,706,975 ( 4,547,900) 1,159,075 70,817 247 1,076,056 11,955 - $ 1,159,075	Singapore $ 2,759,313 - ( 2,759,313 2,402,031 314,255 - - 43,027 $ 2,759,313

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	Three months ended June 30, 2020	Three months ended June 30, 2020	Three months ended June 30, 2020	Three months ended June 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	Others $ 535,702 ( 278,285) 257,417 56,517 78,018 81,375 30,948 10,559 $ 257,417
	Taiwan Shenzhen $ 5,193,062 $ 2,699,638 ( 851) ( 2,630,769) 5,192,211 68,869 2,778,793 27,632 1,972,264 - 98,652 37,510 263,591 1,373 78,911 2,354 $ 5,192,211 $ 68,869 Six months ended June		Singapore $ 936,554 ( 9,850) 926,704 649,760 221,022 - - 55,922 $ 926,704 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	Others $ 1,018,553 ( 576,290) 442,263 129,313 125,680 137,398 37,717 12,155 $ 442,263
	Taiwan $ 9,323,507 ( 3,523) 9,319,984 3,899,262 4,644,035 183,186 419,450 174,051 $ 9,319,984	Shenzhen $ 3,689,111 ( 3,565,365) 123,746 52,467 - 66,022 1,465 3,792 $ 123,746	Singapore $ 1,755,303 ( 19,432) 1,735,871 1,248,288 371,613 - - 115,970 $ 1,735,871

B. Contract assets and liabilities：

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

Contract assets Contract liabilities Refund liabilities		June 30, 2021 $ 86,590	December 31, 2020 $ 43,363 $ 627,002 $ 343,164	June 30, 2020 $ 29,050 $ 680,503 $ -	January 1, 2020 $ 31,585 $ 256,623 $ 81,791
		$ 702,629
		$ 230,067

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

the period：
Revenue recognized that was included in the contract liability balance at the beginning of the period Revenue recognized that was included in the contract liability balance at the beginning of the period	Three months ended June 30 2021 2020 $ 53,575 $ 25,082 Six months ended June 30 2021 2020 $ 108,295 $ 167,715
	2021 $ 53,575 Six months ende
	2021 $ 108,295

(25) Interest income

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	Three months ended June 30 2021 2020 $ 8,555 $ 12,107 1,501 676 $ 10,056 $ 12,783 Six months ended June 30 2021 2020 $ 16,245 $ 24,923 3,149 1,459 $ 19,394 $ 26,382
	2021 $ 16,245 3,149 $ 19,394

(26) Other income

ncome
Rent income Dividend income Sample income Government grants Other income Rent income Dividend income Sample income Government grants Other income	Three months ended June 30 2021 2020 $ 1,916 $ 1,864 1,096 - 11,318 12,078 93,732 79,784 8,340 981 $ 116,402 $ 94,707 Six months ended June 30 2021 2020 $ 3,828 $ 3,812 1,096 - 13,775 14,535 115,970 91,221 18,679 18,031 $ 153,348 $ 127,599
	2021 $ 3,828 1,096 13,775 115,970 18,679 $ 153,348

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(27) Other gains and losses

ains and losses

Losses on disposals of property, plant
and equipment
Loss on disposals of investments
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 on disposals of investments
Foreign exchange loss
Gains on financial assets / liabilities at
fair value through profit or loss
Other gains and losses

Three months ended June 30
2021
2020
($ 1,888)
($ 61)
( 5,580)
-
15,140 ( 22,091)
23,364
15,364
( 8,030)
( 1,755)
$ 23,006
($ 8,543)
Six months ended June 30
2021
2020
($ 3,674) ($ 589)
( 5,580) ( 333)
( 33,439) ( 20,122)
53,641
30,893
( 11,385)
( 4,074)
($ 437)
$ 5,775

2021
($ 3,674)
( 5,580)
( 33,439)
53,641
( 11,385)
($ 437)

(28) Expenses by nature

es by nature
Employee benefit expense Depreciation charge - property, plant and equipment Depreciation charge - right-of-use assets Amortization charge Employee benefit expense Depreciation charge - property, plant and equipment Depreciation charge - right-of-use assets Amortization charge	Three months ended June 30 2021 2020 $ 854,924 $ 683,877 38,162 68,038 42,180 20,590 31,387 32,981 $ 966,653 $ 805,486 Six months ended June 30 2021 2020 $ 1,762,783 $ 1,212,942 218,380 166,391 87,016 37,078 64,110 67,803 $ 2,132,289 $ 1,484,214
	2021 $ 1,762,783 218,380 87,016 64,110 $ 2,132,289

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(29) Employee benefit expense

ee benefit expense
	Three months ended June 30
	2021			2020
Wages and salaries	$	731,808	$	603,612
Share-based payments		25,151		22,445
Labor and health insurance fees		15,802		13,929
Pension costs		35,559		18,366
Other personnel expenses		46,604		25,525
	$	854,924	$	683,877
	Six months ended June 30
	2021			2020
Wages and salaries	$ 1,515,563		$	1,052,908
Share-based payments		46,997		39,982
Labor and health insurance fees		35,218		30,720
Pension costs		72,456		38,677
Other personnel expenses		92,549		50,655
	$ 1,762,783		$	1,212,942

Note: For the six months ended June 30, 2021 and 2020, the Group had 7,689 and 7,622 employees, respectively, with 5 non-employee directors.
A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees‘ compensation and directors’ remuneration. The ratio shall not be lower than 5~10% for employees’ compensation and shall not be higher than 2% for directors’ remuneration.
B. The details of employees’ compensation and directors’ and supervisors’ remuneration of the Company are as follows:

ompany are as follows:
Employees’ compensation Directors’ and supervisors’ remuneration Employees’ compensation Directors’ and supervisors’ remuneration	Three months ended June 30 2021 2020 $ 8,120 $ 27,036 2,889 9,012 $ 11,009 $ 36,048 Six months ended June 30 2021 2020 $ 9,893 $ 30,954 3,298 10,318 $ 13,191 $ 41,272
	2021 $ 9,893 3,298 $ 13,191

The abovementioned amounts were recognized in wages and salaries based on profit status of the current year. Employees’ compensation was estimated at 6% and 6% of the profit for the six months ended June 30, 2021 and 2020, respectively. Directors’ remuneration was estimated at 2% and 2% of the profit for the six months ended June 30, 2021 and 2020, respectively.

Employees’ compensation and directors’ remuneration of 2020 as resolved at the Board of Directors’ meeting were in agreement with those amounts recognized in the profit or loss of 2020.

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

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Observation Post System” at the website of the Taiwan Stock Exchange.

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

bservation Post System” at the website me tax come tax expense ) Components of income tax expense:	of the Taiwan Stock Exchange.	of the Taiwan Stock Exchange.	of the Taiwan Stock Exchange.	of the Taiwan Stock Exchange.	of the Taiwan Stock Exchange.
	Three months ended June 30
	2021				2020
Current tax:
Current tax on profits for the period	($	405)	$		80,091
Surtax on unappropriated earnings		-			36,704
Prior year income tax overestimation	(	11,342)		(	1,140)
Total current tax	(	11,747)			115,655
Deferred tax:
Origination and reversal of temporary
differences		35,937			25,311
Income tax expense	$	24,190	$		140,966
	Six months ended June 30
	2021				2020
Current tax:
Current tax on profits for the period	($	19,826)	$		99,286
Surtax on unappropriated earnings		-			36,704
Prior year income tax (overestimation)
underestimation	(	8,028)			267
Total current tax	(	27,854)			136,257
Deferred tax:
Origination and reversal of temporary
differences		32,332			6,495
Income tax expense	$	4,478	$		142,752
) The income tax (charge)/credit relating to components		of other	comprehensive income is
follows:
	Three months ended June 30
	2021				2020
Exchange differences changes on
translation of foreign financial
statements - the Group	($	16,927)	($		9,413)
Exchange differences changes on
translation of foreign financial
statements - associates	(	7,639)	(		11,938)
Changes in fair value of financial
assets at fair value through other
comprehensive income	(	70)			11
	($	24,636)	($		21,340)

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

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Exchange differences changes on translation of foreign financial statements - the Group Exchange differences changes on translation of foreign financial statements - associates Changes in fair value of financial assets at fair value through other comprehensive income	Six months ended June 30 2021 2020 ($ 26,220) ($ 23,626) ( 14,280) ( 20,633) 1,043 ( 528) ($ 39,457) ($ 44,787)
	2021 ($ 26,220) ( 14,280) 1,043 ($ 39,457)

B. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.
C. Merry Healthcare Co., Ltd. Taiwan Branch (CAYMAN) income tax returns through 2019 have been assessed and approved by the Tax Authority.
D. Fulicare Co., Ltd. Taiwan Branch (SAMOA) income tax returns through 2019 have been assessed and approved by the Tax Authority.
E. Biotest Medical Corporation’s income tax returns through 2019 have been assessed and approved by the Tax Authority.

