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MHC Annual Report 2020

Aug 3, 2021

52372_rns_2021-08-03_9caabd8d-7e67-40d1-97ce-b57b6e492699.pdf

Annual Report

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I. Names, position, contact number and email address of the spokesman and deputy spokesman

Spokesman: Ho, Jhi-Wu / President

Deputy Spokesman: Huang, Hsiu-Ling / Vice President of Finance Center Tel: +886-3-328-9000 E-mail: [email protected]

II. Addresses and telephone numbers for HQ, branch offices and factories

  1. MiTAC Holdings Corporation

No. 202, Wenhua 2nd Road, Guishan District, Taoyuan City 33383, Taiwan, R.O.C. Tel:+886-3-328-9000

  1. Branch: N/A

  2. Factory: N/A

  3. Primary subsidiaries

  4. (1) MiTAC International Corp.

Office and factory address: No. 1, R&D Road 2, Hsinchu Science Park, Hsinchu 30076, Taiwan, R.O.C.

Tel: +886-3-577-9250

Linkou Branch Office: No. 200, Wenhua 2nd Road, Guishan District, Taoyuan City 33383, Taiwan, R.O.C.

Tel: 886-3- 396-2888

  • (2) MiTAC Computing Technology Corporation

Office and factory address: 3F., No. 1, R&D Road 2, Hsinchu Science Park, Hsinchu 30076, Taiwan, R.O.C.

Tel: 886-3-577-9088

Linkou Office: No. 200, Wenhua 2nd Road, Guishan District, Taoyuan City 33383, Taiwan, R.O.C.

Tel: 886-3-327-5988

  • (3) MiTAC Digital Technology Corporation

Office and factory address: 4F., No. 1, R&D Road 2, Hsinchu Science Park, Hsinchu 30076, Taiwan, R.O.C.

Tel: 886-3-577-9968

Linkou Office: No. 200, Wenhua 2nd Road, Guishan District, Taoyuan City 33383, Taiwan, R.O.C.

Tel: 886-3-396-1888

III. Name, address, website and telephone of stock agency

Name: China Trust Commercial Bank - Stock Agency Department

Address: 5F., No. 83, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei, Taiwan, R.O.C. Website:www.ctbcbank.com

Tel: 886-2-6636-5566

IV. Name of CPA, accountant firm, address, website and telephone of CPA responsible for the latest annual financial statement

CPA: Lin, Yu-Kuan, Cheng, Ya-Huei

Name of CPA firm: Pricewaterhouse Coopers

Address: 27F, No.333, Sec. 1, Keelung Rd., Xinyi Dist. Taipei City, Taiwan, R.O.C. Website: www.pwc.tw Tel: 886-2-2729-6666

  • V. Foreign securities listing: N/A

VI. Company website: www.mitac.com

Page

Contents

One. Letter to Shareholders .......................................................................................................... 1 One. Letter to Shareholders .......................................................................................................... 1
Two. Company profile ................................................................................................................... 4
I. Date of establishment ..................................................................................................... 4
II. Company milestones ...................................................................................................... 4
Three. Corporate Governance Report ......................................................................................... 7
I. Organizational system .................................................................................................... 7
II. Information on Directors, Presidents, Vice Presidents, Assistant Vice Presidents,
and managers of each department and division ............................................................... 8
III. Remunerations to Directors, Presidents, and Vice Presidents ........................................ 16
IV. Corporate governance .................................................................................................. 20
V. Information of CPA Regarding Fee ............................................................................... 49
VI. Information for changing CPA ...................................................................................... 50
VII. Whether the Chairman, president, or manager responsible for finance or
accounting has held a position at a firm belonging to a certifying CPA firm or any
affiliated enterprise within the preceding year. .............................................................. 50
VIII. Any transfer of equity interests and/or pledge of or change in equity interests by a
director, managerial officer, or shareholder with a stake of more than 10 percent
during the most recent fiscal year or during the current fiscal year up to the date of
printing of the annual report ......................................................................................... 51
IX. Information on the relationship of Top 10 shareholders by proportion of
shareholding, related parties, spouse, or kindred within the 2nd tier .............................. 52
X. Number of Shares Held by the Company or the Company's Directors and
Managers, as Well as the Number of Shares Held by the Company for the
Reinvestment Businesses That it Directly or Indirectly Controls, and Combined to
Calculate the Comprehensive Shareholding Ratio......................................................... 54
Four. Fund raising ....................................................................................................................... 55
I. Capital and Shares ........................................................................................................ 55
II. Issuance of corporate bonds.......................................................................................... 59
III. The issuance of preferred shares ................................................................................... 59
IV. The issuance of GDR ................................................................................................... 59
V. Status of employee stock option certificates. ................................................................ 59
VI. Status of restricted stock award (RSA) ......................................................................... 59
VII. M&A or acceptance of news shares from assignment of other companies ..................... 59
VIII. Implementation of the fund allocation plan ................................................................... 59
Five. Operation Overview ........................................................................................................... 60
I. Business Activities ....................................................................................................... 60
II. Market and an overview of production and sales .......................................................... 69
III. Employee information in the last two years up to the publication date of this annual
report ........................................................................................................................... 75
IV. Environmental Disclosure ............................................................................................ 75
V. Employer and employee relationships .......................................................................... 76
VI. Important contracts....................................................................................................... 79
Six. Financial Position ................................................................................................................. 81 Six. Financial Position ................................................................................................................. 81
I. Condensed balance sheets and comprehensive income statements covering the last
5 years.......................................................................................................................... 81
II. Financial analysis covering the last 5 years................................................................... 85
III. The Audit Committee’ Review Report on the financial statement of the most recent
year. ............................................................................................................................. 87
IV. Financial report in the most recent year ........................................................................ 87
V. The Company’s financial statement for the most recent fiscal year, certified by a
CPA ............................................................................................................................. 87
VI. If the Company or its affiliates have experienced financial difficulties in the most
recent fiscal year or during the current fiscal year up to the date of printing of the
annual report, the annual report shall explain how said difficulties will affect the
Company's financial situation ....................................................................................... 87
Seven. A review and analysis of the Company’s financial status and operating results,
and risk management ....................................................................................................... 88
I. Review and analysis of the Company’s financial status ................................................ 88
II. Review and analysis of the Company’s financial performance...................................... 89
III. Cash flow review and analysis...................................................................................... 89
IV. The effect upon financial operations of any major capital expenditures during the
most recent fiscal year. ................................................................................................. 90
V. The Company's reinvestment policy for the most recent fiscal year, the main
reasons for the profits/losses generated thereby, the plan for improving re-
investment profitability, and investment plans for the coming year ............................... 90
VI. Risk management issues ............................................................................................... 91
VII. Other important matters ................................................................................................ 95
Eight. Important Notice .............................................................................................................. 96
I. Information on affiliates ............................................................................................... 96
II. The status of private place of securities in the most recent year to the date this
report was printed....................................................................................................... 105
III. Holding or disposal of shares in the Company by the Company's subsidiaries
during the most recent fiscal year or during the recent fiscal year up to the date of
printing of the annual report ....................................................................................... 105
IV. Other matters that require additional description......................................................... 105
V. Events that caused significant influence on shareholders’ equity or stock price
pursuant to Subparagraph II, Paragraph Ш, Article 36 of the Securities and
Exchanges Act in the most recent year to the date this report was printed ................... 105

One. Letter to Shareholders

Dear shareholders,

Due to the outbreak of COVID-19, 2020 was an extremely challenging year. The pandemic containment, lockdown, labor shortage, disrupted transportation, interruption of supply chains, and many other unprecedented problems thronged. Fortunately, MiTAC developed a flexible working model and culture as no mission to be missed through the multi-year training; with the efforts of implementing digital transformation, all employees of the Group were able to collaborate to respond to the ever-changing trends, overcame non-stopping challenges, and deliver on time to meet client demands. The 2020 operation result and 2021 outlook are presented as the following:

2020 operation result

In 2020, MiTAC Holdings generated consolidated revenues totaling NT$41.146 billion (15% YoY growth) and after-tax income attributed to the parent was NT$2.919 billion (4% YoY growth), which resulted in after-tax earnings per share of NT$2.45.

The rapid stagnation of the global economic growth resulting from the impacts of the pandemic shocked the automotive electronics and consumer electronics industries. Although the revenue of MiTAC Digital Technology declined, the automotive products still made profit. This is an uneasy achievement. On the other hand, many “new norms” appeared in the daily working model due to the outbreak of pandemic. Remote working has become the norm in the western countries, and enterprises accelerate the integration of applications and IT structure to clouds; online commercial activities and streaming services have bloomed. Various online education, shopping, services, meetings and other activities, along with subscription services have driven the online consumer expenses higher and higher. Thus, the data center business of MiTAC Computing Technology was able to defeat the trend and grew.

Honors and innovations

  1. The Company improved to be ranked in the 6%-20% range among public companies for its result of the Corporate Governance Evaluation, and was selected a constituent of the “TWSE Corporate Governance 100 Index.”

  2. MiTAC was certified with ISO 27001 Information Security Management System, with significant upgrade of its information security safeguard.

  3. MiTAC was awarded with ISO 14001 Plus Award-EMC Environmental Performance Benchmark.

  4. The professional value and execution outcomes of MiTAC Computing Technology were recognized by an award from a multinational corporation.

  5. MiTAC Digital’s bicycle navigator, “Mio Cyclo™ Discover” brings better riding experience with unique innovations, and thus won the 2021 Taiwan Excellence Award.

Outcomes of R&D

  1. MiTAC Computing Technology launched the first 24G SAS JBOD and PCIe Gen4 JBOF storage system in the world, and recognized by customers.

1

  1. MiTAC Computing Technology’s TYAN launched the cloud and storage system servers support 2nd generation AMD EPYC processor for the modern data centers.

  2. MiTAC Computing Technology’s TYAN launched the new high-performance and AI server platform, supporting the 2nd generation Intel® Xeon® scalable processors.

  3. MiTAC Computing Technology launched the edge computing solution to the 5G intelligent scenarios.

  4. MiTAC Computing Technology has continued to engage and contribute to the industrial association, such as Open Compute Project (OCP) and Open Radio Access Network (O-RAN)

  5. MiTAC Digital Technology’s Mio launched the first 2/3” large image sensor of starlight night vision grade, and the GPS WiFi dashcam with range speed alert measuring feature.

  6. MiTAC Digital Technology’s quality dashcams were validated by car maker clients, and expanded to the original automotive accessory market in the U.S.

  7. MiTAC Digital Technology launched 5” Android ® 9.0 system, and certified by GMS as a rugged handheld mobile device.

  8. The 10” rugged industrial tablets launched by MiTAC Digital Technology were certified by Google Android Enterprise Recommended.

2021 operation outlook

After the bumpy 2020, the vaccination roll out around the world has brought hopes of the global economic recovery. However, the outlook is yet uncertain, questions like whether the broad vaccination could mitigate and contain the COVID-19 pandemic; whether the relief packages around the world really boost the economies, and the confrontation between the U.S. and China, among other geopolitical tensions, will continuously drive the evolutions in the global markets. We never cease adjustment, and learn from history, internal lessons, clients’ feedbacks, or external experience. We stimulate various scenario and responding strategies, to seek to analyze and research the valuable internal digital information and data, combining with variables, to make our commercial plans respond to changes rapidly.

Looking forward, the boom of internet services and 5G introduction just began this year. The cloud and edge computing business of MiTAC Computing Technology have growth momentums. Other than the FANNG, we will see more opportunities in decentralization applications and rapid growth in regions. The automotive electronics and AIoT services of MiTAC Digital Technology have satisfactory progress, expanding the sales industry and geographic coverage, while seeking to strengthen the growth momentum again. We will keep advancing the digital transformation, by actively applying data to enhancing the Company’s value. On the path of transformation, we will implement RPA, AI, and digital transformation projects, to restructure the organization and culture. We will stay true to the highly flexible, accountable, and responsible manner, and stand firm, to embrace the more challenging future. MiTAC is grateful for all the support and encouragement of our shareholders. The management and employees will keep on making all possible efforts, to create higher growth and value.

Best regards

2

Chairman : Miau, Matthew Feng Chiang

President : Ho, Jhi-Wu

3

Two. Company profile

  • I. Date of establishment: September 12, 2013

  • II. Company milestones

  • 2013  For the implementation of the industry holding operation and independent development policy aiming at the upgrade of overall performance and fortifying the competitiveness in market, MiTAC Holdings Corporation was established under a resolution of the shareholders meeting of MiTAC Inc. on June 24, 2013, through share swap in accordance with pertinent laws. The company’s contributed capital came to NT$ 7,555,674,710. After the share swap, MiTAC International Corp. became a subsidiary under MiTAC Holdings Corporation with 100% of its shares. The Company became listed in TWSE with the stock code 3706.

    • Mio MiVue™ R25 rear view Automobile Data Record won the “ITMonth, Top 100 Innovative Products – Gold Award”. MiVue M300 motorcycle data record also won the “ITMonth Top 100 Innovative Products Award”.

  • Magellan® Echo smart running watch won the “Summer Exhibition of USA with two best products”.

  • 2014  Magellan® Echo smart running watch won the 2014 CES Innovations, Design and Engineering Award

    • Mio won the championship again in 2014 as the No. 1 consumer choice in GPS

    • MioCARE™/MioWORK™ L135 professional tablet PC products, Cyclo™ 500 outdoor navigation, MiVue™ 568 car recorder and MiVue™ M350 outdoor activity recorder won the 2014 iF Product Design Award.

    • Mio MiVue™ R25 rearview mirror car recorder and MioCARE™ drug information management system won the 2014 Taiwan Excellence award.

    • Won Supplier Excellence Award for Tier 1 Suppliers of automotive makers.

    • Won the 2013 Supplier Award from a Japanese multinational corporation.

    • Mio has been rated the No. 1 Consumer Ideal Brand for seven consecutive years.

    • The Group pushed forward professional job-division with the objective to achieve organizational upgrade and enhance the Company’s overall competitiveness. As a part of the organizational restructuring plan, MiTAC International Corp. span off the Cloud Computing Business Group to MiTAC Computing Technology Corporation (MCT) and MCT was formally established and begun commenced operation on September 1, 2014 After the spinoff, the Company has two subsidiaries, namely, MiTAC International Corp. and MiTAC Computing Technology Corp..

  • 2015  Wellness Band, Mio MiVue™ 540 Drive Video Recorder, 

     - MioCARE™/MioWORK™ A335 industrial tablet received iF Design Award 2015.

    • Mio MiVue™ R30 Drive Video Recorder won the “Best Choice of Computex 2015” award.

    • Mio was named as the No.1 brand of GPS products in the 2015 Consumers’ Ideal Brand organized by Management Magazine, Taiwan.

    • Mio MiVue™ 658 WIFI Drive Video Recorder and Classic 630 Traffic PND with Smart Alert won the “Innovation Award in ICT Month of 2015”.

    • Won the “Distinguished Partner Award” from a Japanese multinational corporation.

  • Construction of MiTAC Corporate HQ in Hwa Ya Technology Park in Taoyuan City commenced.

  • 2016  Magellan® RoadMate 7670T-LM DashCam Navigator received the “2016 CES Innovations, Design and Engineering Award”.

    • Mio was recognized as the Best Brand of Drive Video Recorder and GPS Products in the 2016 Consumers’ Ideal Brand organized by Management Magazine, Taiwan.

4

  • Magellan® Xplorist TRX7 off-road navigator won the prestigious TU-Automotive award as the 2016 Best Aftermarket Telematics Product/Service.

  • MiCor A100 electrocardiograph wristband received EU’s CE marking.

  • MiCor A100 electrocardiograph wristband received medical device license from TFDA.

  • MiTAC International Corp. invested in HEC/COMPUCASE Enterprise Co., Ltd. to boost both parties’ integrated competitiveness in products, data center and healthcare industry through strategic alliance.

  • Completion of MiTAC Corporate HQ in Hwa Ya Technology Park in Taoyuan City.

  • 2017  Consecration ceremony of the building at Kunshan, China

  • Investment in the Infopower Technologies Ltd. of India for manufacturing of electronic products in India.

  • Mio was recognized as the Best Brand of Drive Video Recorder and GPS Products in the 2017 Consumers’ Ideal Brand organized by Management Magazine, Taiwan.

  • MiCor A100 electrocardiograph wristband and MiVue Drive Video Recorder received iF Design Award 2017.

  • The Megellan® navigation app for IoT was officially launched to market.

  • MiTAC International Corp. was awarded with“ 2017 Supplier Quality Zero Defect Award 2017” for Tier 1 Suppliers of automotive makers.

  • Mio MiVue™ 792 WiFi dashcam has received the IT Month Top 100 Innovative Elite Award.

  • The return trip navigation solution of Megallan® was adopted by the Department of Health of New York City Government for installing at all the salt dispensing snow clearer trucks.

  • MiTAC Computing Technology Corp.(MCT) received a award from a multinational corporation to recognize its organization’s exemplary performance for datacenter execution and operations.

  • MCT received the “2016 Supplier Award.” from a Japanese multinational corporation for its outstanding contribution and performances.

  • MCT and MiTAC Information Systems Corp. received the “2016 Outstanding China Award” from a Chinese multinational corporation.

  • Received the “2016 Supplier Quality Award” from a famous U.S. IT security company in recognition of MiTAC team’s outstanding accomplishments.

  • MiTAC/TYAN released the new generation server platform supporting Intel® Xeon® Scalable Processors.

  • TYAN of MCT announced the AMD EPYC server for NVMe flash memory storage application service.

  • 2018  MiTAC International Corp. span-off its mobile communication product division for the establishment of MiTAC Digital Technology Corporation, which was opened for business on January 1, 2018. After the spinoff, the Company has three subsidiaries, namely, MiTAC International Corp., MiTAC Computing Technology Corporation and MiTAC Digital Technology Corporation

  • Mio won the duo-championship of the 2018 Consumer Preferred Brand for GPS and Dashcam Recorder.

  • MiTAC Computing Technology Corporation (MCT) was awarded the Work-Life Balance Award-Employee Assistance Award by Ministry of Labor in 2018.

  • MiTAC Digital Technology Corporation (MDT) “mobile device management system” won the “Bronze Medal Award” for terminal products and spare parts of the Taipei International Automobile Electronics Show.

  • 2019  MiTAC Computing Technology Corporation was granted the 2018 Best Supplier Award by its client, and was awarded Best Partner Award of the 2019 Open Data

5

Center Summit.

  • MiTAC Computing Technology Corporation took over as co-chair of Open Compute Project Taiwan (OCP).

  • Mio MiVue™ Dash Cam Series was chosen as “Best Choice” from Najdidevice, a Russian media, “Editor’s Best Choice” from IT-Expert, an Russian media, and “2019 Best IT Products Award” from Channelworld.cz in Czech Republic, and got high scores in the test performed by Which? in UK.

  • MiTAC offered high energy-saving benefits and was awarded the EMS Environmental Performance of the ISO Plus Awards by SGS.

  • 2020  MiTAC is certified by the ISO 27001 Information Security Management System to significantly improve its information security protection.

  • MiTAC Digital Technology Corporation established factory in the Hsinchu Science Park and developed the automotive electronics, AIoT, and professional tablet products.

  • MiTAC Computing Technology Corporation’s professional value and results have been recognized by special awards from multinational corporations.

  • 2021  MiTAC’s Mio Cyclo™ Discover Series won the Taiwan Excellence Award of 2021 for bringing rich and unique riding experience to cycling navigation.

For further information on The Company, please visit our official website at: www.mitac.com.

6

Three. Corporate Governance Report

I.Organizational system

  • (I) Organizational Chart

==> picture [479 x 172] intentionally omitted <==

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

Shareholders' meeting
Board of Directors
Auditing Committee Remuneration Committee
Auditing Office
Chairman
President
Legal Affairs Investment planning management Finance Human Resource
----- End of picture text -----

  • (II) Departmental Business Operation
Departments Principal business operation
Auditing Office  Review the condition of the Company’s operations and
offer recommendations for improvement.
Legal Affairs  Contract formulation and review.
 Consultation, support, and provision of business-related
legal service;legal issues in other aspects.
Investment planning
management		  Assess the operation and the development of the investees
and map out related investment plans.
 Design and establish management regulation and manage
the result of operation of the investees.
 Shares registration and transfer.
Finance  Financial operations and planning.
 Evaluation and research of domestic and international
investment opportunities.
 Financial planning and various tax-related accounting
treatment.
Human Resource  Human resources strategic planning and execution.
 Human resource management and talent development.
 Execution and management of administration, safety, and
health issues.

7

II. Information on Directors, Presidents, Vice Presidents, Assistant Vice Presidents, and managers of each department and division

(I) Background of Directors

Unit: share; % ; March 31, 2021

Title Country or
place of		 Name Sex Elected/
appointed		 Term Date First
 Shares held at time of
election		 Shares held at time of
election		 Quantity of shares held Quantity of shares held Shares held in the
names of others		 Shares held in the
names of others		 Education and Experience Positions currently held at MiTAC or other
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Note
Shares currently held
by spouse or
dependents

registration
date		 Elected Shares held
Percentage		 Shares held
Percentage
Shares
held
Percentage		 Shares
held
Percentage		 companies or supervisor
Title
Name
Relationship
Chairman US Miau,
Matthew
Feng
Chiang		 Male May 30,
2019		 3
Years		 Jun. 24,
2013		 9,869,815
1.05%
12,174,721
1.01%
0		 0.00% 0 0.00%
Honorary Ph.D., National Chiao Tung
University
MBA, Santa Clara University
BSEE, University of California, Berkeley
Laureate of Industrial Technology Research
Institute (ITRI)
President, UPC Technology Corp.
President, Linde Lienhwa Industrial Gases
Co., Ltd.
Chairman, Synnex Corporation
Independent Director, Galileo International,
Inc.
Independent Director, The BOC Group Plc.
Independent Director, Linde AG
Delegate, APEC Business Advisory Council
(ABAC)
Convener, Civil Advisory Committee of
National Information & Communications
Initiatives (NICI)		 CSO,MiTAC Holdings Corporation
Chairman and CSO, Lien Hwa Industrial
Holdings Corporation
Chairman and CSO, UPC Technology Corp.
Chairman and Overseas Operation CEO,
Synnex Technology International Corporation
Chairman and CEO, MiTAC Inc.
Director, Getac Technology Corp.
Director, MiTAC Information Technology
Corp
Director, Linde Lienhwa Industrial Gases
Co., Ltd.
Independent Director, Cathay Financial
Holding Co. Ltd.
Independent Director, Cathay Century
Insurance Co., Ltd.
Independent Director, Cathay United Bank
Company Limited
Director, Synnex Corporation
Director,CTCI Foundation		 None None None
Director Republic of
China		 Ho, Jhi-Wu Male May 30,
2019		 3
Years		 Jun. 24,
2013		 2,485,337
0.27%
2,438,953
0.20%		 13,111 0.001% 0 0.00%
Master in Computer Science, Fairleigh
Dickinson University
Master in Science of International Economics,
San Diego State University
Marketing Manager, Pao Hwa Trading Co.,
Ltd.		 President, MiTAC Holdings Corporation
Director and President, MiTAC Inc.
Chairman and CEO, MiTAC Computing
Technology Corp.
Chairman and CEO, MiTAC Digital
Technology Corp.
Chairman, Tsu Fung Investment Corporation
Director, 3-Probe Technologies Co., Ltd.
Director, Loyal Fidelity Aerospace Corp.
Director, Promise Technology, Inc.
Director,Whetron Electronics Co.,Ltd		 None None None
Director Republic of
China		 Chiao, Yu-
Cheng		 Male May 30,
2019		 3
Years		 Jun. 24,
2013		 0
0.00%
0
0.00%
0		 0.00% 0 0.00%
MSEE, Washington University, USA
MS in Telecommunication Engineering, Chiao
Tung University
Chairman, Walsin Lihwa
Chairman, Nuvoton Technology Corporation		 Chairman and CEO, Winbond Electronics
Corp.
Director, Walsin Lihwa
Director, Walsin Technology Corp.
Director, Nuvoton Technology Corporation
Independent Director, Synnex Technology
International Corporation
Independent Director, Taiwan Cement
Corporation		 None None None
Director Republic of
China		 UPC
Technology
Corp.
-		 May 30,
2019		 3
Years		 Jun. 24,
2013		 77,486,490
8.27%
99,802,598
8.27%
0		 0.00% 0 0.00% None None None None None

8

Title Country or
place of		 Name Sex Elected/
appointed		 Term Date First
 Shares held at time of
election		 Shares held at time of
election		 Quantity of shares held Quantity of shares held Shares held in the
names of others		 Shares held in the
names of others		 Education and Experience Positions currently held at MiTAC or other
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Note
Shares currently held
by spouse or
dependents

registration
date		 Elected Shares held
Percentage		 Shares held
Percentage
Shares
held
Percentage		 Shares
held
Percentage		 companies or supervisor
Title
Name
Relationship
Republic of
China		 Rep: Way,
Yung-Do		 Male May 30,
2019		 3
Years		 Jun. 24,
2013		 0
0.00%
0
0.00%
0		 0.00% 0 0.00%
MBA of Georgia University
BA of Accountancy, Soochow University
Senior Auditor, Deloitte Haskins & Sells,
USA
CEO, Deloitte		 Independent Director, Synnex Technology
International Corporation
Independent Director, Far Eastern Dept.
Stores Ltd.
Independent Director, Cathay Financial
Holding Co. Ltd.
Independent Director, Cathay United Bank
Company Limited
Independent Director, Cathay Securities
Corporation
Director, Vanguard International
Semiconductor Corporation
Director, Iron Force Industrial Co., Ltd.
Chairman,Wincome Industrial Co.		 None None None
Republic of
China		 Rep:
Chang,
Kwang-
Cheng		 Male May 30,
2019		 3
Years		 2013.09.13 0
0.00%
0
0.00%
0
0.00%
0
0.00%
PhD. Atmospheric Science, State University
of New York, USA
Honorary Doctorate in Theology, Dallas
Baptist University, USA
Honorary Doctorate, Tokyo Denki University
MBA, State University of New York, USA
Master of Atmospheric Science, State
University of New York, USA
Bachelor of Metrology, Dept. of Geography,
National Taiwan University
Director, Commerce Development Research
Institute
President, Shih Chien University
President, Minghsin University of Science and
Technology
Visiting Professor, School of Business,
University of Hawaii
President, Chung Yuan Christian University
Independent Director, Taiwan Power
Company
None		 None None None
Director Republic of
China		 MiTAC
Inc.		 - May 30,
2019		 3
Years		 Jun. 24,
2013		 73,199,606 7.81%
104,431,091
8.66%
0
0.00%
0
0.00%		 None None None None None
Republic of
China		 Rep: Hsu,
Tzu-Hwa		 Male May 30,
2019		 3
Years		 2013.09.13 0
0.00%
0
0.00%
0
0.00%
0
0.00%
PhD, Electronic Engineering, University of
California, Berkeley, California, USA
President, LFE Aerospace Industry Corp.
Vice Chairman of Board of East Tender
Optoelectronics Corp.
Independent Director of LuxNet Corporation		 None None None None
Republic of
China		 Rep: Su,
Liang		 Male May 30,
2019		 3
Years		 2018.07.03 0
0.00%
0
0.00%
11
0.00%
0
0.00%
Master, Institute of Information Management,
Tamkang University
Bachelor, Department of Computer Science,
National Chiao Tung University
EMBA, National Chengchi University		 Vice Chairman and President, MiTAC Inc.
Chairman and President, MiTAC Information
Technology Corp.
Independent Director, Mao Bao Inc.
Independent Director, Whetron Electronics
Co., Ltd.
Director, Easycard Corporation
Director, Far Eastern Electronic Toll
Collection Co., Ltd.
Director, MiTAC Hikari Corp.
Director, CECI Engineering Consultants, Inc.
Director, FETC INTERNATIONAL CO.,
LTD.
Managing Director, Institute for Information
Industry
Supervisor, EasyCard Investment Holdings
Co.,Ltd.		 None None None

9

Title Country or
place of		 Name Sex Elected/
appointed		 Term Date First
 Shares held at time of
election		 Shares held at time of
election		 Quantity of shares held Quantity of shares held Shares held in the
names of others		 Shares held in the
names of others		 Education and Experience Positions currently held at MiTAC or other
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Spouse or kin within two
degrees of consanguinity
serving as executive, director,
 Note
Shares currently held
by spouse or
dependents

registration
date		 Elected Shares held
Percentage		 Shares held
Percentage
Shares
held
Percentage		 Shares
held
Percentage		 companies or supervisor
Title
Name
Relationship
Independent
Director
Republic of
China		 Lu, Shyue-
Ching		 Male May 30,
2019		 3
Years		 Jun. 21,
2016		 0
0.00%
0
0.00%
0
0.00%
0
0.00%
University of Hawaii, Department of
Electrical Engineering, Ph.D
BS, Department of Engineering Science,
National Cheng Kung U. Department of
Engineering Science, BS
Managing Director, Telecommunication
Laboratories, Ministry of Transportation and
Communication, ROC
Director, Department of Posts and
Telecommunications Ministry of
Transportation and Communication
Deputy Director, General, Directorate-General
of Telecommunication
President, Chunghwa Telecom Co., Ltd.
Chairman,Chunghwa Telecom Co.,Ltd.		 Independent Director, Radium Life Tech. Co.,
Ltd.
Director, Sercomm Corporation
Director, CTCI Advanced Systems Inc.
Director of XRSpace Co., Ltd		 None None None
Independent
Director
Republic of
China		 Ma, Shaw-
Hsiang		 Male May 30,
2019		 3
Years		 Jun. 21,
2016		 0
0.00%
0
0.00%
0
0.00%
0
0.00%
BBA, Hitotsubashi University
Chairman, MACISCO Ltd.
Director & General manager, Federal Corp.
General Manager, Jiangsu Jiaguo
Construction Mateirals Processing Warehouse
Co.,Ltd.		 Chairman, MAXON Corp. None None None
Independent
Director
Republic of
China		 Tsai,
Ching-Yen		 Male May 30,
2019		 3
Years		 May 30,
2019		 0
0.00%
0
0.00%
0
0.00%
0
0.00%
Honorary Doctorate, National Central
University
Post-doctoral fellow, Harvard University
PhD. Atmospheric Science, University of
Utah
Bachelor, Department of Atmospheric
Sciences, National Taiwan University
Director, Loftechnology, Inc.
Chairman, Golden Asia Fund Taiwan Ltd.
Chairman, ITRI
Managing Director (Independent Director),
China Development Financial Holding
Corporation
Managing Director (Independent Director),
CDIB Capital Group
Remuneration Committee Member, MiTAC
Inc.
Chairman, Science and Technology
Committee, Association of East Asian
Relations
Chairman, Association for Taiwan-Japan
Cooperation on Industrial Technology
Minister without portfolio and Convener of
Science and Technology Advisory Group
Vice Chairman, National Science Council
Director General, Civil Aeronautics
Administration, MOTC
Director General, Central Weather Bureau,
MOTC
Professor of and Head of Atmospheric
Science Department, National Taiwan
University		 None None None None

Note 1: Please refer to Table 1 below for information on the main shareholders of corporate shareholders.

Note 2: Served as the representative of institutional supervisor from July 3, 2018 to April 17, 2019, and elected as the representative of institutional director on May 30, 2019.

10

Table 1: Dominant shareholders of institutional shareholders

March 31, 2021

Name of institutional
shareholders
(Note 1)		 Major shareholders of institutional shareholders(Note 2) Major shareholders of institutional shareholders(Note 2)
Name of shareholder Percentage of
shareholding (%)
UPC Technology Corp.
(Note 3)		 Lien Hwa Industrial holdings Corp. 31.89
Synnex Technology International Corporation 5.18
Yi Yuan Investment Co., Ltd. 1.62
Liberty Stationery Corp. 1.55
Mei An Investment Co., Ltd. 1.34
Tong Da Investment Corp. 1.24
Tsu Fung Investment Corporation 1.23
MiTAC International Corp. 1.21
Fubon Life Insurance Co., Ltd. 1.20
Investment account of Norges Bank entrusted for custody to
Citibank Taiwan		 1.16
MiTAC Inc. (Note 3) Lien Hwa Industrial holdings Corp. 35.24
Synnex Technology International Corporation 18.36
Mei An Investment Co., Ltd. 10.54
MiTAC International Corp. 8.69
Tsu Fung Investment Corporation 5.36
Hsu, Ai-Chen 1.97
Hua Cheng Investment Co., Ltd. 1.92
Bao Hsin International Investment Co., Ltd. 1.18
Miau, Matthew Feng Chiang 1.08
Yih Feng Investment Corp. 0.75

  • Note 1: If Directors and Supervisors serve as representatives of institutional shareholders, the names of institutional shareholders must be provided.

  • Note 2: Name the major shareholders (the top 10 owners) of institutional shareholders and their shareholding percentage. Table 2 below is applicable if any of the major shareholders is an institutional entity.

Note 3: As of the printing date of this annual report, as the institution shareholders have not stopped the transfer of shares on the date of 2021 Annual General Meeting, the relevant information and Note 3 of Table 2 below refers to the information on 2020 Annual General Meeting, the date on which share transfer was suspended.

11

Table 2: Major shareholders of dominant shareholder who is an institution

March 31, 2021 March 31, 2021
Name of institutional shareholder
(Note 1)		 Major shareholders of institutional shareholders(Note 2)
Name of shareholder Percentage of
shareholding (%)
Lien Hwa Industrial holdings
Corp. (Note 3)		 UPC Technology Corp. 9.68
Yi Yuan Investment Co., Ltd. 9.14
Yi Feng Investment Co., Ltd. 4.86
Jason Chow 3.32
Miau, Matthew Feng Chiang 3.19
Miao, Feng-Sheng 3.18
Miao, Feng-Chuan 3.02
Y.S. Education Foundation 3.00
Lien Hwa Industrial Holdings Corp. Employee Welfare
Committee		 2.82
MiTAC International Corp. 2.79
Synnex Technology International
Corporation		 MiTAC Inc. 14.91
Fubon Life Insurance Co., Ltd. 3.34
Morgan Stanley & Co International PLC investment
account held in custodybyHSBC Bank(Taiwan)Limited		 3.23
Yuanta Taiwan High Yield Fund Special Account 3.12
Lien Hwa Industrial holdings Corp. 2.99
Tu, Shu-Wu 2.17
Management Board of Public Service Pension Fund 2.00
Rongxuan Investment Corp. 1.85
Miau, Matthew Feng Chiang 1.71
China Life Insurance Company Limited (Investment
Department)		 1.69
Yih Yuan Investment Co., Ltd. Overcome Holdings Ltd. (British Virgin Islands) 100.00
Liberty Stationery Corp. Zhi-Jiang Investment Co., Ltd. 21.09
Masateru Kadota 9.55
Akira Kadota 8.88
Yayoi Kadota 8.88
Takanori Kadota 8.79
Complete Connection Limited 5.70
Sun, Li-Kang 5.29
Yu, Ching-Shen 5.13
Chang, Jheng 3.50
Chang, Cheng 3.50
Mei An Investment Co., Ltd. Vision Quest Overseas Ltd. 82.25
JumpStart Investments Ltd. 16.67
Others 1.08
Tong Da Investment Corp. Ho Li Investment Co., Ltd. 19.99

12

Name of institutional shareholder
(Note 1)		 Major shareholders of institutional shareholders(Note 2) Major shareholders of institutional shareholders(Note 2)
Name of shareholder Percentage of
shareholding (%)
Chou, Te-Chien 0.05
Synnex Technology International Corporation 19.99
Hua Cheng Investment Co., Ltd. 19.99
Wei Cheng Investment Co., Ltd. 19.99
Tsu Fung Investment Corporation 19.99
Tsu Fung Investment Corporation MiTAC International Corp. 100.00
MiTAC International Corp. MiTAC Holdings Corporation 100.00
Fubon Life Insurance Co., Ltd. Fubon Financial Holding Co., Ltd. 100.00
Investment account of Norges
Bank entrusted for custody to
Citibank Taiwan		 Investment accoun (Not applicable) -
Hua Cheng Investment Co., Ltd. Lien Hwa Industrial holdings Corp. 100.00
Bao Hsin International Investment
Co.,Ltd.		 Hon Hai Precision Industry Co., Ltd. 100.00
Yih Feng Investment Co., Ltd. Rich Cycle Ltd. (British Virgin Islands) 100.00
Hong Ding Investment Co., Ltd. Tu,Shu-Wu
Tu, Hai-Chen
Tu, Ying-Rong
Tu, Ying-Hsuan

Note 1: If any of the major shareholders listed in Table 1 is an institution, the name of the institution must be provided. Note 2: Name the major shareholders (the top 10 owners) of institutional shareholders and their shareholding percentage. Note 3: Information as of the date of share transfer suspension of 2020 Annual General Meeting.

13

March 31, 2021

Information on the directors

Whether this person has more than five years of work Whether this person has more than five years of work Whether this person has more than five years of work
Compliance with independence requirements (Note 1)
Qualifications experience and the following professionalqualifications The number of
Lecturer or higher level Judge, public Work experience 1 2 3 4 5 6 7 8 9 10 11 12 public
instructor at a public or prosecutor, attorney at
in business, law,		 companies where
private college or law, CPA, or other finance,
the person
university in business, law,
fi i		 professionals licensed
il		 accounting, or
h
concurrently acts
nance, accountng or
other fields related to the		 by natona exams
that are pertinent to		 oter areas
required for the		 as independent
Name operations of the Company
the operation of the
operation of the		 director
Company Company
Chairman
Miau,Matthew FengChiang		 - - - - - - - 2
(Note 2)
Director
Ho,Jhi-Wu		 - - - - - -
Director
Chiao,Yu-Cheng		 2
Director
MiTAC Inc.
Rep: Hsu,Tzu-Hwa		 -
Director
MiTAC Inc.
Rep: Su,Liang		 - - - 2
Director
UPC Technology Corp.
Rep: Way,Yung-Do		 - 4
(Note 2)
Director
UPC Technology Corp.
Rep: Chang,Kwang-Cheng		 -
Independent Director
Lu,Shyue-Ching		 1
Independent Director
Ma,Shaw-Hsiang
Independent Director
Tsai,Ching-Yen

Note 1: Place a “  ” in the box if the director met the following conditions at any time during active duty and two years prior to the date elected.

  • (1) Not an employee of the Company or its subsidiaries or affiliates.

  • (2) Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.

  • (3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the Company or ranks as one of its top ten shareholders.

  • (4) Not a manager of (1), or spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of (2) or (3).

  • (5) Not a director, supervisor, or employee of a institutional shareholder that directly holds 5% or more of the total number of issued shares of the Company, or ranks as of its top five shareholders, or was appointed pursuant to Paragraph 1 or Paragraph 2 of Article 27 of the Company Act. (The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

  • (6) Not a majority of the Company's director seats or voting shares and those of any other company are controlled by the same person: a director, supervisor, or employee of that other company (The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary).

  • (7) Not the same person as the Company’s Chairman, President or person with equivalent position, or the director, supervisor or employee of company or institution of the spouse thereof. (The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

  • (8) Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the Company or ranks as of its top five shareholders. (The same does not apply, however, in cases where the corporate/institution holds 20% or more and no more than 50% of the total number of issued shares of the Company, or the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

  • (9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company in the most recent 2 years with an accumulated service compensation of less than NTD 500 thousand, or a spouse thereof. This restriction does not apply to any member of the Remuneration Committee, public tender offers Audit Committee or mergers and acquisition special committee, who exercises powers pursuant to relative regulations of the Securities and Exchange Act and Business Mergers and Acquisitions Act.

  • (10) The member was or is not in a spousal relationship nor a relative within the second degree of kinship.

  • (11) The provisions of Article 30 of the Company Act are not applicable.

  • (12) Not elected to the government, institution or their representatives under Article 27 of the Company Act.

  • Note 2: In accordance with Article 4 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”, no independent director of a public company may concurrently serve as an independent director of more than three other public companies. Where an independent director of a financial holding company or of a TWSE listed or TPEx listed investment holding company concurrently serves as an independent director of more than one wholly owned subsidiary of that company, the number of such subsidiaries beyond one shall be included in the calculation of the number of subsidiaries at which the independent director concurrently serves under the preceding paragraph.

14

(II) Information on Presidents, Vice Presidents, Assistant Presidents, and managers of each department and division

Unit: share; % ; March 31, 2021

Shares currently held by Shares currently held by Shares held in the Shares held in the Manager who is the spouse or Manager who is the spouse or Manager who is the spouse or Note
Shareholding
Elected/ spouse or dependents names of others Concurrent duties in other kin within the 2nd tier.
Title Nationality Name Sex
appointed date Shares Shares Education and Experience companies

Shares held		 Percentage Title Name Relationship
held Percentage held Percentage
President ROC Ho, Jhi-Wu Male 2013.09.12 2,438,953
0.20%
13,111
0.001%
0
0.00%
Master in Computer Science,
Fairleigh Dickinson University
Master in Science of International
Economics, San Diego State
University
Marketing Manager, Pao Hwa
Trading Co., Ltd.		 Director and President, MiTAC Inc.
Chairman and CEO, MiTAC
Computing Technology Corp.
Chairman and CEO of MiTAC
Digital Technology Corp.
Chairman, Tsu Fung Investment
Corporation
Director, 3-Probe Technologies Co.,
Ltd.
Director, Loyal Fidelity Aerospace
Corp.
Director, Promise Technology, Inc.
Director, Whetron Electronics Co.,
Ltd		 None None None
Vice President
and Head of
Finance		 ROC Huang, Hsiu-
Ling		 Female 2013.09.12 324,583
0.03%
0
0.00%
0
0.00%
Bachelor, Taxation and Finance,
National Chung Hsing University
Director of General Management
Dept., Hanrei Technology
Corporation		 Vice President, Finance Center,
MiTAC International Corp.
Vice President of the Finance
Center , MiTAC Digital Technology
Corporation,
Director, Loyal Fidelity Aerospace
Corp.
Supervisor, Tsu Fung Investment
Corp.		 None None None
CSO US Miau,
Matthew
Feng Chiang		 Male 2020.05.12 12,174,721
1.01%
0
0.00%
0
0.00%
Honorary Ph.D., National Chiao
Tung University
MBA, Santa Clara University
BSEE, University of California,
Berkeley
Laureate of Industrial Technology
Research Institute (ITRI)
President, UPC Technology Corp.
President, Linde Lienhwa Industrial
Gases Co., Ltd.
Chairman, SYNNEX Corporation
Independent Director, Galileo
International, Inc.
Independent Director, The BOC
Group Plc.
Independent Director, Linde AG
Delegate, APEC Business Advisory
Council (ABAC)
Convener, Civil Advisory
Committee of National Information
& Communications Initiatives		 Chairman and CSO, Lien Hwa
Industrial Holdings Corporation
Chairman and CSO, UPC
Technology Corp.
Chairman and Overseas CEO,
Synnex Technology International
Corporation
Chairman and CEO, MiTAC Inc.
Director, Getac Technology Corp.
Director, MiTAC Information
Technology Corp
Director, BOC Lien Hwa Industrial
Gases Co., Ltd.
Independent Director, Cathay
Financial Holding Co. Ltd.
Independent Director, Cathay
Century Insurance Co., Ltd.
Independent Director, Cathay United
Bank Company Limited
Director, Synnex Corporation		 None None None
Chief
Corporate
Governance
Officer		 ROC Hsu, Che-
Hsien		 Male 2020.08.11 14,445
0.001%
0
0.00%
0
0.00%
MS Program in Technology
Management, Fu Jen Catholic
University
Bachelor, Department of Business
Administration, Soochow University
Senior Manager of Stock
Administration Dep., MiTAC
International Corp.		 None None None None

15

2020

III. Remunerations to Directors, Presidents, and Vice Presidents

Remunerations to Directors and Independent Directors

Unit: In thousands of New Taiwan Dollars/ thousand shares

Remuneration t Remuneration t o the Directors o the Directors o the Directors o the Directors Remuneration from holdingemployeepositions Remuneration from holdingemployeepositions Remuneration from holdingemployeepositions Remuneration from holdingemployeepositions Remuneration from holdingemployeepositions Remuneration from holdingemployeepositions Remuneration from holdingemployeepositions Remuneration from holdingemployeepositions Total of A, B, C, D, Total of A, B, C, D,
Total of A, B, C, and
D in proportion to
Pension (B) Director
 Business expenses Salaries, bonus, and Pension (F) Employee remuneration (G) E, F and G in
proportion to		 Remuneration
from
Compensation (A)
(Note 1)		 remuneration (C)
(Note 2)
(D)		 earnings after
taxation (%)
special expenses (E)
(Note 1)
(Note 3)
earnings after
taxation
investees
other than
Title Name All companies in subsidiaries,
All
All All All All All All All The Company the fin ancial or from the
The
 companies
in the
The
 companies
in the
The
 companies
in the
The
 companies
in the
The
 companies
in the
The
 companies
in the
The
 companies
in the




state
ments

 The

 companies
in the
parent
Company financial
statements		 Company financial
statements		 Company financial
statements		 Company financial
statements		 Company financial
statements		 Company financial
statements		 Company financial
statements		 Amount
paid in
Amount
paid in
Amount
paid in
Amount
paid in		 Company
 financial
statements		 company
(H)
cash shares cash shares
Chairman Miau, Matthew
FengChiang		 552 552 - - 3,500 3,500 160 160 0.14% 0.14% - 14,404 - - 2,400 - 2,400 - 0.23% 0.72% 106
Director Ho, Jhi-Wu
Director Chiao, Yu-
Cheng
Director MiTAC Inc.
Rep: Hsu, Tzu-
Hwa
Rep: Su,Liang
Director UPC
Technology
Corp.
Rep: Way, Yung-
Do
Rep: Chang,
Kwang-Cheng
Independent
Director
Lu, Shyue-
Ching		 216 216 - - 1,500 1,500 84 84 0.06% 0.06% - - - - - - - - 0.06% 0.06% -
Independent
Director
Ma, Shaw-
Hsiang
Independent
Director
Tsai, Ching-Yen

Note 1: Retired Pension as stated is the amount of appropriation.

Note 2: Represents the amount of directors’ remuneration that the board has proposed as part of the latest earnings appropriation.

Note 3: The amount of remuneration to employees planned to pay in the most recent year.

Note 4: The policy and system of remuneration to independent directors : The independent directors' remuneration of the Company is recommended by the Remuneration Committee with reference to the evaluation results of the directors' performance evaluation, the Company's operating performance, and the normal level of peer support, then the comments would be proposed to the Board of Directors to make a resolution.

Note 5: The total remuneration, as a percentage of net income stated in the parent company only financial statements, as paid by the Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure:

The remuneration to the directors is determined on the basis of the Articles of Incorporation of the Company through authorization to the Board and at the suggestion of the Remuneration Committee, with reference to industry standards, and in consideration of the risk in the future. In addition, the remuneration to the directors and supervisors is governed by Article 25 of the Articles of Incorporation of the Company thereby the Company shall appropriate no more than 1% of its earnings, if applicable, as the remuneration to the directors.

The Company established the Audit Committee on May 30, 2019 in place of supervisors and increased the number of directors. Therefore, the 2020 proportion of total remuneration in net profit after tax was 0.2060%, which was slightly increased from the 0.1934% of 2019. No remuneration to supervisors applicable in 2020.

Note 6: The Company does not disclose the name and remuneration of particular director. Therefore, the disclosure of remunerations was presented on a salary scale with the names of all concerned.

Note 7: Further to the aforementioned disclosure, the remunerations received by the Directors of the Company for rendering service to all companies included in the financial statements (like a consultant): None.

16

Salary Scale

Bracket of salaries paid to directors of the Company Name of director Name of director Name of director Name of director
Total of first 4 items(A+B+C+D) Total of(A+B+C+D+E+F+G)+(H)
The Company All companies in the financial
statements		 The Company All investees
Less than NT$1,000,000 Miau, Matthew Feng Chiang/Ho Jih-
Wu/Chiao, Yu-Cheng/Ho, Jhi-
Wu/MiTAC Inc./Hsu, Tzu-Hwa/Su,
Liang/UPC Technology Corp./Way,
Yung-Do/Chang, Kwang-Cheng/Lu,
Shyue-Ching/Ma, Shaw-
Hsiang/Tsai, Ching-Yen		 Miau, Matthew Feng Chiang/Ho Jih-
Wu/Chiao, Yu-Cheng/Ho, Jhi-
Wu/MiTAC Inc./Hsu, Tzu-Hwa/Su,
Liang/UPC Technology Corp./Way,
Yung-Do/Chang, Kwang-Cheng/Lu,
Shyue-Ching/Ma, Shaw-
Hsiang/Tsai, Ching-Yen		 Chiao, Yu-Cheng/ MiTAC Inc./Su,
Liang/Hsu, Tzu-Hwa/UPC
Technology Corp./Way, Yung-
Do/Chang, Kwang-Cheng/Lu,
Shyue-Ching/Ma, Shaw-
Hsiang/Tsai, Ching-Yen		 Chiao, Yu-Cheng/ MiTAC Inc./Su,
Liang/Hsu, Tzu-Hwa/UPC
Technology Corp./Way, Yung-
Do/Chang, Kwang-Cheng/Lu,
Shyue-Ching/Ma, Shaw-
Hsiang/Tsai, Ching-Yen
NT$1,000,000 (inclusive)~NT$2,000,000 (exclusive) Miau, Matthew Feng Chiang/Ho,
Jhi-Wu
NT$2,000,000 (inclusive)~NT$3,500,000 (exclusive)
NT$3,500,000 (inclusive)~NT$5,000,000 (exclusive)
NT$5,000,000 (inclusive)～NT$10,000,000 (exclusive) Miau, Matthew Feng Chiang
NT$10,000,000 (inclusive)～NT$15,000,000 (exclusive) Ho, Jhi-Wu
NT$15,000,000 (inclusive)～NT$30,000,000 (exclusive)
NT$30,000,000 (inclusive)～NT$50,000,000 (exclusive)
NT$50,000,000 (inclusive)～NT$100,000,000 (exclusive)
More than NT$100,000,000
Total 12 12 12 12

17

2020

Remuneration to President and Vice Presidents

Unit: In thousands of New Taiwan Dollars/ thousand shares

Title Salaries
(A)		 Salaries
(A)		 Pension
(B)(Note 1)		 Pension
(B)(Note 1)		 Bonus and special expenses
(C)		 Bonus and special expenses
(C)		 Employee remuneration (D)
(Note 3)		 Employee remuneration (D)
(Note 3)		 Employee remuneration (D)
(Note 3)		 Employee remuneration (D)
(Note 3)		 Total of A, B, C, and D in
proportion to earnings after
taxation(%)		 Total of A, B, C, and D in
proportion to earnings after
taxation(%)
i ft
earnngs aer
on(%)		 Remuneration from
The Company The Company All companies
in the financial
statements		 The Company The Company
 All companies in the
financial statements
 The Company All companies
in the financial
statements		 investees other than
subsidiaries, or from
the parent company
(E)
Name
All companies
in the financial		 All companies
in the financial
tatements

statements
statements		 Amount
paid in cash		 Amount
paid in
shares		 Amount
paid in cash		 Amount
paid in
shares
President Ho, Jhi-Wu - 9,541 - 167 - 9,570 2,800 - 2,800 - 0.10% 0.76% 116
Vice President
and Head of
Finance		 Huang, Hsiu-
Ling
CSO Miau, Matthew
Feng Chiang
(Note 1)

  • Note 1: Held the position on May 12, 2020. (The former CEO resigned on April 14, 2020.)

  • Note 2: Retired Pension as stated is the amount of appropriation.

  • Note 3: The amount of remuneration to employees planned to pay in the most recent year.

  • Note 4: The total remuneration, as a percentage of net income stated in the parent company only financial statements, as paid by the Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to President and Vice President, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure:

  • The remunerations to the President and the Vice Presidents are commensurate with their personal contribution to the overall operation performance of the Company at the recommendation of the Remuneration Committee, peer levels, and the possible risks in the future. In consideration of the increase in net income of 2020, the total remuneration to the Presidents and Vice Presidents was raised accordingly. The total remuneration, as a percentage of net income, as paid by the Company and by each other company included in the consolidated financial statements in 2020 was also higher than that of 2019.

Salary Scale

Brackets of salaries to the President and all Vice Presidents Name of President and Vice Presidents Name of President and Vice Presidents
Total of(A+B+C+D)+(E)
The Company All investees
Less than NT$1,000,000 Huang,Hsiu-Ling
NT$1,000,000(inclusive)~NT$2,000,000(exclusive) Miau,Matthew FengChiang/Ho,Jhi-Wu
NT$2,000,000(inclusive)~NT$3,500,000(exclusive)
NT$3,500,000(inclusive)~NT$5,000,000(exclusive)
NT$5,000,000 (inclusive)～NT$10,000,000 (exclusive) Miau, Matthew Feng Chiang/Huang, Hsiu-Ling
NT$10,000,000 (inclusive)～NT$15,000,000 (exclusive) Ho, Jhi-Wu
NT$15,000,000 (inclusive)～NT$30,000,000 (exclusive)
NT$30,000,000 (inclusive)～NT$50,000,000 (exclusive)
NT$50,000,000 (inclusive)～NT$100,000,000 (exclusive)
More than NT$100,000,000
Total 3 3

18

Names of managers entitled to employee remuneration and amount entitled

2020

Unit: In thousands of New Taiwan Dollars/ thousand shares

Title Name Amount paid in shares Amount paid in cash Total Total amount in proportion to
earnings before taxation(%)
Manager President Ho, Jhi-Wu 0 2,880 2,880 0.10%
Vice President and Head of Finance Huang, Hsiu-Ling
CSO Miau, Matthew Feng Chiang (Note 1)
Chief Corporate Governance Officer Hsu, Che-Hsien (Note 2)

Note 1: Held the position on May 12, 2020. (The former CEO resigned on April 14, 2020.) Note 2: Held the position on Aug.11,2020.

Note 3: The amount of remuneration to employees planned to pay in the most recent year.

19

IV. Corporate governance

(I) The function of the Board: The Board convened for 6 instances (A) in 2020. The attendance of the Directors to the meetings is shown below:

Title Title Title Name Name Attendance in
person
B		 Attendance
by proxy		 Percentage of actual
attendance (%)
[B/A]		 Percentage of actual
attendance (%)
[B/A]		 Percentage of actual
attendance (%)
[B/A]		 Note Note
Chairman Miau,Matthew FengChiang 6 0 100.00%
Director Ho,Jhi-Wu 6 0 100.00%
Director Chiao,Yu-Cheng 5 1 83.33%
Director UPC Technology Corp.
Rep: Way,Yung-Do		 6
0 100.00%
Director UPC Technology Corp.
Rep: Chang,Kwang-Cheng		 6
0 100.00%
Director MiTAC Inc.
Rep: Hsu,Tzu-Hwa		 6
0 100.00%
Director MiTAC Inc. Rep: Su,Liang 5 1 83.33%
Independent Director Lu,Shyue-Ching 6 0 100.00%
Independent Director Ma,Shaw-Hsiang 6 0 100.00%
Independent Director Tsai, Ching-Yen 6 0 100.00%
Special notes:
I. If any of the following circumstances was noted in the Board of Directors’ meeting, the date, term, subject matter, all the
opinions of the independent directors and the Company’s response towards said opinions shall be stated:
(I)Pursuant toArticle14-3of the SecuritiesandExchangesAct
Board of Directors’ meeting
Opinions of
the
Independent
Directors
The Company’s
response
towards
independent
directors’
opinions
Date
Term
Subject Matter
2020.01.21
3rdBoard 4th Meeting
The review of the year-end bonus for the managers in 2019 for
resolution
None
None
Ratification of added limit of endorsement/guarantee for others
None
None
2020.02.27
3rdBoard 5th Meeting
Capitalization of earnings into share capital against issuance of
129,273,942 new common shares.
None
None
Replacement of the independent auditors
None
None
Replacement of the Chief Internal Auditor of the Company
None
None
Additional limit of financing for subsidiary – MiTAC Computing
TechnologyCorp.
None
None
Partial amendments to the “Procedures for Loaning Funds to
Others” and “Procedures for Endorsements/Guarantees”
None
None
2020.05.12
3rdBoard 6th Meeting
Additional limit of financing for subsidiaries – MiTAC International
Corp. and MiTAC Digital TechnologyCorporation
None
None
Appointment of CSO of the Company
None
None
Termination of the ban on managers about concurrent positions and
competition
None
None
2020.08.11
3rdBoard 8th Meeting
Review the salaryadjustment of managers in 2020 for resolution.
None
None
Review of the remuneration of employees to the managers in 2019
and the mid-year bonus of 2020 for resolution.
None
None
Amendments to the Company’s “Internal Control System”, “Internal
Audit Implementation Rules” and “Regulations Governing
Procedure for Preparation of Financial Statements”.
None
None
2020.11.13
3rdBoard 9th Meeting
Ratification of added and removed limit of endorsement/guarantee
for others
None
None
(II)Further to the aforementioned matters, other adverse or qualified opinions of the Independent Directors on the resolutions of
the Boards on record or in written declaration: None.
II. Regarding the situation of directors’ conflict of interest recusal, the name of the director with potential conflict of interest,
subject matter,reason for conflict of interest recusal and deliberationparticipation shall be recorded:
If any of the following circumstances was noted in the Board of Directors’ meeting, the date, term, subject matter, all the
opinions of the independent directors and the Company’s response towards said opinions shall be stated:
(I)Pursuant toArticle14-3of the SecuritiesandExchangesAct
Board of Directors’ meeting The Company’s
Date Opinions of response
the towards
Term Subject Matter Independent independent
Directors directors’
opinions
2020.01.21 The review of the year-end bonus for the managers in 2019 for
resolution
None None
3rdBoard 4th Meeting
Ratification of added limit of endorsement/guarantee for others None None
2020.02.27 Capitalization of earnings into share capital against issuance of
129,273,942 new common shares.
None None
Replacement of the independent auditors None None
Replacement of the Chief Internal Auditor of the Company None None
3rdBoard 5th Meeting
Additional limit of financing for subsidiary – MiTAC Computing
TechnologyCorp.
None None
Partial amendments to the “Procedures for Loaning Funds to
Others” and “Procedures for Endorsements/Guarantees”
None None
2020.05.12 Additional limit of financing for subsidiaries – MiTAC International
Corp. and MiTAC Digital TechnologyCorporation
None None
3rdBoard 6th Meeting Appointment of CSO of the Company None None
Termination of the ban on managers about concurrent positions and
competition
None None
2020.08.11 Review the salaryadjustment of managers in 2020 for resolution. None None
Review of the remuneration of employees to the managers in 2019
and the mid-year bonus of 2020 for resolution.
None None
3rdBoard 8th Meeting
Amendments to the Company’s “Internal Control System”, “Internal
Audit Implementation Rules” and “Regulations Governing
Procedure for Preparation of Financial Statements”.
None None
2020.11.13 Ratification of added and removed limit of endorsement/guarantee
for others
3rdBoard 9th Meeting None None
(II)Further to the aforementioned matters, other adverse or qualified opinions of the Independent Directors on the resolutions of
the Boards on record or in written declaration: None.
Regarding the situation of directors’ conflict of interest recusal, the name of the director with potential conflict of interest,
subject matter,reason for conflict of interest recusal and deliberationparticipation shall be recorded:

20

III.
IV.		 Board of
Avoid the conflict Reasons for the
Directors’
Term of interest Subject Matter avoidance of the Participation in deliberation
meeting
Name of director conflict of interest
Date

Miau, Matthew		 Passed unanimously as
3rdBoard 4th Review of the year-end bonus for Concurrently serving
2020.01.21
Feng Chiang		 proposed by all attending
Meeting the managers in 2019 for resolution. as manager
Ho,Jhi-Wu directors entitled to vote.
Passed unanimously as
Appointment as CSO of the The decision directly
proposed by all attending
Company involved him
109.05.12 3rdBoard 6th Miau, Matthew directors entitled to vote.
Meeting Feng Chiang Lift the ban on managers holding Passed unanimously as

positions in potential conflicts of		 The decision directly
proposed by all attending
involved him
interest directors entitled to vote.
Miau, Matthew Passed unanimously as
Review of the salary adjustment for Concurrently serving
Feng Chiang proposed by all attending
the managers in 2020 for resolution. as manager
Ho,Jhi-Wu directors entitled to vote.
rdh
2020.08.11 3Board 8t Review of the remuneration of
Meeting Miau, Matthew Passed unanimously as
employees to the managers in 2019 Concurrently serving
Feng Chiang proposed by all attending
and the mid-year bonus of 2020 for as manager
Ho, Jhi-Wu directors entitled to vote.
resolution.
Status of Board evaluation:
Cycle Period Scope Method Contents
Once a year
January 1,		 1. The Board 1. Board self- I. Performance evaluation of the Board:
2020~December
31, 2020		 2. Individual Board evaluation 1. Participation in the operation of
members 2. Board member self- the Company
3. Remuneration evaluation 2. Improvement of the quality of the
Committee 3. Functional board of directors’ decision
4. Audit Committee Committee member
making.
self-evaluation 3. Composition and structure of the
board of directors.
4. Election and continuing education
of Directors
5. Internal control
II. Performance evaluation on individual
Board members:
1. Alignment of the goals and
missions of the Company’s
2. Awareness of the duties of the
duties of a director
3. Participation in the operation of
the Company
4. Management of internal
relationship and communication.
5. The directors’ professionalism and
continuing education
6. Internal control
III. Functional committees
(Remuneration Committee and Audit
Committee) Performance evaluation:
1. Participation in the operation of
the Company
2. Awareness of the duties of the
functional committee
3. Improvement of quality of o
decisions made by the functional
committee
4. Makeup of the committee and
election of its members
5. Internalcontrol.

21

  • Board” in the Board session thereby performance of the Board shall be subject to internal evaluation at least once a year and report to the Board.

  • In the years ahead, the Company will fortify the functions of the Board of Directors in responding to applicable legal rules and the requirements of corporate governance.

22

  • (II) The operation of the Audit Committee:

  • The Company has established the Audit Committee consisting of all independent directors in place of the supervisors since May 2019. The Audit Committee shall operate in accordance with the Company’s “Charter of Audit Committee” and primarily supervise the following work:

    • (1) Fair presentation of the Company’s financial statements

    • (2) Selection (release) of CPAs and their independence and evaluation

    • (3) Effective implementation of internal control

    • (4) The Company’s compliance with relevant laws and regulations

    • (5) Management control of the Company's existing or potential risks

  • The Committee’s main duties are stated as following:

    • (1) Adoption of or amendments to the Internal Control System pursuant to Article 14-1 of the Securities and Exchange Act.

    • (2) Effectiveness Evaluation of the Internal Control System.

    • (3) Adoption of or amendments to the procedures for handling material financial or business activities, such as acquisition or disposal of assets, derivatives trading, loans of funds to others, and endorsements or guarantees for others pursuant to Article 36-1 of the Securities and Exchange Act.

    • (4) Matters in which a director is an interested party.

    • (5) Derivatives trading of a material nature.

    • (6) Loans of funds, endorsements, or provision of guarantees of a material nature.

    • (7) The offering, issuance, or private placement of equity-type securities.

    • (8) The hiring or dismissal of a certified public accountant and their compensation.

    • (9) The appointment or discharge of a financial, accounting, or internal audit officer.

    • (10) Annual financial reports that are duly signed or sealed by the Chairman, managerial officer, and accounting officer.

    • (11) Other matters of material nature as prescribed by the Company or competent authority.

  • The Audit Committee held 5 (A) meetings in 2020. The record of the Independent Directors' attendances is shown below:

Title Name Attendance by proxy Percentage of actual
attendance (%)
(B/A)		 Note
Attendance in person
(B)
Audit Committee
(Convener)		 Lu, Shyue-Ching 5 0 100%
Audit Committee Ma,Shaw-Hsiang 5 0 100%
Audit Committee Tsai,Ching-Yen 5 0 100%
Special notes:
I. For the operation of the Audit Committee in any of the following circumstances, please specify the date, term, the contents of
the proposals, the opinions of all Audit Committee members, and the Company’s response to the opinions proposed by the
Audit Committee members:
(I) On issues statedin Article14-5of the SecuritiesandExchangeAct:
Board of Directors’ meeting
The opinions of Audit
Committee members
The Company's
response to such
Audit Committee
members’
opinions
Date
Term
Subject Matter
2020.01.21
3rd Board
4th
Meeting
Ratification of added limit of
endorsement/guarantee for others
The motion was approved
by all present members
unanimously.
None
2020.02.27
3rd Board
5th Meeting
Completed preparation of the Company's 2019
business report and financial statements
The motion was approved
by all present members
unanimously.
None
Proposal for the Company's 2019 earnings
distribution
The motion was approved
byallpresent members
None

23

II.
III.		 unanimously.
New share issue through capitalization of
earnings		 The motion was approved
by all present members
unanimously.		 None
Replacement of the Company's independent
auditors		 The motion was approved
by all present members
unanimously.		 None
Evaluation on validity of the Company's internal
control system design and implementation, and
“Declarationof InternalControl”		 The motion was approved
by all present members
unanimously.		 None
Change of the Chief Internal Auditor of the
Company.		 The motion was approved
by all present members
unanimously.		 None
Partial amendments to the “Procedures for
Loaning Funds to Others” and “Procedures for
Endorsements/Guarantees”.		 The motion was approved
by all present members
unanimously.		 None
Additional limit of financing for subsidiary –
MiTAC Computing Technology Corp.		 The motion was approved
by all present members
unanimously.		 None
2020.05.12 3rd Board
6th Meeting		 Addotopma; limit of financing for subsidiaries –
MiTAC International Corp. and MiTAC Digital
Technology Corporation		 The motion was approved
by all present members
unanimously.		 None
2020.08.11 3rd Board
8th Meeting		 Amendments to the Company’s “Internal Control
System”, “Internal Audit Implementation Rules”
and “Regulations Governing Procedure for
Preparationof FinancialStatements”.		 The motion was approved
by all present members
unanimously.		 None
Partial amendments to the Company’s “Charter
of AuditCommittee”
2020.11.13 3rd Board
9th Meeting		 Formulationof the Company2021 auditplan The motion was approved
by all present members
unanimously.		 None
Ratification of added and removed limit of
endorsement/guaranteeforothers
Suggestions and
Date Nature Focus of communication
implementation
2020.02.24 Communication
meetings between
the Audit
Committee
members and CPAs
Communication with the governance body after the 2019 audit
(I) Scope of audit

Audit on the financial statements of the group

Materiality and audit opinions
(II) Matters for communication

Changes in accounting principles

Significant accounting estimate

Key audit matter - Explanatory notes to alternative procedures
for 2019audit in responsetothe COVID-19 epidemic		 None

24


Major adjustment of listing
(III)Recentupdatestolawsandaccounting standards
2020.08.11 6th Meeting of 1st
Audit Committee		 Communication with the governance body after the audit and at
planning stage of the Q2 2020 audit
(I) Scope and findings of the Q2 2020 audit
(II) Recent updates to laws
(III)Communication plan
(IV)Role and responsibility of CPA in charge
(V) Auditing plan
(VI)Independence of auditpersonnel		 None
2020.11.13 7th Meeting of 1st
Audit Committee		 Communication with the governance body after the audit and at
planning stage of the Q3 2020 audit
(I) Scope of the Q3 2020 audit
(II) Findings of the Q3 2020 audit
(III)Annual cross-border audit planning
(IV)Recentupdatestolaws		 None

25

(IV) Corporate governance practices, and deviation from Corporate Governance Best Practice Principles for TWSE/TPEx-Listed Companies, and causes thereof:

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of deviation
Yes from the Corporate Governance
No Summary Best-Practice Principles for
TWSE/TPEx Listed Companies
I. Has the Company established and disclosed its
corporate governance principles based on
"Corporate Governance Best-Practice Principles
for TWSE/TPEx Listed Companies?"		 The Company has established corporate governance principles in accordance with "Corporate
Governance Best-Practice Principles for TWSE/TPEx Listed Companies" and published onto its
website and on MOPS.		 Compliant with the rationale and
practices of “Corporate
Governance Best-Practice
Principles for TWSE/TPEx Listed
Companies.”
II. Equity structure and shareholders’ equity:
(I) Has the Company implemented a set of
internal procedures to handle shareholders'
suggestions, queries,disputes and litigations?		 The Company has appointed a designated company spokesperson for responding to the
recommendations, queries, and disputes from the shareholders.		 Compliant with the rationale and
practices of “Corporate
Governance Best-Practice
Principles for TWSE/TPEx Listed
Companies.”
(II)Is the Company constantly informed of the
identities of its major shareholders and the
ultimate controller?		 The Company can properly control the composition of major shareholders and the ultimate parties in
control of these major shareholders, and declares the quantity of shareholding by the directors,
supervisors, and major shareholders on a monthly basis in accordance with the Securities and Exchange
Act.
(III) Has the Company established and
implemented risk management and firewalls
on companies it is affiliated with?		 The Company has established an internal control system and related rules and regulations in compliance
with applicable legal rules, and has properly enforced such rules and regulations. In addition to self-
assessment, the Board of Directors and the management has also reviewed the self-assessment results of
the departments and the audit reports of the auditing functions at regular intervals or at any time as
needed to materialize the enforcement of the internal control system. The Company seeks to establish
viable financial, operation, and accounting systems in accordance with requirements, and for buttressing
the management of the subsidiaries and affiliates for proper control to reduce operation risk. The
transactions with subsidiaries and affiliates were made under the principle of equality and fairness, and
they are bound by related rules and regulations governing business and financial transactions among the
entities.
(IV)Has the Company established internal
policies that prevent insiders from trading
securities against non-public information?		 The Company has established a set of “Material Internal Information Procedures” and “Integrity Code
of Conduct” to outline insiders’ duty of confidentiality over material information. No insider is allowed
to exploit material information for own gain or for the gains of others. The above procedures and code
of conduct have been communicated to Directors, managers and all parties who come into contact with
material insider information,whether due to identity, job role or controllinginterest.