(31) Earnings per share

approved by the Tax Authority. Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Convertible bonds Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Three	months ended June 30,	2021 Earnings per share (in dollars) $ 0.54 $ 0.52
	Amount after tax $ 111,217 111,217 - 5,975 - $ 117,192	Weighted average number of ordinary shares outstanding (share in thousands) 207,687 207,687 77 16,806 353 224,923

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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 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 Employee restricted shares Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Three	months ended June 30,
	Amount after tax $ 132,137 132,137 - - $ 132,137	Weighted average number of ordinary shares outstanding (share in thousands) 207,685 207,685 341 342 208,368

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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	Six months ended June 30, 2020 Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share (in dollars) $ 350,149 206,602 $ 1.69 350,149 206,602 - 670 13,539 16,436 - 810 $ 363,688 224,518 $ 1.62	Six months ended June 30, 2020 Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share (in dollars) $ 350,149 206,602 $ 1.69 350,149 206,602 - 670 13,539 16,436 - 810 $ 363,688 224,518 $ 1.62
	Amount after tax $ 350,149 350,149 - 13,539 - $ 363,688	Weighted average number of ordinary shares outstanding (share in thousands) 206,602 206,602 670 16,436 810 224,518

A. 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.
B. The Group’s convertible bonds have an antidilutive effect on the earnings per share for the six months ended June 30, 2021. Accordingly, the diluted earnings per share were not calculated.

(32) Supplemental cash flow information

A. Investing activities with partial cash payments

Purchase of property, plant and equipment Add: Beginning 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	Six months ended June 30 2021 2020 $ 594,172 $ 366,225 356,594 77,958 93,603 83,333 ( 84,488) ( 41,911) ( 428,585) ( 92,288) $ 531,296 $ 393,317
	2021 $ 594,172 356,594 93,603 ( 84,488) ( 428,585) $ 531,296

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		Six months ended June 30	Six months ended June 30
		2021		2020
Purchase of property, plant and
equipment	$	27,663	$	11,955
Add: Beginning balance of payable on
equipment		4,344		-
Ending balance of prepayments
for equipment		61,663		33,040
Less: Beginning balance of
prepayments for equipment	(	37,436)	(	30,953)
Ending balance of payable on
equipment	(	15,783)	(	4,224)
Cash paid during the period	$	40,451	$	9,818
B. Financial assets at fair value through profit or loss
		Six months ended June 30
		2021		2020
Change in financial assets at fair value
through profit or loss	$	283,731	$	30,496
Add: Uncollected proceeds from
disposal during the period		-		3,755
Payment for prior period purchase		306		-
Net cash flows used (provided) during
the period	$	284,037	$	34,251
C. Financial assets at fair value through other comprehensive income
		Six months ended June 30
		2021		2020
Disposal of financial assets at fair
value through other comprehensive
income	($	83,970)	($	135,205)
Add: Uncollected proceeds from
disposal during the period		-		821
Less: Collected proceeds from prior
period disposal		-	(	4,336)
Net cash flows provided during the
period	($	83,970)	($	138,720)
D. Financing activities with no cash flow effects:
		Six months ended June 30
		2021		2020
Dividend payable	$	1,068,244	$	1,608,376

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(33) Changes in liabilities from financing activities

At January 1, 2021 Changes in cash flow from financing Additions Impact of changes in foreign exchange rate Changes in other non- cash items At June 30, 2021 At January 1, 2020 Changes in cash flow from financing Additions Impact of changes in foreign exchange rate Changes in other non- cash items At June 30, 2020	Short-term borrowings $3,271,489 2,289,280 - (83,639) - $5,477,130 Short-term borrowings $ 470,890 210,139 - (15,269) - $ 665,760		Lease Liabilities	Convertible bonds $2,203,801 - - - 14,574 $2,218,375 Convertible bonds $2,229,959 - - - 15,092 $2,245,051	Long-term borrowings $ 807,419 282,478 - 10,772 ( 32,778) $1,067,891 Long-term borrowings $ 62,000 46,510 - ( 99) - $ 108,411	Dividends payables $ - - 1,068,244 - - $1,068,244 Dividends payables $ - - 1,608,376 - - $1,608,376	Other non- current liabilities $ 36,449 ( 5,248) - 157 ( 466) $ 30,892 Other non- current liabilities $ 496,302 14,467 - 375 ( 3,720) $ 507,424	Liabilities from financing activities- gross $ 6,580,814 2,460,583 1,068,244 ( 74,986) 16,924 $10,051,579 Liabilities from financing activities- gross $ 3,377,964 219,514 1,608,376 ( 13,581) 97,502 $5,289,775
		$261,656 (105,927) - ( 2,276) 35,594 $189,047 Lease liabilities $118,813 (51,602) - 1,412 86,130 $154,753

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(34) Government grants

A. 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 and received the final subsidies amounting to RMB 1,313 thousand (NTD 5,587 thousand) in January 2020.
B. The subsidiary, MECL, received the electricity subsidy for enterprises in advanced and hightech manufacturing amounting to RMB 182 thousand (NTD 744 thousand) from Economy, Trade and Information Commission of Shenzhen Municipality in January 2020.
C. The subsidiary, MECL, received the patent subsidy amounting to RMB 440 thousand (NTD 11,872 thousand) from Market Supervision Administration of Shenzhen Municipality in March 2020.
D. The subsidiary, MECL, received the electricity subsidy for enterprises in advanced and hightech manufacturing amounting to RMB 293 thousand (NTD 1,279 thousand) from Economy, Trade and Information Commission of Shenzhen Municipality in January 2021.
E. The subsidiary, MECL, received the foreign invention expenditure subsidy amounting to RMB 450 thousand (NTD 1,964 thousand) from Longhua Branch, Market Supervision Administration of Shenzhen Municipality in February 2021.
F. The subsidiary, MECL, received the business intellectual property management subsidy amounting to RMB 300 thousand (NTD 1,309 thousand) from Longhua Branch, Market Supervision Administration of Shenzhen Municipality in February 2021.
G. The subsidiary, MECL, received the employment subsidy amounting to RMB 845 thousand (NTD 3,688 thousand) from Longhua Branch, Human Resource Bureau of Shenzhen Municipality in March 2021.
H. The subsidiary, MECL, received the bank loan and interest subsidy amounting to RMB 700 thousand (NTD 3,055 thousand) from Culture, Radio and Television and Sports Bureau of Shenzhen Municipality in March 2021.
I. The subsidiary, MECA, applied for “Paycheck Protection Program” subsidy from local government amounting to USD 262 thousand (NTD 7,449 thousand) in 2020 and received the subsidy in January 2021.
J. The subsidiary, MESG, applied for “Jobs Support Scheme” subsidy from local government amounting to SGD 565 thousand (NTD 12,025 thousand) in 2020 and received the subsidy amounting to SGD 62 thousand (NTD 1,298 thousand) in March 2021.
K. The subsidiary, SOCV, applied for “Emergency Wage Subsidy Program” subsidy from local government amounting to CAD 374 thousand (NTD 8,368 thousand) in 2020 and received the subsidy amounting to CAD 59 thousand (NTD 1,322 thousand) in March 2021.
L. The subsidiary, MECL, received the electricity subsidy for enterprises in advanced and hightech manufacturing amounting to RMB 517 thousand (NTD 2,246 thousand) from Economy, Trade and Information Commission of Shenzhen Municipality in April 2021.
M. The subsidiary, MECL, received the Shenzhen Enterprise R&D subsidy amounting to RMB 1,273 thousand (NTD 5,531 thousand) from Shenzhen Science and Technology Innovation Commission in June 2021.
N. The subsidiary, MECL, received the patent subsidy of Intellectual Property Office Patent Agency amounting to RMB 380 thousand (NTD 1,651 thousand) from Market Supervision Administration of Shenzhen Municipality in June 2021.
O. The subsidiary, MECL, received the employment subsidy amounting to RMB 2,476 thousand (NTD 10,757 thousand) from Longhua Branch, Human Resource Bureau of Shenzhen Municipality in June 2021.
P. The subsidiary, MECL, received the subsidy for stable growth in industry development amounting to RMB 5,000 thousand (NTD 21,724 thousand) from Industry and Information Technology Bureau of Shenzhen Municipality in June 2021.
Q. The subsidiary, MECL, received the capacity expansion subsidy amounting to RMB 9,363

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thousand (NTD 40,679 thousand) from Industry and Information Technology Bureau of Shenzhen Municipality in June 2021.