26

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
Yes deviation from the
Corporate Governance
No Summary Best-Practice Principles
for TWSE/TPEx Listed
Companies
III. The organization and
functions of the Board of
Directors
(I) Does the Board of
Directors have diversified
policies regulated and
implemented
substantively according
to the composition of the
members?		 1. The Board of Directors discloses the diversified policies on the composition of its members on the Company's website and MOPS.
2. The current Board consists of 7 directors and 3 independent directors. The management objectives and achievement of the diversified
policies on the Board members are stated as follows:
(1) The Company focuses on the operational judgment ability, operational and management ability, and crisis management ability. A majority
of the Board members ought to possess the ability required by the core indicators:
Operational judgment ability: 10/10 (100%), operational and management ability: 5/10 (50%), crisis management ability: 10/10 (100%)
(2) A majority of the independent directors are not allowed to be reelected for more than 3 terms consecutively, in order to maintain the
independence: Proportion of independent directors: 3/10 (30%), two serving less than two terms of office, and one serving less than one
term of office; therefore, none having served for more than three terms.
(3) A majority of directors shall not serve as employees or managers concurrently, for the purpose of supervision: Proportion of the
Company's directors serving as employees concurrently: 2/10 (20%).
3. The Board members have rich experience and professionalism in the fields of finance, commerce, and management. The relevant
implementation situation is as follows:




Compliant with the
rationale and practices of
“Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies.”
Core
Sex		 Age Serving as
 Seniority of
Independent
Director		 Experience Operational
 Accounting
and financial		 Operational
and		 Crisis Knowledge of Industry Understanding of
 Decision
Title Item
Name		 Nationality employees
concurrently
Less
than 3
years
3~9
years
More
than 9
years
Background		 judgment
ability
analysis
ability
management
ability		 management
ability		 Technology Telecommunication Venture
capital		 Finance International
Markets		 Leadership
Making
Chairman Miau, Matthew
FengChiang		 Male >50 US Industry
Director Ho, Jhi-Wu Male >50 Republic of
China		 Industry
Director Hsu, Tzu-Hwa Male >50 Republic of
China		 Industry
Director Chiao, Yu-Cheng Male >50 Republic of
China		 Industry
Director Way, Yung-Do Male >50 Republic of
China		 Finance
Accountant
Director Chang, Kwang-
Cheng		 Male >50 Republic of
China		 Academic
Director Su, Liang Male >50 Republic of
China		 Industry
Independent
Director		 Lu, Shyue-Ching Male >50 Republic of
China		 Industry
Independent
Director		 Ma, Shaw-
Hsiang		 Male >50 Republic of
China		 Industry
Independent
Director		 Tsai, Ching-Yen Male >50 Republic of
China		 Industry
(II)Apart from the
Remuneration Committee
and Audit Committee,
has the Company
assembled other
functional committees at
its own discretion?		 Other functional committees will be introduced as needed by the Company.
(III) Has the Company
established methodology		 The Company has established regulations for evaluating the performance of its Board of Directors, and the performance evaluation is
conducted at least once ayear. The 2020performance evaluation report has been submitted to the 2021 Board Meeting,and relevant results of

27

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
Yes deviation from the
Corporate Governance
No Summary Best-Practice Principles
for TWSE/TPEx Listed
Companies
for evaluating the
performance of its Board
of Directors, on an annual
basis? Are the results of
the evaluation reported at
the Board Meeting and
used as reference for
remuneration and the
nomination for re-
election?		 the evaluation are disclosed on the “Corporate Governance” Sector of the Company’s website. According to the Article 25 of the Company's
Article of Incorporation, the Company shall set aside no higher than 1% of the earnings as the remuneration to Directors, and distribute
reasonable remunerations taking account the Company's operating results, and the Director’s contribution to the Company's performance. The
procedure for determining remuneration is based on the Company's “Regulations for the Evaluation of the Performance of the Board”. In
addition to the Company's overall operating performance, industry risks, and development trends, the Company also takes into consideration
the individual performance and contribution to Company to determine a reasonable remuneration. The remuneration system is reviewed at any
time in accordance with the actual operation status of the Company and relevant laws to ensure the Company's sustainable operation and risk
control.
(IV)Are CPAs’
independence assessed on
a regular basis?		 The Company assesses the independence and suitability of CPAs at least once a year, with regard to their professional qualifications, their
seniority in audit services, whether they are involved in the Company’s interest (such as investing in the Company or serving as the
Company's executive), and whether they have kinship relations to the Company's responsible person or managers, whether there is regular
trainings for evaluation, and after obtaining the CPA's statement, the evaluation results will be submitted to the Audit Committee and the
Board of Directors for approval.
IV. Does the TWSE/TPEx
Listed company have an
adequate number of
corporate governance
personnel with appropriate
qualifications to be in charge
of corporate governance
affairs including, but not
limited to, providing
directors and supervisors
with required information
for business execution,
handling relevant matters
with board meetings and
shareholders meetings
according to the laws,
processing corporate
registration and amendment
registration, and preparing
minutes of board meetings
and shareholders meetings?		 I. In order to implement corporate governance and promote the effective function of the Board, the Company has approved the appointment
of Mr. Hsu, Che-Hsien as Chief Corporate Governance Officer of the Company on August 11, 2020 by the Board. The Chief Corporate
Governance Officer is the highest executive in charge of corporate governance related matters. The corporate governance personnel
responsible for the corporate governance business of each relevant unit are responsible for various matters of corporate governance. The
Company's Chief Corporate Governance Officer has more than 10 years of working experience at public offering companies engaged in
financial, shareholders service affairs or deliberations management.
II. Implementation of major duties in 2020:
1. Board, Remuneration Committee, Audit Committee:
(1) Summarize the meeting agenda, state the reason for the meeting, sent meeting notice to the members of the Committee or members
of the Board seven days before the meeting, prepare sufficient meeting materials and send them together with the meeting notice.
(2) Notify the personnel of relevant departments or subsidiaries to attend the meeting depending on the contents of the meeting. Invite
CPAs, lawyers or other professionals to attend the meeting and explain, if required.
(3) Meeting agenda and matters of interest to the directors themselves or their legal representatives, and remind the Directors that
interest should be avoided
(4) The meeting minutes will be sent within 20 days after the meeting.
2. Shareholders’ Meeting:
(1) Register the date of the shareholders' meeting according to law.
(2) Prepare and publish the meeting notice, the meeting manual and the meeting minutes within the time limit.
3. Assist Directors in continuing training: Provide information about Directors’ continuing training, reminding them to complete the
training hours and completing the application process in accordance with the “Directions for the Implementation of Continuing
Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”.
4. According to the Company's “Regulations for the Evaluation of the Performance of the Board”, the performance of the Board and the
functional committees is regularly evaluated to strengthen the efficiency of the Board and functional committees.
5. Provide Directors with information required for business operation.		 Compliant with the
rationale and practices of
“Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies.”

28

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
Yes deviation from the
Corporate Governance
No Summary Best-Practice Principles
for TWSE/TPEx Listed
Companies
III. 6. Assist Directors in compliance with laws and regulations, and make matters such as declaration of shareholding changes according to
law.
7. Other matters as required by the Company’s Article of Incorporation or contract.
2020ContinuingEducation Training
Organizer Course name Study hours
Taiwan Institute of Directors Annual Forum of Twiod 3
Taiwan Corporate Governance Association ase Studies of contests for corporate control 3
Taiwan Stock Exchange Corporation (TWSE) 2020 Corporate Governance and Ethical Corporate Management Propaganda for
Directors and Supervisors		 3
Taiwan Corporate Governance Association Antitrust Case Analysis: Hewlett-Packard Company v. Quanta Storage, Inc and Quanta
Storage America,Inc.		 3
V. Does the Company have
established a communication
channel for the stakeholders
(including but not limited to
stockholders, employees,
customers and suppliers), set
the stakeholder section on
the Company’s website, and
responded to the
stakeholders regarding their
concerns over corporate
social responsibilities?		 The Company has created a stakeholders section on its website and assigned dedicated personnel to communicate, handle and reply to
stakeholders' queries. The corporate sustainability report has been made available on the website, which stakeholders may access and
download at any time.
Stakeholders section: https://www.mitac.com/zh-TW/stakeholders/index
The corporate sustainability report may be downloaded from https://www.mitac.com/zh-TW/csr_reports/index.		 Compliant with the
rationale and practices of
“Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies.”
VI. Does the Company have
commissioned a professional
stock service agent to handle
shareholders affairs?		 The Company has commissioned Chinatrust Bank as the share administration agency, which is responsible for handling shareholder meeting
affairs.		 Compliant with the
rationale and practices of
“Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies.”
VII.Information disclosure
(I) Has the Company
established a website that
discloses financial,
business, and corporate
governance-related
information?		 The Company has a website (www.mic-holdings.com) that discloses financial, business and corporate governance information in the investor
and corporate governance sections.
Investor section: https://www.mitac.com/zh-TW/investors_overview/index
Corporate governance section: https://www.mitac.com/zh-TW/corporate_governance/index		 Compliant with the
rationale and practices of
“Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies.”
(II)Has the Company
adopted other means to		 The Company has Simplified Chinese, Traditional Chinese and English versions on their website and appoints dedicated personnel to gather
and disclose information relatingto the Company. The Companyhas a spokesperson and an actingspokespersonpolicyto address thepublic.

29

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
Yes deviation from the
Corporate Governance
No Summary Best-Practice Principles
for TWSE/TPEx Listed
Companies
disclose information
(e.g., English website,
assignment of specific
personnel to collect and
disclose corporate
information,
implementation of a
spokesperson system,
broadcasting of investor
conferences via the
Companywebsite)?		 Presentation materials of investor conferences are made publicly accessible on the Company’s website and MOPS.
(III) Does the Company
announce and report the
annual financial report
within two months after
the end of the fiscal year,
and announce and report
Q1, Q2, Q3 financial
reports and the operating
status of each month in
advance of the prescribed
deadline?		 The Company has announced and reported the annual financial report within two months after the end of the fiscal year, and has, as early as
possible, announced and reported the Q1, Q2, Q3 financial reports and the operating status of each month in advance of the prescribed
deadline.		 Compliant with the
rationale and practices of
“Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies.”

30

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
Yes deviation from the
Corporate Governance
No Summary Best-Practice Principles
for TWSE/TPEx Listed
Companies
VIII.Does the Company have
other information that
enables a better
understanding of the
Company's corporate
governance practices
(including but not limited to
employee rights, employee
care, investor relations,
supplier relations,
stakeholders’ interests,
continuing education of
directors/supervisors,
implementation of risk
management policies and
risk measurements,
implementation of customer
policy, and insuring against
liabilities of Company
directors and supervisors)?		 (I) Employee rights and privileges
MiTAC firmly believes that people is the driving force for corporate development. For this reason, MiTAC highly values the rights and
privileges of its employees and makes additional investment for their welfare to high standard further to the protection of the rights and
privileges of the employees as required by law:
1. Policies:
(1) Labor/health insurance, pension contribution, employee training, safety and health measures, equal gender opportunities etc.
(2) Provide different forms of fringe benefits for the employees with ceaseless effort, including group insurance protection, free
physical examination, and subsidy for pleasure trips, gym, emergency aid, subsidy for matrimony/maternity/funeral, car loans,
subsidy for continuing education, parenting care and support for employees’ religious diversity.
2. Implementation:
(1) Duly observe applicable legal rules for the protection of the rights of employees.
(2) Employee welfare is managed by designated personnel.
(3) Designated employee relation personnel are appointed to respond to the personal needs of the employees. This service system is
running well.
(II) Concern for employees
1. Policies: MiTAC has appointed designated personnel for managing employee relations. These personnel are responsible for caring for
the employees. Scope of service: Emergency aid, employee complaint, handling complaints, response to whistleblowing and protection
of whistleblowers, employee health and hospitalization care, coordination of employee problems, prevention of sexual harassment at
workplace, handling complaints and consultation in career development. MiTAC introduced the Employee Assistant Program in
cooperation with an external consulting firm. Through psychological counseling and assistance from financial and legal experts,
MiTAC helps its employees to relieve any psychological and life problems.
2. Implementation: There were 45 cases involving Taiwanese employees’ use of the staff assistance program during the year. The topic of
consultation is mainly on family counseling, personal health care, legal assistance, and psychological counseling. According to the
result of the satisfaction feedback of individual cases, employees are able to receive adequate help through this channel and have highly
praised this service. When employees or their families suffered from accidental injuries, natural disasters, or severe illness, or death,
MiTAC will provide immediate and appropriate help in the form of financial aid. The purpose is to help these employees or families
recover from their ailment and get back to work quickly. This is the manifestation of the Company in caring for the employees and their
families as an integral part of its corporate social responsibility. As mentioned, under the prerequisite of winning on both sides of the
management and labor, this has been proven highly effective in bringing harmony and commitment to organizational stability at
workplace.
(III)Investor relation:
MiTAC firmly insists on the principles of sincerity and information disclosure, and spare no effort in making corporate governance
transparent. In practice, MiTAC discloses its state of operation and financial position to shareholders. With the establishment of the
spokesperson and acting spokesperson system, the Company has performed its obligation in disclosure under due diligence. The Company
has set up a “Investor section” in its website. Specialists and electronic mailbox have been made available to handle investors’ suggestions
and questions.
(IV)Supplier relations and stakeholders’ rights:
The Group maintains long-term relationship with its suppliers to ensure continuity of material supply. Dedicated personnel have been
assigned to resolve product-related problems and whatever queries raised by shareholders on the Company’s website, in the “Stakeholder
section”,andthereby protect their interests.		 Compliant with the
rationale and practices of
“Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies.”

31

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
Yes deviation from the
Corporate Governance
No Summary Best-Practice Principles
for TWSE/TPEx Listed
Companies
(V) Continuing education of the Directors and Supervisors: All the Directors and Supervisors of the Company have respective professional
background in the industry. Information on the continuing education of the Directors and Supervisors is shown at MOPS in the section of
“Corporate Governance” for thereference of theinvestorsat anytime:2020ContinuingEducation Training
(VI)Risk management policies, practices, and risk assessment standards: The Company has established internal policies and performs risk
management and evaluation accordingly.
(VII)Execution of customer policy: The group maintains sound relationship with customers to secure profitability.
(VIII)Professional liability insurance for the protection of Directors and Manager: As per the requirement of the “Corporate Governance Best
Practice Principles for TWSE/GTSM-listed Companies”, MiTAC has taken professional liability insurance to protect the directors and the
supervisors. Information is beingdisclosed at the “corporategovernance” section of MOPS.
The insured The insurer The amount insured Term ofpolicy (startingand ending)
All directors and
managers		 Fubon Insurance Co., Ltd. NT$348,720 thousand November 15, 2020 ~November 14, 2021
(IX)Licensing and certification of the internal auditors of the group:
1. IIA: 4 persons
2. CPA of the ROC:1person

32

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
Yes deviation from the
Corporate Governance
No Summary Best-Practice Principles
for TWSE/TPEx Listed
Companies
IX. The improvement status for the result of Corporate Governance Evaluation announced by the Taiwan Stock Exchange and priority improvement plan and measures for areas to be improved.
(I) Response to the 2020 Corporate Governance Evaluation Result:
Evaluation Indicators in 2019
Improvement status
If the Chairman and President, or any other equivalents (senior management) are the same person, or spouse or relative within 1st degree of kinship with
each other, whether the number of independent directors is increased and a majority of directors do not work as employees or managers of the Company?
Not applicable since 2020.
Are the Regulations for the Evaluation of the Performance of the Board set forth by the Company approved by a Board meeting and does the Company
regularly (at least once a year) carry out an evaluation of the performance of the Board of Directors and disclose the evaluation results on its website or in
its annual report?
The Company's evaluation on the performance of Board in 2019 has
covered the functional committees.
Has the Company called for institutional investors conference for at least 2 instances on request (voluntarily more), and whether the interval between first
and last conferences is more than three months?
The Company has convened the institutional investors conferences on
August 14, 2020 and December 17, 2020, respectively.
Has the Company set up dedicated (concurrent) unit in charge of promotion of the Company's ethical corporate management practices and responsible for
establishment, supervision and execution of the ethical management policies and prevention programs, and disclosed the unit’s operation and performance
of duty on the Company's website and in the annual report, and reported to the Boardperiodically?
The Company's website and annual report have made the disclosure
honestly. The status of implementation in 2020 was also reported to the
Board of Directors.
Whether the Company's website or annual report discloses the ethical management policy passed by the Board of Directors, and prescribes the concrete
practices and unethical conduct prevention programs?
The Company's website and annual report have made the disclosure
honestly.
Whether the Company established and disclose on the Company's website the internal rules prohibiting the insiders, such as directors or employees, from
using the information inaccessible from the market to seek profit, and the status of implementation thereof?
The Company's website has made the disclosure honestly.
(II)Matters required further improvements as stated in the 2020 Corporate Governance Evaluation Result and the measures to be taken:
Evaluation Indicators in 2019
Priority improvement plan and measures
Has the Company on its website or the MOPS disclosed the mid-term financial reports in English (including financial statements and notes)? The Company plans to disclose the mid-term financial reports in English since 2021.

33

  • (V) Disclosure of the organization, functions, and operation of the remuneration committee, if applicable:

  • The Company established the Compensation consisting of 3 outside experts who satisfied criteria of professionalism and independence. The Committee holds meetings at least twice a year and exercises the following authorities in a professional and objective manner; its suggestions are raised for discussion in board meetings:

    • (1) Review and revise the committee charter on a regular basis, and make necessary suggestions

    • (2) Stipulate and regularly review the performance of the Company’s Directors and managers, as well as the annual and long-term performance goal, compensation policies, systems, standards and structure.

    • (3) Regularly evaluate the achievement of the Company's Directors and managers' performance goals, and determine the content and amount of their individual remuneration based on the evaluation results obtained from the performance evaluation.

  • Profiles of the Remuneration Committee members

Member Type Whether this person has more than five years of
work experience and the following professional		 Whether this person has more than five years of
work experience and the following professional		 Whether this person has more than five years of
work experience and the following professional		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Compliance with independence requirements
(Note 1)		 Note
Qualifications
lifii
quacatons
Lecturer or
 Judge, public Work
 If the member is
higher level
 prosecutor,
 experience in
 also a member
instructor at a
 attorney at law,
 business,
 of the
public or
 CPA, or other
 law, finance,
 remuneration of
private college
or university in		 professionals
licensed by		 accounting,
or other areas		 other public
companies

business, law,
finance
national exams
that are
required for
the operation		 1 2 3 4 5 6 7 8 9 10 ,
specify the
number of these
,
accounting or
pertinent to the
of the
public
other fields operation of Company companies.
Name related to the the Company
operations of
the Company
Independent
director and
member of the
Remuneration
Committee		 Ma, Shaw-
Hsiang		 0
Independent
director and
member of the
Remuneration
Committee		 Lu, Shyue-Ching 1
Independent
director and
member of the
Remuneration
Committee		 Tsai, Ching-Yen 0

Note 1: Place a "  " in the box below if the member met the following conditions at any time during active duty and two years prior to the date of appointment.

  • (1) Not an employee of the Company or its subsidiaries or affiliates.

  • (2) Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.

  • (3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the Company or ranks as one of its top ten shareholders.

  • (4) Not a manager of (1), or spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of (2) or (3).

  • (5) Not a director, supervisor, or employee of a institutional shareholder that directly holds 5% or more of the total number of issued shares of the Company, or ranks as of its top five shareholders, or was appointed pursuant to Paragraph 1 or Paragraph 2 of Article 27 of the Company Act. (The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

  • (6) Not a majority of the Company's director seats or voting shares and those of any other company are controlled by the same person: a director, supervisor, or employee of that other company (The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary).

  • (7) Not the same person as the Company’s Chairman, President or person with equivalent position, or the director,

34

supervisor or employee of company or institution of the spouse thereof. (The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

Not a majority of the Company's director seats or voting shares and those of any other company are controlled by the same person: a director supervisor, or employee of that other company (The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

  • (8) Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the Company or ranks as of its top five shareholders. (The same does not apply, however, in cases where the corporate/institution holds 20% or more and no more than 50% of the total number of issued shares of the Company, or the person is an independent director of the Company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)

  • (9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company in the most recent 2 years with an accumulated service compensation of less than NTD 500 thousand, or a spouse thereof. This restriction does not apply to any member of the Remuneration Committee, public tender offers Audit Committee or mergers and acquisition special committee, who exercises powers pursuant to relative regulations of the Securities and Exchange Act and Business Mergers and Acquisitions Act.

  • (10)The provisions of Article 30 of the Company Act are not applicable.

35

3. The Operation of the Remuneration Committee

  • (1) The Remuneration Committee of MiTAC consists of 3 members.

  • (2) Duration of service: May 30, 2019~May 29, 2022 The Remuneration Committee held 3 meetings (A) in 2020. Details of members’ eligibility and attendance are as follows:

Title Name Attendance in
person
(B)		 Attendance by
proxy		 Percentage of actual
attendance (%)
(B/A)		 Note
Convener Ma, Shaw-Hsiang 3 0 100.00%
Members Lu, Shyue-Ching 3 0 100.00%
Members Tsai, Ching-Yen 3 0 100.00%
Special notes:
I. Where the Board may not accept or revise the recommendations of the Remuneration Committee, specify the date and the
instance of the Board session, and the content of the motions, the resolution of the Board, and the response to the opinions of
the Remuneration Committee: None.
II. If there is any adverse opinion or qualified opinion of the members in the decision of specific motions in the Remuneration
Committee on record or with written declaration, specify the date and the instance of the committee meeting, the content of the
motion, the opinions of all members and the response to the opinions of the members: None.
III. Discussion mattersandresolutions of RemunerationCommitteemeetings,andthe Company’sresponsetomembers’opinions:
Date
Term
Subject Matter
Resolution
Result
The Company's
response to
members’ opinions
2020.01.211st meeting
in 2020
Review of theyear-end bonus for the managers in 2019 for resolution.
No objection
None
Review of the 2019 remuneration to directors for resolution.
No objection
None
Review of amendments to “Chart of the Remuneration Committee”.
No objection
None
Review of the 2019 Board performance evaluation indicators for resolution.
Suspended
Discussion
None
2020.02.24
2nd
meeting in
2020
Review of the 2019 Boardperformance evaluation indicators for resolution.
No objection
None
Review of the partial amendments of the Company's “Regulations for the
Evaluation of the Performance of the Board” for resolution
No objection
None
2020.08.113rd meeting
in 2020
Review of the salaryadjustment for the managers in 2020 for resolution.
No objection
None
Review of the remuneration of employees to the managers in 2019 and the
mid-year bonus of 2020 for resolution.
No objection
None
Review of amendments to the “Regulations for the Evaluation of the
Performance of the Board” and “Chart of the Remuneration Committee” for
resolution.
No objection
None

  1. Explanation of the link between performance evaluation and remuneration of directors and managers

  2. According to Article 25 of the Articles of Incorporation, when the Company has a profit (i.e. pre-tax profit after distribution of employees' and directors' remuneration) for any fiscal year, the Company shall allocate at least 0.1% of the profit as bonus to be issued to its employees and not in excess of 1% of the profit as remuneration to directors of the Company.

Directors and managerial officers’ remuneration are recommended by the remuneration committee with reference to the evaluation results of the performance evaluation, the team's operating performance, personal performance, and the normal level of peer support, then the comments would be proposed to the Board of Directors to make a resolution.

The performance evaluation indicators of directors and managerial officers are as follows:

ollows:
Scope Directors Manager
Indicator Their grasp of goals and missions.
Their recognition of director's duties.
Level of participation in the operation of the
Company
Their management of internal relationships and
communication.
Directors’ professionalism and continuing training
Internal control		 Financial indicators (revenue, profit
target)
Non-financial indicators (key
performance indicators responsible
for functions)

36

(VI) Fulfillment of social responsibility, and deviation from Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies, and causes thereof:

Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
Assessment criteria deviation from Corporate Social

Responsibility Best Practice
Yes No Summary Principles for TWSE/TPEx
Listed Companies
I. Does the Company conduct risk
assessments of environmental, social and
corporate governance issues related to the
Company's operations in accordance with
the materiality principle, and formulate
relevant risk management policies or
strategies?		 Based on the principle of materiality, the Company gathers opinions from stakeholders and corporate
governance levels, identifies major issues at the environmental, social and economic levels, exposes them in
the corporate social responsibility (CSR) report, and conducts risk assessments, formulates policies and
performance indicators to ensure a sound management and response to issues. The important issues and
strategies 2020 are stated as following.For details, please refer to "Identification of Stakeholders" in the
Company's CSR report.
Important
Issue
Risk
Risk Management Strategy
Econo
my
Business
Strategy and
Performanc
e
Loss of Order Caused by Failure
of Operational Orientation to
Satisfy Customers’ Requirements
or Peer Level.
Execute the Company's strategies and
business meetings periodically.
Corporate
Governance
Defective governance practices
result in increase in operating
costs,
or
violations
of
the
government laws and regulations
causing economic losses.
Delegation of the Audit Committee and
Chief Corporate Governance Officer,
and related units’ review on the related
laws and regulations.
Code
of
Ethical
Professional
Conduct
and Ethical
Managemen
t
Best-
Practice
Principles
The relevant standards are not
communicated
or
executed
completely, thus resulting in
personnel's violations posing the
monetary
loss/loss
of
reputation/fine by the competent
authority to the Company.
Establish the “Ethical Management
Best-Practice Principles,” and include
the same into the personnel’s training
program
and
the
Articles
of
Incorporation, and post them on the
official website.
Risk
Managemen
t
Failure
to
re-assess
the
plan/system periodically, thus
causing the risk management to
become invalid.
Establish the “Risk Management Policy
and Procedure” to conduct annual
assessment and report it at the Board of
Directors’ meeting.
Societ
y
Talent
attraction
and
retention
The
salary,
management
philosophy, or welfare policy
without competitiveness result in
the
brain
drain
movement/obstruction in brain
MiTAC Employee Welfare Committee
and HR unit organize various activities,
and disclose the employee welfare and
management philosophy on the talent
recruitment page and in the CSR report		 Compliant with the rationale
and practices of “Corporate
Social Responsibility Best-
Practice Principles for
TWSE/TPEx Listed
Companies”.

37

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
deviation from Corporate Social

Responsibility Best Practice
Yes No Summary Principles for TWSE/TPEx
Listed Companies
gain. on the official website.




Customer
Service		 Failure to respond to customers’
needs timely or satisfactorily
poses negative comments about
the products.


QBR communication with customers
per quarter
Envir
nmen		 o
t
Compliance
with laws		 Failure to update the latest laws
and
requirements
timely
constitutes the deficiency.

Each responsible unit will identify the
corporate governance, labors’ ethics
and environmental safety and health
laws and regulations periodically to
ensure the compliance with laws
internally.
II. Does the Company have a unit that
specializes (or is involved) in CSR
practices? Is the CSR unit run by senior
management and reports its progress to the
Board of Directors?		 The Company appoints the President Office and relevant corresponding units to be responsible for the
presentation and implementation of corporate social responsibility policies, systems, or related management
policies and specific promotion plans, and prepare the CSR report on a regular basis.		 Compliant with the rationale
and practices of “Corporate
Social Responsibility Best-
Practice Principles for
TWSE/TPEx Listed
Companies”.
III. Environmental issues
(I) Does the Company have an appropriate
environmental management system
established in accordance with its
industrial character?		 The Company has set up an the platform for the management of restricted use of chemical substances, and
the control of hazardous substances under ISO Environmental management system and management
system for hazardous substances.		 Compliant with the rationale
and practices of “Corporate
Social Responsibility Best-
Practice Principles for
TWSE/TPEx Listed
Companies”.
(II)Is the Company committed to enhance
the utilization efficiency of resources
and use renewable materials that are
with low impact on the environmental?		 1. Enhance the efficient use of all resources, such as the use of photovoltaic energy, renovation for green
lighting, the use of T5 energy efficient light bulbs, renovation of the air-conditioner compressors,
optimization of electrical devices, the use of variable-frequency devices and green electrical appliances,
the recycled use of heat from air compressor for water heating, renovation of fuel boilers, and the
automated control of air-conditioning system.
2. Use the best effort to promote the supplies for general affair falling in the scope of green procurement;
procure the products with environmental protection mark and energy conservation mark, and paper
products certified by FSC/PEFC; attaining the overall achievement rate 97%.
3. In order to cherish the Earth's resources and reduce the impact on the environment, MiTAC pursues
paperless e-process. For paper, the Company encourages double-sided printing. The Company also
encourages the use of recycled toner cartridges and recycledplasticgarbage bags.
(III) Does the Company assess the potential
risks and possibilities of climate
changes to the Company now and in the
future,and take measures to respond to		 Based on GRI guidelines and materiality principles, the Company gathers opinions from stakeholders and
corporate governance levels. Among the environmental issues, the Company identifies “climate change” as
Mitac’s core sustainable issues, and sets up carbon reduction targets in the plants, and introduces green
design andgreen manufacturing. For details, please refer to the "Causes of climate change andglobal

38

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
deviation from Corporate Social

Responsibility Best Practice
Yes No Summary Principles for TWSE/TPEx
Listed Companies
climate-related issues? warming" in the Company's CSR report.
(IV)Does the Company record the
greenhouse gas emissions, water
consumption and total weight of waste
produced in the past two years, and
formulate policies on energy
conservation and carbon reduction,
greenhouse gas reduction, water
consumption or other waste
management?		 1. MiTAC has the ability to track carbon footprint of its products, and has been disclosing carbon emission
on the CDP (Carbon Disclosure Project) platform on an annual basis. In addition, MiTAC also sets
reduction goals and takes step towards achieving them.
(1) In environmental protection, the Company strictly requires no unusual emission of industrial
wastewater and air pollution, and reduction of industrial solid wastes and emission of greenhouse
gases.
(2) For the mitigation of global warming and energy saving, the Company requires the administrative
unit to replace the obsolete T5 lights with LED light. The lighting of big office area was changed to
zone control and the strip power supply previously used was replaced with zone control switch.
Insofar as there is no concern about safety, regular light turn-off should be set in the office space, and
the temperature of air-conditioning in the office space has been adjusted upward to 26℃to save
unnecessary energy consumption.
(3) Installation of rainwater collection system for irrigation and reduced use of running water from tape
for plantation.
(4) Introduction of ice water motors equipped with variable-frequency device to cut the electricity bill by
30%.
(5)Installation of IR sensor to lighting system for automatic control of the power switch to save
unnecessary consumption of energy.
(6) Installation of duct-type energy-saving fans in the office area to improve the air-conditioning
efficiency and achieve the power-saving effect.
2. For information on greenhouse gas emissions, water consumption, and total weight of waste in the past
twoyears, please refer to the Company's CSR report on "Climate Change and Global Warming".
IV. Social issues
(I) Does the Company have the relevant
management policies and procedures
stipulated in accordance with the
relevant laws and regulations and
international conventions on human
rights?		 The Group duly observes the “United Nations Universal Declaration of Human Right”, “United Nations
Guiding Principles on Business and Human Right”, and the “United Nations International Labor
Organization” and practices the requirements defined by Responsible Business Alliance (“RBA”), respects
internationally recognized basic human right, including the prohibition of hiring minors, elimination of
force labor in any form, and elimination of discrimination in employment. Meanwhile, it also establishes the
regulations and rules governing employees’ right and obligation, including the “Declaration of Employment
Policy”, “Prohibition of Child Labors and Corrective Action Policy” and “Standard Operating Procedure for
Humane Treatment and Non-Discrimination” in accordance with local laws governing labors, and update
the same in a timely manner, in response to amendments to policies, if any.
In order to promote the employees’ understanding in the legal labor human rights, the Company has
incorporated human rights education into the compulsory training for all employees, and compiled
textbooks that cover the government laws and regulations, ethical management best-practice principles, and
code of conduct of the Responsible Business Alliance (RBA) norms. In addition to the compulsory training
for new employees,all employees are also scheduled toparticipate in online retraining.		 Compliant with the rationale
and practices of “Corporate
Social Responsibility Best-
Practice Principles for
TWSE/TPEx Listed
Companies”.
(II)Does the Company formulate and
implement reasonable employee
benefits measures(including		 In addition to complying with the “Labor Standards Act” and relevant regulations, MiTAC conducts salary
and welfare policy surveys every year, which is used as a reference for formulating reasonable and market
competitive employee welfare measures andprovidingsalaryand compensationpolicies. In addition,

39

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
deviation from Corporate Social

Responsibility Best Practice
Yes No Summary Principles for TWSE/TPEx
Listed Companies
remuneration, vacation and other
benefits, etc.), and appropriately reflect
the results of operating performance in
employee compensation?		 performance evaluation is conducted every six months. Based on the individual’s performance, MiTAC
provides two-track promotion opportunities and adjusts salary and performance bonuses to share the
business results shared with its employees.
(III) Does the Company provide employee
with a safe and healthy work
environment, and provide safety and
health education to employees
regularly?		 The Group also duly observes the Occupational Safety and Health Act with the enforcement of the
following rules and regulations:
1. Perform the necessary workplace environment tests (lighting, CO2, noise & organic solvent) every six
months, and carry out the bacteria count test on drinking water every three months.
2. Carries out fire prevention, building security inspection and other safety procedures every year, and
immediately implement improvements for prevention and correction projects that require correction.
3. Carry out health check-up on every employee every two years as healthy employees are important assets
of the Company; in addition to health check-up items defined under the labor health protection rules,
there are also a number of cancer screenings and ultrasound examination, etc., to take care of employees
with benefits superior to the laws and regulations.
4. Organize the weight-loss and health promotion activities, advocate the importance of regular exercising
and healthy diet, enhance the workers’ physical health; obtain the accreditation badge for a healthy
workplace from Ministry of Health and Welfare, and build a healthy friendly workplace.
5. Carry out routine training on safety and health of the new employees, and organizes civil defense
annually, firefighting teams with routine training and drill every six months.
6. Arrange re-training courses for labor and security personnel on a regular basis, as well as re-training
courses for first-aid personnel, fire management personnel, organic solvent operation supervisors,
radiation safety operators, and high-pressure gas specific equipment operators, etc. every three years.
7. For the prevention of accident and response to emergency, automatic non-invasive AED was placed at
the main hall of the facilities a Hsinchu and Hwa Ya.
8. Post the safety precaution notice in the work areas of the production area, and provide the employees
with trainings regardingwork safety.
(IV)Does the Company have an effective
career capacity development training
program established for the employees?		 To assist employees in their career planning, the group requires managers to engage employees in two-way
discussions every six months about career plans. Department heads have been assigned the responsibility to
organize professional training, while a global rotation system is in place to help employees develop multiple
talents. These talent programs are run on a long-term basis to help enhance competitiveness. Furthermore,
the Company encourages employees with managerial roles to undertake on-job postgraduate studies and
EMBAprograms to further refine theirprofessional skills and management talents.
(V)Does the Company comply with
relevant laws and regulations and
international standards for customer
health and safety, customer privacy,
marketing and labeling of products and
services, and develop relevant consumer
protection policies and complaint
procedures?		 The Group is devoted to protecting customers’ interests as part of its product responsibilities. Products are
designed from a life cycle perspective, and the final approval weighs upon a number of factors such as
environmental protection, convenience to consumers, and protection of consumers’ interests. Customer
complaint channels have been established, while litigation and claims procedures are also available for
consumers to state their claims. Customers are able to raise queries or recommendations through the contact
methods specified on the web page (at https://www.mitac.com/zh-TW/stakeholders).		 Compliant with the rationale
and practices of “Corporate
Social Responsibility Best-
Practice Principles for
TWSE/TPEx Listed
Companies”.
(VI)Doesthe Companyformulatea Allsuppliers of the Companymustpass supplierevaluation and comply with the suppliercode ofconduct. Compliantwith therationale

40

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
deviation from Corporate Social

Responsibility Best Practice
Yes No Summary Principles for TWSE/TPEx
Listed Companies
supplier management policy that
requires suppliers to follow relevant
regulations on issues such as
environmental protection, occupational
safety and health, or labor rights, and
their implementation?		  Raw material suppliers related to process: Must pass ISO9001 Quality Management System certification
 Factory and operation related contractors: Must obtain ISO 45001 Occupational Health and Safety
Assessment Series certification
 Local suppliers: Must obtain effective factory registration certificate and ISO14001 Environmental
management certification issued by local government according to business type.		 and practices of “Corporate
Social Responsibility Best-
Practice Principles for
TWSE/TPEx Listed
Companies”.
V. Does the Company prepare its non-
financial reports such as Corporate Social
Responsibility Report in accordance to the
internationally-used reporting standards or
guidelines? Have such reports been
assured, verified or certified by a third
party?		 The Company has prepared the CSR report with reference to the internationally accepted GRI standards, but
has not obtained the confidence or assurance opinions of the three-party verification unit. Obtaining of such
certification will be planned in the future.		 The CSR report has not
obtained the confidence or
assurance opinions of the
three-party verification unit.
Obtaining of such
certification will be planned
in thefuture.
VI. In the event the Company has established its own CSR principles in accordance with the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”, please
describe the differences between the actual implementation of CSR and the Company’s own CSR principles:
The Company has established its own CSR principles, which conform to the rationale and practices of “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed
Companies.”
VII.Other information useful to the understanding of corporate social responsibilities:
1. Responsibility of environmental protection
(1) Systems and
measures
： a. In response to the requirement of RoHS/WEEE Directives and REACH, we have installed the green product platform with the organization of the green supply chain
management.
b. For conflict minerals, the Company evaluated the supply at least once a year, and through the power of purchasing, the Company urges upstream suppliers to cooperate.
(2) Status of
implementation：a. For performing the corporate responsibility to environmental protection in the electronics industry, MiTAC upgrades its capacity in speeding up the procurement of
green items for its products and parts through greenprocurement from the suppliers in order to supervise the suppliers to reduce or ban the use of hazardous substances
in the production.
b. A conflict minerals investigation system has been constructed to understand the response of complex supply chains in a transparent and traceable manner.
2. Contribution to society:
(1)
Systems and
measures
： a. Sponsorship of the Y.S. Creative Award, which helps develop local design talents and improve industry competitiveness.
b. Organize forums on campus to exchange with the university students and share with them the experience in industry.
c. Participation in all kinds of industry seminars to share management and industry experience.
(2)
Status of
implementation：a. MiTAC sponsors the Y.S. Award of Creativity, an event that awards outstanding software designs, industrial designs, and micro film productions. Upon outbreak of the
COVID-19 epidemic in 2020, a lot of campus propaganda and conferences were cut. Notwithstanding, MiTAC still uses its best effort to support the activity by
participating in the review and guidance online.
3. Social charity:
(1) Systems and
measures
： a. Organize charity events from time to time and encourage the employees to take care of the social vulnerable groups within their means.
b. Donate our own products and services to the charity groups in need.
(2) Status of
implementation：a. Organize the blood donation activity, sponsor Export Cup Multiethnic Baseball Game and art gallery of Sheda Community in Linkou, transfer sacrificial offerings to
“Huashan Social Welfare Foundation’s Gueishan Angel's Service Station”, and donate the raised fund and supplies to “White Kite Garden” Orphanage in Taoyuan.
b. The related charity activities were attended by a total of 973 persons in 2020, which spent 575 hours and raised the donated fund NT$617,000.
4. Consumers’ rights andprivileges:

41

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Deviation and causes of
deviation from Corporate Social

Responsibility Best Practice
Yes No Summary Principles for TWSE/TPEx
Listed Companies
(1) Systems and
measures
： For realizing the responsibility for the consumers, MiTAC customer service team spares no effort in creating innovative models and logistics support system, and promotes
this idea and system to all customer service teams of MiTAC in different countries of the world.
(2) Status of
implementation：The Mio/NAVMAN/MAGELLAN brands of MiTAC unveiled the following to the consumers.
a. “Online Repair Service” allows the customers to request for repairs without the constraints of time and place.
b. “Mio Online Service” offers round-the-clock question and answer for Mio product information.
c. “Mio Online Update” allows for online product update through simple procedures.
d. “Mio Quick Map” allows the consumers to update their map through the facilitation of the selected Industry in Taiwan.
5. Human rights:
(1) Systems and
measures
： a. Under the Employment Policy of MiTAC, local employees and the physically and mentally impaired in respective countries and regions where MiTAC has its facilities
will be considered for employment at the top priority. Competence is the determinant for employment. There shall be no discrimination against sex, religion, nationality,
and political affiliation. All will be treated equally. The employment policy of MiTAC also explicitly states that all applicants and employees will be offered equal
opportunity in recruitment, employment, development, evaluation, and remuneration.
b. MiTAC concerns for the rights and privileges of its employees, and duly obeys the code of conduct defined by the Responsible Business Alliance (“RBA”) and relevant
labor regulations in countries where it operates. It strictly prohibits employment of child labors less than 16 years old and never employs any child labors. Protect the
employees’ human rights, irrespective of race, skin color, gender, language, religion, political affiliation or opinion, nationality, social background, wealth, birth, or any
other identity differences, from any discriminative treatment in employment or work. Any form of forced labor is strictly forbidden, including contract labor and bonded
labor. Meanwhile, MiTAC insists on the humane treatment toward employees, and stop any violence, corporal punishment, mental or physical threat and public
humiliation.
c. MiTAC is dedicated to maintaining gender equality among gender diversity in workplace, and strives to ensure equal opportunities and protect employees' dignity by
strictly prohibiting against sexual harassment in the workplace.
(2) Status of
implementation：a. MiTAC recognizes the contribution of people with different talents. Any addition or alteration of the policy of the terms and conditions of employment will be made
through mutual consultation and coordination with the people concerned. There has been no dispute so far.
b. MiTAC duly obeys labor regulations and respects the opinions of its employees. Any addition or amendment to the employment policy is fully negotiated between
employees and the management. No employment-related dispute has arisen so far.
c. MiTAC has implemented a set of "Regulation Governing the Prevention of Sexual Harassment at Workplace and Complaints" and established a sexual harassment
complaint hotline. Any complaint raised will be attended to by dedicated personnel. In addition, lectures on the prevention of sexual harassment are being held regularly
to avoid sexual harassment in the workplace.
For any sexual harassment problem that has occurred in the workplace, these policies and practices have been soundly enforced so far.
6. Safety and health:
(1) Systems and
measures
： MiTAC has been certified for ISO 14001 - Environmental Management System and transferred to the certification under the new occupational safety and health
management system, ISO 45001. These certifications are regularly validated by third-party institutions and properly enforced throughout the organization.
(2) Status of
implementation：a. Protect the employees in safety and health, prevent occupational hazards, diseases, and potential danger, encourage the employees to participate in corrective action
plans, and create a safe and healthy work environment.
b. Continual performance improvement in environmental safety and health: MiTAC conducts routine audits and assesses investments where appropriate to continually
improve its environmental safetyand health management system.

42

(VII) Fulfillment of ethical corporate management, and deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPExListed Companies, and causes thereof:

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Discrepancy from Ethic Corporate
Yes Management Best Practice
No Summary Principles for TWSE/GTSM-listed
Principles and the reasons
I. With business integrity policy and action plan in place
(I) Are the Company's guidelines on corporate conduct and
ethics provided in internal policies and disclosed publicly?
Have the Board of Directors and the senior management
team demonstrated their commitments to implement the
policies?		 MiTAC has implemented “Integrity Code of Conduct Board of Directors”,
reported it to the Board and was approved, and published it onto the
official website, which the Board of Directors and the management are
bound to obey when exercising authority. Training courses and awareness
campaigns are organized annually to enhance the ethical values of
employees and toprevent dishonest behaviors from allpersonnel.		 Compliant with the rationale and
practices of “Ethical Corporate
Management Best Practice
Principles for TWSE/TPEx Listed
Companies.”
(II) Has the Company established an evaluation mechanism
for the risk of dishonesty behaviors? Does the Company
regularly analyze and evaluate business activities with a
higher risk of dishonesty in the business scope, and
formulate a plan to prevent dishonesty behaviors, which at
least covers Paragraph 2 of Article 7 in the "Ethical
Corporate Management Best Practice Principles for
TWSE/TPEx Listed Companies?		 MiTAC demands all employees to refrain from accepting improper gifts, so
that they do not compromise the Company's interests for personal gains. In
addition, all employees have the duty of confidentiality over business
secrets of the Company and other relevant parties. For the prevention plan
within business activities with a high risk of dishonesty in the business
scope, MiTAC has established management measures such as preventing
bribery and bribery, prohibiting the provision of illegal political
contributions, prohibiting inappropriate charitable donations or
sponsorship,andprohibitinginside transactions.
(III) Has the Company established relevant policies for
preventing any unethical conduct? Are the implementation
and reviews of the relevant procedures, guidelines,
punishment for violation, and rules of appeal, provided in
the policies?		 “Business Integrity” has always been the cornerstone of the MiTAC's
sustainable operation. MiTAC adheres to operational transparency,
implements internal management, and sets various anti-corruption
management policies as the basis for business operations. MiTAC has the
“Procedures for Ethical Management and Guidelines for Conduct”,
“Employee Code of Conduct” and “Anti-corruption Policy” in place to
provide whistle-blowing channels, outline operating procedures and
behavioral guidelines that employees are bound to obey, and disciplinary
actions and grievance systems for violations. Both the code and the policy
are rigorously enforced. In the event of law amendments or poor
implementation results, such policy will be adjusted timely to suit the
present requirements.
II. Realization of business integrity
(I) Does the Company evaluate the integrity of all
counterparts it has business relationships with? Are there
any integrity clauses in the agreements it signs with
business partners?		 All procurement personnel of MiTAC has signed the "Letter of Integrity"
and further promoted such self-requests to partner manufacturers. MiTAC
signs an "Integrity Commitment Agreement" when dealing with important
suppliers, for systematically tracking, identification and implementation of
regulations,in aim to become a trustworthy partner of the stakeholders.		 Compliant with the rationale and
practices of “Ethical Corporate
Management Best Practice
Principles for TWSE/TPEx Listed
Companies.”
(II) Has the Company set up dedicated unit in charge of
promotion and execution of the company's corporate
conduct and ethics, and report to the Board about any
operation policies, and plans and supervision on honesty
and integrityandprevention of dishonestyon a regular		 The Human Resource Development Center is responsible for the
establishment of business integrity policy and prevention measures,
whereas the internal audit function is responsible for supervising execution
of such policy and measures. The internal audit function conducts random
audits on compliance status within the Company. The report on the 2020

43

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Discrepancy from Ethic Corporate
Yes Management Best Practice
No Summary Principles for TWSE/GTSM-listed
Principles and the reasons
basis (at least once a year)? compliance status has been submitted to the Board on March 8, 2021. The
Board of Directors of MiTAC will exercise the due care as prudent
administrators to supervise and prevent dishonest conducts, while
constantly review performance to ensure continual improvement and sound
execution of integrity policy.
(III) Does the Company have any policy that prevents conflict
of interest, and channels that facilitate the report of
conflicting interests?		 MiTAC has made a policy for the prevention of the conflict of interest, and
it provides appropriate channels for the directors, supervisors, and
managers in voluntary justification of their positions, which may entail
potential conflict of interest against the Company.
(IV) Has the Company established effective accounting and
internal control systems for the implementation of policies,
prepared audit plans according to the evaluation result of
dishonesty risks, and audit such execution and compliance,
or hire external auditors to audit such execution and
compliance?		 MiTAC has established an effective accounting system and internal control
system for operating procedures that are potentially at high risk of
dishonest behaviors. The internal audit also conducts various audits based
on the annual audit plan prepared by the risk assessment results. The
implementation of the audit plan and follow-up improvement plans are
reported the Audit Committee and the Board to ensure the effectiveness of
audit implementation. In addition, through the annual corporate internal
control self-assessment, all departments and subsidiaries of the Company
must self-examine the effectiveness of the design and implementation of
the internal control system.
(V)Does the Company organize internal or external training
on a regular basis to maintain business integrity?		 In order to implement the concept of business integrity, the Company has,
on its internal and external official websites, strengthened the policy that
all employees must complete online courses including the “Integrity Code
of Conduct”, “Employee Code of Conduct”, “Anti-corruption Policy”, and
“Prohibition of Insider Trading”. In addition to new employees, all
employees are also scheduled to participate in online retraining annually.
Through announcements and reminders, the Company ensures that
employees understand the Company's emphasis on ethics and implement
the spirit of integrity in daily work. A total of 1816 persons have completed
the trainingbyspending6401 man hours in 2020.
III. Reporting of misconducts
(I) Does the Company provide a whistleblower and reward
system for employees to report misconduct? Does the
Company assign dedicated personnel to investigate the
reported misconducts?		 The Company has an Anti-corruption Policy supported by a whistleblower
and reward system. There is a broad range of misconduct reporting
channels available to both insiders and outsiders, including mailboxes and
hotlines that are run by the Company or by independent third-party
institutions. These reporting channels have been announced to the public,
while the internal audit function is assigned to handle and investigate
reported cases.		 Compliant with the rationale and
practices of “Ethical Corporate
Management Best Practice
Principles for TWSE/TPEx Listed
Companies.”
(II)Has the Company established standard operating
procedures for investigations on reports, follow-up
measures to be taken after the investigation is completed,
and related confidentialitymechanisms?		 The Company has standard procedures in place to accept and investigate
reported misconducts. The procedures call for an investigation panel to
investigate and discipline wrongdoers, while at the same time introduce a
confidentialitysystem that ensures confidentialityof the investigation

44

Assessment criteria Corporategovernance in action Corporategovernance in action Corporategovernance in action Discrepancy from Ethic Corporate
Yes Management Best Practice
No Summary Principles for TWSE/GTSM-listed
Principles and the reasons
process and safekeepingof audit-related documents.
(III) Has the Company provided proper whistleblower
protection?		 In order to protect the safety of the whistleblowers, the whistleblower or
related documents are kept strictly confidential, to prevent the
whistleblowers from being retaliated against, and also to establish a
competent whistleblower system, so that no whistleblowers shall be treated
unfavorably.
IV. Increasing disclosure of information
Does the Company have the contents of corporate
management and its implementation disclosed on the website
and MOPS?		 The Company has established “Integrity Code of Conduct” and published
onto its website and at the “Corporate Governance” section of MOPS.
Implementation progress of the Integrity Code of Conduct is disclosed in
annual reports.		 Compliant with the rationale and
practices of “Ethical Corporate
Management Best Practice
Principles for TWSE/TPEx Listed
Companies.”
V. If the Company has established business integrity policies in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/TPEx-Listed Companies,” please describe its
current practices and any deviations from the Best Practice Principles:
The Company has implemented Integrity Code of Conduct, which conforms with the rationality and practices of “Ethical Corporate Management Best Practice Principles for TWSE/TPEx-listed
Companies.”
VI. Other information relevant to understanding the Company’s business integrity (e.g., reviews of business integrity principles): The Board has approved the amendments to the “Integrity Code of
Conduct” on Nov. 7,2019,in compliance to the regulations of the competent authorityand the needs ofpractical operations.

(VIII)Other essential information that can help to understand the practice of corporate governance shall also be disclosed: For more information on corporate governance, please visit the “Corporate Governance” section on MiTAC’s website, or visit the “Corporate Governance” section at MOPS (mops.twse.com.tw).

  • (IX) Other essential information that helps the understand pursuit of corporate governance better: None.

45

(X) The implementation of the internal control system:

  1. Statement of Declaration of Internal Control:

Mitac Holdings Corporation

Statement of Declaration of Internal Control

  • Date: March 8, 2021

  • Based on the findings of a self-assessment, MiTAC Holdings Corporation states the following with regard to its internal control system during 2020: I. The Company understands that the establishment, implementation and maintenance of internal control system are the responsibility of the Board of Directors and managers of the Company. The Company already established such system. The purpose of the system is to reasonably ensure that the effectiveness and efficiency of operations (including profits, performance, and protecting the security of assets), reliability, timeliness, transparency, and regulatory compliance of reporting, as well as the compliance with applicable laws, regulations, and bylaws are achieved.

  • II. Any internal control system has its inherent limitations. No matter how well an internal control system is designed, it can only provide reasonable assurance regarding the achievement of the above three objectives. Moreover, the effectiveness of an internal control system may be altered as a result of changes in the environment and circumstances. However, a self-monitor mechanism is installed in the internal control system of the Company. The Company will make corrections once the deficiencies are identified.

  • III. The Company judges the effectiveness of the design and implementation of internal control based on the criteria for the effectiveness of internal control system provided in “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as “Regulations”). The criteria for the effectiveness of internal control adopted by the Regulations divide internal control system into five elements based on the process of management control: 1. Control environment, 2. Risk assessment, 3. Control activities, 4. Information and communications, 5. Monitoring activities. Each of the elements in turn contains certain audit items, Please refer to the Regulations for aforementioned items.

  • IV. The Company has adopted the aforementioned judgment items to evaluate the effectiveness of the design and implementation of internal control system.

  • V. Based on the findings of such evaluation, the Company believes that, on December 31, 2020, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.

  • VI. This Statement of Declaration will be the major content of the annual report and prospectus of the Company and to be publicly disclosed. If the aforementioned disclosed content contains misrepresentation or nondisclosure, the Company is subject to the liability of Article 20, 32, 171, and 174 of the Securities and Exchange Act.

  • VII. This statement of declaration has been unanimously approved by the Board on March 8, 2021 with presence of 10 directors.

Mitac Holdings Corporation Chairman: Miau, Matthew Feng Chiang President: Ho, Jhi-Wu

  1. Certified public accountants commissioned to conduct internal audit and the audit report: None.

46

  • (XI) The punishments received by the Company and its internal personnel in accordance with laws, the punishment, material deficiencies and improvement by the Company against its internal personnel in the most recent fiscal year and as of the publish date of the annual report, where the result of such penalty could have a material effect on shareholder equity or securities prices: None.

  • (XII) In the latest year and to the date this report was printed, major resolutions of the Board and the Shareholders Meeting:

1. Shareholders’ Meeting

Date of
meeting		 Summary of important motions Resolutions Status of implementation
2020.05.28 1. Ratification of the Business Report and
Financial Statements of 2019.		 Voted and approved as
proposed		 Act in accordance with the
resolution
2. Ratification of the proposal for
distribution of earnings in 2018 (the
cash dividend to be distributed as
resolved by the Board, and also
reported to a shareholders’ meeting)
Shareholder Bonus: Cash dividends at
NT$1.0 per share.
Shareholder Bonus: Stock dividend
NT$1.2per share		 Voted and approved as
proposed		 Set July 20, 2020 as the cash
dividend distribution record
date, the record date for new
share issue through
capitalization of earnings, and
shares distribution record date,
and distribute cash dividends on
August 12, 2020.
3. Discussion on new share issue through
capitalization of earnings		 Voted and approved as
proposed
4. Discussion on partial amendments to
the “Procedures for Loaning Funds to
Others” and “Procedures for
Endorsements/Guarantees”.		 Voted and approved as
proposed		 Act in accordance with the
amended “Procedures for
Loaning Funds to Others” and
the “Procedure for Guarantee
and Endorsement”.
5. Discussion on partial amendments to
the Company's “Rules of Procedure for
Shareholders’ Meeting”.		 Voted and approved as
proposed		 Act in accordance with the
amended “Rules of Procedure
for Shareholders’ Meeting”.

2. Board of Directors

Date of
meeting		 Term Important resolutions
2020.01.21 3rdBoard 4th
Meeting		 Passed the motion of remuneration to Directors and Supervisors in 2019
amountingto NT$4.8 million.
2020.02.27 3rdBoard 5th
Meeting		 1. Resolved to pass the motion of remuneration to employees in 2019 amounting
to NT$2,859 thousand.
2. Pass the financial statements 2019.
3. Pass the motion for distribution of earnings 2019.
Shareholder Bonus: Cash dividend at NT$1.00 per share and stock dividend at
NT$1.20per share.
4. Pass the capitalization of earnings into share capital against issuance of
129,273,942 new common shares.
5. To cope with the internal transfer within the financial statement accounting
firm, the Board passed the resolution that starting 2020 Q1, the certified public
accountants of PwC Taiwan would be changed from Wen, Fang-Yu and Cheng,
Ya-Huei to Lin, Yu-Kuan and Cheng, Ya-Huei and evaluated that certified
public accountants meet the criteria of independence and eligibility.
6. Pass the change of internal audit officer of the Company.
7. Pass the partial amendments to the “Procedures for Loaning of Company
Funds”, “Procedures for Endorsements and Guarantees”, “Rules of Procedure

47

Date of
meeting		 Term Important resolutions
for Shareholders’ Meeting”, and “Rules of Procedure for Board of Directors
Meeting”.
8. Pass the date and agenda for the Company's 2020 annualgeneral meeting.
9. Passed a loan of NT$3 billion to the subsidiary - MiTAC Computing
TechnologyCorporation
2020.05.12 3rdBoard 6th
Meeting		 1. Pass the motion for financing subsidiaries within the limit of NT$2 billion and
NT$1 billion, respectively – MiTAC International Corp. and MiTAC Digital
TechnologyCorp.
2. Pass the motion for appointment of Chairman, Miau, Matthew Feng Chiang, as
the CSO.
3. Pass the motion for termination of the ban on managers about concurrent
positions and competition.
2020.06.23 3rd Board 7th
Meeting		 Pass the motion for setting July 20, 2020 as the cash dividend distribution basis
date, the basis date for new share issue through capitalization of earnings, and
shares distribution basis date.
2020.08.11 3rdBoard 8th
Meeting		 Pass the motion for change of the Chief Corporate Governance Officer from Ms.
Crystal Yangto Mr. Hsu,Che-Hsien.
2020.11.13 3rdBoard 9th
Meeting		 Pass the motion for partial amendments to the “Ethics Guidelines”, “Corporate
Governance Best Practice Principles” and “Corporate Social Responsibility Best
Practice Principles” of the Company.
2021.01.28 3rd Board 10th
Meeting		 Passed the motion of remuneration to Directors and Supervisors in 2020
amountingto NT$5 million.
2021.03.08 3rd Board 11th
Meeting		 1. Resolved to pass the motion of remuneration to employees in 2020 amounting
to NT$2,937 thousand.
2. Pass the financial statements 2020.
3. Pass the motion for distribution of earnings 2020.
Shareholder Bonus: Cash dividend at NT$1.00per share.
4. To cope with the internal transfer within the financial statement accounting
firm, the Board passed the resolution that starting 2021 Q1, the certified public
accountants of PwC Taiwan would be changed from Lin, Yu-Kuan and Cheng,
Ya-Huei to Liu, Chien-Yu and Cheng, Ya-Huei and evaluated that certified
public accountants meet the criteria of independence and eligibility.
5. Passed a loan of NT$3 billion to the subsidiary - MiTAC Computing
TechnologyCorporation
6. Pass the motion for partial amendments to the Company's “Rules of Procedure
for Shareholders’ Meeting” and “Regulations Governing Election of
Directors”.
7. Pass the motion for termination of the ban on directors about competition.
8. Pass the date and agenda for the Company's 2021 annualgeneral meeting.

(XIII)Please specify if any director has expressed a dissenting opinion with respect to a material resolution passed by the Board of Directors, and said dissenting opinion has been recorded or prepared as a written declaration in the most recent fiscal year or as of printing date of the annual report: None.

48

  • (XIV)Summary of resignation or dismissal of the Company’s Chairman, president, accounting manager(s), financial manager(s), internal audit manager(s), corporate governance manager(s) and R&D manager(s) during the most recent FY or as of the date on which the annual report was printed:

2021.03.31

TITLE NAME DATE OF
ASSUMING
OFFICE		 DATE OF
RESIGNATION OR
REMOVAL FROM
OFFICE		 REASON FOR
RESIGNATION OR
REMOVAL FROM
OFFICE
Internal audit officer Chien, Chih-Hung 2017.01.18 2020.02.27 Personnel relocation
Chief Corporate
Governance Officer		 Crystal Yang 2019.08.12 2020.08.11 Personnel relocation

V. Information of CPA Regarding Fee

Range of Information Regarding Fee

Name of CPA firm Name of CPA Name of CPA CPA AuditingPeriod Note
PwC Taiwan Lin, Yu-Kuan Cheng, Ya-Huei January1, 2020~December 31, 2020

Unit: In thousands of New Taiwan Dollars

Fee Item
Range of Amount		 Fee Item
Range of Amount		 Audit Fee Non-audit fee
(Note)		 Total
1 Less than NT$2,000,000
2 NT$2,000,000(inclusive)~NT$4,000,000
3 NT$4,000,000(inclusive)~NT$6,000,000
4 NT$6,000,000(inclusive)~NT$8,000,000
5 NT$8,000,000 (inclusive)
~NT$10,000,000
6 More than NT$10,000,000(inclusive)

Note: The fee for non-auditing service amounted to NT$232 thousand and was incurred from processing the registration for change in business licensing and tax project services.

  • (I) When professional fees paid to a certified public accountant or the accounting firm of a certified public accountant or its affiliate enterprises for non-auditing services account for a proportion equal to one-quarter or more of the fees paid for auditing, the amount of fees paid for both auditing and non-auditing service as well as the nature of the nonauditing services performed shall be disclosed: None.

  • (II) When the Company changes its accounting firm and the amount of fees paid for auditing services during the year in which the change is made are lower than for the previous year, the amount by which the fees decreased, the proportional decrease, and the reasons therefor shall be disclosed: None.

  • (III) When the amount of fees paid for auditing services is lower than for the previous year by ten percent or more, the amount by which the fees decreased, the proportional decrease, and the reasons therefor shall be disclosed: None.

49

VI. Information for changing CPA

(I) 1. Ex-CPA

Date of change February27, 2020 February27, 2020 February27, 2020 February27, 2020 March 8, 2021 March 8, 2021
Reason and description for the
change		 To cope with the internal transfer
within the financial statement
accounting firm, the Board passed the
resolution that starting 2020 Q1, the
certified public accountants of PwC
Taiwan would be changed from Wen,
Fang-Yu and Cheng, Ya-Huei to Lin,
Yu-Kuan and Cheng, Ya-Huei.		 To cope with the internal transfer
within the financial statement
accounting firm, the Board passed the
resolution that starting 2021 Q1, the
certified public accountants of PwC
Taiwan would be changed from Lin,
Yu-Kuan and Cheng, Ya-Huei to Liu,
Cheng, Ya-Huei and Cheng, Ya-Huei.
Description is that the appointer
or CPA terminates or refuse
appointment.		 Participants
Circumstance		 CPA Appointer
Voluntarily terminate
appointment		 Not applicable Not applicable
Appointment is no longer
accepted(continued)		 Not applicable Not applicable
If issued any audit report with
other than an unqualified opinion
during the preceding two years,
the opinion and the reason:		 None
Have different opinions
With the issuer		 Have Accounting principle orpractice
Disclosure of financial report
Audit scope or steps
Others
None
Description: none
Other disclosures
(Matters that shall be disclosed
provided from Item 1-4 to 1-7,
paragraph 6, Article 10 of these
Guidelines)		 None

2. About the successor CPA

2. About the successor CPA
Name of CPA firm PwC Taiwan PwC Taiwan
Name of CPA Lin, Yu-Kuan/Cheng,
Ya-Huei		 Liu, Chien-Yu/
Cheng, Ya-Huei
Date of appointment February27, 2020 March 8, 2021
Inquired with such accountant about the accounting treatment method
of a specific transaction or the applicable accounting principle and
his/herpossible opinion on the financial report before appointment		 None
Written opinion of the successor certified public accountant in
connection with any discrepancy of opinion between him/her and the
former CPA		 None

  1. Reply letter from former CPA on matters provided in item 1 and matter No. 3 in item

  2. 2, paragraph 6, Article 10 of these Guidelines: None.

VII. Whether the Chairman, president, or manager responsible for finance or accounting has held a position at a firm belonging to a certifying CPA firm or any affiliated enterprise within the preceding year : None.

50

VIII.Any transfer of equity interests and/or pledge of or change in equity interests by a director, managerial officer, or shareholder with a stake of more than 10 percent during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report

(I) Transfer of equity by a director, manager or major shareholder

Title Name 2020 2020 As of March 29,2021 As of March 29,2021
Change in
Shareholding		 Increase
(decrease) on
Pledged
Shares		 Change in
Shareholding		 Increase
(decrease) on
Pledged
Shares
Chairman and CSO Miau, Matthew Feng
Chiang		 1,304,434 0 0 0
Director and President Ho, Jhi-Wu 261,316
(600,000)		 0 0 0
Director Chiao, Yu-Cheng 0 0 0
Director UPC Technology Corp. 10,693,135 0 0 0
Rep: Way, Yung-Do 0 0 0 0
Rep: Chang, Kwang-
Cheng		 0 0 0 0
Director MiTAC Inc. 20,251,545 0 0 0
Rep: Hsu, Tzu-Hwa 0 0 0 0
Rep: Su, Liang 0 0 0 0
Independent Director Lu, Shyue-Ching 0 0 0 0
Independent Director Ma, Shaw-Hsiang 0 0 0 0
Independent Director Tsai, Ching-Yen 0 0 0 0
Vice President and
head of finance		 Huang, Hsiu-Ling 34,776
(125,000)		 0 0 0
Chief Corporate
Governance Officer		 Crystal Yang
(Date of discharge:
August 11, 2020)		 0 0 0 0
Chief Corporate
Governance Officer		 Hsu, Che-Hsien
(Date on board: August
11, 2020)		 0 0 0 0

Note: The counterparts of shareholding transfers and shareholding pledges are not related parties.

  • (II) Information of equity transfer: Not applicable

  • (III) Information of equity pledge: Not applicable

51

March 29, 2021

IX. Information on the relationship of Top 10 shareholders by proportion of shareholding, related parties, spouse, or kindred within the 2nd tier.

Shares currently Shares currently Shares held in Shares held in Disclosure of names and relationships between the top Disclosure of names and relationships between the top
Shares held in own
held by spouse or the names of ten shareholders including spouses, relatives within 2nd
name
Name dependents others degree of kinship, or the relationships Note
Shares Shares
held
Shares held Percentage Percentage Percentage Name Relationship
held
MiTAC Inc.
Rep: Miau, Matthew
Feng Chiang		 104,431,091 8.66% 0 0.00% 0 0.00% UPC Technology Corp. Same as the Chairman
Lien Hwa Industrial
Holdings Corp.		 Same as the Chairman

Miau, Matthew Feng
Chiang		 The company’s chairman

Getac Technology
Corporation		 The representative of
institutional director is that
company's chairman.
Tsu Fung Investment
Corporation		 The chairman of the parent
company is that company's
chairman.
UPC Technology
Corp.
Rep: Miau, Matthew
Feng Chiang		 99,802,598 8.27% 0 0.00% 0 0.00% MiTAC Inc. Same as the Chairman
Lien Hwa Industrial
Holdings Corp.		 Same as the Chairman

Miau, Matthew Feng
Chiang		 The company’s chairman

Getac Technology
Corporation		 The representative of
institutional director is that
company's chairman.
Tsu Fung Investment
Corporation		 The chairman of the parent
company is that company's
chairman.
Lien Hwa Industrial
Holdings Corp.
Rep: Miau, Matthew
Feng Chiang		 85,941,944 7.12% 0 0.00% 0 0.00% MiTAC Inc. Same as the Chairman
UPC Technology Corp. Same as the Chairman

Miau, Matthew Feng
Chiang		 The company’s chairman

Getac Technology
Corporation		 The representative of
institutional director is that
company's chairman.
Tsu Fung Investment
Corporation		 The chairman of the parent
company is that company's
chairman.
An Mei Investment
Co., Ltd.
Rep: Hsu, Ai-Chen		 28,592,586 2.37%
0		 0.00% 0 0.00% Miau, Matthew Feng
Chiang		 Spouse of the company's
chairman

Hua-Jeou Eneterprise
Co., Ltd.
Rep: Hsu,Ai-Chen		 Same as the Chairman
JPMorgan Chase
Bank N.A. Taipei
Branch entrusted for
custody to Vanguard
Emerging Markets
Stock Index Fund, a
Series of Vanguard
International Equity
Index Funds		 12,824,901 1.06%
0		 0.00% 0 0.00% None None
JPMorgan
Chase
Bank entrusted for
custody to Vanguard
Total
International
Stock Index Fund



12,514,570		 1.04%
0		 0.00% 0 0.00% None None
Miau, Matthew Feng
Chiang
12,174,721		 1.01% 0 0.00% 0 0.00% MiTAC Inc. Chairman

UPC Technology Corp.		 Chairman
Lien Hwa Industrial
Holdings Corp.		 Chairman

52

Shares currently Shares currently Shares held in Shares held in Disclosure of names and relationships between the top Disclosure of names and relationships between the top
Shares held in own
held by spouse or the names of ten shareholders including spouses, relatives within 2nd
name
Name dependents others degree of kinship, or the relationships Note
Shares Shares
held
Shares held Percentage Percentage Percentage Name Relationship
held
An Mei Investment Co.,
Ltd.		 Chairman’s spouse
Getac Technology
Corporation		 Representatives of institutional
directors
Tsu Fung Investment
Corporation		 The parent company's
chairman
Hua-Jeou Eneterprise
Co.,Ltd.		 Chairman’s spouse
Getac
Technology
Corporation
Rep.: Huang Ming-
Han
10,299,987		 0.85%
0		 0.00% 0 0.00% MiTAC Inc. Chairman is the representative
of institutional director of that
company
UPC Technology Corp. Chairman is the representative
of institutional director of that
company

Lien Hwa Industrial
Holdings Corp.		 Chairman is the representative
of institutional director of that
company
Tsu Fung Investment
Corporation		 Chairman of the parent
company is the representative
of institutional director of that
company.
Tsu Fung Investment
Corporation
Rep.: Ho, Jhi-Wu		 9,250,594 0.77%
0		 0.00% 0 0.00% MiTAC Inc. The Chairman is the chairman
of itsparent company.
UPC Technology Corp. The Chairman is the chairman
of itsparent company.

Lien Hwa Industrial
Holdings Corp.		 The Chairman is the chairman
of itsparent company.
Miau, Matthew Feng
Chiang		 Chairman of the parent
company
Getac Technology
Corporation		 The representative of
institutional director is the
parent company's chairman.
Hua-Jeou
Eneterprise Co., Ltd.
Rep: Hsu, Ai-Chen		 7,708,917 0.64% 0 0.00% 0 0.00%
An Mei Investment Co.,
Ltd.		 Same as the Chairman

Miau, Matthew Feng
Chiang		 Spouse of the chairman of this
company

53

  • X. Number of Shares Held by the Company or the Company's Directors and Managers, as Well as the Number of Shares Held by the Company for the Reinvestment Businesses That it Directly or Indirectly Controls, and Combined to Calculate the Comprehensive Shareholding Ratio

March 29, 2021; Unit: share; %

Investee
(Note)		 Holdings of the Company Holdings of the Company Holdings of the directors,
managers, and the Company
for the reinvestment
businesses that it directly or
indirectlycontrols		 Holdings of the directors,
managers, and the Company
for the reinvestment
businesses that it directly or
indirectlycontrols		 Total investment Total investment
Shares held Shareholding
percentage		 Shares held Shareholding
percentage		 Shares held Shareholding
percentage
MiTAC International
Corp..		 2,222,013,187 100.00 - - 2,222,013,187 100.00
MiTAC Computing
Technology
Corporation		 232,757,102 100.00 - - 232,757,102 100.00
MiTAC Digital
Technology Co.,
Ltd.		 103,099,000 97.17 466,000 0.44 103,565,000 97.61
Infopower
Technologies Ltd.		 6,774,199 33.33 - - 6,774,199 33.33

Note: Investee accounted for under the equity method

54

Four. Fund raising

I. Capital and Shares

  • (I) Sources of capital

  • Outstanding shares

Unit: share; NTD

Authorized capital Authorized capital Paid-in capital Paid-in capital Note Note Note
Investment Effective date (approval
date) of new capital and
approval document
number
Issuance by
Date
price Shares held Amount Shares held Amount Sources of capital
properties
other than
cash
2020.08
10		 1,500,000,000 15,000,000,000 1,206,556,789 12,065,567,890
Capitalization of
earnings into share
capital,
NT$1,292,739,420		 2020.08.18
Ching-Shou-Shang-Tzi
No. 10901147930

Note: Only information for the last year and up until the publication date of this annual report is shown.