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

RELATED PARTY TRANSACTIONS
(1) Names of related parties and relationship

Name Relationship Merry Electronics (Suzhou) Co., Ltd. (MECE) Affiliated company Merry Electronics (Huizhou) Co., Ltd. (MECH) Affiliated company Merry Electronics (Shanghai) Co., Ltd. (MECS) Affiliated company Guangdong Luxshare & Merry Electronics Co., Affiliated company Ltd. (MEDG) Leohab Enterprise Co., Ltd. (LEOHAB) Affiliated company Merry Fuling Co., Ltd. Taiwan Branch Other related party

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

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

Other related party (Note 1)

Lanto Electronic Limited Dongguan Luxshare Precision Industry Co., Ltd. Luxshare Precision Limited (HK)

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

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

(2) Significant related party transactions

A. Operating revenue

icant related party transactions erating revenue
Sales of goods MECH MECE Others Sales of goods MECH MECE Others	Three months ended June 30 2021 2020 $ 18,556 $ 8,274 754 1,037 648 688 $ 19,958 $ 9,999 Six months ended June 30 2021 2020 $ 53,762 $ 14,431 1,602 1,848 1,323 1,307 $ 56,687 $ 17,586
	2021 $ 53,762 1,602 1,323 $ 56,687

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,

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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 to 65 days end of month and 30 to 120 days end of month to the third parties.

B. Purchases

chases
Purchases of goods MECH MECE Others Purchases of goods MECH MECE Others		Three months ended June 30 2021 2020 $ 1,980,521 $ 1,770,303 1,084,637 1,118,762 40,293 - $ 3,105,451 $ 2,889,065 Six months ended June 30 2021 2020 $ 4,190,924 $ 3,932,148 2,441,250 1,902,643 90,370 - $ 6,722,544 $ 5,834,791


		2021 $ 4,190,924 2,441,250 90,370 $ 6,722,544

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 to 65 days end of month and 30 to 120 days end of month to the third parties.

C. Receivables from related parties

Accounts receivable: Luxshare Precision Limited (HK) MECH MECE Others Total Other receivable: MECH MECE Others Total		June 30, 2021 $ - 23,672 9,883 82 $ 33,637 $ 384,720 26,558 217 $ 411,495	December 31, 2020 $ 214,473 46,822 10,276 1,961 $ 273,532 $ 703,400 2,155 - $ 705,555		June 30, 2020 $ - 9,690 4,195 20 $ 13,905 $ 408,108 28,077 434 $ 436,619

Other receivables as of June 30, 2021, December 31, 2020 and June 30, 2020 mainly were the purchases of raw materials on behalf of MECH and MECE.

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D. Payables to related parties

ables to related parties
		June 30, 2021	December 31, 2020			June 30, 2020
Accounts payable:
MECE	$	1,289,970	$	2,505,588	$	1,076,685
MECH		955,392		1,469,889		1,060,256
Others		53,601		192,000		6
Total	$	2,298,963	$	4,167,477	$	2,136,947
Other payable:
MECE	$	142,651	$	54,169	$	40,068
Others		-		100		699
Total	$	142,651	$	54,269	$	40,767

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

E. Contract liabilities (shown as other current liabilities)

MECH		June 30, 2021 $-	December 31, 2020 $-		June 30, 2020 $ 24,596

F. Property transactions

(a) Acquisition of property, plant and equipment:

MECH MECE MECH MECE	Three months ended June 30 2021 2020 $ 1,366 $ 281 1,004 - $ 2,370 $ 281 Six months ended June 30 2021 2020 $ 2,789 $ 281 1,981 - $ 4,770 $ 281
	2021 $ 2,789 1,981 $ 4,770

(b) Disposal of property, plant and equipment:

MECH MECH	Three months ended June 30 2021 2020 Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal $ 40 ($ 4) $ - $ - Six months ended June 30 2021 2020 Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal $ 198 ($ 4) $ 4,632 $ 386	Three months ended June 30 2021 2020 Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal $ 40 ($ 4) $ - $ - Six months ended June 30 2021 2020 Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal $ 198 ($ 4) $ 4,632 $ 386
	2021 Disposal proceeds Gain (loss) on disposal $ 198 ($ 4)
	Disposal proceeds $ 198	Disposal proceeds $ 4,632

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G.Other current assets - temporary debits of other expenses

BESKYTTE HUANG & CO	June 30, 2021 $-	December 31, 2020 $ 1,066	June 30, 2020 $-

Other current assets mainly were temporary debits of brand royalties. (3) Key management compensation

(3) Key management compensation	(3) Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments Salaries and other short-term employee benefits Post-employment benefits Share-based payments PLEDGED ASSETS Pledged asset June 30, 2021 Time deposits (pledged) (as financial assets at amortized cost – current) $ 16,053		Three months ended June 30			19,475 - 5,492 24,967 28,523 123 10,984 39,630 Purpose Project guarantee
		2021 2020 $ 2,531 $ 1 4,859 $ 7,391 $ Six months ended June 30		2020
				$
				$
		2021 $ 10,192 127 10,794 $ 21,113 Book value		2020
				$
				$
			Book value

	June 30, 2021 $ 16,053		December 31, 2020 $ 12,200

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

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

Property, plant and equipment Intangible assets	June 30, 2021 $ 583,583 4,052 $ 587,635	December 31, 2020 $ 350,813 7,412 $ 358,225	June 30, 2020 $ 260,117 170,271
			$ 430,388

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

Due to the rapidly changing financing environment of the capital market, the Company conducted the issuance of the 3rd domestic unsecured convertible bonds and a cash capital increase through new shares issued under the Board resolution on June 15, 2021. The total face value of the bonds issued amounted to NT$3,000,000 thousand. The total number of shares issued amounted to 6,000 thousand shares (with par value per share NT$10), and it is expected to raise a total fund of NT$480,000 thousand with a temporary issue price set at NT$80 per share. The above-mentioned proposal was declared to the competent authority and effective on July 19, 2021. Please refer to the following for

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procedure for the issuance of the bonds.

(1) The proposed issuance of the 3rd domestic unsecured convertible bonds by the Company in 2021 is as follows:
A. The conditions of the issuance is as follows:
- (a) The competent authority has approved the Company’s third issuance of domestic unsecured corporate bonds. The bonds are for a total issuance amount of $3,000,000 thousand and a coupon rate of 0% with an issue price of 100.5%~101% of the total face value of the bonds, cover a 3-year period of issuance, and will be redeemed in cash at face value at the maturity date. The bonds are expected to be listed on the Taipei Exchange in 2021.
- (b) 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.
- (c) The conversion price of the bonds is set up based on the pricing model in the terms of the bonds. As of July 29, 2021, the conversion price of convertible bonds was temporarily set at $110.8 per share.
- (d) 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.
- (e) 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.

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12. OTHERS

(1) Capital management

Due to the nature of the Group’s operating industry and the Group’s future development, and the consideration of the changing outside environment, the Company’s capital management is to ensure it has sufficient financial resource and operating plans to meet operational capital for future needs, capital expenditure, research and development expense, obligation repayment and dividend distribution within the next year.

The Company monitors capital by reassessing debt ratios periodically. The debt ratios as on June 30 2021, December 31, 2020 and June 30, 2020 were as follows:

June 30, 2021 Total debts $ 20,919,520 Total assets 32,020,852 Debt ratio 65% ancial instruments Financial instruments by category June 30, 2021 Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss $ 372,215 Financial assets at fair value through other comprehensive income Designation of equity instrument $ 1,345,992 Qualifying equity instrument 144,327 $ 1,490,319 Financial assets at amortized cost/ Loans and receivables Cash and cash equivalents $ 5,651,209 Financial assets at amortized at cost 851,853 Accounts receivable (including due from related parties) 7,504,777 Other receivables (including due from related parties) 593,350 Guarantee deposits paid 64,523 $ 14,665,712	December 31, 2020 $ 21,884,605 $ 34,155,348 64% December 31, 2020 $ 105,387 $ 1,536,272 232,060 $ 1,768,332 $ 3,046,963 866,600 12,714,950 776,641 71,625 $ 17,476,779	June 30, 2020 13,923,416 25,064,865 56% June 30, 2020 $ 61,824 $ 1,701,789 89,285 $ 1,791,074 $ 6,242,503 - 5,134,937 508,454 38,931 $ 11,924,825

(2) Financial instruments

A. Financial instruments by category

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Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Short-term borrowings Notes payable Accounts payable (including payable to related parties) Other accounts payable (including payable to related parties) Lease liability Corporate bonds payable (including maturing within one year or one operating cycle) Long-term borrowings (including maturing within one year or one operating cycle) Guarantee deposits received	June 30, 2021 $ 5,342 5,477,130 2,614 6,958,811 2,569,684 189,047 2,218,375 1,100,670 23,893 $ 18,545,566	December 31, 2020 $ 30,047 3,271,489 - 10,634,407 1,655,453 261,656 2,203,801 807,419 29,329 $ 18,893,601	June 30, 2020 $ 10,052 665,760 74 5,605,057 2,647,365 154,753 2,245,051 108,411 3,033 $ 11,439,556

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.
(b) Group treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. Such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
(c) Information about derivative financial instruments that are used to hedge certain exchange rate risk was provided in Note 6 (2).
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, 2020, 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 currencies, primarily with respect to the USD, RMB and HKD. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities.
ii. The Group’s management has stipulated a policy stating each entity of the Group shall manage the foreign exchange risk comparing to its functional currency. Each entity shall hedge the overall exchange rate risk according to the instruction of the Group’s finance department. Foreign exchange risk is measured at the expected transaction of highly probable payment in USD under the foreign exchange agreement to reduce the impact of fluctuation in foreign exchange rate on expected cost of inventory purchased.