March 29, 2021/ Unit: share

Share category Authorized capital Note
Outstanding Unissued Total
Registered
common shares		 1,206,556,789 293,443,211 1,500,000,000 Listed companies’ stocks

2. Information relevant to the aggregate reporting policy: None.

(II) Composition of shareholders

March 29, 2021/ Unit: share

The composition of
Shareholders
Qty		 Government
institutions		 Financial
institutions		 Other
institutions		 Foreign
institutions
and foreign
individuals		 Natural
persons		 Treasury
Stock		 Total
Number of persons 2 14 300 386 128,475 0 129,177
Qty of shareholding 29 15,307,130 386,044,555 127,904,284 677,300,791 0 1,206,556,789
Percentage 0.00% 1.27% 32.00% 10.60% 56.13% 0.00% 100.00%

(III) Equity distribution

1. Common share

March 29, 2021

Level of holding No. of shareholders Qtyof shareholding Percentage
1 ~ 999 48,761 11,779,788 0.98%
1,000 ~ 5,000 55,149 123,824,629 10.26%
5,001 ~ 10,000 12,271 91,892,845 7.62%
10,001 ~ 15,000 4,603 56,388,389 4.67%
15,001 ~ 20,000 2,526 44,827,454 3.72%
20,001 ~ 30,000 2,195 54,163,767 4.49%
30,001 ~ 40,000 1,054 36,986,284 3.07%
40,001 ~ 50,000 666 30,415,648 2.52%
50,001 ~ 100,000 1,109 77,706,203 6.44%
100,001 ~ 200,000 489 66,961,564 5.55%
200,001 ~ 400,000 210 54,696,169 4.53%
400,001 ~ 600,000 52 25,345,031 2.10%
600,001 ~ 800,000 23 15,896,972 1.32%
800,001 ~ 1,000,000 13 11,632,326 0.96%

55

Level of holding No. of shareholders Qtyof shareholding Percentage
More than 1,000,001 shares 56 504,039,720 41.77%
Total 129,177 1,206,556,789 100.00%
  1. Preferred stocks: None.

56

(IV) List of major shareholders

March 29, 2021/ Unit: share

Shareholding
Name of major shareholder		 Qty of shareholding Shareholding percentage
MiTAC Inc. 104,431,091 8.66%
UPC Technology Corp. 99,802,598 8.27%
Lien Hwa Industrial holdings Corp. 85,941,944 7.12%
Mei An Investment Co., Ltd. 28,592,586 2.37%
JPMorgan Chase Bank N.A. Taipei Branch entrusted for custody to Vanguard
Emerging Markets Stock Index Fund, a Series of Vanguard International
EquityIndex Funds		 12,824,901 1.06%
JPMorgan Chase Bank entrusted for custody to Vanguard Total International
Stock Index Fund		 12,514,570 1.04%
Miau, Matthew Feng Chiang 12,174,721 1.01%
Getac Technology Corporation 10,299,987 0.85%
Tsu Fung Investment Corporation 9,250,594 0.77%
Hua-Jeou Eneterprise Co., Ltd. 7,708,917 0.64%

(V) Information on market price, net worth, earnings, and dividend per share

Item Year Year 2019 2019 2020 2020 As of March
31, 2021
(Note 4)
Before
adjustment		 After
adjustment		 Before
adjustment		 After
adjustment
Per-share
Market price		 Highest 32.70 27.13 36.00 31.25 31.45
Lowest 23.90 19.48 23.25 19.87 27.80
Average 28.99 30.79 29.47
Per-share
Net worth		 Before dividend 37.21 35.74 -
After dividend 32.26 34.73 -
Per-share
earnings		 Weighted average shares
(thousand shares)		 1,061,382 1,188,748 1,193,649 -
EPS 2.65 2.37 2.45 -
Per-share
dividend		 Cash dividends 1.00 1.00 -
Stock
dividend		 Shares obtained
from retained
earnings		 1.20 0 -
Shares obtained
from capitalization
of surplus		 0 0 -
Accumulated unpaid dividend 0 0 -
Investment
return
analysis		 Price/Earnings ratio(Note 1) 11.03 12.18 -
Price/Dividend ratio(Note 2) 29.23 29.84 -
Cash dividend yield (Note 3) 3.42% 3.35% -

Note 1: Price/Earnings ratio = Yearly average closing price/Earnings per share. Note 2: Price/Dividend ratio = Yearly average closing price /Cash dividend per share. Note 3: Cash dividend yield rate = Cash dividend per share/ Yearly average closing price.

Note 4: Net worth per share and earnings per share should be based on auditor-reviewed data as at the latest quarter before the publication date of this annual report. For all other fields, calculations should be based on data as at the end of their respective years.

57

  • (VI) Dividend policy and its implementation

  • Dividend policy stipulated in Articles of Incorporation:

When allocating the earnings, the Company shall first estimate and reserve the taxes to be paid, offset its losses, set aside a legal capital reserve at 10% of the remaining earnings, and allocate or reverse special reserve pursuant to relevant laws and regulations. If there is a surplus, the balance and the accumulated undistributed surplus will be determined by the Board for distribution. In circumstances of distributing in forms of issuance of new shares, such matter shall be first submitted to the Shareholders' Meeting for resolution before distribution. In circumstances of distributing in form of cash, pursuant to Paragraph 5, Article 240 of the Company Act, the distribution shall be determined by a majority of the Directors at a meeting attended by two-thirds or more of the total number of Directors, and then reported to the Shareholders’ Meeting.

The percentage of dividends to be paid in cash may be proposed at the Board of Directors' discretion based on the Company's financial structure, future capital requirements and profitability, subject to a minimum of 10%.

The Company may distribute all or part of the legal reserve and capital reserve stipulated by Article 241 of the Company Act in form of cash and report to the Shareholders’ Meeting, after such matter has been determined by a majority of the Directors at a meeting attended by two-thirds or more of the total number of Directors.

  1. The Company will maintain a stable dividend policy and distribute no less than 30% of the current year earnings as the shareholder dividend.

  2. The proposal of dividend distribution in this Shareholders’ Meeting

    • Under the above principle, the Company prepared the motion for 2020 earnings distribution on March 8, 2021. The cash dividend amounting to NT$1.00/share may be distributed after the Board resolution pursuant to the Company Act and the Company’s Article of Incorporation. The motion will be reported to the annual general meeting on May 27, 2021.

  3. Anticipated significant changes in dividend policy: none.

  4. (VII) Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at this shareholders' meeting

  5. The 2020 earnings distribution of the Company does not contain this proposal. Therefore, this is not applicable

  6. (VIII)Remuneration to employees/directors

  7. The percentages or ranges with respect to remuneration to employees and directors, as set forth in Articles of Incorporation

    • Annual profits concluded by the Company (i.e. pre-tax profit before distribution of employees’/directors’ remuneration) shall be subject to employee remuneration of no less than 0.1% and director remuneration of no more than 1%. Remuneration shall be distributed with the resolution of the Board of Directors. However, profits must first be taken to offset against cumulative losses if any.

    • Employees’ remuneration, as mentioned above, can be paid in shares or cash and to employees of affiliated companies that satisfy certain criteria. This certain criteria may be determined under the Chairman's authority.

  8. Basis of calculation for employees' and directors' remuneration and share-based remuneration; and accounting treatments for any discrepancies between the amounts estimated and the amounts paid:

    • (1) The basis for the estimation of remunerations to employees and directors in

58

current period: The Company shall appropriate at least 0.1% of the EBT before the deduction of remuneration to employees and Directors as remuneration to employees in 2020. The estimation of the remuneration to directors shall be based on the expected amount of payment.

  • (2) Basis of estimation for share-based employee remuneration: The number of shares to be paid as employee remuneration was determined based on the closing price one day before the board resolution date, after taking into consideration the effects of stock and cash dividends.

  • (3) The accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure: Dispose based on the accounting estimated changes.

  • Board of Directors passed remuneration distribution:

  • (1) The amount of remuneration employees and directors distributed in cash or shares. If there is a difference between the estimated amount and the actual amount of expense, disclose the value, the reason for the difference and response: The Board resolved to appropriate NT$2,937 thousand as remuneration to employees and NT$5,000 thousand as remuneration to Directors. There is no difference between the estimated amount and the actual amount.

  • (2) The amount of stock dividend paid to employees in proportion to the sum of the net income as stated in the parent company only or separate financial statements and the total remunerations to employees: Not applicable, as the Company did not pay out any stocks as remunerations to employees in 2020.

  • The actual distribution of employee bonuses and director/supervisor compensation for the previous fiscal year (with an indication of the number, dollar amount, and stock price, of the shares distributed). If there is any discrepancy between the actual distribution and the recognized employee bonuses and director/supervisor compensation, additionally the discrepancy, cause, and how it is treated:

The actual distribution of amount in cash
Employee bonuses
Director/supervisor compensation		 2,859 thousand
4,800 thousand

Note: The actual distribution and the recognized employee bonuses and director/supervisor compensation is consistent.

  • (IX) Buy-back of the Company's shares by the company: None.

II. Issuance of corporate bonds : None.

  • III. The issuance of preferred shares : None

  • IV. The issuance of GDR : None

  • V. Status of employee stock option certificates : None.

  • VI. Status of restricted stock award (RSA) : None.

VII. M&A or acceptance of news shares from assignment of other companies : None

  • VIII. Implementation of the fund allocation plan : None.

59

Five. Operation Overview

The Company is a holding company that specializes in investment, with subsidiaries involved primarily in the development, design, manufacturing and distribution of computers and ancillary equipment as well as communication related products. And as such, overview of the Company’s operation will be based on the businesses of its subsidiaries.

I. Business Activities:

  • (I) Scope of business

  • Principal business activities

    • (1) Cloud computing products: Genral-purpose servers/workstation products series, including the x86-based (Intel) and AMD) single-/dual-/quad-way servers/workstations, and customized servers/workstation platforms, storages, network and sever devices for customer R&D; in response to the trend of AI application development, the high-performance computing computers (HPC servers) are developed; to meet the growing demands of edge computing, the industry-compliant open EDGE server has been developed; to meet the demands for large data centers, rackmount server system design and assembly services are offered for storage solutions integrating computing, networking and optimization. In response to the trend of open design architecture,MiTAC Computing Technology Corporation is committed to contributing more Open Computer Project (OCP)-compliant design coverage after becoming a platinum member of Open Computer Project (OCP). Such designs include: racks, servers, storage, and CORD (Central Office Re-Structure as Datacenter). The big 5G bandwidth, low-latency, and IoE have revolutionized the information and telecommunication industries. MiTAC has continued its long-term advantages over servers. In addition to the orignal cloud computing solutions which have extend to the product lineup of edge computing, it has joined O- RAN Alliance, a 5G open wireless access organization, worked with its hardware and software partners, and developed servers using this open architecture to apply them to public and private 5G cells. Additionally, for the industrial automation, IoT applications, and smart store applications, the All-InOne LCD PC, Mini PC, POS system, Panel PC, BOX PC, and embedding motherboard product lineup are offered to meet the demand for diverse vertical market applications.

    • (2) Automotive electronics and AIoT products: Including telematic products (i.e. in-car navigation, audio amplifier), consumer electronics (i.e. portable navigation device (PND), GPS-enabled digital drive recorder), enterprise electronics (i.e. fleet communication/navigation devices, industrial-use tablet PCs), and smart navigation and cloud-based services.

  • Business distribution

Unit: In thousands of New Taiwan Dollars

Year
Products		 2020 Ratio (%)
Computer & communicationproducts 41,145,756 100.00

  1. Major products and new products or technology under planning

  2. (1) Cloud computing products

    • Data center computing servers

    • Data center storage servers

    • Standard rack mount servers

60 

     - Enterprise-grade high-availability storage systems

     - High-performance computing servers (HPC servers)

     - Open Computer Project (OCP) and Open Edge servers

     - 5G wireless access networking servers

     - Rackmount server system design and assembly services for integration of computing/networking/storage solutions

     - Product series for smart store applications (self-checkout system, AI recognition device)

     - Interactive Kiosk/ Kiosk Panel PC

     - Industrial Panel PC

     - Wide temperature and pressure 3.5/2.5 inch main board for industrial use

     - Industrial/medical use COM Express motherboard module

     - Quasi system (Box PC) for railway transport use (IEC50155).

     - Wide-temperature and wide-voltage fan-less Box PC

     - Industrial ICS Gateway

     - Industrial/commercial NVR

  - (2) Automotive electronics and AIOT business

     - Portable navigation device (PND)

     - Carplay Display Audio & Connected Car Tablet & Navigation Box and telematic products

     - Car Amplifier

     - Bike Computer

     - Outdoor Lighting Control

     - Consumer electronic product, fitness navigation device for outdoor use

     - Enterprise electronics

     - Mobile cloud storage

  • (II) Industry overview:

  • Current status of the industry and its development

According to the analysis and research of customer demands in major markets, as the fifth generation mobile communication technology (5G), artificial intelligence (AI), AI Internet of Things (AIoT), Edge Computing have been emerging, demand for HPC & GPU Servers and Edge Servers has been rising annually, in addition to traditional enterprise server market, enterprise storage market, and infrastructure of large cloud data centers. In addition, as HPC & GPU servers and 5G transmission are more and more popular among computing based on the AI model training, demand for high-performance, low-latency edge computing servers starts rising. For the server market where the x86-based architecture is mainstream, the release of each new Intel CPU can drive the demands for upgrading servers; its major competitor, AMD, is actively competing for the mainstream server market over its 7nm manufacturing process advantage. AMD’s EPYC processor features advanced technologies, such as 64 computing cores, 8 memory channels, and high-speed PCIe e 4.0 to win customers of large data centers with its highly cost-effective products. In addition, as the AI and machine learning applications are getting mature, relevant projects have driven the demands for high-performance computing (HPC) servers. For data centers applications focusing on energy saving and high-density computing, in addition to standard rack-mount unit products, OCP servers have been gradually adopted by hyperscale data centers, serving a new alternative when building data centers. In recent years, because of the new opportunities brought up by 5G, OCP has been committed to promoting CORD (Central Office Re-Structure as Datacenter) and Open Edge Servers. The concept that general-purpose servers are used to run visualization software for open architecture has been adopted gradually

61

in the cloud, central office, and access.

Customers of large data centers focus on the Total Cost of Ownership (TCO). Despite of high product customization, the product specifications in the mainstream product still dominates the design. Further to the stability, availability, user friendliness, easy management and easy maintenance of the system, the energy efficiency will be more important. In terms of logistics, customers of large data centers reduce their overall cost with the business model where the direct order with ODM vendors in customization will help to boost up growth of shipment under the ODM Direct. Medium-to-small sized data center operators utilize standard products for limited customization, while reducing Total Cost of Ownership (TCO) with the rackmount server system design and assembly services for integration of computing/networking/storage solutions provided by ODM vendors.

On the other hand, as the IoT issues and applications are more popular, the application of industrial tablet PCs has been getting mature. It application scope covers the retailing, healthcare, governmental agencies, military, logistics, factory automation, warehousing management, energy, etc. and most major markets are located in the Europe, U.S., and Japan. More and more companies are willing to introduce industrial tablet PC solutions.

With regards to POS (point-of-sale) systems, market research companies have estimated the global demand for POS systems to be between 2 million ~ 3 million units per year, translating to a steady growth at 7~10%. Since the traditional POS system, the mobility and self-service trends has took place with more new opportunities and applications, such as the self-ordering system for restaurants, price comparison system for shopping malls, self-checkout system. According to studies by international research and consultancy institutions, there will be increasing demands for POS systems to incorporate mobile payment features.

For the industrial PC, with the advent of Industrial 4.0 and its applications, machines and tools at factories are connected and communicate with each other through the IoT architecture. Big data and cloud computing are utilized to provide feedback for better on-site production efficiency. Industrial Pcs with edge computing capability are used to provide more timely on-line AI recognition and determination. As a result, factories or vertical industrial with various embedding applications have started upgrading their PC infrastructure, in the hope that their investment in industrial PCs will drive IoT and AI smart production and services. The overall global demands for industrial PCs, therefore, have grown at a rate of 10% each year. Edge Computing and AI have been mature, which will drive the overall market demand.

In terms of automotive electronics and AIoT product planning, although global sales of portable satellite navigation products have fallen over the years, related applications of satellite navigation has continued to be transferred to products such as embedded in-car navigation equipment and GPS tracker for bicycles. At the same time, new products with the same satellite tracking technologies, such as GPS sports watch, have been also developed for IoV positioning or self-driving car. These products, once integrated with the Company’s existing cloud computing services and hardware/software environment, will become total solutions for customers; in the IoT segment, the Company will integrate products with GPS technology and work with customers to foray into this new industry.

62

2. Linkage of industry upstream, midstream and downstream

  • The industry in which our group operates is regarded as the downstream. The upstream comprises IC and chip manufacturers; the midstream comprises component manufacturers and the downstream comprises end products such as servers and consumer products.

==> picture [414 x 303] intentionally omitted <==

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

Graphic ICs Network controller ICs Disk array controller ICs
Application processors Server management ICs Power management ICs
Wireless communication
Panel controller ICs RFID ICs
ICs
Touch panel Lens Antenna Battery Casing
Connectors Thermal module Fan High-speed signal
cables
Passive Power supply
Active component PCB
components module
Processors Memory HDD Solid hard disk Power supply unit
(Connected) dashcam Tablet PCs
Embedded
Software-defined storage server Enterprise storage systems
equipment
High-performance computing
AI servers servers Rackmout integrated servers
Upstream
Mid-stream
Downstream
----- End of picture text -----

  1. Development trends and degree of competition for our products

  2. (1) Cloud computing products:

Standard rack-mounted servers are still mainstream, featuring Intel/AMD x86-based architecture with various hardware specifications and corresponding software (including the operating system, virtualization software, and various application software) to meet user needs in various markets (such as mediumto-small sized enterprises, large multinational corporations, and large cloud data center users). As the technology has been relatively mature and there are a large number of ODM firms, differentiation strategy emerged as the vital issue for all R&D designers. OCP servers focusing on high-density computing and high performance have been popular among hyperscale data centers. The concept that virtualization software has been run on general-purpose servers for open architecture has been adopted gradually in the cloud, central office, and access. In response to this trend, MiTAC has implemented the “Alliance” and “High Fence” strategies: For the “Alliance” strategy, we have joined the OCP and O- RAN Alliance to keep pace with the latest industry trends and seek for partnerships. We keep driving the demands for the open architecture through partnerships in the industry. For the “High Fence” strategy, in addition to getting a head start, we have researched and developed the new generation servers in the industry and introduce unique value-added functions, such as: flexible scalability and cybersecurity to stand out among open architecture and stay competitive.

As the software technology specifications advance, data storage has not

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relied o the traditional RAID adapters to provide data redundancy. The Software-Defined methodology has been utilized to provide low-cost, highavailability, high-efficient and easy-to-scale storage architecture. The demands for storage servers has begun emerging. After installing the Distributed File System on their available servers, customers can quickly re-purpose them as storage servers for storage of big data. Traditional enterprise storage devices focus on the high availability of data and devices, and most of them feature dual SAS controllers combined with dual-port SAS HDDs to provide stable data access for enterprise customers. As the amount of data has been increasing enormously and the storage media technology evolves, the types of enterprise storage equipment has changed from SAS storage to NVMe featuring PCIe, which not only reduces the overhead for protocol conversion, but also improves the throughput and read/write performance of the overall data.

Because the trend of cloud computing increased the market for Thin Client computers, demand grew as a result. In the past, only remote access was possible, the computers have grown to support area browser and have evolved to support VOIP and video conferencing. Computers have evolved from small screens to the capacity to support multiple high resolution monitors, and fanless architecture have become the norm. In terms of product structure, Thin Client PCs have also evolved from traditional micro independent cases to AllIn-One, industria and Panel PC/Box PC for retail applications. In terms of platforms, SOC integrated chips have been developed from x86 architecture. The embedded application in industry expanded from the use of particular industry to the domain of different public applications (e.g.: Smart Retailing). As such, product design tended to incline to multiple-function and small in dimension in the design. In addition, the physical appearance also becoming a concern.

(2) Automotive electronics and AIoT products:

For automotive electronics and AIoT products, we focus on the three areas: automotive electronics, smart connected devices, and professional tablet PCs. The bread-winning products for automotive electronics include the dashcam, advanced driver assistance system, navigation hardware and software solutions, and outdoor recreation navigation. For the dashcam, not only its video resolution and night vision sensing do constantly evolve, but also it is used with the advanced driver assistance system (such as the forward collision, lane departure, driver fatigue detection, pedestrian impact, go alert), GPS speed camera alert, blindspot detection, anti-thief features to improve the driver safety; in addition, its Wi-Fi features enable quick video transmission to the cloud for storage to provide real-time message and remot control. The navigation hardware and software solution is integrated with GPS, Wi-Fi, and Bluetooth features and can be tailored for certain vehicles to implement route planning and fleet management to effectively improve driving safety and working efficiency. We have launched the product with cycling navigation for outdoor leisure lovers. It is anit-shock and waterprof, and suitable for outdoor environment. It also features GPS, Wi-Fi, and Bluetooth and allows you to plan your route, share it with your friends, and upload it to the cloud platform.

For the field of smart connected devices, we focus on the VoT, implementing cloud file storage, remote system control, driving behavior analysis (speeding, braking, and accelerating), which has been extended to the smart lighting system, or even system installations for smart cities.

The professional tablet PCs and device management platform has been tailored for the environment where special industries operate. The device is

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rugged, durable, drop-proof, and water-proof. When combined with the 4G, LTE, Wi-Fi, NFC, and Bluetooth features, it can be used in the fields of logistics, retailing, tourism, healthcare, and industry and takes the place of human with low efficiency to improve working efficiency, reduce costs, and improve service quality.

  • (III) Technology and R&D overview

  • Committed R&D expense

Unit: In thousands of New Taiwan Dollars

Year
Item		 2020
Research and development expense 2,436,592
  1. Successfully developed technology or product in the latest year or up to the publication date of the annual report

As a response to the development trends of global wireless communications, mobile communications, and cloud computing, MiTAC’s main R&D strategy is controlling the development schedule of new technology and products, and launching new technology products whenever possible with the R&D talent pool in Taiwan, China, and the US. We follow the product specification set by technology leaders in mainstream markets and create our own technology through R&D. We can also roll out products that meet market demand to control business opportunities. Our competitiveness rested with the diversity of products, the complete series, a complete vertical supply system, and globalized production sites.

  • (1) Only information about the number of patents obtained for the last year and up until the publication date of this annual report is shown.
Taiwan Mainland China Europe and U.S.
285 344 281

  • (2) Product development and brand strength:

  • A. TYAN organized several online exhibitions in 2020 and launched many server platforms with support for Intel second-generation scalable Xeon processors and AMD second-generation EPYC processors. The Company provides flexible system options and high-performance computing server system for AI, in-depth learning, high-performance computing, high-density storage, and cloud computing. TYAN also worked in cooperation with industrial system integration firms to provide server motherboard for embedded application at high temperature to satisfy the needs for highperformance computing and high reliability under special environment.

  • B. TYAN also exhibited a wide array of optimized GPGPU server platform for enterprises and data center at the SC’ 20 to boost up the momentum for growth in the HPC market. The diversity of application of TYAN HPC platform provides high-performance computing users to meet the diversity of needs in different computing frameworks.

  • C. The Magellan Fleet Management System provides effective functionality for the management of professional fleets from the provision of all functions required to plan the route for drivers, maintenance of the driver schedule and plans, to compliance with (U.S.) governmental mandatory electronic logging regulation. It provides software from fleet management navigation and EDL-compliant HOS as well as Return to Route. Magellan’s new portfolio provides a scalable set of basic services that satisfy growing demands for fleet and urban transportation.

  • D. ORV (Off-road Recreation Vehicle) SmartECO System: This system not

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only allows users to receive LBS (location-based service) data but also enables access to personalized navigation data stored on cloud, which can be used to plan recreational routes. It integrates the functionalities of cloud system, smart phone, PC and navigation device.

  • E. Connected Car Tablet: Designed specially for enterprise customers with vehicle management needs, the tablet has 3G/LTE/BT/WiFi connectivity built in and transmits real-time vehicle data to the cloud in order to achieve communication and interaction between the dispatch center and the driver. These tablets have been tested under more rigorous conditions for vehicle use.

  • F. Industrial/medical use COM Express motherboard module: the separate design of motherboard module and serial interface module is suitable for the diversity of flexible design in small quantity. (high technology entrance barrier and high margin market)

  • G. The Box BC for railway transport (IEC50155): the Box PC compatible with the IEC50155 standard for railway transport worldwide can ensure the stable running of computer system for railway transport under changeable and challenging environment and high demand. (high technology entrance barrier and high margin market)

  • H. Highly expandable Kiosk Panel PC: In response to the rapid growth of automated equipment for the retailing industry, the Company will launch touch panel models of different sizes. The design of this series is a breakthrough from the traditional design frame with thin frame for easy fitting into a variety of peripheral devices (e.g.: MSR, Smart Card Reader, Camera, Barcode Reader) .

  • I. MiTAC Digital Technology Corporation launched its first dual-lens driving recorder with analog to digital conversion, first radar driving recorder and the first detachable dual-lens driving recorder for motorcycles. It also released 7-inch and 10-inch AndroidⓇ9.0 system and passed GMS

certification of rugged industrial tablet.

  • J. Awards of Mio brands in 2020:
Product Name Region Media Award Logo
MiVue798
Dual		 Czech Computerworld. cz Product of the
Year
Cyclo
Discover
Series		 Taiwan TAITRA Taiwan
Excellance
Award
MiVue i85 Russia Candoru.ru Editor’s choice
MiVue i95 Russia Megaobzor.
com		 Editor’s choice
MiVue i95 Russia Greentechreviews.ru Editor’s choice

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Product Name Region Media Award Logo
MiVue C550 Russia Megaobzor.com Editor’s choice
MiVue J86 Russia Greentechreviews.ru Editor’s choice
MiVue C530 Russia Megaobzor.com Editor’s choice
MiVue C530 Russia Greentechreviews.ru Editor’s choice

  • (IV) Long and short-term business development plans

  • Cloud computing product series

    • (1) Short-term business development plan: In terms of product strategy, the Company will continue to cooperate with existing customers and chip manufacturers in the development of work stations, servers and storage devices. To provide a variety of end-to-end options for cusomters, we also actively seek for partners and system integrators who can work with us in the long run.

    • (2) Long-term business development plan: In terms of product strategy, the Company will continue to develop new server and storage device products to function as the propelling force to drive sales growth in the next three years. With regards to business strategy, the Company will expand its cooperation with leading server customers around the world and deliver products from modules to full-systems, from low-end to high-end and from single to multiple product lines. In order to maintain stable collaboration over long-term, the Company has to improve its capacity and speed for product development, control production quality and delivery, integrate supply chains throughout the world and maintain a global logistics and service network in order to consolidate Group’s position as a major ODM/OEM for server systems. In summary, MiTAC has launched servers with several specifications for cloud deployment and edge computing. It can also provide various end-to-end products for several smart application fields, such as: smart store, smart factory, smart cities, etc. Continuous innovations allows the Company to well prepare for red oceans while discovering blue oceans.

  • Automotive electronics and AIoT products

    • (1) Short-term business development plan:

      • A. In terms of mobile handheld and vehicle navigation devices, although global sales of portable satellite navigation products have fallen over the years, related applications of satellite navigation has continued to be transferred to products such as embedded in-car navigation equipment and GPS tracker for bicycles. At the same time, new products with the same satellite tracking technologies have been developed as well. In addition, we planned IoV devices, smart image recognition, and self-driving system, combined with our existing HW/SW products, technologies, and services, to provide the total solution for customers. The IoV products incorporate satellite positioning and we work with customers to enter this new industry.

      • B. Industrial use tablet PC and portable devices: The Company will be

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launching portable devices with equal emphasis in proprietary brand, ODM and OEM. In Europe, MiTAC’s primary focus will be the promotion of proprietary brand; in USA, the Company will focus primarily on OEM whereas in Japan, ODM and OEM will receive equal attention.

  • (2) Long-term business development plan:

    • A. Automotive electronics and IoV products: Our mid- and long-term business development strategies calls for expanding our scope and exploring emerging markets in Asia-Pacific, China, Russia and the Middle East. We will adapt to the changes and needs of different age groups with diversified products for vehicle driving, image analysis and recognition, and IoV. In addition, through our brands and B2B strategy and experience of Mio Magellan as well as Navman products, we integrate life, safety, sports and leisure, and navigation service products to allow customers to take advantage of product features and services in real time, whether they are moving, running, or driving. This strategy will guide MiTAC toward the leader of hardware and software integration for IoV and automotive electronics products.

  • B. Professional tablet PCs and device management platform: The marketing region expands to Russia, Middle East, South Asia, and South America. We continue development of the vehicle tablet PC and Mobile POS. In addition, the professional tablet PCs have been tailored for the environment where special industries operate. The device is rugged, durable, drop-proof, and water-proof. When combined with the 4G, LTE, Wi-Fi, NFC, and Bluetooth features, it can be used in the fields of logistics, retailing, tourism, healthcare, and industry and takes the place of human with low efficiency to improve working efficiency, reduce costs, and improve service quality. Thus, more product applications are covered for higher business and sales performance.

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II.Market and an overview of production and sales

  • (I) Market analysis

  • Geographic location of the sales of the company’s major products

Unit: In thousands of New Taiwan Dollars

Regions 2020
Taiwan 1,157,516
US 23,009,897
Europe 4,403,958
Others 12,574,385
Total 41,145,756
  1. Market share

According to the surveys and research findings of DIGITIMES Research, MIC was ranked the 5th place by shipment volume of all ODM firms in whole system in 2020. With regards to automotive electronics and AIoT products, MiTAC’s auto electronic brand ranks firmly among the top 3 in the world.

  1. Future supply and demand in this market and growth outlook

  2. (1) Cloud computing product

As the businesses for cloud data centers continue growing, the enterprise data amount has been increased significantly. Due to the unexpected COVID-19 pandemic in 2020, the capital expenditure of companies stagnate, which in turns, leads to enormous growth of the cloud servers and software-defined storage markets. With the emergency of the new markets of bid data analysis usage, AI, IoT and 5G edge computing, the demand for global cloud servers is expected to grow in 2021. However, the intense impact caused by China-United States trade war and pandemic has resulted in material shortage for the supply chain of key components and parts. For this reason, we have to keep an eye on the situation and respond to it actively.

In light of increased shipment and declining average sales price, recently major international server firms committed themselves to lower production cost and increase product competitiveness and market share. As a result, energy efficiency and lower cost have become the opportunity for future products of these firms. In the future, computing will be converged at the server and energy efficiency will be the rule. Customers will appeal to low achieve the energy consumption or high-performance of the server. The TYAN brand launched several x86-based server products featuring latest AMD 7nm(AMD EPYC)/Intel 10nm (Intel Xeon Scalable) Multi-core; Multi-thread) processors from the entry-level cloud computing servers to AI servers with support for high-end graphic processors (GPU) to satisfy the comprehensive applications. The mission of the Group is to cooperate with our customers to provide IT professionals with the latest products. Continued effort will be made in innovation for developing solutions with flexibility, reliability, high performance, high utility and low cost in operation to help the customers installing an ideal IT infrastructure. This is the optimal feedback to the changeable commercial environment and opportunities for the enterprises.

The concept that general-purpose servers are used to run visualization software for open architecture has been adopted gradually in the cloud, central office, and access. This trend represents that the server demand will continue to grow in different forms of specifications. We should keep a close eye on the lifecycle of each product and timely launch new products to meet the market

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demands.

  • (2) Automotive electronics and AIoT products

As the cloud industry develops and the IoV era comes, the number of vehicle connected devices will rapidly increase to ensure driving safety and change driving behavior. Through the B2B business model, more driving information and records are provided for drivers. For 5G applications in daily life, smart cities will be the infrastructure each country seeks for while smart mobility will be the most profitable market for smart cities. The key to smart mobility is the connected vehicles. The business model for the vehicle market include the factory-installed products and aftermarket installed products. The solutions for aftermarket installed products are the key to dominance. MiTAC will provide appropriate solutions once the time is ripe.

  1. Competitive niche, positive and negative factors for the prospects of our development, and our corresponding strategy

As cloud applications grow, MiTAC not only possesses the ability to design and manufacture cloud hardware but has also been integrating hardware, software, engineering automation, manufacturing design, and after-sales services around the world to develop a new business model that would accomplish higher customer satisfaction and competitive advantages in order to break free of the low-margin PC OEM business.

In terms of automotive electronics and AIOT, MiTAC will take the initiative in developing niche products that target specific needs in the market, while at the same time improve its capacity in terms of R&D, innovation, hardware/software integration, cost control, quality control, yield control, mass production, inventory management, access to key components, logistic support, regional distribution, and financial strength.

  • (1) Competitive niche

  • A. Customer demand and control of the market: We grow with location based service markets. MiTAC jointly explores and invests in markets with regional software and hardware customers to understand terminal demand. MiTAC is also negotiating cooperation plans with various world-class information and communication firms so that it can fully grasp market trends, seize fluctuations in the market, and explore new products.

  • B. Cooperation with world-class software and hardware firms to secure the supply of material: This advantage includes the support of software firms in software development and the source of key components.

  • C. Research and development capability: Many of our products lead the market and win international awards, earning “number one” ranks

  • D. Ceaseless advancement of quality and the expansion of production capacity: We have accumulated years of embedded product software-hardware integration technology, which is a major advantage in design and manufacturing.

  • E. Provide full-range service to the customers through the partners in the market of regional channels and the global logistics system of the Group.

  • (2) Favorable factors for prospects of development

  • A. A supply chain that integrates internet infrastructure

    • MiTAC has revised its sales and distribution model to conform with growing e-commerce throughout the world. Many of the high-priced products are being produced and distributed directly to customers for greater efficiency, lower cost, and higher customer satisfaction

  • B. Global eManufacturing model

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After the trial running of the logistics model, the eManufacturing system of MiTAC. is well-developed. We have formed a global manufacturing model with division of labor: Taiwan, Australia, and the US concentrate on R&D and design, combined with the modules and semi-finished goods produced by production bases in Mainland China, and joined by the BTO/CTO assembly centers in the US. This combination is our global manufacturing model with division of labor. Components and systems with low level and long transportation time are manufactured in China; main components with high unit price are procured from production bases worldwide. This form of the integration of global division of labor allowed Mitac to grow from a regional organization to an international manufacturer with global division of labor in R&D, engineering, manufacturing, and distribution .

  • C. Intensify the development of products of high added-value In response to the trend of development in the integration of wirless Internet communication and computer , MiTAC will continue to form strategic alliance with international leading firms for joint development of market. MiTAC possesses spectacular innovative design, R&D, production, and manufacturing integration capabilities in the GPS market and launched various mobile navigation/communication products ahead of the market. In addition, effort will be made in the development of the MDM (Mobile Device Management) software with a view to providing software integration partners faster and complete full-range service.

  • D. Maintaining growth momentum in the market In addition to continuing to invest resources in major markets such as North America and Europe, intensified cultivation of markets with enormous growth potential in GPS, such as Asia-Pacific and emerging markets such as China, Japan, and Eastern Europe will be our focal point of development.

  • E. Full-range of eSupply Chain As dictated by the needs of global production, and the regional products of customer and segmentation, MiTAC is engaged in the design of key component modules and integration with the eCommerce of the upstream firms for timely delivery of goods worldwide and reduce the operation risk, cut down the inventory level, and provide timely delivery service to the customers.