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iii.The Group hedge the foreign exchange risk by foreign exchange trading and it is recognized under financial assets or liabilities at fair value through profit or loss. However, it is not accounted for under hedge accounting. Please refer to Note 6 (2).
iv.The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, RMB, HKD and CAD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:
(Remainder of page intentionally left blank)

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(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD USD : RMB RMB : HKD Receivables USD : HKD USD : NTD USD : RMB SGD : USD Non-monetary items Current financial assets at fair value through other comprehensive income USD : NTD Current financial assets at amortized cost USD : NTD Investments accounted for under equity method USD : NTD HKD : NTD RMB : NTD				June 30, 2021	June 30, 2021
	Foreign currency amount (In thousands) $ 59,658 3,844 8,879 5,994 2,538 $ 1,084 218,146 38,077 3,286 $ 5,000 $ 30,000 $ 114,009 280,029 86,186	Exchange rate	Book value (NTD) $ 1,662,072 16,564 247,369 166,993 10,936 $ 30,200 6,077,548 1,060,825 68,119 $ 139,300 $ 835,800 $ 3,176,288 1,004,464 371,376		Sensitivity analysis
				Degree of variation 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
		27.86 4.31 7.77 6.47 1.20 7.77 27.86 6.47 0.74 27.86 27.86 27.86 3.59 4.31			$ 49,862 497 7,421 5,010 328 $ 906 182,326 31,825 2,044 ($ 1,010) $ 25,074 $ - - -


under equity method USD : NTD HKD : NTD RMB : NTD

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			June 30, 2021	June 30, 2021
Foreign currency amount (In thousands) $ 107,000 63,412 2,600 16,716 $ 188 180,131 128,811 37,773	Exchange rate	Book value (NTD) $ 2,981,020 1,766,658 72,436 72,029 $ 674 776,184 3,588,674 1,052,356		Sensitivity analysis
			Degree of variation 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
	27.86 6.47 0.81 4.31 0.83 4.31 27.86 6.47			$ 89,431 53,000 2,173 2,161 $ 20 23,286 107,660 31,571

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(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD : HKD USD : NTD USD : RMB USD : THB SGD : USD Non-monetary items Current financial assets at fair value through other comprehensive income USD : NTD Current financial assets at amortized cost USD : NTD Investments accounted for under equity method USD : NTD HKD : NTD RMB : NTD				December 31, 2020	December 31, 2020
	Foreign currency amount (In thousands) $ 11,164 2,882 8,736 201 9,412 1,390 2,534 $ 1,321 366,711 115,742 5,126 - $ 8,000 $ 3,000 $ 110,476 247,654 85,181	Exchange rate	~69~ Book value (NTD) $ 317,951 12,615 248,801 738 268,054 39,587 11,091 $ 37,622 10,443,929 3,296,332 145,988 - $ 227,840 $ 85,440 $ 3,146,355 909,632 372,839		Sensitivity analysis
				Degree of variation 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
		28.48 4.38 7.75 3.67 6.51 29.80 1.19 7.75 28.48 6.51 29.80 0.76 28.48 28.48 28.48 3.67 4.38			$ 9,539 378 7,464 22 8,042 1,188 333 $ 1,129 313,318 98,890 4,380 - $ 6,335 $ 2,563 $ - - -


under equity method USD : NTD HKD : NTD RMB : NTD

			December 31, 2020	December 31, 2020
Foreign currency amount (In thousands) $ 48,000 42,815 2,600 4,500 $ 234 213,075 230,702 61,494	Exchange rate	Book value (NTD) $ 1,367,040 1,219,371 74,048 19,697 $ 859 932,629 6,570,393 1,751,349		Sensitivity analysis
			Degree of variation 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
	28.48 6.51 0.78 4.38 0.84 4.38 28.48 6.51			$ 41,011 36,581 2,221 591 $ 26 27,979 197,112 52,540

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(Foreign currency: functional currency) Financial assets Monetary items Cash in banks USD : NTD RMB : NTD USD : HKD HKD : NTD USD : RMB USD : THB RMB : HKD Receivables USD : HKD USD : NTD USD : RMB USD : THB SGD : USD Non-monetary items Current financial assets at fair value through other comprehensive income USD : NTD Investments accounted for under equity method USD : NTD HKD : NTD RMB : NTD				June 30, 2020	June 30, 2020
	Foreign currency amount (In thousands) $ 47,281 29,007 9,056 1,060 329 4,331 1,614 $ 997 141,140 52,723 3,719 2,723 $ 2,991 $ 94,646 189,411 86,084	Exchange rate	Book value (NTD) $ 1,400,936 121,568 268,329 4,052 110,490 128,328 6,764 $ 29,541 4,181,978 1,562,182 110,194 57,837 $ 88,623 $ 2,804,362 724,117 360,776		Sensitivity analysis
				Degree of variation 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
		29.63 4.19 7.75 3.82 7.07 30.72 1.10 7.75 29.63 7.07 30.72 0.72 29.63 29.63 3.82 4.19			$ 42,028 3,647 8,050 122 3,315 3,850 203 $ 886 125,459 46,865 3,306 1,735 $ - $ - - -


under equity method USD : NTD HKD : NTD RMB : NTD

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			June 30, 2020	June 30, 2020
Foreign currency amount (In thousands) $ 3,000 15,201 2,600 11,750 $ 2,363 230,515 117,595 26,902	Exchange rate	Book value (NTD) $ 88,890 450,392 77,038 49,244 $ 9,034 966,088 3,484,340 797,106		Sensitivity analysis
			Degree of variation 3% 3% 3% 3% 3% 3% 3% 3%	Effect on profit or loss
	29.63 7.07 0.73 4.19 0.91 4.19 29.63 7.07			$ 2,667 13,512 2,311 1,477 $ 271 28,983 104,530 23,913

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Total exchange gain (loss), including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the three months and six months ended June 30, 2021 and 2020 amounted to a gain of $15,140 thousand, a loss of $22,091 thousand, a loss of $33,439 thousand, and a loss of $20,122 thousand, respectively.

Price risk

i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise shares and open-end funds issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 3% with all other variables held constant, post-tax profit for the six months ended June 30, 2021 and 2020 would have increased/decreased by $794 thousand and $729 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 $40,380 thousand and $51,054 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 amortized 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 six months ended June 30, 2021 and 2020 would have increased/decreased by $6,578 thousand and $774 thousand, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.
iii.If the Current investments in debt instrument interest rate had increased/decreased by 0.25% with all other variables held constant, profit (loss), net of tax for the six months ended June 30, 2021 and 2020 would have increased/decreased by $424 thousand and $90 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 amortized 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 minimize credit risk. The Group can only enter into the financial services and loan agreement provided by banks and financial institutions after being approved by the Board of Directors or authorized management according to the Company’s delegation of authorization policy. To prevent legal risks, all the Group signs with banks and financial institutions after all documents are examined by counsel or legal advisor profession. The Group periodically checks the credit rating, conditions and quality of service as well as transactions. According to the Group’s operating condition, the credit limits and utilization of credit limits are monitored on a regular basis and maintained within a reasonable range to ensure it meets

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the needs of the operation.

iii. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.
iv.The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:
(i) If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
(ii) For investments in bonds that are traded over the counter, if any external credit rating 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.

geographic area. The Group applies the modified approach estimate expected credit loss under the provision matrix basis. vii. The Group wrote-off the financial assets, which cannot be recovered, after initiating recourse procedures. However, executing the recourse procedures to secure their rights.	geographic area. The Group applies the modified approach estimate expected credit loss under the provision matrix basis. vii. The Group wrote-off the financial assets, which cannot be recovered, after initiating recourse procedures. However, executing the recourse procedures to secure their rights.	geographic area. The Group applies the modified approach estimate expected credit loss under the provision matrix basis. vii. The Group wrote-off the financial assets, which cannot be recovered, after initiating recourse procedures. However, executing the recourse procedures to secure their rights.	geographic area. The Group applies the modified approach estimate expected credit loss under the provision matrix basis. vii. The Group wrote-off the financial assets, which cannot be recovered, after initiating recourse procedures. However, executing the recourse procedures to secure their rights.	geographic area. The Group applies the modified approach estimate expected credit loss under the provision matrix basis. vii. The Group wrote-off the financial assets, which cannot be recovered, after initiating recourse procedures. However, executing the recourse procedures to secure their rights.	using provision matrix to reasonably expected to be the Group will continue	using provision matrix to reasonably expected to be the Group will continue
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 June 30, 2021, December 31, 2020 and June 30, 2020, the provision
matrix is as follows:
	Not past due		Up to 30 days	31 to 90 days	Over 90 days	Total
June 30, 2021
Expected loss rate		0.04%	0.79%	5.51%	100%
Total book value	$	7,238,657	$ 149,113	$ 92,676	$ 10,841	$ 7,491,287
Loss allowance	($	3,023)	($ 1,172)	($ 5,111)	($ 10,841)	($ 20,147)
December 31, 2020
Expected loss rate		0.02%	2.13%	25.59%	100%
Total book value	$ 12,401,873		$ 38,897	$ 6,066	$ 24,258	$ 12,471,094
Loss allowance	($	3,038)	($ 828)	($ 1,552)	($ 24,258)	($ 29,676)
June 30, 2020
Expected loss rate		0.08%	6.01%	20.87%	100%
Total book value	$	5,056,543	$ 62,163	$ 12,927	$ 16,452	$ 5,148,085
Loss allowance	($	4,164)	($ 3,739)	($ 2,698)	($ 16,452)	($ 27,053)