  • (3) Negative factors for the prospects of our development and our corresponding strategies

  • A. Since large auto makers and high-tech companies in each country have invested in the development of self-driving vehicles. AI applications will be the focus of the future IoV. The AI applications and familiarization with the IoT platform poise the challenge to the future vehicle business development. Our corresponding strategy are shown below:

    • (a) Enhance the integration with the telematics and focus on the development of connection capability of devices and AI application technologies.

    • (b) Emphasize R&D and innovation. Improve our result from R&D. Reduce product development cycle. Maintain our ability to launch new products. In addition, we will localize our products, and make them more diversified, differentiated, mass-produced to ensure we have an edge in our products and profit.

    • (c) Improve the satisfaction of our customer from design in the upstream to mass-production to logistics. We seek strategic alliance with major firms in the world.

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     - (d) We use our global logistics model and establish an entire set of material planning, value chain, and logistics infrastructure.

  - B. The embedded system products confront the problems of small quantity in large variety, extremely high cost of development, and the strict requirements of quality and application environment. Most of the customers are small and medium enterprises in wide dispersion geographically. Marketing of these products is tough and the counter-measures are:

     - (a) Modular design shortens the lead-time for development of new products and customized products.

     - (b) Continue the development of high-level integrative solution with equal weight in hardware and software research and development.

     - (c) Global marketing in a wide array of business mode

     - (d) Invest in development of AI software applications. Launch a total solution for enhancing added value. Acquire Domain Knowledge of the industry for continued development of leading brands in technologies.

     - (e) Work with strategic partners to maximize the margin benefits and satisfy the most diverse shipping needs.

  - C. Key components are still controlled by overseas manufacturers. We need further experience in the integration of software and hardware. Our corresponding strategies are as follows:

     - (a) Maintain good supply chain relationship with overseas manufacturers of key components. We will also do our best to develop talent that is capable of integrating software and hardware in operating platform and communication components.

     - (b) Diversify the supply channel of key components: We seek more sources of suppliers and secure the source of our suppliers and competitive pricing. We seek to establish good interaction with domestic firms that are already producing or planning to produce key components to maximize our choices.

     - (c) Achieve the advantage of support by quantity: the promotion sale of product series helped to secure voluminous OEM/ODM orders, which could help to reduce the cost of purchase substantially.

  • (II) Important applications and production process for main products

  • The functions of major products

Product
categories		 Major usage and functions
Servers Commercial and connected data computingtools
Storage Commercial and connected data storage tools
Industrial PC PC andpherials for IoT applications.
Automotive
electronics and
AIoTproducts		 Consumer electronics (outdoor, physical fitness, driver navigation),
fleet management system, smart cloud IoV, and embedded system,
industrial use tablet PC system.

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  1. Production process

  2. (1) Printed Circuit Board Assembly (PCBA)

==> picture [341 x 218] intentionally omitted <==

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

Incoming Automated
ESL picking Solder paste SPI
inspection warehouse
Double-
Board AOI (optical
sided Reflow SMT
cutting inspection)
processes
Manual Wave Visual
insertion soldering Touch up inspection AXI
Base board Visual BFT Assembly ICT (Manual,
packaging inspection robotic arm)
OQA Stocking
----- End of picture text -----

  • (2) Whole set process (AIO, tablet PC, on-board equipment)

==> picture [269 x 194] intentionally omitted <==

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

Monitor/lens Machine Machine
Base board
cleaning and system function test
inspection calibration
assembly
Finished
Stocking OQA goods
packaging
System
Incoming System System
inspection assembly configuration test extension test
Finished
Stocking OQA goods Stress test
packaging
----- End of picture text -----

  • (3) System Assembly

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(III) Supply of key materials

Component name Sourde
CPU/ CHIPSET Original manufacturers: USA,Japan,Taiwan,Korea,China
HDD Suppliers: USA,Japan,Thailand
DRAM Suppliers: Taiwan,USA,Korea
PCB Suppliers: Taiwan,USA,China,Korea
LOGIC IC Suppliers: Taiwan,USA,Japan,China
PSU Suppliers: USA,China,Thailand
Availability:
The above suppliers are mostly famous international companies that have good track records
in the industry close with us for many years. In such a challenging pandemic, they still can
supply goods to uspermanentlyand stably.

(IV) Major customers and suppliers in the last two years

  1. The name of the supplier that accounted for more than 10% of the total purchase in any of the last two years, and the proportion of the purchase amount, the reason for the changes:
In thousands of New Taiwan Dollars In thousands of New Taiwan Dollars In thousands of New Taiwan Dollars
Item 2019 2020
Name Amount Ratio to net
annual
purchase
(%)		 Relation
with the
issuer		 Name Amount Ratio to net
annual
purchase (%)		 Relation
with the
issuer
1 Supplier B 1,901,961 6 None Supplier B 5,020,208 13 None
2 Others 30,013,842 94 Others 32,861,823 87
Net
purchase		 31,915,803 100 Net purchase 37,882,031 100

Note: All variations had taken into consideration production/sales policies, raw material demands, suppliers’ prices, actual delivery and quality of the respective years.

  1. The name of the customer that accounted for more than 10% of the total sale in any of the last two years, and the proportion of the sale amount, the reason for the changes:
In thousands of New Taiwan Dollars In thousands of New Taiwan Dollars In thousands of New Taiwan Dollars
Item 2019 2020
Name Amount Ratio to
net annual
sales(%)		 Relation
with the
issuer		 Name Amount Ratio to net
annual sales
(%)		 Relation
with the
issuer
1 Customer A 5,355,068 15 None Customer A 4,618,786 11 None
2 Customer B 5,321,094 15 None Customer B 11,717,045 28 None
3 Customer C 4,349,024 12 None Customer C 4,656,177 11 None
4 Customer D 3,781,545 11 None Customer D 4,347,822 11 None
5 Others 17,025,229 47 Others 15,805,926 39
Net sales 35,831,960 100 Net sales 41,145,756 100

Note: The changes are the responses to market trend, product needs, prospect of the industry, R&D technology, sale profit, and the contracts with customers.

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(V)Production volume and value in the latest two years

In thousands of New Taiwan Dollars/ unit

Year
Production volume & value
Main items		 2019 2020
Capacity Volume Value Capacity Volume Value
Computer & communication products 52,718,623 44,424,933 31,915,803 55,449,372 40,718,672 37,882,031

(VI) Sales volume and value in the last two years

In thousands of New Taiwan Dollars/ unit

Year
Sales volume
& value
Main items		 2019 2019 2020 2020
Import Export Import Export
Capacity Value Capacity Value Capacity Value Capacity Value
Computer &
communication
products		 297,467
827,127		 44,235,672 35,004,833
429,148
1,157,516		 40,178,189
39,988,240

III. Employee information in the last two years up to the publication date of this annual report

Year 2019 2020 Up to March 31,
2021 for theyear
Number of
employees		 Direct Labor 3,654 3,436 3,433
Indirect Labor 3,979 3,809 3,708
Total 7,633 7,245 7,141
Average age 32.65 34.21 35.25
Averageyears of service 5.74 6.10 6.54
Education
levels
(%)		 Ph.D. 0.16 0.14 0.12
Master’s degree 9.80 10.66 10.49
College 40.08 42.11 45.65
Senior High School 37.07 33.11 29.33
Schools at the Senior
SecondaryLevel and Below		 12.89 13.95 14.40

IV. Environmental Disclosure

  • (I) The group did not suffer any loss or penalty due to pollution of environment in the last year up until the publication date of this annual report. Below is a description of relevant practices adopted by MiTAC:

The Group is a professional assembly firm and the operation is mostly assembly works. As such, the problem of air pollution, water pollution and contaimination of toxic substances for control is not found. In 1992, MiTAC received Certificate of Excellence during the 1st Environmental Evaluation for Top-500 Businesses organized by Environmental Protection Administration. In 1997, MiTAC attained ISO 14001 Environmental Management System certification and continues to devote itself to preventing pollution. In 1999, MiTAC received from the Council of Labor Affairs a 2- year certification for having passed the Safety and Health System Evaluation. MiTAC will continue to enforce its environmental protection and work safety policies, and strive to sustain an operation that is free of pollution and hazard.

For expenditure regarding environmental protection, the Group classifies it into three categories: Direct environmental cost, indirect environmental cost, and others. It is

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compiled based on the local investment amount or spending of the year In additional to the requirements of local regulations which cost us necessary fees, the energy saving programs are conducted for the GHG (Greenhouse Gas) issues. For example, the renewable energy - solar/waste recycling/electricity saving - lighting management, summer air-conditioning management have been introduced to reach the goal of reducing CO2 emission. The energy efficiency improvement is considered the main expenditure item of the direct environmental cost. The electricity usage at factories and offices accounts for the largest portion of the energy consumption. Therefore, the Shanghai office buildings in Mainland China followed the Headquarter in Taiwan to introduce the Comismart environmental control system to control the energy consumption of buildings effectively and optimize the energy efficiency.

  • (II) Environmental protection expenditure

  • Environment protection expenditure refers to all expenses related to environmental protection activities. It represents how dedicated a company is to the environment, and serves as a key indicator to the quality of environmental management. However, the definition and scope of environmental expenditure still differ from country to country.

  • MiTAC has been gathering data on the group’s environmental expenditure since 2020, with new statistics on environmental protection expenditure covered as follows:

    • Environmental costs associated with the Company’s operations (direct cost) amounted to NT$ 11,115,751, which included expenses on the prevention of air/effluent/soil/groundwater pollution, efficient use of resources and disposal/treatment/recycling/reuse of commercial wastes.

    • Environmental management activity costs (indirect cost) amounted to NT$ 3,362,911. The administrative costs included personnel expenses on environmental education, system management and validation, environmental monitoring and environmental protection-related activities.

    • Other environmental costs totaled NT$ 2,300,858, which included social activity expenses (i.e., sponsoring environmental organizations, promotion of environmental information and so forth), taxes (i.e., energy levies) and other expenses (i.e., water treatment expenses).

    • Losses (including damage compensations) and fines incurred due to pollution of environment in the year of report up until the publication date of this annual report: The Company has not incurred any losses (including damage compensations) or fines due to environmental pollution; hence the sum is zero.

V. Employer and employee relationships

Driven by a humane management approach, MiTAC is dedicated to creating a work environment that facilitates two-way communication between line managers, their subordinates and their peers. The Company has also taken initiative in creating communication channels and gathering employees’ thoughts as a means of ensuring harmonious labor-management relations and achieving win-win between the Company and its employees.

  • (I) Communication and reward

  • Labor communication

The Group holds cross-level meetings, communication meetings for managers at each level, and labor-management committee to establish a good two-way communication mechanism. The current group agreement and labor union coverage are 66.8%. In addition, the HR unit has established the employee relationship and dedicated management rules. The employees can propose advice through multiple

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channels, including the employee feedback box at offices, hotlines and Speak out email address, etc. The escalation process is absolutely confidential and deeply trusted by our employees. We are committed to building a fair and gender-friendly working environment.

For daily work and communications, being a multinational conglomerate, MiTAC has offices in many parts of the world. In order to facilitate communication and conferences between different parts of the Company or across regions, MiTAC has spent nearly NT$10 million to install video-conferencing equipment in 9 offices including Taiwan, China, USA, and UK. This advanced equipment delivers high image quality and stable audio stream, which enhances the efficiency of conferences and minimizes the need to have employees travel between office locations. Meanwhile, MiTAC employees are able to learn the Company's business performance and latest product information through internal channels such as intranet, monthly publications, and the general assembly. Together, these measures ensure the completeness of internal communication within the Company.

  1. Employee incentives

MiTAC offers a variety of incentives to commend individual and team performance in all areas of expertise, and thereby encourage employees to seek continual growth and improvement that would contribute to the Company’s competitiveness. Some of the incentives offered to employees include:

  • Employee of the year award: Winners of this award are commended personally by the President during the year-end gathering; in addition, the Company prepares commendation letters and offers bonuses and extra leaves as a show of gratitude to employees and their families.

  • Department/individual patent award: This award is intended to encourage employees in creating patents that are relevant to their jobs. Incentives are provided from proposal, application to approval stage of a patent application; at the end of each year, departments and individuals are assessed for the patents created, and those who exhibit outstanding performance are commended with department/individual awards.

  • Long-term service award: As an appreciation for employees’ long-time contribution and commitment to the Company, senior employees with 5, 10, 15, 20, 25, and 30-year service seniority are commended personally by the senior management with the long-term service award and bonus as reward.

  • Short-term and long-term rewards: Provide short-term and long-term rewards including performance bonuses, profit sharing, employee stock options and treasury stocks based on the operating performance and personal performance of the company and the leadership team.

  • (II) Welfare and training

1. Welfare

MiTAC views employees as critical capital to the organization. All employees are entitled to labor insurance, national health insurance, group insurance, and travel insurance. Together, these insurance cover employees for death, health, and safety during overseas business trips and thereby provide them with additional security both in work and life. On the other hand, when our employees suffer an accident and cannot support their family, or lose their life and property due to natural disasters, the Company will provide proper assistance for them through “emergency financial aid” to help them and their families restore health and to increase their engagement.

We deeply believe that happy families are the foremost support to our employees. The creation of an environment with proper balance between workload and daily lives will be the only way to allow for physical and psychological health of

77

the employees so that they could indulge in their work, which in turn contribute to the sustainable development of the organization. For this end, the Group support the employees in taking care of their families thereby a hearty “temporary nursery care space” has been arranged in the office area. Employees who have the needs for day care of children may take their children to the workplace for reading and resting at a safe place. In so doing, the employees could take care of their children nearby and could have the peace of mind in concentrating on their works. In addition, the Company allocates the budget “for no-interest subsidy on car purchase with advance salary and wages ” to help the employees to improve their commute. Nearly NT$ 1.5 million are issued in 2020.

To ensure employees’ physical and mental health, MiTAC has been collaborating with professional external consultants to launch our “Employee Assistance Program.” The program features a pool of experts including psychiatrists, lawyers, nutritionists and financial consultants to assist employees and their family members on matters such as work stress, interpersonal relationships, family, marriage, romantic relationship, law, finance and healthcare so that employees may achieve balance between work, life and health.

In addition, a well-organized Employee Welfare Committee also provides a variety of benefits for the employees. Each department nominated their representative to the committee. The Committee convenes regularly and organizes a diversity of benefits and events for the employees. It also established different social functions, a free gymnasium, aerobic dance room, and massage room. Professional massage therapists were recruited from outside to help employees to release their pressure. Subsidy will also be granted for employees in different occasions such as marriage, funerals, and other festivities to express the concern of the Company. In addition to trip subsidies and year-end part lotteries, bonus will be given in Spring Festival, Dragon Boat Festival and Mid-Autumn Festival as reward to the employees for their effort. In this year, for example, subsidizes of nearly NT$ 20 million were released by the committee.

  1. Employees' training and continuing education

We place great emphasis on the improvement of employees skills and implement employee training from orientation, on-job skills, to management skills. In addition, other learning resources such as online courses, work mentors, life counselors and ongoing education subsidies are being offered to provide employees with an environment that supports continual learning and growth. In 2020, for example, the Company organized 600 courses and received more than 85,000 enrollments, delivering 270,000 hours of training in total.

  • (III) Retirement policy

The group has established a robust retirement system in accordance with the Labor Standards Act and the Labor Pension Act. All contributions made to the system are being held in a dedicated pension reserve account and managed by a supervisory committee that comprises labor and management representatives. Furthermore, monthly contributions are made to the pension reserve account using actuarial estimates produced by an impartial third party. For employees who are subject to the retirement system under the Labor Pension Act (the new system), monthly contributions are made into employees' pension accounts in the amounts specified by law. So far, the two systems have been running properly as they are expected to.

  • (IV) Labor-management communication

MiTAC has always taken care of its employees and maintained sound labormanagement relationship by sharing its gains and adequate communication with its employees. The labor-management committee is held quarterly and invites employees to

78

discuss labor conditions and benefits. In the future, MiTAC shall commit to its humane management and aim to strengthen labor-management relationship further by creating more variety of communication channels.

  • (V) Work environment and employees’ safety

MiTAC has been certified for ISO 14001 - Environmental Management System and ISO 45001 Occupational Health and Safety Management System. These certifications were attained as reinforcements to the safety and health of employees at workplace, and to protect employees from occupational injury, death, and prevent protest that arise as a result. These certifications are regularly validated by third-party institutions and properly enforced throughout the organization.

  • (VI) Employee code of conduct

The Company has created a set of "Integrity Code of Conduct" to establish integrity as part of its corporate culture, and a set of "Employee Code of Conduct" to ensure the consistency of employees' behaviors. There are four main focuses in the Employee Code of Conduct: service principles, confidentiality and prohibition against competing business involvements, network usage and information security, and interaction with suppliers. These codes have been published on the Company's intranet where employees may access at any time, and serve as a regular reminder not to commit violations. Below are terms of the employee service principles:

  1. Employees shall obey the instructions and assignments given by their managers. Managers shall have the duty to guide and supervise their subordinates.

  2. Employees are expected to work diligently and commit themselves to improving work performance and quality, and achieve the expected productivity.

  3. Employees are not allowed to leave their posts during work hours except for urgent matters, which are subject to approval of the line manager.

  4. Employees must not carry contraband, flammable or explosive substances, or hazardous objects unrelated to work into the workplace.

To enforce discipline and fairness within the Company, a set of "Employee Reward and Disciplinary Policy" has been created to serve as guidelines for rewarding excellence and penalizing violators. The Company has a set of "Anti-corruption Policy" policy in place to prevent illegal conducts and organized fraud. An investigation panel has been assembled to investigate suspicious conducts, and thereby ensure the soundness of the Company's operations.

  • (VII) List any losses suffered by the company in the most recent 2 fiscal years and up to the annual report publication date due to labor disputes (including any violations of the Labor Standards Act found in labor inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, the substance of the legal violations, and the content of the dispositions), and disclosing an estimate of possible expenses that could be incurred currently and in the future and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided:

MiTAC did not suffer any losses due to employment dispute in the most recent year up until the publication date of this annual report. The Company currently maintains sound labor-management relationship and expects very low probability of encountering any losses due to employment dispute in the future.

VI. Important contracts

Contract
nature		 Participants Contract start/end date Main contents Restrictions

79

Business
agreements		 Customer C From July 1, 2015 to July 1,
2018; automatically renewable.		 To outline terms
concerning the production,
delivery, payment and
warranty of computer-
relatedproducts.		 None
Master
Supply
Agreement
Restatement		 Customer A From July 1, 2014 to June 30,
2017; automatically renewable on
a yearly basis.		 To outline terms
concerning the production,
delivery, payment and
warranty of computer-
relatedproducts.		 None
Purchasing
Agreement		 Customer D From July 1, 2011 to June 30,
2016; renewable under the
consensus of all participants.		 The clauses of the
production and
manufacturing, delivery,
payment and warranty of
computer products as
agreed.		 None

80

Six. Financial Position

I. Condensed balance sheets and comprehensive income statements covering the last 5 years:

  • (I) Condensed Balance Sheet – IFRSs (consolidated)

Unit: In thousands of New Taiwan Dollars

Year
Item		 Year
Item		 Financial information covering the last 5years Financial information covering the last 5years Financial information covering the last 5years Financial information covering the last 5years Financial information covering the last 5years
Dec. 31,2016 Dec. 31,2017 Dec. 31,2018 Dec. 31,2019 Dec. 31,2020
Current assets 25,553,342 20,499,461 19,033,549 23,189,327 21,981,509
Property, Plant and
Equipment		 6,030,530 6,697,711 7,154,611 7,810,995 7,753,087
Intangible assets 96,980 134,987 102,788 89,448 75,904
Other assets 18,383,086 19,853,104 21,755,203 24,320,612 27,361,235
Total assets 50,063,938 47,185,263 48,046,151 55,410,382 57,171,735
Current
liabilities		 Before
dividend		 14,887,395 11,651,825 9,437,584 14,102,831 12,521,697
After
dividend		 16,910,093 12,706,471 10,842,736 15,180,114 13,728,254
Non-Current
liabilities		 660,130 784,822 805,240 1,752,805 1,888,543
Total
liabilities		 Before
dividend		 15,547,525 12,436,647 10,242,824 15,855,636 14,410,240
After
dividend		 17,570,223 13,491,293 11,647,976 16,932,919 15,616,797
Attributable to the
shareholder’s equity
of the parent
company		 34,516,413 34,748,616 37,803,327 39,489,824 42,712,994
Share capital 8,156,048 8,190,022 9,367,677 10,772,829 12,065,568
Additional paid-in
capital		 22,446,436 22,537,691 23,370,899 23,400,002 23,582,411
Retained
earnings		 Before
dividend		 3,159,137 3,691,113 4,968,926 4,998,381 5,561,608
After
dividend		 1,136,439 1,419,568 2,158,622 2,628,359 4,355,051
Other equity 1,277,241 852,239 448,912 671,699 1,743,283
TreasuryStock (522,449) (522,449) (353,087) (353,087) (239,876)
Non-Controlling
Interest		 0 0 0 64,922 48,501
Total
equity		 Before
dividend		 34,516,413 34,748,616 37,803,327 39,554,746 42,761,495
After
dividend		 32,493,715 33,693,970 36,398,175 38,477,463 41,554,938

Note: Proposal for cash dividend distributed from earnings 2020, $1,206,557, passed upon resolution by the Board of Directors’ meeting

81

(II) Condensed Balance Sheet – IFRSs (individual)

Unit: In thousands of New Taiwan Dollars

Year
Item		 Year
Item		 Financial information covering Financial information covering the last 5years
Dec. 31,2016 Dec. 31,2017 Dec. 31,2018 Dec. 31,2019 Dec. 31,2020
Current assets 3,432,107 2,510,868 640,871 246,615 1,671,206
Property, Plant and
Equipment		 1,407 673 3,980 3,184 2,388
Intangible assets 0 0 0 0 0
Other assets 32,236,183 33,909,252 37,671,545 40,470,219 44,612,687
Total assets 35,669,697 36,420,793 38,316,396 40,720,018 46,286,281
Current
liabilities		 Before
dividend		 1,153,284 1,672,177 513,069 1,230,194 3,573,287
After
dividend		 3,175,982 2,726,823 1,918,221 2,307,477 4,779,844
Non-Current
liabilities		 0 0 0 0 0
Total
liabilities		 Before
dividend		 1,153,284 1,672,177 513,069 1,230,194 3,573,287
After
dividend		 3,175,982 2,726,823 1,918,221 2,307,477 4,779,844
Attributable to the
shareholder’s
equity of the parent
company		 34,516,413 34,748,616 37,803,327 39,489,824 42,712,994
Share capital 8,156,048 8,190,022 9,367,677 10,772,829 12,065,568
Additional paid-in
capital		 22,446,436 22,537,691 23,370,899 23,400,002 23,582,411
Retained
earnings		 Before
dividend		 3,159,137 3,691,113 4,968,926 4,998,381 5,561,608
After
dividend		 1,136,439 1,419,568 2,158,622 2,628,359 4,355,051
Other equity 1,277,241 852,239 448,912 671,699 1,743,283
TreasuryStock (522,449) (522,449) (353,087) (353,087) (239,876)
Non-Controlling
Interest		 0 0 0 0 0
Total
equity		 Before
dividend		 34,516,413 34,748,616 37,803,327 39,489,824 42,712,994
After
dividend		 32,493,715 33,693,970 36,398,175 38,412,541 41,506,437

Note: Proposal for cash dividend distributed from earnings 2020, $1,206,557, passed upon resolution by the Board of Directors’ meeting.

82

(III) Condensed Comprehensive Income Statement – IFRSs (consolidated)

Unit: In thousands of New Taiwan Dollars

(EPS in NT$)

Year
Item		 Financial information covering Financial information covering the last 5years
2016 2017 2018 2019 2020
Revenue 48,341,745 48,760,514 30,751,819 35,831,960 41,145,756
Grossprofit 5,553,540 5,665,177 4,787,868 5,189,724 4,625,061
Operatingincome(loss) 683,344 739,881 333,896 500,960 74,383
Non-Operating Income
and Expenses		 2,377,593 2,162,407 3,138,818 2,581,948 2,905,693
Pre-Tax Income(loss) 3,060,937 2,902,288 3,472,714 3,082,908 2,980,076
Continuing department
net income - current
(Loss)		 2,718,568 2,581,014 3,296,249 2,773,789 2,850,785
Loss from the
discontinued
department		 0 0 0 0 0
Net Income - current
(Loss)		 2,718,568 2,581,014 3,296,249 2,773,789 2,850,785
Other current
comprehensive
income (loss) (net
after tax)		 (688,788) (451,342) (304,397) 244,200 1,085,269
Total current
comprehensive income
or loss		 2,029,780 2,129,672 2,991,852 3,017,989 3,936,054
Net income attributable
to the shareholder’s
equity of the parent
company		 2,718,568 2,581,014 3,296,249 2,817,880 2,918,705
Net income attributable
to the non-controlling
equity		 0 0 0 (44,091) (67,920)
Comprehensive profit
and loss attributable to
the shareholder’s equity
of theparent company		 2,029,780 2,129,672 2,991,852 3,063,366 4,004,833
Comprehensive profit
and loss attributable to
the non-controlling
equity		 0 0 0 (45,377) (68,779)
EPS 3.44 2.81 3.11 2.37 2.45

83

(IV) Condensed Comprehensive Income Statement – IFRSs (individual)

Unit: In thousands of New Taiwan Dollars

(EPS in NT$)

Year
Item		 Financial information covering Financial information covering the last 5years
2016 2017 2018 2019 2020
Revenue 2,736,021 2,636,880 3,301,845 2,861,497 2,968,036
Grossprofit 2,736,021 2,636,880 3,301,845 2,861,497 2,968,036
Operating income
(loss)		 2,702,751 2,602,340 3,270,650 2,827,265 2,934,156
Non-Operating Income
and Expenses		 19,038 28,695 35,068 13,053 (4,888)
Pre-Tax Income(loss) 2,721,789 2,631,035 3,305,718 2,840,318 2,929,268
Continuing department
net income - current
(Loss)		 2,718,568 2,581,014 3,296,249 2,817,880 2,918,705
Loss from the
discontinued
department		 0 0 0 0 0
Net Income - current
(Loss)		 2,718,568 2,581,014 3,296,249 2,817,880 2,918,705
Other current
comprehensive
income (loss) (net
after tax)		 (688,788) (451,342) (304,397) 245,486 1,086,128
Total current
comprehensive income
or loss		 2,029,780 2,129,672 2,991,852 3,063,366 4,004,833
EPS 3.44 2.81 3.11 2.37 2.45

(V) Names and audit opinions of CPAs in the latest five years

Year Name of CPA firm Name of CPA Auditingopinions
2016 PwC Taiwan Wen, Fang-Yu, Cheng, Ya-Huei Unqualified opinion plus other
matters section
2017 PwC Taiwan Wen, Fang-Yu, Cheng, Ya-Huei Unqualified opinion plus other
matters section
2018 PwC Taiwan Wen, Fang-Yu, Cheng, Ya-Huei Unqualified opinion plus other
matters section
2019 PwC Taiwan Wen, Fang-Yu, Cheng, Ya-Huei Unqualified opinion plus other
matters section
2020 PwC Taiwan Lin, Yu-Kuan/Cheng, Ya-Huei Unqualified opinion plus other
matters section

84

II. Financial analysis covering the last 5 years:

(I) Financial analysis – IFRSs (consolidated)

Analysis items Year
 Financial analysis in the latest fiveyears Financial analysis in the latest fiveyears Financial analysis in the latest fiveyears Financial analysis in the latest fiveyears Financial analysis in the latest fiveyears
2016 2017 2018 2019 2020
Financial
structure (%)		 Debt to asset ratio 31.05 26.35 21.31 28.61 25.2
The ratio of long-term funds
to property, plant and
equipment		 583.30 530.53 539.63 528.83 575.9
Debt
servicing
capability (%)		 Current ratio 171.64 175.93 201.67 164.43 175.54
Quick ratio 124.95 119.35 127.37 105.95 99.44
Interest Coverage ratio 178.24 86.80 266.53 56.14 65.11
Operating
efficiency		 A/R turnover rate(times) 6.13 6.66 6.16 6.01 6.87
Average collection days 59.54 54.80 59.25 60.73 53.12
Inventory turnover rate
(times)		 5.59 5.71 3.50 3.7 3.75
Payable turnover ratio(times) 5.78 5.93 4.89 5.47 5.82
Average days in sales 65.29 63.92 104.28 98.64 97.33
Property, plant, and
equipment turnover rate
(times)		 8.40 7.66 4.43 4.78 5.28
Total assets turnover(time) 1.01 1.00 0.64 0.69 0.73
Profitability Return on assets(%) 5.74 5.36 6.94 5.45 5.14
Return on equity (%) 7.98 7.45 9.08 7.17 6.92
Pre-tax income to
paid-upcapital(%)		 37.52 35.43 37.07 28.61 24.69
Netprofit margin(%) 5.62 5.29 10.71 7.74 6.92
Earningsper share(NT$) 3.44 2.81 3.11 2.37 2.45
Cash flow Cash flow ratio(%) 4.98 27.34 11.11 1.65 21.32
Cash flow adequacyratio(%) 82.50 87.81 73.06 59.52 47.39
Cash reinvestment ratio(%) - 2.95 0.02 - 3.17
Leverage
ratios		 Operatingleverage ratios 9.21 8.80 17.97 14.22 92.18
Financial leverage ratios 1.02 1.04 1.04 1.12 2.66
Root causes of changes in each financial ratio in the last two years (the changes under 20% are exempt from analyses)
1. The increase in cash flow ratio mainly resulted from the increase in cash inflow from operating activities.
2. The decrease in cash flow adequacy ratio (%) mainly resulted from the decrease in inventories for the most recent five years.
3. The increase in cash reinvestment ratio mainly resulted from the increase in net cash inflow from operating activities.
4. The increase in operating leverage ratio mainly resulted from the decrease in operating profit.
5. The increase in financial leverage ratio mainly resulted from the decrease in operating profit.

85

(II) Financial analysis – IFRSs (parent company only)

Year
Analysis items		 Year
Analysis items		 Financial analysis in the latest fiveyears Financial analysis in the latest fiveyears Financial analysis in the latest fiveyears
2016 2017 2018 2019 2020
Financial
structure (%)		 Debt to asset ratio 3.23 4.59 1.33 3.02 7.71
Ratio of long-term
capital to property,
plant and equipment		 2,453,192.11 5,163,241.60 949,832.33 1,240,256.72 1,788,645.36
Debt
servicing
capability
(%)		 Current ratio 297.59 150.15 124.90 20.04 46.76
Quick ratio 297.49 150.11 124.72 19.96 46.74
Interest Coverage ratio NA NA 14,008.27 1,364.2 337.6
Operating
efficiency
(Note)		 A/R turnover rate
(times)		 NA NA NA NA NA
Average collection days NA NA NA NA NA
Inventory turnover rate
(times)		 NA NA NA NA NA
Payable turnover ratio
(times)		 NA NA NA NA NA
Average days in sales NA NA NA NA NA
Property, plant and
equipment turnover
ratio(times)		 NA NA NA NA NA
Total assets turnover
(time)		 NA NA NA NA NA
Profitability Return on assets(%) 7.83 7.16 8.82 7.13 6.72
Return on equity (%) 7.98 7.45 9.08 7.29 7.10
Pre-tax income to
paid-upcapital(%)		 33.37 32.12 35.28 26.36 24.27
Netprofit margin(%) 99.36 97.88 99.83 98.47 98.33
EPS($) 3.44 2.81 3.11 2.37 2.45
Cash flow Cash flow ratio(%) 72.56 40.07 135.25 33.48 5.21
Cash flow adequacy
ratio(%)		 175.53 107.64 99.31 42.67 41.19
Cash reinvestment ratio
(%)		 - - - - -
Leverage
ratios		 Operating leverage
ratios		 1.00 1.00 1.00 1.00 1.00
Financial leverage
ratios		 1.00 1.00 1.00 1.00 1.00
Root causes of changes in each financial ratio in the last two years (the changes under 20% are exempt from analyses)
1. The increase in the debt to asset ratio mainly resulted from the increase in other payables - related party.
2. The increase in the ratio of long-term capital to property, plant and equipment mainly resulted from the increase in the capital
of common stock.
3. The increase in current ratio and quick ratio mainly resulted from the increase in other receivables - related party.
4. The decrease in interest coverage ratio mainly resulted from the increase in interest expenses.
5. The decrease in cash flow ratio mainly resulted from the decrease in net cash inflow from operating activities and increase in
current liabilities.

Note: Not applicable, as the Company is an investment holding company.

86

  1. Financial structure

    • (1) Debt to asset ratio = total liabilities / total assets

    • (2) The ratio of long-term capital to property, plant and equipment = (total equities + non-current liabilities)/ net amount of property, plant and equipment.

  2. Debt servicing capability

    • (1) Current ratio = current assets / current liabilities

    • (2) Quick ratio = (current assets - inventory-prepayments) / current liabilities

    • (3) Interest coverage ratio = net profit before interest and tax / interest expenses for the current period

  3. Operating capacity

    • (1) Receivables turnover (including accounts receivable and notes receivable from business activities) = net sales / average receivables balance (including accounts receivable and notes receivable from business activities).

    • (2) Average days of collection = 365 / Receivables turnover

    • (3) Inventory turnover = Cost of goods sold / Average inventory amount

    • (4) Payables turnover (including accounts payable and notes payable for business activities) = cost of sales / average payables balance (including accounts payable and notes payable for business activities).

    • (5) Average days in sales = 365 / Inventory turnover

    • (6) Property, plant and equipment turnover = net sales / average net property, plant and equipment balance.

    • (7) Total assets turnover = Net sales / Average total assets

  4. Profitability

    • (1) Return on assets = [Net Income or Loss + Interest expense × (1 - tax rate)] / Average total assets

    • (2) Return on equity = after tax net profit/ average total equity

    • (3) Net profit margin = after tax net profit/net sales

    • (4) Earnings per share = (attributable to the shareholder’s profit and loss of the parent company) - Preferred dividends) / Weighted average number of shares issued

  5. Cash flow

    • (1) Cash flow ratio = Cash flow from operating activities / current liabilities

    • (2) Cash flow adequacy ratio = net cash flow from operating activities in the latest five years / (capital expenditure inventory + increase + cash dividends) in the latest five years.

    • (3) Cash flow reinvestment ratio = (Cash flow from operating activities-Cash dividends) / (Property, Plant and Equipment + long term investments + Other non-current assets + working capital)

  6. Degree of leverage

    • (1) Degree of operating leverage = (net operating revenues - variable operating costs and expenses) / operating income.

    • (2) Degree of financial leverage = operating income / (operating income - interest expense).

  7. III. The Audit Committee’ Review Report on the financial statement of the most recent year : refer to page106.

  8. IV. Financial report in the most recent year: refer to page 107-209 for further information.

  9. V. The Parent Company only financial statement for the most recent fiscal year, certified by a CPA : See from page 210 to 251.

  10. VI. If the Company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, the annual report shall explain how said difficulties will affect the Company's financial situation : None.