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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:

allowance for accounts receivable are as follows:
At January 1 Reversal of impairment loss Effect of foreign exchange At June 30 At January 1 Reversal of impairment loss Effect of foreign exchange At June 30	2021
	Accounts receivable
	$ 29,676 ( 8,262) ( 1,267) $ 20,147 2020 Accounts receivable $ 29,507 ( 1,694) ( 760) $ 27,053
		$ 29,507 ( 1,694) ( 760) $ 27,053

For provisioned loss during the six months ended June 30, 2021 and 2020, the (reversal of) impairment losses arising from customers’ contracts were a gain of $8,262 thousand and a gain of $1,694 thousand, respectively.

x. For the six months ended June 30, 2021 and 2020, there was no loss allowance for investments in debt instruments at fair value through other comprehensive income.
xi.For investments in debt instruments at fair value through other comprehensive income, the credit rating levels are presented below:

	June 30, 2021	June 30, 2021	Total $ 144,327
12 months $ 144,327	Lifetime
	Significant increase in Credit risk Impairment of credit $ - $ - December 31, 2020
12 months $ 232,060	Lifetime		Total $ 232,060
	Significant increase in Credit risk $ -	Impairment of credit $ -

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Financial assets at fair value through other comprehensive income Group 1		June 30, 2020	Total $ 89,285
	12 months $ 89,285	Lifetime Significant increase in Credit risk Impairment of credit $ - $ -
		Significant increase in Credit risk $ -

Group 1: Debt instruments designated as investment grade.

(c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. Group treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.
iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.
iv. The Group has $6,411,069 thousand, $7,597,976 thousand and $4,720,258 thousand in undrawn borrowing facilities as of June 30, 2021, December 31, 2020 and June 30, 2020, respectively.

Non-derivative financial liabilities

June 30, 2021 Less than 3 months Short-term borrowings $ 3,236,754 Notes payable 2,614 Accounts payable 4,137,892 Accounts payable - related parties 2,090,535 Other payables (including related parties) 2,534,448 Lease liabilities 35,299 Other current liabilities 56,143 Bonds payable 2,231,900 Long-term borrowings 814 Derivative financial liabilities Forward exchange contracts 5,342	Between 3 months and 1 year $2,251,633 - 521,956 208,428 35,236 81,718 42 - 35,205 -	Between 1 and 2 years $ - - - - - 21,787 - - 167,926 -	Between 2 and 5 years $ - - - - - 22,624 - - 856,111 -	Over 5 years $ - - - - - 30,724 - - 50,075 -	Total $ 5,488,387 2,614 4,659,848 2,298,963 2,569,684 192,152 56,185 2,231,900 1,110,131 5,342

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Non-derivative financial liabilities

Non-derivative financial liabilities
December 31, 2020 Less than 3 months Between 3 months and 1 year Short-term borrowings $ 2,591,817 $ 681,792 Accounts payable 6,062,301 404,629 Accounts payable - related parties 4,043,135 124,342 Other payables (including related parties) 1,588,845 66,608 Lease liabilities 39,865 110,075 Other current liabilities 76,729 531 Bonds payable - 2,231,900 Long-term borrowings 828 10,001 Derivative financial liabilities Forward exchange contracts 30,047 - Non-derivative financial liabilities June 30, 2020 Less than 3 months Between 3 months and 1 year Short-term borrowings $ 552,166 $ 115,461 Notes payable 74 - Accounts payable 2,643,359 824,751 Accounts payable - related parties 2,080,674 56,273 Other payables (including related parties) 2,609,521 37,844 Lease liabilities 14,914 38,961 Other current liabilities 44,913 631 Bonds payable - - Long-term borrowings 106 315 Derivative financial liabilities Forward exchange contracts 10,052 -	Between 1 and 2 years $ - - - - 57,231 - - 84,284 - Between 1 and 2 years $ - - - - - 44,294 - 2,289,500 12,966 -	Between 2 and 5 years $ - - - - 24,612 - - 635,779 - Between 2 and 5 years $ - - - - - 27,354 - - 88,223 -	Over 5 years $ - - - - 35,049 - - 87,718 - Over 5 years $ - - - - - 35,285 - - 8,362 -	Total $ 3,273,609 6,466,930 4,167,477 1,655,453 266,832 77,260 2,231,900 818,610 30,047 Total $ 667,627 74 3,468,110 2,136,947 2,647,365 160,808 45,544 2,289,500 109,972 10,052
June 30, 2020 Less than 3 months Short-term borrowings $ 552,166 Notes payable 74 Accounts payable 2,643,359 Accounts payable - related parties 2,080,674 Other payables (including related parties) 2,609,521 Lease liabilities 14,914 Other current liabilities 44,913 Bonds payable - Long-term borrowings 106 Derivative financial liabilities Forward exchange contracts 10,052

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(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 takes place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, and derivative instruments with quoted market prices is included in Level 1.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in certain derivative instruments and equity instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in certain derivative instruments, equity investment without active market and is included in Level 3.
B. Financial instruments not measured at fair value Financial instruments not measured at fair value include the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term and long-term borrowings, notes payable, accounts payable and other payables.

payable and other payables.
June 30, 2021		Fair value
	Book value $ 2,231,900	Level 1 Level 2 $- $2,218,375 Fair value		Level 3 $-
Liabilities Bonds payable December 31, 2020
	Book value $ 2,231,900	Level 1 Level 2 $- $2,203,801 Fair value		Level 3 $-
Liabilities Bonds payable June 30, 2020
	Book value $ 2,231,900	Level 1 $-	Level 2 $2,245,051	Level 3 $-
Liabilities Bonds payable

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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 is as follows:

June 30, 2021 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Forward exchange contracts -Fund -Bonds investments Financial liabilities at fair value through other comprehensive income - Equity securities - Debt securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts December 31, 2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss -Equity securities -Forward exchange contracts -Fund -Call options of convertible bonds Financial liabilities at fair value through other comprehensive income - Equity securities - Debt securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contracts	Level 1 $ - - 55,517 - 1,207,124 144,327 $ 1,406,968 $- Level 1 $ - - 52,157 - 1,402,262 232,060 $ 1,686,479 $-	Level 2 $ - 10,230 - 280,000 - - $ 290,230 $ 5,342 Level 2 $ - 26,316 - - - - $ 26,316 $ 30,047	Level 3 $ 26,468 - - - 138,868 - $ 165,336 $- Level 3 $ 26,468 - - 446 134,010 - $ 160,924 $-	Total $ 26,468 10,230 55,517 280,000 1,345,992 144,327 $ 1,862,534 $ 5,342 Total $ 26,468 26,316 52,157 446 1,536,272 232,060 $ 1,873,719 $ 30,047

~79~

June 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		-		6,235		-		6,235
-Fund	30,826			-		-		30,826
-Call options of convertible bonds		-		-		458		458
Financial liabilities at fair value
through other comprehensive income
- Equity securities	1,576,318			-		125,471		1,701,789
- Debt securities	89,285			-		-		89,285
	$ 1,696,429		$	6,235	$	150,234	$	1,852,898
Liabilities
Recurring fair value measurements
Financial liabilities at fair
value through profit or loss
-Forward exchange contracts	$	-	$	10,052	$	-	$	10,052

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:

Market quoted price

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

~80~

current market conditions.

E. For the six months ended June 30, 2021 and 2020, there was no transfer between Level 1 and Level 2.
F. The following chart is the movement of Level 3 for the six months ended June 30, 2021 and 2020:

20:
At January 1 Current increase Losses recognized in profit or loss Gains (losses) recognized in other comprehensive income At June 30	Six months ended June 30 2021 2020 $ 160,924 $ 152,921 - 3,004 ( 446) ( 1,832) 4,858 ( 3,859) $ 165,336 $ 150,234
	2021 $ 160,924 - ( 446) 4,858 $ 165,336

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:

value measurement:
Equity securities Private equity funds in venture capital Equity securities Private equity funds in venture capital Call options of convertible bonds	Fair value at June 30, 2021 $ 138,868 26,468 Fair value at December 31, 2020 $ 134,010 26,468 446	Valuation technique Market comparable companies Net asset value Valuation technique Market comparable companies Net asset value Binary tree convertible bond valuation model	Significant unobservable input	Range (weighted average) $ 15,528 26,468 Range (weighted average) $ 15,818 26,468 0.0544%	Relationship of inputs to fair value The higher the multiplier, the higher the fair value N/A Relationship of inputs to fair value The higher the multiplier, the higher the fair value N/A The higher the risk-free interest rate, the lower the fair value
			Price to book ratio multiple N/A Significant unobservable input
			Price to book ratio multiple N/A Risk-free interest rate

~81~

Equity securities Private equity funds in venture capital Call options of convertible bonds	Fair value at June 30, 2020 $ 78,279 24,305 458	Valuation technique Market comparable companies Net asset value Binary tree convertible bond valuation model	Significant unobservable input	Range (weighted average) $ 15,921 24,305 0.2502% 139.5 32.46%	Relationship of inputs to fair value The higher the multiplier, the higher the fair value N/A The higher the risk-free interest rate, the lower the fair value The higher the stock price, the higher the fair value The higher the stock price volatility, the higher the fair value
			Price to book ratio multiple N/A Risk-free interest rate Stock price Volatility

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

Equity securities Financial assets Call options of convertible bonds Equity securities Financial assets Call options of convertible bonds Equity securities	Input Cash flow Input Risk-free interest rate Stock price Volatility Cash flow Risk-free interest rate Stock price Volatility Cash flow	Change ±10% Change ±20bp ±10% ±5% ±10% ±20bp ±10% ±5% ±10%	June 30, 2021 Recognized in profit or loss Recognized in other comprehensive income Favorable change Unfavorable change Favorable change Unfavorable change $- $- $ 13,887 ($ 13,887) December 31, 2020	June 30, 2021 Recognized in profit or loss Recognized in other comprehensive income Favorable change Unfavorable change Favorable change Unfavorable change $- $- $ 13,887 ($ 13,887) December 31, 2020	June 30, 2021 Recognized in profit or loss Recognized in other comprehensive income Favorable change Unfavorable change Favorable change Unfavorable change $- $- $ 13,887 ($ 13,887) December 31, 2020
			Favorable change $-
			Recognized in profit or loss Recognized in other comprehensive income Favorable change Unfavorable change Favorable change Unfavorable change $ - $ - $ - $ - 446 ( 223) - - 223 ( 223) - - - - 13,401 ( 13,401) $ 669 ($ 446) $ 13,401 ($ 13,401) June 30, 2020 Recognized in profit or loss Recognized in other comprehensive income $ - $ - $ - $ - 229 ( 229) - - 229 ( 229) - - - - 7,828 ( 7,828) $ 458 ($ 458) $ 7,828 ($ 7,828)
			Favorable change $ - 446 223 - $ 669
			Recognized in profit or loss $ - $ - 229 ( 229) 229 ( 229) - - $ 458 ($ 458)
					$ - - - 7,828 $ 7,828

(4) Assessment of impact of COVID-19

Though there is COVID-19 pandemic and several epidemic prevention measures from the government, the Group’s overall business were not significantly impacted based on the Group’s assessment as of June 30, 2021. The Group has taken actions to prevent the spread of the pandemic which may affect the business operation, and has been monitoring the status of this matter.

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.
B. Provision of endorsements and guarantees to others: Please refer to table 1.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.
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 Note 4 (3).
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Please refer to table 3.
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 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
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 6.
(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

(3) Information on investments in Mainland China
A. Basic information: Please refer to table 8.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in Mainland China: Please refer to table 9.
(4) Major shareholders information

Major shareholders information: None.

14. SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions. Business organization is divided into Taiwan, Shenzhen, Singapore and other segments based on the operating regions.

The Company’s revenue is mainly from manufacturing and sales of microphones, receivers, speakers and other electronic components.

(2) Measurement of segment information

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

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

A. The segment information provided to the chief operating decision-maker for the reportable

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segments for the six months ended June 30, 2021 is as follows:

Taiwan Shenzhen Singapore Others Total

	Taiwan	Shenzhen	Singapore	Others	Total
Revenue Revenue from external customers Inter-segment revenue Total revenue Segment profit (loss)	$ 11,323,640 57,982 $ 11,381,622 $ 181,838	$ 1,159,075 4,547,900	$ 2,759,313 - $ 2,759,313 $ 113,935	$ 661,432 2,464,823 $ 3,126,255 $ 184,116	$ 15,903,460 7,070,705 $ 22,974,165 $ 132,137
		$ 5,706,975
		($ 347,752)

Note: The Group does not use segment information relating to assets and liabilities to evaluate segment performance. As a result, such assets and liabilities to be disclosed amounted to $0.

B. The segment information provided to the chief operating decision-maker for the reportable segments for the six months ended June 30, 2020 is as follows:

Shenzhen	Others	Total
$ 123,746 3,565,365	$ 442,263 576,290 $ 1,018,553 ($ 145,171)	$ 11,621,864 4,164,610 $ 15,786,474 $ 350,149
$ 3,689,111
($ 25,938)

Note: The Group does not use segment information relating to assets and liabilities to evaluate segment performance. As a result, such assets and liabilities to be disclosed amounted to $0.

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

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(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:
Adjusted revenue from reportable segments Adjusted revenue from other operating segments Total operating segments Elimination of inter-segment revenue Total consolidated operating revenue	Six months ended June 30 2021 2020 $ 19,847,910 $ 14,767,921 3,126,255 1,018,553 22,974,165 15,786,474 ( 7,070,705) ( 4,164,610) $ 15,903,460 $ 11,621,864
	2021 $ 19,847,910 3,126,255 22,974,165 ( 7,070,705) $ 15,903,460

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 Elimination of inter-segment income Income from continuing operations after income tax	Six months ended June 30 2021 2020 ($ 51,979) $ 495,320 618,783 114,228 566,804 609,548 ( 434,667) ( 259,399) $ 132,137 $ 350,149
	2021 ($ 51,979) 618,783 566,804 ( 434,667) $ 132,137

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MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Provision of endorsements and guarantees to others Six months ended June 30, 2021

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

Party being Endorsed/guaranteed

Ratio of accumulated endorsement/ Limit on Maximum guarantee Ceiling on total Provision of Provision of Provision of endorsements/ outstanding Outstanding Amount of amount to net amount of endorsements endorsements endorsements/ Relationship guarantees endorsement/ endorsement/ endorsements/ asset value of endorsements/ / guarantees / guarantees guarantees to with the the endorser/ endorser/ provided for a guarantee guarantee Actual guarantees guarantees by parent by subsidiary the party in Number Endorser/ Company guarantor single party amount as of amount as of amount secured with guarantor provided company to to parent Mainland (Note 1) guarantor name (Note 2) (Note 3) June, 2021 June 30, 2021 drawn down collateral company (Note 4) subsidiary company China Footnote 0 MEHO SOCV 2 $ 8,512,730 $ 97,510 $ 97,510 $ 72,436 $ - 0.92% $ 10,640,912 Y N N 0 MEHO SENM 2 8,512,730 27,860 27,860 - - 0.26% 10,640,912 Y 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 1, 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) June 30, 2021

			June 30, 2021
Table 2 Securities held by The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company MEST MEST	Marketable securities (Note 1) 76324296A KGI Taiwan Multi-Asset Income Fund A TWD SYNergy Private Placement (YDB8AA) JAFCO 2881B.TW 2882B.TW 5871A Stock - 4943.TW Stock - 3290.TW Stock - FUJITER Semiconductor CO.,LTD. Stock - NETVOX TECHNOLOGY CO., LTD Stock - -EVER THAI AGRI-PRODUCT CO.,LTD. Stock - -SUNSINO SME Development Co., Ltd. Stock - -LINSATION Intelligent Technology Limited Stock - MERRY FULING CO., LTD., TAIWAN BRANCH (SAMOA) Bond - XS218687550 Stock - Perfect Fortune Inc Stock - LOYAL WIRE& CABLE COMPANY LTD	Relationship with the securities issuer - - - - - - - - - - - - - - - - -	General ledger account Financial assets mandatorily measured at fair value through profit or loss Valuation adjustment Financial assets mandatorily measured at fair value through profit or loss Non-current financial assets mandatorily measured at fair value through profit or loss Equity instruments measured at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income Equity instruments measured at fair value through other comprehensive income Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Debt instruments measured at fair value through other comprehensive income Valuation adjustment Measured at fair value through other comprehensive income - non-current Measured at fair value through other comprehensive income - non-current Valuation adjustment		Expressed in thousands of NTD (Except as otherwise indicated) As of June 30, 2021 Book value (in thousands) Ownership (%) Fair value (in thousands) Note $ 50,000 - $ 55,517 5,517 $ 55,517 $ 280,000 - $ 280,000 $ 26,468 0.71% $ 26,468 $ 40,980 - $ 43,097 35,100 - 36,855 30,000 - 30,000 106,080 $ 109,952 3,872 $ 109,952 $ 648,164 8.84% $ 1,015,047 99,990 5.75% 82,125 27,811 9.79% 16,563 2,976 1.32% - 6,425 5.17% 6,425 2,123 0.36% 2,123 8,772 6.35% 8,772 10,437 19.00% 10,437 144,625 - 144,327 951,323 $ 1,285,819 334,496 $ 1,285,819 $ 7,627 18.33% $ 63,927 7,352 18.33% 30,621 14,979 $ 94,548 79,569 $ 94,548
				Number of shares 5,015 280,000 875 683 585 300 13,905 5,723 2,126 324 683 169 75 356 5,000 2,126 1,159	Book value (in thousands) $ 50,000 5,517 $ 55,517 $ 280,000 $ 26,468 $ 40,980 35,100 30,000 106,080 3,872 $ 109,952 $ 648,164 99,990 27,811 2,976 6,425 2,123 8,772 10,437 144,625 951,323 334,496 $ 1,285,819 $ 7,627 7,352 14,979 79,569 $ 94,548	Ownership (%) - - 0.71% - - - 8.84% 5.75% 9.79% 1.32% 5.17% 0.36% 6.35% 19.00% - 18.33% 18.33%