87

Seven. A review and analysis of the Company’s financial status and operating results, and risk management

I. Review and analysis of the Company’s financial status

Unit: In thousands of New Taiwan Dollars

Year
Item		 Dec. 31, 2019 2020.12.31 Difference Difference
Amount %
Current assets 23,189,327 21,981,509 (1,207,818) -5%
Property, Plant and
Equipment		 7,810,995 7,753,087 (57,908) -1%
Intangible assets 89,448 75,904 (13,544) -15%
Other assets 24,320,612 27,361,235 3,040,623 13%
Total assets 55,410,382 57,171,735 1,761,353 3%
Current liabilities 14,102,831 12,521,697 (1,581,134) -11%
Non-Current liabilities 1,752,805 1,888,543 135,738 8%
Total liabilities 15,855,636 14,410,240 (1,445,396) -9%
Share capital 10,772,829 12,065,568 1,292,739 12%
Additionalpaid-in capital 23,400,002 23,582,411 182,409 1%
Retained earnings 4,998,381 5,561,608 563,227 11%
Other equity 671,699 1,743,283 1,071,584 160%
TreasuryStock (353,087) (239,876) 113,211 -32%
Attributable to the
shareholder’s equity of the
parent company		 39,489,824 42,712,994 3,223,170 8%
Non-ControllingInterest 64,922 48,501 (16,421) -25%
Total equity 39,554,746 42,761,495 3,206,749 8%
The main reasons for any material change in the Company's assets, liabilities, or equity during the past two
fiscal years:
1. Other equity: mainly due to the increase in unrealized gains from financial assets at fair value through
other comprehensive income.
2. Treasury Stock: mainly due to disposal of the treasury stock in 2020.
3. Non-controlling Interest: mainly due to exclusion of Hyve Design Solutions Corporation into the
consolidated financial statements in Q3 2020, as MiTAC lost the controlling power over it at that
moment.

88

II. Review and analysis of the Company’s financial performance

Unit: In thousands of New Taiwan Dollars

Year
Item		 2019 2020 Difference Difference
Amount %
Revenue 35,831,960 41,145,756 5,313,796 15%
Grossprofit 5,189,724 4,625,061 (564,663) -11%
OperatingIncome 500,960 74,383 (426,577) -85%
Non-OperatingIncome and Expenses 2,581,948 2,905,693 323,745 13%
Netprofit before tax 3,082,908 2,980,076 (102,832) -3%
Income tax expense (309,119) (129,291) 179,828 -58%
Net Income - current 2,773,789 2,850,785 76,996 3%
Other current comprehensive income 244,200 1,085,269 841,069 344%
Total current comprehensive income or
loss		 3,017,989 3,936,054 918,065 30%
Net income attributable to the
shareholder’s equity of the parent
company		 2,817,880 2,918,705 100,825 4%
Comprehensive profit and loss
attributable to the shareholder’s equity
of theparent company		 3,063,366 4,004,833 941,467 31%
(I) The main reasons for any material change in operating revenues, operating income, and income before tax during
the past two fiscal years:
1. The decrease in operating profit compared to the same period in the previous year mainly resulted from the
change in product portfolio. The decrease in gross profit and gross profit margin compared to the same period
in the previous year.
2. The increase in other current comprehensive income, current comprehensive income or loss and comprehensive
profit and loss attributable to the shareholder’s equity of the parent company compared to the same period in
the previous year mainly resulted from the increase in unrealized gain from financial assets at fair value
through other comprehensive income compared to the same period in the previous year.
(II) Expected sales volume and basis of estimate: No applicable, as the Company does not prepare financial forecasts.
(III)The possible effect upon the Company's financial operations as well as measures to be taken in response: No
material effect.

III. Cash flow review and analysis

(I) Analysis of cash flow for the year

Unit: In thousands of New Taiwan Dollars

Opening cash
balance		 Net cash flow from
operating activities
for the year
Cash flow from
operatingactivities		 Net cash flow from
investing activities
for the year
Cash flow from
operatingactivities		 Net cash flow from
financing activities
for the year
Cash flow from
operatingactivities		 Ending cash
balance
6,664,566 2,670,771 (594,391) (3,065,779) 5,805,297

  • (1) Operating activities: The amount of net cash inflow from operating activities was NT$2,670,771 thousand. This was mainly due to operating profits and the change in net assets and net liabilities related to operating activities.

  • (2) Investing activities:The amount of net cash outflow from investing activities was NT$594,391 thousand. This was mainly due to the plant renovation and purchase of equipment.

  • (3) Financing activities: The amount of net cash outflow from financing activities was NT$3,065,779 thousand. This was mainly due to repayment of bank loans and distribution of cash dividend.

89

  • (II) Improvement plans for cash deficit: Not applicable.

  • (III) Cash liquidity analysis for the next fiscal year

Unit: In thousands of New Taiwan Dollars

Opening cash
balance		 Net cash flow
from operating
activities for the
year
Cash flow from
operating
activities		 Annual cash
outflow		 Cash surplus
(deficit) amount		 Financingof cash deficits Financingof cash deficits
Investment
plans		 Finance
plans
5,805,297 1,933,512 (2,069,029) 5,669,780 - - 
  1. Analysis of cash flow for the year:

     - (1) Operating activities:Net cash inflow is expected from operating activities in 2021, which is mainly due to the net change in assets and liabilities related to profit and operating activities.

     - (2) Full-year cash outflow: The outflow is expected to be spent on plant renovation, purchase of equipment, and payment of cash dividends.

  2. Improvement plans for cash deficit: Not applicable.

  • IV. The effect upon financial operations of any major capital expenditures during the most recent fiscal year : None.

  • V. The Company's reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving reinvestment profitability, and investment plans for the coming year:

  • (I) The reinvestment policy for the most recent fiscal year: The reinvestments of the Group are long-term strategic planning for future business demands, hoping to increase revenues and profits.

  • (II) The main reasons for the profits/losses generated from reinvestments and the plan for improving re-investment profitability: Profits were mainly caused by the stable growth of business and proper control of costs. The loss was mainly caused by the reason that it is still on the stage of developing new products or the sales of products fell short of expectation. In addition, MiTAC will consider elements from all perspectives and make proper management policy for non-operating reinvestees or investees with poor performance to improve management performance and control investment losses.

  • (III) Investment plans for the coming year: The Company will follow the operating strategy to execute the global investment plans.

90

VI. Risk management issues

  • (I) Organization structure for risk management
Responsible
departments		 Tasks and duties
Finance Responsible for operational decision planning, assessment of
medium/long-term investments, funding, treasury, hedging, reliability
of financial reports, monitoring of performance and efficiency, and
compliance matters relating to the above. The department's goals are to
minimize financial,taxation and strategic risks.
Information
Management		 Responsible for the planning, establishment, maintenance, security and
protection of the Company's information network, hardware, software
and systems, as well as ongoing monitoring of network/system quality
in order to minimize securityrisks of existingnetworks and systems.
Legal Affairs Responsible for the management of legal risks, including compliance
with government supervision and resolution of contractual disputes and
litigation.
Human Resource Responsible for the management of personnel risks and real estate
property risks, and compliance with government regulations to ensure
sustainability of the Company's operations and security of real estate
properties.

  • (II) The effect upon the Company's profits (losses) of interest and exchange rate fluctuations and changes in the inflation rate, and response measures to be taken in the future:

  • The influence of the changes in interest rate and exchange rate, and inflation in 2020 on the profits (loss) of the Company:

Unit: In thousands of New Taiwan Dollars

Item 2020 2020
Amount As a percentage of
revenues %
Interest income(expense) (1,997) (0.005)
Exchange gains (losses)
(including gains/losses on valuation of
financial instruments)		 81,089 0.20

Note: The influence of inflation on the profits (loss) of the Company is insignificant.

  1. The response measures taken by the Company for interest and exchange rate fluctuations and changes in the inflation rate:

  2. (1) The pricing, collection and payments for trade receivables and payables are mainly in USD along with one-basket currencies to reduce the effect of exchange rate fluctuation on the overall revenues.

  3. (2) All derivative transactions the Company has currently undertaken are intended to hedge against foreign currency assets and liabilities shown on the balance sheet. As required by "Procedures for Derivatives Trading," the Company transacts financial instruments with banks and evaluates gains and losses on a regular basis to ensure that hedges remain effective in minimizing interest rate and exchange rate impacts on income.

  4. (3) The Company maintains close interactions with banks and conducts regular assessments to secure the best borrowing rates, and therefore reduces impact of

91

interest rate variations on income. 

  - (4) The Company gathers regular information on exchange rate, interest rate, and the financial market. Meetings are held where appropriate to discuss the best course of action. In the occurrence of extreme market events, the executive management will be notified immediately for proper actions.

  - (5) In light of recent disasters caused by extreme weather conditions and rapid changes of interest rates and exchange rates around the world, it is increasingly important for businesses to source supplies that are stable and reasonably priced. To address this challenge, MiTAC has been monitoring changes in the market and making procurement plans in advance so that suppliers have ample time to find alternative materials or make advance purchases at their discretion. Since most of the supply chains are commonly affected by prolonged delivery, it has become apparent that the Company must devote greater attention to create demands, explore ways to reduce risks, manage uncertainties involving prolonged delivery and shortage of labor, relax inventory control and adjust cost control of non-production materials. Meanwhile, distributors shall carry additional inventory to avoid impact on earnings due to disruption of supply or volatile costs.

  • (III) The Company's policy regarding high-risk investments, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future:

  • MiTAC does not engage in high-risk and highly leveraged investments.

  • Financing third parties was undertaken in accordance with the “Procedures for Loaning of Company Funds”. As of the end of 2020 and March 31, 2021, the Company and subsidiaries had balance of loans to third parties amounting to NT$17,926,578 thousand and NT$17,636,691 thousand, respectively.

  • Endorsement/guarantees in favor of third parties were undertaken in accordance with the “Procedures for Endorsements/Guarantees”. As of the end of 2020 and March 31, 2021, the Company and subsidiaries had balance of endorsements/guarantees undertaken in favor of third parties amounting to NT$866,972 thousand and NT$1,382,276 thousand, respectively.

  • Derivatives transactions are conducted in accordance with “Procedures for Derivatives Trading”

  • (IV) Research and development work to be carried out in the future, and further expenditures expected for research and development work:

  • This year (2021), the Company planned to appropriate NT$2 billion in R&D.

  • Future R&D plans

    • (1) Cloud computing product series

      • AI and in-depth learning optimal design server platform

      • Industrial grade embedded server platform

      • High-performance GPU computing server

      • Development of the new generation of Intel core Embedded Motherboard

      • R&D of embedded industrial use main board for terminal application

      • Development of Industrial Interactive Kiosk in different sizes

      • Development of Panel Mount/Open Frame Panel PC in medium to small sizes

      • Development of Kiosk Panel PC in different sizes

      • Development of the new generation of Intel core Embedded Motherboard

92 

     - Development of Industrial use wide temperature and voltage range 3.5” motherboard.

     - Development of Industrial use wide temperature and voltage range 2.5” motherboard.

     - Development of Industrial/Medical use COM Express motherboard module.

     - Development of quasi system Box PC for railway transport (IEC50155).

     - Wide-temperature and wide-voltage fan-less Box PC

     - ARM framework embedded motherboard and Box PC

     - Industrial ICS Gateway

     - Industrial/commercial NVR

  - (2) Automotive electronics and smart IoT product series

     - Cloud computing applications and technologies

     - Integrated data capture, voice, and wireless broadband communication

     - Global positioning system (GPS), electronic navigation technologies and mobile positioning services

     - Compact portable electronic devices; technological development for green energy products.

  • (V) Effect on the Company's financial operations of important policies adopted and changes in the legal environment at home and abroad, and measures to be taken in response: MiTAC Group (MiTAC) has global presence and has production sites in China and the USA. Subject to the development condition, the Company will seek the optimal production model based on the production cost, logistic cost and customer needs, and will also make good use of the production base in the USA to engage in assembly and production to mitigate the tariff impact. The production line installation project of the Hsinchu Science Park factory was initiated in 2018. A part of the production capacity in the mainland China has been transferred back to the factory in Hsinchu in the middle of 2019. Therefore, no material impact should be imposed on the Company’s financial position. Meanwhile, the ISO quality, environment and safety certification has been competed in 2020. This year, the in-vehicle certification is scheduled to be completed. Meanwhile, for the consistency in the corporate social responsibility, MiTAC has taken the responsibility for the Validity Audit Procedure (VAP) under Responsible Business Alliance (“RBA”) Code of Conduct since 2020. The Procedure is scheduled to be completed this year.

  • (VI) Financial impacts and responsive measures in the event of technological or industrial changes:

  • MiTAC has engaged in joint ventures with the supply chain for the development of substitute non-high-melting-point soldering materials. Through supply chain management, MiTAC demands its upstream suppliers to proceed to application for waiver and development of substitute new materials without the waiver clause so that the products could meet the requirements of the RoHS waiver clause under the optimal cost structure and mode of operation.

  • The impact of the COVID-19 epidemic and the future situation of the Sino-US trade treaty are expected to have effects the global strategy planning and investment strategy. The best response to this change would be to continue in the introduction of automated production lines in all factories. In addition, MiTAC will try to incorporate the concept of manufacturing 4.0 and enhance supply chain management with an intelligent system. By integrating automated machinery with the production system, MiTAC would be able to produce broad variety of products in small quantities at a faster rate.

  • Due to COVID-19, the demand for teleworking and other related services has increased, resulting in a large demand for medium-to-large data center for cloud

93

services, and the proportion of completely built unit and full container load shipments are expected to increase. Thus, strengthening logistics operations and financial scheduling capabilities will effectively turn the challenges into business opportunities.

  1. In order to protect the information assets of customers, companies, and individuals from internal or external deliberate or accidental damage, and to protect and manage the data stored or transmitted, to prevent incidents such as damage, theft, leakage, tampering, abuse, and infringement, the company clearly declares the importance of maintaining information security and implements it, through the formulation of information security policy, so that all units can truly understand the information security policy. The Company follows the relevant control procedures to continuously improve the confidentiality, integrity and availability of all operations of each information service system, so as to maintain the information security and sustainable business philosophy of all business of the Company.

  2. (VII) Crisis management, impacts, and responsive measures in the event of a change in corporate image: None.

  3. (VIII)Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken: None.

  4. (IX) Expected benefits and possible risks associated with any plant expansion and mitigation measures being or to be taken: None.

  5. (X) Risks associated with any consolidation of purchasing or sales operations, and mitigation measures being or to be taken: Purchasing: Main raw material procurement policy is based on the principle of maintaining two suppliers or more and distribution of purchasing and establishing safe stock with major suppliers and instantly updating changes in demand to maintain a long-term and close collaboration relationship and to ensure the sources of all materials. Sales: MiTAC's strong R&D and manufacturing capability has enabled it to maintain long-term relationship with existing customers while at the same time explore new customers to diversify revenue sources. There should not be any concentration in sales that would impact the Company's growth.

  6. (XI) Effect upon and risk to the Company in the event a major quantity of shares belonging to a director, or shareholder holding greater than a 10 percent stake in the Company has been transferred or has otherwise changed hands, and mitigation measures being or to be taken:

  7. The Company is constantly aware of the identity of its controlling shareholders, and the name of the ultimate controller of its major shareholders. Shareholdings of directors and major shareholders with more than 10% ownership interest are reported regularly in accordance with the Securities and Exchange Act.

  8. (XII) Effect upon and risk to company associated with any change in governance personnel or top management, and mitigation measures being or to be taken: None.

  9. (XIII)Litigation and non-contentious matters:

  10. In the most recent fiscal year up till the publication date of this annual report, there had been no litigations, non-contentious cases, or administrative litigations involving the Company, the Company's director, president, person-in-charge, any shareholder with more than 10% ownership interest, or any subsidiary of the Company that would have significant impact on shareholders' equity or securities prices, as described in the subparagraph 12, Paragraph 6, Article 20 of "Regulations Governing Information to be Published in Annual Reports of Public Companies."

  11. (XIV)Other important risks, and mitigation measures being or to be taken:

  12. Suppliers’ profit-oriented strategy: Integration continues to be conducted in IT

94

industry and further strategic alliance mode is adopted in the hope for finding the niche of the industry chain. The rise of Chinese suppliers coupled with rising wages in China, volatile commodity prices, and shift of focus towards hand-held devices and cloud applications all pose additional pressure to material costs and stability of supply. In response to this threat, MiTAC will discuss with its suppliers regularly on the choice and supply of materials and changes in the market, and adjust its procurement strategies accordingly.

  1. The sound financial position of the suppliers will be a key issue for control thereby surveys and analysis have been conducted on the financial reports of the suppleirs at regular intervals.

VII. Other important matters : None.

95

Eight. Important Notice

I. Information on affiliates

(I) The consolidated business reports of affiliates

1. Organizational Chart of Affiliates

==> picture [582 x 323] intentionally omitted <==

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

MiTAC Holdings Corporation
MiTAC Digital Technology MiTAC Computing
MiTAC International Corporation
Corporation Technology Corporation
Tsu Fung MiTAC Telematics
Investment Technology
Corporation Corporation
Mio Technology
(Shuzhou) Ltd.
MiTAC Computer MiTAC Investment MiTAC Research MiTAC Innovation
(Shunde) Ltd. Holding Ltd. (ShangHai) Ltd. (KunShan) Ltd.
MiTAC Technology MiTAC Logistic MiTAC Information MiTAC Computer
(KunShan) Co., Ltd. Service (KunShan) Technology Ltd. (KunShan) Co., Ltd
Ltd.
MiTAC Information
Systems (KunShan) Co.,
Ltd.
----- End of picture text -----

96

2. Basic information of each affiliate

Currency: NTD 1,000

Enterprise name Date of incorporation Address Paid-in capital Principal business or running items
(Note 1)
MiTAC International Corp. Dec. 08, 1982 No.1, Yan-Fa 2nd Rd., Hsinchu Science Park, Hsinchu City,
Taiwan, R.O.C.		 NTD22,220,132 The development, design, manufacturing, and sales
of computers and peripherals, communications and
relatedproducts.
MiTAC Computing
Technology Corporation		 Jul. 25, 2014 3F, No.1, Yan-Fa 2nd Rd., Hsinchu Science and Industrial Park,
Hsinchu City, Taiwan, R.O.C..		 NTD2,327,571 The development, design, manufacturing, and sales
of computers and peripherals, communications and
relatedproducts.
Tsu Fung Investment
Corporation		 Feb. 16, 1998 10F, No. 77, Sec. 3, Minsheng E. Rd., Zhongshan Dist. Taipei
City,Taiwan,R.O.C.		 NTD1,428,847 General Investment
Silver Star Developments
Ltd.		 Jun. 05, 1990 Vistra Corporate Services Centre, Wickhams Cay II, Road
Town,Tortola,VG1110,British Virgin Islands		 USD176,299 General Investment
MiTAC Japan Corp. Apr. 30, 1983 Yasuda Shibaura-building No2 3F, Kaigan 3-2-12, Minato-ku,
Tokyo, Japan 108-0022		 YEN50,000 Sales of communication, computer peripherals,
software and hardware and post-delivery
maintenance and repair service
MiTAC Benelux N.V. Sep. 13, 1993 Z5 Mollem 318 - 1730 Asse (Mollem), Belgium EUR1,618 Sales of communication products and related post-
deliveryservice
MiTAC Pacific(H.K.)Ltd. Jun. 13,1991 Level 12 28 HennessyRoad,Wanchai HongKong USD10 Import and export service
Pacific China Corp. Dec. 27, 1996 Vistra Corporate Services Centre, Wickhams Cay II, Road
Town,Tortola,VG1110,British Virgin Islands		 USD89,910 General Investment
MiTAC Computer
(Shunde) Ltd.		 Jan. 18, 1993 No .1, Shunda Road, Lunjiao Street, ShunDe District, Foshan
City, Guangdong Province, China		 CNY416,705 Production of mainframe, motherboard, interface
cards, displays, power supply, keyboards and
related metal/plastic parts, and motherboard repair
services.
Start Well Technology Ltd. Apr. 20, 2000 Vistra Corporate Services Centre, Wickhams Cay II, Road
Town,Tortola,VG1110,British Virgin Islands		 USD29,900 General Investment
MiTAC Computer
(KunShan) Co., Ltd		 Nov. 01, 2000 No.269, No.2 Avenue2nd Road, Export Processing Zone,
Changjiang South Road, Kunshan, Jiangsu, P.R.C		 CNY510,505 Production of products relating to communication,
computers, peripherals, software and hardware;
sale ofproprietary products.
Software Insights Ltd. Jul. 18, 2000 Vistra Corporate Services Centre, Wickhams Cay II, Road
Town,Tortola,VG1110,British Virgin Islands		 USD5,200 General Investment
MiTAC Star Service Ltd. Jan. 12, 2001 Vistra Corporate Services Centre, Wickhams Cay II, Road
Town,Tortola,VG1110,British Virgin Islands		 USD44,601 General Investment
MiTAC Technology
(KunShan) Co., Ltd.		 Jan. 28,2002 No.269, No.2 Avenue2nd Road, Export Processing Zone,
Changjiang South Road, Kunshan, Jiangsu, P.R.C		 CNY8,277 Testing, maintenance, and technical consultation
and after-sale service of computer parts and related
products.
Mio International Ltd. Feb. 06, 2004 Vistra Corporate Services Centre, Wickhams Cay II, Road
Town,Tortola,VG1110,British Virgin Islands		 USD1,275 Sales of communication related products
MiTAC Research
(Shanghai)Ltd.		 Nov. 23, 2004 No. 213, Jiangchang San Rd., Zabei Dist., Shanghai CNY43,040 Research, development and technical consultation
services
Huge Extent Ltd. Jun. 22, 2006 Vistra Corporate Services Centre, Wickhams Cay II, Road
Town,Tortola,VG1110,British Virgin Islands		 USD8,000 General Investment

97

Enterprise name Address Paid-in capital
Date of incorporation Principal business or running items
(Note 1)
MiTAC Australia Pty Ltd. Mar. 06, 2007 Unit 5,43-51 College Street, Gladesville NSW 2111 Australia AUD6,022 Sales of communication products and related post-
deliveryservice
MiTAC Europe Ltd. May 10, 2001 Unit 27, Hortonwood 33, Telford, Shropshire, England, TF1
7EX		 EUR18,830 Sales of communication products and related post-
deliveryservice
Tyan Computer
Corp.(USA)		 Jul. 17, 1989 39660 Eureka Drive, Newark, CA 94560, USA USD3,950 Sales of computer peripherals, software and
hardware and relatedproducts
Mio Technology
(Shuzhou)Ltd.		 Dec. 04, 2003 No. 33, Jiefang Road, Kunshan Development Zone CNY1,878 Sales of communication products and related post-
deliveryservice
MiTAC Logistic Service
(KunShan)Ltd.		 Mar. 17, 2008 No. 269, No. 2 Avenue, Export Processing Zone, Changjiang
South Road,Kunshan,Jiangsu,P.R.C		 CNY6,821 Shipping agent, import/export, and warehouse
service.
MiTAC Digital Corp. Nov. 21, 2008 21660 E. Copley Drive, Suite 170 Diamond Bar, CA 91765 USD45,000 Sales of communication products and related post-
deliveryservice
Mitac Information
Technology Ltd.		 Nov. 19, 2009 No. 300, Di Yi Da Dao, Kunshan Development Zone, Jiangsu
Province.		 CNY2,048 After-sale maintenance, testing, consultation and
technical services relating to computers,
communication devices, and consumer electronics;
operation of a customer service center; professional
data processing, analysis and integrated services,
and ERP services
MiTAC Information
Systems Corp.		 Jul. 08, 2010 39889 Eureka Drive Newark, CA 94560 USD25,000 Assembly, sales of computer peripherals, software
and hardware and relatedproducts
MiTAC Innovation
(KunShan)Ltd.		 Jan. 21, 2011 No. 300, Di Yi Da Dao, Kunshan Development Zone, Jiangsu
Province.		 CNY6,571 Research, development and technical consultation
services
MiTAC Telematics
TechnologyCorporation		 Jul. 24, 2014 Suite 501, No. 211, Jiangchang San Road, Jin-an District,
Shanghai		 CNY2,000 Sale of proprietary products and provision of after-
sale services
MiTAC Technology UK
Ltd.		 Aug. 01, 2014 Unit 27, Hortonwood 33, Telford, Shropshire, England, TF1
7EX		 USD55,146 General Investment
MiTAC Information
Systems (KunShan) Co.,
Ltd.		 Sep. 17, 2015 No. 33, Jiefang Road, Kunshan Development Zone 3 CNY240,000 Production of products relating to communication,
computers, peripherals, software and hardware;
sale ofproprietary products.
MiTAC Investment
HoldingLtd.		 Nov. 06, 2015 Suite 208-211, 2F, Zone B, No. 300, Di Yi Da Dao, Kunshan
Development Zone,Jiangsu Province.		 CNY469,292 General Investment
MiTAC Digital
Technology Corporation		 Sep. 01,2017 4F, No.1, Yan-Fa 2nd Rd., Hsinchu Science Based Industrial
Park, Baoshan Township, Hsinchu County		 NTD1,061,000 Sales of electronic telecommunications,
communications and software products and post-
deliveryservice.
Access Wisdom Holdings
Ltd.		 Oct. 23,2017 Vistra Corporate Services Centre, Wickhams Cay II, Road
Town,Tortola,VG1110,British Virgin Islands		 USD48,500 General Investment

Note 1: Please refer to Note 3 of the operation summary of each affiliate for the exchange rate on the date of the financial statement. (Page 103)

98

3. Information on the same shareholder deemed as controlling or in a parent-subsidiary relationship: None.

  1. The industries in which the affiliates operate and the linkage between the affiliates
Industry Name of affiliates Connection with other affiliates in business operation
Manufacturing and
sales of PC and
communication
products		 MiTAC International Corp. Manufacturing and sale of products, and provision of after-sale
services
MiTAC Computer
(KunShan)Co., Ltd.		 Manufacturing and sale of products
MiTAC Computer (Shunde)
Ltd.		 Manufacturing and sale of products
MiTAC Computing
TechnologyCorporation		 Manufacturing and sale of products, and provision of after-sale
services
MiTAC Information Systems
(KunShan)Co., Ltd.		 Manufacturing and sale of products
MiTAC Digital Technology
Corporation		 Products sales and post-delivery service
Investment and
Holding
Companies		 Silver Star Developments
Ltd.		 Investment in overseas subsidiaries for the manufacturing and
sales ofproducts andprovision of after-sale services
Pacific China Corp. Investment in overseas subsidiaries for the manufacturing and
sales ofproducts andprovision of after-sale services
Software Insights Ltd. Investment in overseas subsidiaries for product research and
development, andprovision of technical consultation services
Start Well Technology Ltd. Investment in overseas subsidiaries for the manufacturing and
sales ofproducts andprovision of after-sale services
MiTAC Star Service Ltd. Investment in overseas subsidiaries for the manufacturing and
sales ofproducts
Huge Extent Ltd. General Investment
Tsu Fung Investment
Corporation		 General Investment
MiTAC Technology UK Ltd. Investment in overseas subsidiaries for the sales of products and
provision of after-sale services
MiTAC Investment Holding
Ltd.		 General Investment
Access Wisdom Holdings
Ltd.		 General Investment
Technical Service MiTAC Research (Shanghai)
Ltd.		 Research, development and technical consultation services
MiTAC Technology
(KunShan)Co., Ltd.		 After-sale product maintenance and repair, and provision of
technical consultation services
Mitac Information
TechnologyLtd.		 After-sale product maintenance and repair, and provision of
technical consultation services
MiTAC Innovation
(KunShan)Ltd.		 Research, development and technical consultation services
Trading MiTAC Japan Corp. Sale ofproducts andprovision of after-sale services
MiTAC Benelux N.V. Sale ofproducts andprovision of after-sale services
Mio International Ltd. Sale ofproducts
Mio Technology (Shuzhou)
Ltd.		 Sale of products and provision of after-sale services
MiTAC Australia PtyLtd. Sale ofproducts andprovision of after-sale services
MiTAC Europe Ltd. Sale ofproducts andprovision of after-sale services
Tyan Computer Corp.(USA) Sale ofproducts andprovision of after-sale services
MiTAC Digital Corp. Sale ofproducts andprovision of after-sale services

99

Industry Name of affiliates Connection with other affiliates in business operation
MiTAC Telematics
TechnologyCorporation		 Sale of proprietary products and provision of after-sale services
Trading and
assembly		 MiTAC Information Systems
Corp.		 Assembly and sale of products, and provision of after-sale
services
Shipping agent
and import/export
trade		 MiTAC Logistic Service
(KunShan)Ltd.		 Shipping agent, import/export, and warehouse service.
MiTAC Pacific(H.K.)Ltd. Import and export service

5. Information of directors, supervisors, and presidents of affiliates

Enterprise name Title Name or representative Shareholding Shareholding
Shares held Shareholding
percentage
MiTAC International Corp. Chairman
Director/President
Director
Director		 MiTAC Holdings Corporation /Rep: Miau, Matthew
Feng Chiang
MiTAC Holdings Corporation/Rep: Ho, Jhi-Wu
MiTAC Holdings Corporation/Rep: Michael Lin
MiTAC Holdings Corporation/Rep: Steve Chang		 2,222,013,187
2,222,013,187
2,222,013,187
2,222,013,187
100%
100%
100%
100%
MiTAC Computing
Technology Corporation		 Chairman
Director
Director/President
Supervisor		 MiTAC Holdings Corporation/Rep: Ho, Jhi-Wu
MiTAC Holdings Corporation /Rep: Miau, Matthew
Feng Chiang
MiTAC Holdings Corporation/Rep: Michael Lin
MiTAC Holdings Corporation/Rep: Crystal Yang		 232,757,102
232,757,102
232,757,102
232,757,102
100%
100%
100%

100%
MiTAC Digital Technology
Corporation		 Chairman
Director
Director/President
Supervisor		 MiTAC Holdings Corporation/Rep: Ho, Jhi-Wu
MiTAC Holdings Corporation /Rep: Miau, Matthew
Feng Chiang
MiTAC Holdings Corporation/Rep: Steve Chang
Tsu FungInvestment Corporation/Rep: Crystal Yang		 103,099,000
103,099,000
103,099,000
1,000		 97.17%
97.17%
97.17%
0%
Tsu Fung Investment
Corporation		 Chairman
Director
Director
Supervisor		 MiTAC International Corp./Rep: Ho, Jhi-Wu
MiTAC International Corp./Rep: Crystal Yang
MiTAC International Corp./Rep: Chung, Shu-Ling
MiTAC International Corp./Rep: Huang, Hsiu-Ling		 142,884,651
142,884,651
142,884,651
142,884,651
100%
100%
100%
100%
Silver Star Developments Ltd. Director
Director		 Ho Jhi-Wu
YangHsiang-Yun		 0
0
0%

0%
MiTAC Japan Corp. Director
Director
Director/ President
Supervisor		 Ho Jhi-Wu
Yang Hsiang-Yun
Toshihiko Hara
Hsiu-LingHuang		 0
0
0
0
0%

0%
0%
0%
MiTAC Benelux N.V. Director
Director
Director
General magager		 Ho Jhi-Wu
Chang Le-Chun
Yang Hsiang-Yun
Ferdi.Lor		 0
0
0
0
0%
0%

0%
0%
MiTAC Pacific (H.K.) Ltd. Director
Director		 Ho Jhi-Wu
YangHsiang-Yun		 0
0
0%

0%
Pacific China Corp. Director
Director		 Ho Jhi-Wu
Yang Hsiang-Yun		 0
0
0%

0%
MiTAC Star Service Ltd. Director
Director		 Ho Jhi-Wu
Yang Hsiang-Yun		 0
0
0%

0%
Software Insights Ltd. Director
Director		 Ho Jhi-Wu
YangHsiang-Yun		 0
0
0%

0%
MiTAC Computer (KunShan)
Co., Ltd.		 Chairman
Vice chairman
Director
Director/President
Supervisor		 Mitac Holdings Corporation/Rep: Steve Chang
Mitac Holdings Corporation/Rep: J.J. Huang
Mitac Holdings Corporation/Rep: Lin, Wen-Feng
Mitac Holdings Corporation/Rep: Wu, Shun-Huang
Huang, Hsiu-Ling		 N/A
N/A
N/A
N/A
N/A		 100%
100%
100%
100%
0%
MiTAC Computer (Shunde)
Ltd.		 Chairman
Vice chairman
Director/President		 MiTAC Star Service Ltd./Rep: Michael Lin
MiTAC Star Service Ltd./Rep: J.J. Huang
MiTAC Star Service Ltd./Rep: Chen, Chien-Hung		 N/A
N/A
N/A		 100%
100%
100%

100

Enterprise name Title Name or representative Shareholding Shareholding
Shares held Shareholding
percentage
Supervisor Huang, Hsiu-Ling N/A 0%
MiTAC Research (ShangHai)
Ltd.		 Chairman
Director
Director
President
Supervisor		 Software Insights Ltd./Rep: Ho, Jhi-Wu
Software Insights Ltd./Rep: Michael Lin
Software Insights Ltd./Rep: Steve Chang
Chang, Wen-Chien
Cheng, Hsiao-Wen		 N/A
N/A
N/A
N/A
N/A		 100%
100%
100%
0%
0%
Start Well Technology Ltd. Director
Director		 Ho Jhi-Wu
YangHsiang-Yun		 0
0
0%

0%
MiTAC Technology
(KunShan) Co., Ltd.		 Chairman
Director/President
Director
Supervisor		 Mitac Holdings Corporation/Rep: J.J. Huang
Mitac Holdings Corporation/Rep: Chen, Chi-Ming
Mitac Holdings Corporation/Rep: Chang, Wen-Chien
Huang, Hsiu-Ling		 N/A
N/A
N/A
N/A		 100%
100%
100%
0%
Mio International Ltd. Director
Director		 Ho Jhi-Wu
YangHsiang-Yun		 0
0
0%

0%
Huge Extent Ltd. Director
Director		 Ho Jhi-Wu
YangHsiang-Yun		 0
0
0%

0%
MiTAC Australia Pty Ltd. Director
Director
Director		 Ho Jhi-Wu
Yang Hsiang-Yun
WendyHammond		 0
0
0
0%

0%

0%
MiTAC Europe Ltd. Director
Director
Director		 Ho Jhi-Wu
Chang Le-Chun
YangHsiang-Yun		 0
0
0
0%
0%

0%
Mio Technology (Shuzhou)
Ltd.		 Chairman
Director/President
Director
Supervisor		 Mio International Ltd./Rep: Steve Chang
Mio International Ltd./Rep: Chao Chin
Mio International Ltd./Rep: Chang, Wen-Chien
Huang, Hsiu-Ling		 N/A
N/A
N/A
N/A		 100%
100%

100%
0%
Tyan Computer Corp.( USA) Director
Director
Director		 Ho Jhi-Wu
Danny Hsu
Lin Chung-Liang		 0
0
0
0%

0%
0%
MiTAC Logistic Service
(KunShan) Ltd.		 Chairman
Director/President
Director
Supervisor		 Mitac Holdings Corporation/Rep: Steve Chang
Mitac Holdings Corporation/Rep: Wu, Shun-Huang
Mitac Holdings Corporation/Rep: Lin, Wen-Feng
Huang, Hsiu-Ling		 N/A
N/A
N/A
N/A		 100%
100%
100%
0%
MiTAC Digital Corp. Director
Director
Director		 Ho Jhi-Wu
Chang Le-Chun
Yang Hsiang-Yun		 0
0
0
0%

0%

0%
Mitac Information
Technology Ltd.		 Chairman
Director/President
Director
Supervisor		 Mitac Holdings Corporation/Rep: Steve Chang
Mitac Holdings Corporation/Rep: Chang, Wen-Chien
MiTAC Investment Holding Ltd./Rep: Ho, Jhi-Wu
Huang, Hsiu-Ling		 N/A
N/A
N/A
N/A
100%
100%

100%
0%
MiTAC Information Systems
Corp.		 Director
Director
Director
Director/President		 Ho Jhi-Wu
Yang Hsiang-Yun
Lin Chung-Liang
Charlotte C.Y. Chou		 0
0
0
0
0%