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 2, Page 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

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

Six months ended June 30, 2021

Table 3

Expressed in thousands of NTD

(Except as otherwise indicated)

Real estate acquired by MEVN	Real estate acquired Plant	Date of the event May 11, 2020	Transaction amount $ 483,488	Status of payment $ 443,827	Counterparty HOP LUC CONSTRUCTION JOINT STOCK COMPANY	Relationship with the counterparty None	If the counterparty is a related party, information as to the last transaction of the real estate is disclosed below Original owner who sold the real estate to the counterparty Relationship between the original owner and the acquirer Date of the original transaction Amount - - - -	If the counterparty is a related party, information as to the last transaction of the real estate is disclosed below Original owner who sold the real estate to the counterparty Relationship between the original owner and the acquirer Date of the original transaction Amount - - - -	If the counterparty is a related party, information as to the last transaction of the real estate is disclosed below Original owner who sold the real estate to the counterparty Relationship between the original owner and the acquirer Date of the original transaction Amount - - - -	Basis or reference used in setting the price Reason for acquisition of real estate and status of the real estate - For business use	Other commitment
							Original owner who sold the real estate to the counterparty -	Relationship between the original owner and the acquirer -	Date of the original transaction -
											-

Table 3, Page 1

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 Six months ended June 30, 2021

Table 4

Expressed in thousands of NTD (Except as otherwise indicated)

Purchase/seller The Company The Company The Company The Company METC MESG MESG MESG	Counterparty MECE MECL MEVN MECH The Company MECH METC MECL	Relationship with the counterparty Investment accounted for using the equity method A subsidiary of the Company A subsidiary of the Company Investment accounted for using the equity method Parent company Investment accounted for using the equity method A subsidiary of the Company A subsidiary of the Company		Transaction	Transaction	Credit term 60 - 65 days end of month after offsetting with accounts receivable 60 - 65 days end of month after offsetting with accounts receivable 60 - 65 days end of month after offsetting with accounts receivable 60 - 65 days end of month after offsetting with accounts receivable 60 - 65 days end of month after offsetting with accounts receivable 60 - 65 days end of month after offsetting with accounts receivable 60 - 65 days end of month after offsetting with accounts receivable 60 - 65 days end of month after offsetting with accounts receivable		Differences in transaction terms compared to third party transactions (Note 1) Unit price Credit term (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties (Note 1) 30~120 days end of month for the third parties	Notes/accounts receivable (payable) Balance (Note 2) Percentage of total notes/ accounts receivable payable ($ 1,241,822) 18% ( 1,467,373) 21% ( 790,489) 11% ( 350,864) 5% ( 606,285) 9% ( 602,881) 9% ( 243,512) 3% ( 232,223) 3%	Note
			Purchases (sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases	Amount $ 4,106,845 4,076,761 1,515,664 1,175,486 575,282 1,261,284 906,219 472,455	Percentage of total purchases (sales) 26% 26% 10% 7% 4% 8% 6% 3%			Unit price (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1)	Balance (Note 2) ($ 1,241,822) ( 1,467,373) ( 790,489) ( 350,864) ( 606,285) ( 602,881) ( 243,512) ( 232,223)
										(Note 3) (Note 3) (Note 3) (Note 3) (Note 3)

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

Table 4, Page 1

Table 5

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Receivables from related parties reaching $100 million or 20% of paid-in capital or more June 30, 2021


Table 5 Creditor The Company MECL MECL METC MEVN MECL	Counterparty METC The Company MESG MESG The Company MECH	Relationship with the counterparty A subsidiary of the Company Parent Company A subsidiary of the Company A subsidiary of the Company Parent Company Investment accounted for using the equity method	Balance of accounts receivable due from related party General ledger account Amount Accounts receivable $ 606,285 Accounts receivable 1,467,373 Accounts receivable 232,223 Accounts receivable 243,512 Accounts receivable 790,489 Other receivable 384,720	Turnover rate 2.62 3.11 2.88 8.93 6.24 -	Overdue receivables Amount Action taken $ - - - - - - - - - - - -		Expressed in thousands of NTD (Except as otherwise indicated) Amount collected subsequent to the balance sheet date (Note2) Allowance for doubtful accounts Note $ 276,762 $ - (Note 1) 410,456 - (Note 1) 86,676 - (Note 1) 119,030 - (Note 1) 436,568 - (Note 1) 128,052 -
			General ledger account Accounts receivable Accounts receivable Accounts receivable Accounts receivable Accounts receivable Other receivable		Amount $ - - - - - -
						- - - - - -

Note 1: Inter-company transactions between companies within the Group are eliminated. Note 2: The balance was as at July 29, 2021.

Table 5, Page 1

Table 6

Expressed in thousands of NTD

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Significant inter-company transactions during the reporting periods Six months ended June 30, 2021

(Except as otherwise indicated)

Number (Note 1) 0 0 0 0 1 1 2 2 2 2	Company name MEHO MEHO MEHO MEHO METC METC MESG MESG MESG MESG	Counterparty MECL MECL MEVN MEVN MEHO MEHO MECL MECL METC METC	Relationship (Note 2) 1 1 1 1 2 2 3 3 3 3	General ledger account Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable Purchases Accounts payable		Transaction	Percentage of consolidated total operating revenues or total assets (Note 3) 26% 5% 10% 2% 4% 2% 3% 1% 6% 1%
					Amount $ 4,076,761 1,467,373 1,515,664 790,489 575,282 606,285 472,455 232,223 906,219 243,512	Transaction terms The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties The price is based on the profitability of the product The balance shown was net of receivables as agreed by both parties

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

Parent company is ‘0’.
The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between transaction company and counter party is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):
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 6, Page 1

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Information on investees Six months ended June 30, 2021

Table 7 Investor 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	Investee MEST DDBV LEOHAB ENTERPRISE CO.,LTD. MECA MESG METC MHKY INSA BTTT MEVN UCMU MTHK FUSA SOCV SOCA SENM	Location HONG KONG British Virgin IS. Taichung City U.S.A. SINGAPORE THAILAND CAYMAN SAMOA Taichung City VIETNAM MAURITIUS HONG KONG SAMOA CANADA CANADA NORWAY	Main business activities Sales of microphone, receiver and speaker General investment business Plastic injection molding and metal stamping Technique, marketing and after service Sales of microphone, receiver and speaker Microphone, components and product and sale of other electric products Sales of medical device General investment business 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	Initial investment amount Balance as on June 30, 2021 Balance as on December 31, 2020 $ 981,113 $ 981,113 1,479,925 1,479,925 96,666 96,666 28,887 28,887 92,132 92,132 484,358 484,358 887,287 887,287 1,199,977 865,832 14,640 14,640 366,710 366,710 151 151 1,392,956 1,392,956 818,916 818,916 30 30 11,112 11,112 23 23	Shares held as on June 30, 2021 Number of shares (in thousand shares) Ownership (%) Book value 25,658 100.00 $ 3,790,117 48,005 100.00 3,176,369 4,986 21.00 47,667 999 99.90 34,923 800 100.00 1,216,512 5,060 99.99 569,292 24,979 100.00 655,493 - 100.00 844,155 9,000 100.00 22,362 - 51.00 449,966 5 100.00 - 48,000 100.00 3,176,288 - 97.12 672,215 - 100.00 36,915 - 100.00 72,576 - 100.00 59,070	Shares held as on June 30, 2021 Number of shares (in thousand shares) Ownership (%) Book value 25,658 100.00 $ 3,790,117 48,005 100.00 3,176,369 4,986 21.00 47,667 999 99.90 34,923 800 100.00 1,216,512 5,060 99.99 569,292 24,979 100.00 655,493 - 100.00 844,155 9,000 100.00 22,362 - 51.00 449,966 5 100.00 - 48,000 100.00 3,176,288 - 97.12 672,215 - 100.00 36,915 - 100.00 72,576 - 100.00 59,070	Expressed in thousands of NTD (Except as otherwise indicated) Net profit (loss) of the investee for the year ended June 30, 2021 Investment income (loss) recognized by the Company for the year ended June 30, 2021 Note ($ 239,302) ( $ 236,123) (Note 1) 54,156 80,437 (Note 1) 10,488 2,202 8,226 8,218 113,935 113,935 60,781 61,320 (Note 1) ( 54,927) ( 54,927) ( 23,490) ( 16,443) 710 710 153,137 78,100 - - (Note 2) 54,156 - (Note 2) ( 52,221) - (Note 2) 46 - (Note 2) 8,011 - (Note 2) 7,978 - (Note 2)
				Balance as on June 30, 2021 $ 981,113 1,479,925 96,666 28,887 92,132 484,358 887,287 1,199,977 14,640 366,710 151 1,392,956 818,916 30 11,112 23	Number of shares (in thousand shares) 25,658 48,005 4,986 999 800 5,060 24,979 - 9,000 - 5 48,000 - - - -	Ownership (%) 100.00 100.00 21.00 99.90 100.00 99.99 100.00 100.00 100.00 51.00 100.00 100.00 97.12 100.00 100.00 100.00

Note 1: The investment income included unrealized gains or losses and realized gains arising from upstream transactions. Note 2: The investee is second subsidiary and investment income (loss) is not shown.

Table 7, Page 1

Table 8

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Information on investees in Mainland China Six months ended June 30, 2021

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland China MECL MECE MECS Perfect Fortune Inc. LOYAL WIRE& CABLE COMPANY LTD. MECH FUSZ MEDG MSCS ETCX	Main business activities Microphone, receiver, speaker, security system, induction cooker and other electronic component Manufacture and sales of microphone, receiver and speaker International trade, transit trade and trading consulting; trading amongst companies in bonded area and trading agency in the area Electric wire, electric cable and other wire processing Electric wire, electric cable and other wire processing Manufacture and sales of microphone, receiver, speaker and mobile phone Manufacture of medical device Research and development of sound equipment, earphones, mobile power supply, charging box, cable, connector, electronic components, plastic hardware, mold and antenna Manufacture of speaker and amplifier Retail sales of hearing products	Paid-in capital $ 410,837 2,696,309 7,151 41,609 119,702 430,900 276,566 861,800 148,973 19,391	Investment method (Note 2) (Note 2) (Note 2) (Note 2, 4) (Note 2, 4) (Note 2) (Note 2) (Note 1) (Note 1) (Note 2)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2021 $ 453,191 1,369,285 6,055 107,624 - 420,687 310,763 452,564 79,728 19,009	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for six months ended June 30, 2021 Remitted to Mainland China Remitted back to Taiwan $ - $ - - - - - - - - - - - - - - - 30,769 - - -	Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2021 $ 453,191 1,369,285 6,055 107,624 - 420,687 310,763 452,564 110,497 19,009	Net income of investee for six months ended June 30, 2021	Ownership held by the Company (direct or indirect) 100.00% 49.00% 49.00% 18.33% 18.33% 49.00% 97.12% 49.00% 100.00% 97.12%	Investment income (loss) recognized by the Company for six months ended June 30, 2021 ($ 347,752) 80,437 ( 7) - - 109,905 ( 1,258) 4,366 8,964 ( 18,854)	Book value of investments in Mainland China as of June 30, 2021 (Note 5) $ 2,411,842 3,176,288 ( 1,058) 63,925 30,620 1,005,522 244,038 371,376 120,739 ( 11,202)	Accumulated amount of investment income remitted back to Taiwan as of June 30, 2021 $ 2,282,120 295,185 40,321 4,125 - - - - - -	Note
					Remitted to Mainland China $ - - - - - - - - 30,769 -
							($ 347,752) 110,521 ( 14) 8,392 5,129 217,574 ( 1,295) 8,910 12,806 ( 7,520)					Note 3 Note 3 Note 3

Table 8, Page 1

Table 8

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES Information on investees in Mainland China Six months ended June 30, 2021

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China ASCX LACX ASCZ FUXM	Main business activities Manufacture and sales of hearing aid, hearing device and acoustics equipment Research and development and technical sales of software for hearing aid use Manufacture of hearing aid and acoustics for rehabilitation device Sales of medical device	Paid-in capital 57,142 21,545 17,236 300,049	Investment method (Note 2) (Note 2) (Note 2) (Note 2)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2021 275,537 22,180 17,744 302,995	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for six months ended June 30, 2021 Remitted to Mainland China Remitted back to Taiwan - - - - - - - -	Accumulated amount of remittance from Taiwan to Mainland China as of June 30, 2021 275,537 22,180 17,744 302,995 $ 3,868,131	Net income of investee for six months ended June 30, 2021	Ownership held by the Company (direct or indirect) 96.63% 96.63% 96.63% 97.12%	Investment income (loss) recognized by the Company for six months ended June 30, 2021 2,579 303 1,192 ( 35,786)	Book value of investments in Mainland China as of June 30, 2021 (Note 5) 76,632 41,417 27,673 187,188	Accumulated amount of investment income remitted back to Taiwan as of June 30, 2021 - - - -	Note
					Remitted to Mainland China - - - -
							2,669 313 1,234 ( 36,848)

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

Investment amount Accumulated amount approved by the Ceiling on investments in of remittance from Investment Mainland China imposed Taiwan to Mainland Commission of the by the Investment China as of June Ministry of Economic Commission (MOEA) Company name 30, 2021 Affairs (MOEA) (Note 1) Merry Electronics Co., Ltd. $ 3,868,131 $ 3,757,859 $ 6,384,547

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

Table 8, Page 2

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas Six months ended June 30, 2021

Table 9 Investee in Mainland China MECL MECL MECE MECH MECH	Counterparty MEHO MESG MEHO MEHO MESG	Sales (purchase) Amount % ($ 4,076,761) 26% ( 472,455) 3% ( 4,106,845) 26% ( 1.175,486) 7% ( 1,261,284) 8%	Property transaction Amount % - - - - - - - - - -	Accounts receivable (payable) Balance on June 30, 2021 % ( $1,467,373) 21% ( 232,223) 3% ( 1,241,822) 18% ( 350,864) 5% ( 602,881) 9%	Provision of endorsements/ guarantee or collaterals Balance on June 30, 2021 Purpose - - - - - - - - - -		Expressed in thousands of NTD (Except as otherwise indicated) Financing Balance on June 30, 2021 Interest rate Interest during the six months ended June 30, 2021 Others - - - - - - - - - - - - - - - - - - - -	Expressed in thousands of NTD (Except as otherwise indicated) Financing Balance on June 30, 2021 Interest rate Interest during the six months ended June 30, 2021 Others - - - - - - - - - - - - - - - - - - - -	Expressed in thousands of NTD (Except as otherwise indicated) Financing Balance on June 30, 2021 Interest rate Interest during the six months ended June 30, 2021 Others - - - - - - - - - - - - - - - - - - - -
		Amount ($ 4,076,761) ( 472,455) ( 4,106,845) ( 1.175,486) ( 1,261,284)	Amount - - - - -	Balance on June 30, 2021 ( $1,467,373) ( 232,223) ( 1,241,822) ( 350,864) ( 602,881)	Balance on June 30, 2021 - - - - -	Maximum balance during the six months ended June 30, 2021	Balance on June 30, 2021 - - - - -	Interest rate - - - - -
						- - - - -			- - - - -

Table 9, Page 1

AI assistant

MERRY — Interim / Quarterly Report 2021

52085_rns_2021-12-24_9edd728f-f555-4c30-a1dd-6e74844a747c.pdf

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2021, DECEMBER 31, 2020 AND JUNE 30, 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2021, DECEMBER 31, 2020 AND JUNE 30, 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

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

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2021 AND 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2021 AND 2020

MERRY ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 2021 AND 2020

1. HISTORY AND ORGANISATION

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

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

(3) Impact on IFRS issued by IASB but not yet endorsed by the FSC

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Basis of consolidation

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

6. DETAILS OF SIGNIFICANT ACCOUNTS

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

(6) Inventories

(7) Other current assets

(8) Investments accounted for using the equity method

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

C. Associates

Statement of comprehensive income

(9) Property, plant and equipment

(11) Intangible assets

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

(12) Other non-current assets

(15) Other current liabilities

(16) Bonds payable

- (17) Long term borrowings

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

(19) Share-based payment

(d) The first restricted stocks to employees in 2019

(e) The second restricted stocks to employees in 2019

(f) The first restricted stocks to employees in 2020

(20) Share capital

(22) Retained earnings

(23) Other equity items

(24) Operating revenue

A. Disaggregation of revenue from contracts with customers

(25) Interest income

(26) Other income

(27) Other gains and losses

(28) Expenses by nature

(29) Employee benefit expense

(31) Earnings per share

(32) Supplemental cash flow information

(33) Changes in liabilities from financing activities

(34) Government grants

(2) Significant related party transactions

A. Operating revenue

B. Purchases

C. Receivables from related parties

D. Payables to related parties

E. Contract liabilities (shown as other current liabilities)

F. Property transactions

(a) Acquisition of property, plant and equipment:

(b) Disposal of property, plant and equipment:

G.Other current assets - temporary debits of other expenses

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

MERRY Interim / Quarterly Report 2021