0%

0%

0%
MiTAC Innovation
(KunShan) Ltd.		 Chairman
Director/President
Director
Supervisor		 Software Insights Ltd./Rep: Steve Chang
Software Insights Ltd./Rep: Chang, Wen-Chien
Software Insights Ltd./Rep: Michael Lin
Cheng, Hsiao-Wen		 N/A
N/A
N/A
N/A
100%
100%

100%
0%
MiTAC Telematics
Technology Corporation		 Chairman/Presiden
t
Director
Director
Supervisor		 MiTAC Cloud Technology Co., Ltd./Rep: Michale
Lin
MiTAC Digital Technology Corporation/Rep: J.J.
Huang
MiTAC Cloud Technology Co., Ltd./Rep: Ho, Jhi-Wu
Huang, Hsiu-Ling		 N/A
N/A
N/A
N/A		 100%
100%
100%
0%
MiTAC Technology UK Ltd. Director
Director		 MiTAC Cloud Technology Co., Ltd./Rep: Ho, Jhi-Wu
MiTAC Cloud Technology Co., Ltd./Rep: Michale		 55,146,138
55,146,138		 100%
100%

101

Enterprise name Title Name or representative Shareholding Shareholding
Shares held Shareholding
percentage
Director Lin
MiTAC Cloud Technology Co., Ltd./Rep: Crystal
Yang		 55,146,138 100%
MiTAC Information Systems
(KunShan) Co., Ltd.		 Chairman
Vice chairman
Director
Director/President
Supervisor		 Kunda Computer Technology (kunshan) Co.,
Ltd./Rep: Steve Chang
Kunda Computer Technology (kunshan) Co., Ltd/Rep:
J.J. Huang
Kunda Computer Technology (kunshan) Co.,
Ltd./Rep: Micheal Lin.
Kunda Computer Technology (kunshan) Co.,
Ltd./Rep: Wu, Shun-Huang
Huang, Hsiu-Ling		 N/A
N/A
N/A
N/A
N/A		 100%
100%
100%
100%
0%
MiTAC Investment Holding
Ltd.		 Chairman/Presiden
t
Director
Director
Director
Supervisor		 Start Well Technology Ltd./Rep: Ho, Jhi-Wu
Start Well Technology Ltd./Rep: Steve Chang
Start Well Technology Ltd./Rep: J. J. Huang
Start Well Technology Ltd./Rep: Wu, Shun-Huang
Huang, Hsiu-Ling		 N/A
N/A
N/A
N/A
N/A
100%
100%

100%

100%
0%
Access Wisdom Holdings Ltd. Director Ho Jhi-Wu 0
0%
Director Yang Hsiang-Yun 0
0%
Director Chang Le-Chun 0
0%

102

6. Operation summary of affiliates

Unit: In thousands of New Taiwan Dollars

Enterprise name Total
assets		 Operating Earnings in
current period
(after tax)		 EPS
Total Net
Capital Revenue income (NT$) (after-
liabilities worth
(loss) tax)
MiTAC International Corp. 22,220,132 40,563,022 1,462,397 39,100,625 240,075 (288,093) 2,813,362 1.27
Tsu Fung Investment
Corporation		 1,428,847 3,036,135 328 3,035,807 89,219 86,498 86,534 0.61
Silver Star Developments Ltd.-
Consolidated		 5,021,004 24,408,251 2,321,523 22,086,728 14,530,108 104,470 1,824,157 10.35
MiTAC Japan Corp. 13,815 140,874 94,654 46,220 226,653 7,141 4,310 4,310.00
MiTAC Benelux N.V. 56,669 121,439 78,106 43,333 7 7 (2,896) (44.38)
MiTAC Pacific(H.K.)Ltd. 285 11,174 7,796 3,378 0 (597) 2 0.20
Pacific China Corp. 2,560,626 2,655,620 0 2,655,620 0 0 0 0.00
MiTAC Computer (Shunde)
Ltd.		 1,823,920 3,609,621 745,331 2,864,290 9,562,627 99,867 126,546 NA
Start Well TechnologyLtd. 851,552 2,734,034 871,507 1,862,527 0 0 0 0.00
MiTAC Computer (KunShan)
Co.,Ltd		 2,234,480 4,126,479 1,283,249 2,843,230 4,388,900 (10,462) 33,090 NA
Software Insights Ltd. 148,099 153,405 28,480 124,925 0 0 0 0.00
MiTAC Star Service Ltd. 1,270,229 1,286,505 0 1,286,505 0 0 1 0.00
MiTAC Technology
(KunShan)Co.,Ltd.		 36,228 171,350 143,813 27,537 268,683 1,166 (3,312) NA
Mio International Ltd. 36,312 51,582 0 51,582 0 (2) 612 0.48
MiTAC Research Shanghai 188,386 538,379 63,512 474,867 182,393 4,842 11,898 NA
Huge Extent Ltd. 227,840 227,840 0 227,840 0 0 0 0.00
MiTAC Australia PtyLtd. 132,191 222,444 198,920 23,524 233,077 (17,796) (31,377) (5.21)
MiTAC Europe Ltd. 659,427 166,186 45,692 120,494 113,532 9,026 6,024 0.35
Tyan Computer Corporation-
USA		 112,505 751,682 198,996 552,686 562,216 (47,932) (29,101) (29,101.00)
Mio Technology (Shuzhou)
Ltd.		 8,219 71,559 37,849 33,710 164,792 1,009 1,694 NA
MiTAC Logistic Service
(KunShan)Ltd.		 29,854 223,971 184,507 39,464 850,900 1,473 1,405 NA
MiTAC Digital Corporation 1,281,600 180,085 93,920 86,165 133,415 25,315 19,624 0.44
Mitac Information Technology
Ltd.		 8,966 73,390 25,284 48,106 90,968 2,309 3,637 NA
MiTAC Information Systems
Corp.		 712,000 6,902,428 5,864,914 1,037,514 18,475,483 28,610 (5,513) (1,837.67)
MiTAC Innovation (KunShan)
Ltd.		 28,760 96,057 20,317 75,740 60,673 2,623 3,858 NA
MiTAC Computing
TechnologyCorporation		 2,327,571 15,757,820 12,021,980 3,735,840 26,679,313 275,965 121,447 0.52
MiTAC Telematics Technology
Corporation		 8,754 29,870 13,059 16,811 738,432 3,217 7,767 NA
MiTAC TechnologyUK Ltd. 1,570,562 1,596,741 63,185 1,533,556 0 (3) (34,273) (0.62)
MiTAC Information Systems
(KunShan)Co.,Ltd.		 1,050,480 1,385,888 341,986 1,043,902 0 (5,554) (2,053) NA
MiTAC Investment Holding
Ltd.		 2,054,091 3,384,750 278,891 3,105,859 11,744 (428) 50,733 NA
MiTAC Digital Technology
Corporation		 1,061,000 4,335,572 2,644,919 1,690,653 4,401,263 27,524 34,190 0.32
Access Wisdom Holdings Ltd. 1,381,280 133,177 31,379 101,798 0 (7) (5,728) (0.12)
Note 1: Related figures of the subsidiaries incorporated in foreign countries shall be denominated in NTD at the exchange rate between NTD and Note 1: Related figures of the subsidiaries incorporated in foreign countries shall be denominated in NTD at the exchange rate between NTD and Note 1: Related figures of the subsidiaries incorporated in foreign countries shall be denominated in NTD at the exchange rate between NTD and
respective foreign currencies as of the day of reporting.
Note 2: The information on Silver Star Developments Ltd.-Consolidated is the consolidated information of this company and its subsidiaries.
Note 3: Based on the exchange
rate of 2020		 Year-end Average
USD: 28.480 29.551
EUR: 35.020 33.713
JPY: 0.276 0.277
RMB: 4.377 4.282
AUD: 21.950 20.398

103

(II) Consolidated financial statements of affiliates

MiTAC Holdings Corporation

Declaration of Consolidated Financial Statements of Affiliates

In connection with the Consolidated Financial Statements of Affiliated Enterprises of Mitac Holding Corporation (the “Consolidated FS of the Affiliates”), we represent to you that, the entities required to be included in the Consolidated FS of the Affiliates as of and for the year ended December 31, 2020 (January 1, 2020~December 31, 2020) in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are the same as those required to be included in the Consolidated Financial Statements of Mitac Holding Corporation and its subsidiaries (the

“Consolidated FS of the Group”) in accordance with International Financial Reporting Standard 10, as well as that, the information required to be disclosed in the Consolidated FS of Affiliates is disclosed in the Consolidated FS of the Group. Consequently, no Consolidated FS of Affiliates are prepared separately.

Very truly yours

Company name: MiTAC Holdings Corporation

Rep: Miau, Matthew Feng Chiang March 8, 2021

(III) Affiliation report: None.

104

  • II. The status of private place of securities in the most recent year to the date this report was printed : None.

  • III. Holding or disposal of shares in the Company by the Company's subsidiaries during the most recent fiscal year or during the recent fiscal year up to the date of printing of the annual report:

Unit: NTD thousand; share/%

Number
of shares
and Endorsement
Number Number amount and Loan
Shareholding
Acquisition
of shares		 of shares Investment
holding		 Creation guarantee amount to
Name of Paid-in Fund
ratio of the or disposal acquired disposed income as of the of amount by subsidiaries
subsidiaries capital source
Company Date and and (loss) date of pledge the from the
amount amount printing Company for
Company
of the subsidiaries
annual
report
Silver Star
Developments
Ltd.		 US$176,299
thousand
Own funds
and
borrowings
100%		 2020 and
2021 to the
date this
report was
printed.		 227,995
shares
-		 - - 2,127,954
shares
$77,002


None		 - -
Tsu Fung
Investment
Corporation		 $1,428,847 Own funds
and
borrowings
100%		 2020 and
2021 to the
date this
report was
printed.		 1,066,135
shares
-
5,816,000
shares
$200,507
-		 9,250,594
shares
$162,874


None		 - -

Note: The shares acquired refer to the stock dividends.

IV. Other matters that require additional description : None.

  • V. Events that caused significant influence on shareholders’ equity or stock price pursuant to Subparagraph II, Paragraph I, Article 36 of the Securities and Exchanges Act in the most recent year to the date this report was printed : None.

105

MiTAC Holdings Corporation Audit Committee’s Review Report

2020 financial statements (January 1, 2020 to December 31, 2020) of MiTAC Holdings Corp. are prepared by the Board of Directors and audited by Lin Yu-Kuan and Cheng Ya-Huei, PricewaterhouseCoopers (PwC), Taiwan. These financial statements, along with 2020 business reports and earnings distribution plan, have been reviewed by us as Audit Committee of the Company and these reports and statements are indeed compliance with the related laws and regulations. Pursuant to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this review report for your consideration.

Submit To:

2021 Annual General Meeting, MiTAC Holdings Corporation

MiTAC Holdings Corporation

Chairman of the Audit Committee: LU, SHYUECHING

March 8, 2021

106

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT

DECEMBER 31, 2020 AND 2019

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

107

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES Declaration of Consolidated Financial Statements of Affiliated Enterprises

In connection with the Consolidated Financial Statements of Affiliated Enterprises of Mitac Holding Corporation (the “Consolidated FS of the Affiliates”), we represent to you that, the entities required to be included in the Consolidated FS of the Affiliates as of and for the year ended December 31, 2020 in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are the same as those required to be included in the Consolidated Financial Statements of Mitac Holding Corporation and its subsidiaries (the “Consolidated FS of the Group”) in accordance with International Financial Reporting Standard 10, as well as that, the information required to be disclosed in the Consolidated FS of Affiliates is disclosed in the Consolidated FS of the Group. Consequently, Mitac Holding Corporation does not prepare a separate set of Consolidated FS of Affiliates.

Very truly yours,

Matthew Feng-Chiang Miau Chairman of Mitac Holding Corporation March 8, 2021

108

INDEPENDENT AUDITORS’ REPORT

PWCR20000462

To the Board of Directors and Shareholders of MiTAC Holdings Corporation

Opinion

We have audited the accompanying consolidated balance sheets of MiTAC Holdings Corporation and its subsidiaries (the “MiTAC Group”) as at December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the audit reports of other independent auditors, as described in the Other matter section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the MiTAC Group as at December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China; and in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, “Rule No. Financial-Supervisory-Securities-Auditing1090360805 issued by the Financial Supervisory Commission on February 25, 2020” and generally accepted auditing standards in the Republic of China for our audit of the consolidated financial statements as of and for the year ended December 31, 2019. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the MiTAC Group in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled

109

our other ethical responsibilities in accordance with these requirements. Based on our audits and the audit reports of the other independent auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

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

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

Sales revenue recognition

Description

For accounting policies on sales revenue recognition, please refer to Note 4(32). Considering that the sales revenue are material to its financial statements, the types of MiTAC Group products and sales terms are various, the timing of revenue recognition can only be determined when the controls of ownership for products are transferred to the customers based on contract terms of each different customer. Thus, we identified the sales revenue recognition as a key audit matter.

How our audit addressed the matter

We conducted audit procedures, including: discussed with management and evaluated the policy of revenue recognition; assessed the effectiveness of design and implementation of internal controls over recognition of revenue; test sampled the sales transactions including their terms, performance obligations, and prices and verified the supporting documents for deliveries to ensure the proper timing and amounts of recognition; selected sales transactions for a specific period prior to and after the balance sheet date and verified transaction documents to ensure sales revenue are recorded in the proper period.

Valuation of inventory

Description

Subsidiaries accounted for using equity method were mainly engaged in manufacturing and selling computers and their peripherals and communications products. Since the industry involved rapidly changing technology and were affected by market demand, there was higher risk of incurring inventory

110

valuation losses or having obsolete inventory. Inventories of investees were measured at the lower of cost and net realisable value. Considering that these inventories were significant, items were voluminous and the valuation is associated with subjective judgement, we identified valuation of inventory of the subsidiaries as a key audit matter.

How our audit addressed the matter

We performed audit procedures, including: discussed with management and evaluated the policy of inventory valuation, validated inventory aging report through checking the logic of calculating aged inventories and confirming the appropriateness of categorization of aged inventories; and validated the basis in determining net realizable values of obsolete or slow-moving inventories in order to evaluate the reasonableness of allowance for inventory valuation losses.

Other matter- reference to audits of other auditors

We did not audit a certain indirectly held investment accounted for using equity method that was included in the consolidated financial statements, whose financial statements were prepared under a different financial reporting framework. We have performed necessary audit procedures on the conversion of those financial statements into financial information in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission. Those financial statements prior to conversion were audited by other independent auditors whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit report of the other independent auditors. Share of profit of associates and joint ventures accounted for using equity method amounted to NT$1,604,767 thousand and NT$1,585,642 thousand for the years ended December 31, 2020 and 2019, respectively. Investments accounted for using equity method amounted to NT$12,693,073 thousand and NT$11,569,372 thousand as at December 31, 2020 and 2019, respectively.

111

Other matter - Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of MiTAC Holdings Corporation as at and for the years ended December 31, 2020 and 2019.

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

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

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

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

Auditors’ responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but not a guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the generally accepted auditing standards in the Republic of China, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

112

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

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

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

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

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

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

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

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

113

ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

Lin, Yu-Kuan Cheng, Ya-Huei

For and on behalf of PricewaterhouseCoopers, Taiwan March 8, 2021

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

114

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(3)
6(4)
6(5) and 12(2)
6(5), 7 and 12(2)
7
6(6)
6(10)(14)
6(7) and 8
6(3)
6(8)
6(9)
6(10) and 7
6(12)
6(13)
6(32)
6(7) and 8		 December31,2020
AMOUNT
%
$ 5,805,297
10
6,107
-
1,232,843
2
-
-
31,689
-
4,982,050
9
215,960
-
60,168
-
2,136
-
9,123,004
16
406,538
1
90,133
-
25,584
-
21,981,509
38
6,065,749
11
19,071,689
33
7,753,087
14
359,874
1
1,229,431
2
75,904
-
504,324
1
130,168
-
35,190,226
62
$ 57,171,735
100		 December31,2019 December31,2019
AMOUNT
$ 5,805,297
6,107
1,232,843
-
31,689
4,982,050
215,960
60,168
2,136
9,123,004
406,538
90,133
25,584
21,981,509
6,065,749
19,071,689
7,753,087
359,874
1,229,431
75,904
504,324
130,168
35,190,226
$ 57,171,735		 AMOUNT
$ 6,664,566
99,948
892,050
490,770
92,751
6,183,075
289,650
131,562
26,588
7,761,668
484,459
33,531
38,709
23,189,327
4,675,838
17,455,704
7,810,995
381,487
1,242,821
89,448
481,086
83,676
32,221,055
$ 55,410,382		 %
Current assets
1100
Cash and cash equivalents
1110
Financial assets at fair value through
profit or loss - current
1120
Financial assets at fair value through
other comprehensive income - current
1136
Financial assets at amortised cost -
current
1150
Notes receivable - net
1170
Accounts receivable - net
1180
Accounts receivable - related parties -
net
1200
Other receivables
1220
Current income tax assets
130X
Inventories
1410
Prepayments
1460
Non-current assets held for sale - net
1470
Other current assets
11XX
Total current assets
Non-current assets
1517
Financial assets at fair value through
other comprehensive income - non-
current
1550
Investments accounted for using
equity method
1600
Property, plant and equipment - net
1755
Right-of-use assets
1760
Investment property - net
1780
Intangible assets
1840
Deferred income tax assets
1900
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 12
-
2
1
-
11
1
-
-
14
1
-
-
42
8
32
14
1
2
-
1
-
58
100

(Continued)

115

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December31,2020
December31,2019
Notes
AMOUNT
%
AMOUNT
%
6(15)
$ 1,443,851
3
$ 3,803,871
7
6(16)
11,691
-
8,637
-
6(25)
127,866
-
274,968
1
6,662,560
12
5,783,558
11
7
20,222
-
62,992
-
7
3,366,781
6
3,362,875
6
440,247
1
397,042
1
6(20)
132,169
-
142,592
-
7
36,760
-
41,204
-
6(17)
279,550
-
225,092
-
12,521,697
22
14,102,831
26
6(17)
863,366
2
791,561
1
6(20)
123,905
-
109,714
-
6(32)
378,872
1
382,573
1
7
194,448
-
148,024
-
6(8)(18)
327,952
1
320,933
1
1,888,543
4
1,752,805
3
14,410,240
26
15,855,636
29
6(21)
12,065,568
21
10,772,829
19
6(22)
23,582,411
41
23,400,002
43
6(23)
1,451,388
3
1,167,412
2
-
-
12,265
-
4,110,220
7
3,818,704
7
6(24)
1,743,283
3
671,699
1
6(21)
(
239,876)(
1)(
353,087)(
1)
42,712,994
74
39,489,824
71
48,501
-
64,922
-
42,761,495
74
39,554,746
71
9(1)(2)
11
$ 57,171,735
100
$ 55,410,382
100
Current liabilities
2100
Short-term borrowings
2120
Financial liabilities at fair value
through profit or loss - current
2130
Contract liabilities - current
2170
Accounts payable
2180
Accounts payable - related parties
2200
Other payables
2230
Current income tax liabilities
2250
Provisions - current
2280
Lease liabilities - current
2300
Other current liabilities
21XX
Total current Liabilities
Non-current liabilities
2540
Long-term borrowings
2550
Provisions - non-current
2570
Deferred income tax liabilities
2580
Lease liabilities - non-current
2600
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Share capital
3110
Common shares
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
Other equity interest
3400
Other equity interest
3500
Treasury stocks
31XX
Equity attributable to owners of
the parent
36XX
Non-controlling interests
3XXX
Total equity
Significant Contingent Liabilities
And Unrecognised Contract
Commitments
Significant Events After the Balance
Sheet Date
3X2X
Total liabilities and equity

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

116

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items Year ended December 31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(25) and 7
$ 41,145,756
100
$ 35,831,960
100
6(6) and 7
(
36,520,695 ) (
89) (
30,642,236) (
85)

4,625,061
11

5,189,724
15
6(30)(31) and 7






(
985,724 ) (
2) (
1,119,178) (
3)

(
1,128,362 ) (
3) (
1,197,462) (
3)

(
2,436,592 ) (
6) (
2,372,124) (
7)
(
4,550,678 ) (
11) (
4,688,764) (
13)

74,383
-

500,960
2






6(26)

44,482
-

89,404
-
6(27) and 7

481,886
1

406,824
1
6(28)

10,416
- (
98,262)
-
6(29) and 7
(
46,479 )
- (
55,905)
-
6(8)

2,415,388
6

2,239,887
6

2,905,693
7

2,581,948
7

2,980,076
7

3,082,908
9
6(32)
(
129,291 )
- (
309,119) (
1)
$ 2,850,785
7
$ 2,773,789
8
4000
Operating revenue
5000
Operating costs
5900
Gross profit
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit of associates and
joint ventures accounted for using
equity method
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year

(Continued)

117

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items YearendedDecember31
2020
2019
Notes
AMOUNT
%
AMOUNT
%












6(18)
$ 1,151
- ($ 24,960)
-
6(3)(24)

1,644,487
4

1,263,333
3
6(8)(24)

162,399
-

19,993
-
6(32)
(
230 )
-

4,992
-

1,807,807
4

1,263,358
3






6(24)
(
763,323 ) (
1) (
637,983) (
2)
6(8)(24)

40,785
- (
381,175)(
1)
(
722,538 )(
1)(
1,019,158)(
3)
$ 1,085,269
3
$ 244,200
-
$ 3,936,054
10
$ 3,017,989
8






$ 2,918,705
7
$ 2,817,880
8
($ 67,920 )
- ($ 44,091)
-






$ 4,004,833
10
$ 3,063,366
8
($ 68,779 )
- ($ 45,377)
-




6(33)
$ 2.45
$ 2.37
6(33)
$ 2.42
$ 2.35
Other comprehensive income (loss) -
net
Components of other comprehensive
income(loss) that will not be
reclassified to profit or loss
8311
Gains (losses) on remeasurements of
defined benefit plans
8316
Unrealised gains (losses) from
investments in equity instruments
measured at fair value through other
comprehensive income
8320
Share of other comprehensive
income of associates and joint
ventures accounted for using equity
method, components of other
comprehensive income that will not
be reclassified to profit or loss
8349
Income tax related to components of
other comprehensive income that
will not be reclassified to profit or
loss
8310
Components of other
comprehensive income that will
not be reclassified to profit or loss
Components of other comprehensive
income(loss) that will be reclassified
to profit or loss
8361
Exchange differences on translation
of foreign financial statements
8370
Share of other comprehensive
income of associates and joint
ventures accounted for using equity
method, components of other
comprehensive income that will be
reclassified to profit or loss
8360
Components of other
comprehensive loss that will be
reclassified to profit or loss
8300
Other comprehensive income for the
year
8500
Total comprehensive income for the
year
Profit (loss), attributable to:
8610
Profit, attributable to owners of
parent
8620
Loss, attributable to non-controlling
interests
Comprehensive income(loss)
attributable to:
8710
Comprehensive income, attributable
to owners of parent
8720
Comprehensive loss, attributable to
non-controlling interests
9750
Basic earnings per share
9850
Diluted earnings per share

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

118

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan dollars)

Year 2019
Balance at January 1, 2019
Effects on adoption of IFRS 16
Balance at January 1, 2019 after
adjustments
Profit (loss) for 2019
Other comprehensive income (loss) for
2019
Total comprehensive income (loss)
Distribution of 2018 earnings
Legal reserve
Special reserve
Cash dividends
Stock dividends
Subsidiaries received cash dividends paid
by the parent company
Change of associates accounted for using
equity method
Proceeds from disposal of investments
accounted for using equity method
Increase in non-controlling interests
Compensation cost of subsidiaries’
employee stock options
Proceeds from disposal of equity
instruments measured at fair value
through other comprehensive income
Balance at December 31, 2019		 Notes Equity at tributable to owners oft he parent he parent he parent Non-controlling
interests		 Total equity
Share capital-
common shares		 Capital surplus,
additional paid-in
capital		 Retained earnings Otherequityinterest Treasurystocks Total
Legal reserve Special reserve Unappropriated
retained earnings		 Financial statements
translation
differences of foreign
operations		 Unrealised gains
(losses) from
financial assets
measured at fair
value through other
comprehensive
income
6(24)


6(22)(24)
6(24)
6(34)
6(19)
6(3)(24)		 $ 9,367,677
-
9,367,677
-
-
-
-
-
-
1,405,152
-
-
-
-
-
-
$ 10,772,829		 $ 23,370,899
-
23,370,899
-
-
-
-
-
-
-
20,740
7,754
-
609
-
-
$ 23,400,002		 $ 837,787
-
837,787
-
-
-
329,625
-
-
-
-
-
-
-
-
-
$ 1,167,412		 $ -
-
-
-
-
-
-
12,265
-
-
-
-
-
-
-
-
$ 12,265		 $ 4,131,139
(
50 )
4,131,089
2,817,880
(
22,376 )
2,795,504
(
329,625 )
(
12,265 )
(
1,405,152 )
(
1,405,152 )
-
4,624
(
341 )
-
-
40,022
$ 3,818,704		 ($ 62,976 )
-
(
62,976 )
-
(
1,017,982 )
(
1,017,982 )
-
-
-
-
-
-
-
(
770 )
-
-
($ 1,081,728 )		 $ 511,888
-
511,888
-
1,285,844
1,285,844
-
-
-
-
-
(
4,624 )
341
-
-
(
40,022 )
$ 1,753,427		 ($ 353,087 )
-
(
353,087 )
-
-
-
-
-
-
-
-
-
-
-
-
-
($ 353,087 )		 $ 37,803,327
(
50 )
37,803,277
2,817,880
245,486
3,063,366
-
-
(
1,405,152 )
-
20,740
7,754
-
(
161 )
-
-
$ 39,489,824		 $ -
-
-
(
44,091 )
(
1,286 )
(
45,377 )
-
-
-
-
-
-
-
109,581
718
-
$ 64,922		 $ 37,803,327
(
50 )
37,803,277
2,773,789
244,200
3,017,989
-
-
(
1,405,152 )
-
20,740
7,754
-
109,420
718
-
$ 39,554,746

(Continued)

119

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020

(Expressed in thousands of New Taiwan dollars)

Year 2020
Balance at January 1, 2020
Profit (loss) for 2020
Other comprehensive income (loss) for
2020
Total comprehensive income (loss)
Distribution of 2019 earnings
Legal reserve
Reversal of special reserve
Cash dividends
Stock dividends
Subsidiaries received cash dividends paid
by the parent company
Change of associates accounted for using
equity method
Increase in non-controlling interests
Proceeds from disposal of equity
instruments measured at fair value
through other comprehensive income
Proceeds from disposal of investments
accounted for using equity method
Disposal of company’s share by
subsidiaries recognised as treasury share
transactions
Loss control over the subsidiaries
recognised as disposal transactions
Cash dividends paid by subsidiaries to
non-controlling interests
Capital surplus - dividends unclaimed by
the subsidiaries’ shareholders
Balance at December 31, 2020		 Notes Equity at tri butable to owners oft he parent he parent he parent Non-controlling
interests		 Total equity
Share capital-
common shares		 Capital surplus,
additional paid-in
capital		 Retained earnings Otherequityinterest Treasurystocks Total
Legal reserve Special reserve Unappropriated
retained earnings		 Financial statements
translation
differences of foreign
operations		 Unrealised gains
(losses) from
financial assets
measured at fair
value through other
comprehensive
income
6(24)

6(22)

6(22)(24)
6(34)
6(3)(24)
6(24)
6(21)(22)
6(34)
6(34)
6(22)		 $ 10,772,829
-
-
-
-
-
-
1,292,739
-
-
-
-
-
-
-
-
-
$ 12,065,568		 $ 23,400,002
-
-
-
-
-
-
-
10,784
87,108
-
-
-
83,417
-
-
1,100
$ 23,582,411		 $ 1,167,412
-
-
-
283,976
-
-
-
-
-
-
-
-
-
-
-
-
$ 1,451,388		 $ 12,265
-
-
-
-
(
12,265 )
-
-
-
-
-
-
-
-
-
-
-
$ -		 $ 3,818,704
2,918,705
221
2,918,926
(
283,976 )
12,265
(
1,077,283 )
(
1,292,739 )
-
25,693
-
(
11,382 )
12
-
-
-
-
$ 4,110,220		 ($ 1,081,728 )
-
(
721,722 )
(
721,722 )
-
-
-
-
-
-
-
-
-
-
-
-
-
($ 1,803,450 )		 $ 1,753,427
-
1,807,629
1,807,629
-
-
-
-
-
(
25,693 )
-
11,382
(
12 )
-
-
-
-
$ 3,546,733		 ($ 353,087 )
-
-
-
-
-
-
-
-
-
-
-
-
113,211
-
-
-
($ 239,876 )		 $ 39,489,824
2,918,705
1,086,128
4,004,833
-
-
(
1,077,283 )
-
10,784
87,108
-
-
-
196,628
-
-
1,100
$ 42,712,994		 $ 64,922
(
67,920 )
(
859 )
(
68,779 )
-
-
-
-
-
-
90,150
-
-
-
(
33,330 )
(
4,462 )
-
$ 48,501		 $ 39,554,746
2,850,785
1,085,269
3,936,054
-
-
(
1,077,283 )
-
10,784
87,108
90,150
-
-
196,628
(
33,330 )
(
4,462 )
1,100
$ 42,761,495

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

120

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Expected credit loss (gain on reversal in expected
credit loss)
Loss on inventory market value decline
Depreciation
Amortization
Compensation cost of employee share-based payment
transactions
Interest income
Interest expense
Dividend income
Loss (gain) of financial assets/liabilities at fair value
through profit or loss
Share of profit of associates and joint ventures
accounted for using equity method
Loss on disposal of investments
Gain on disposal of property, plant and equipment
Changes in operating assets and liabilities
Changes in operating assets
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Contract liabilities
Accounts payable
Other payables
Other current liabilities
Provisions for liabilities
Accrued pension liabilities
Other non-current liabilities
Cash inflow (outflow) generated from operations
Payment of interest
Receipt of interest
Cash dividend received
Payment of income tax
Net cash flows from operating activities		 Year ended December 31
Notes
2020
2019
$ 2,980,076
$ 3,082,908
12(2)
17,494
(
14,812 )
6(6)
137,040
231,906
6(9)(10)(12)(30)
908,976
836,105
6(13)(30)
89,722
84,614
6(19)
-
718
6(26)
(
44,482 ) (
89,404 )
6(29)
46,479
55,905
6(27)
(
214,428 ) (
190,145 )
6(28)
18,855
(
9,828 )
6(8)
(
2,415,388 ) (
2,239,887 )
6(28)
6,674
5,444
6(28)
(
564 ) (
255 )
61,062
(
539 )
1,069,041
(
1,478,028 )
64,646
(
52,830 )
(
1,694,988 ) (
1,603,717 )
34,425
39,542
13,223
2,321
(
147,102 )
109,526
854,435
559,771
165,626
30,338
9,055
(
13,739 )
3,523
(
3,914 )
(
14,827 ) (
3,358 )
603
-
1,949,176
(
661,358 )
(
51,786 ) (
50,117 )
48,487
87,293
813,467
1,007,530
(
88,573 ) (
150,589 )
2,670,771
232,759

(Continued)

121

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of financial assets at fair value
through profit or loss
Acquisition of financial assets at fair value through profit
or loss
Increase in other financial assets
Acquisition of financial assets at fair value through other
comprehensive income
Proceeds from disposal of financial assets at fair value
through other comprehensive income
Proceeds from capital reduction of financial assets at fair
value through other comprehensive income
Decrease (increase) in financial assets at amortised cost
Acquisition of investments accounted for using equity
method
Proceeds from capital reduction of investments accounted
for using equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in investment property
Increase in intangible assets
(Increase) decrease in refundable deposits
Increase in other non-current assets
Decrease in net cash from disposal of subsidiaries
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings
Proceeds from long-term borrowings
Decrease in guarantee deposits
Repayment of principal portion of lease liabilities
Cash dividends paid
Investments increased by non-controlling interest
Proceeds from disposal of treasury shares
Capital surplus - expired unclaimed dividends
Net cash flows (used in) from financing activities
Effects of changes in exchange rates
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Year ended December 31
Notes
2020
2019
$ 89,242
$ 109,645
(
11,148 ) (
78,000 )
-
(
25,078 )
(
102,528 ) (
360,062 )
6(3)
16,211
37,299
-
45,389
490,770
(
490,770 )
6(8)
(
131,207 )
-
-
20,307
6(9)
(
780,003 ) (
1,622,516 )
8,959
17,521
6(12)
-
(
125,783 )
6(13)
(
76,994 ) (
71,351 )
(
6,117 )
1,305
(
12,961 )
-
6(35)
(
78,615 )
-
(
594,391 ) (
2,542,094 )
6(36)
(
2,349,843 )
3,834,646
6(36)
119,073
791,561
6(36)
(
671 ) (
3,250 )
6(36)
(
51,255 ) (
44,205 )
6(35)
(
1,070,961 ) (
1,384,412 )
6(34)
90,150
109,420
6(21)
196,628
-
1,100
-
(
3,065,779 )
3,303,760
130,130
(
55,075 )
(
859,269 )
939,350
6(1)
6,664,566
5,725,216
6(1)
$ 5,805,297
$ 6,664,566

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

122

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

1. HISTORY AND ORGANISATION

  • (1) MiTAC Holdings Corporation (the “Company”) was established by MiTAC International Corp. (“MiTAC International”) through a share conversion on September 12, 2013, and on the same date, the competent authority has approved for the Company’s shares to be listed on the Taiwan Stock Exchange (TWSE). MiTAC International became the Company’s wholly-owned subsidiary after conversion. The main business of the Company and its subsidiaries (collectively referred herein as the “Group”) is to design, manufacture and sell products related to investments, computers and its peripherals and communications.

  • (2) In order to promote specialization of work for transforming and improving overall competitiveness of the Group, the Board of Directors of its subsidiary, MiTAC International, has resolved to divest its cloud computing products group to the newly established company, MiTAC Computing Technology Corporation (collectively referred herein as the “MiTAC Computing Technology”), as the consideration for the acquisition of 220,000 thousand newly issued ordinary shares of MiTAC Technology on the spin-off day, September 1, 2014. In addition, in 2017, the Board of Directors of MiTAC International has resolved to divest its mobile communication products group to the newly established company, MiTAC Digital Technology Corporation (collectively referred herein as the “MiTAC Digital Technology”), as the consideration for the acquisition of 100,000 thousand newly issued ordinary shares of MiTAC Digital Technology on the spin-off day, January 1, 2018. As a result, MiTAC International, MiTAC Computing Technology and MiTAC Digital Technology are the wholly-owned subsidiaries of the Company after the spin-off.

  • THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

  • These consolidated financial statements were authorised for issuance by the Board of Directors on March 8 , 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

123

New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of
material’
Amendments to IFRS 3, ‘Definition of a business’
Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate benchmark
reform’
Amendment to IFRS 16, ‘Covid-19-related rent concessions’
Note：Earlier application from January 1, 2020 is allowed by FSC.		 January 1, 2020
January 1, 2020
January 1, 2020
June 1, 2020 (Note)

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

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

the Group

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

endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
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’		 January 1, 2021
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.

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

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

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New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’
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, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Definition of accounting estimates’
Amendments to IAS 16, ‘Property, plant and equipment:proceeds before
intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a contract
Annual improvements to IFRS Standards 2018–2020		 January 1, 2022
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, 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.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation

  • A. Except for the following items, these 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.

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

  • B. The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or

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complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

  • A. Basis for preparation of consolidated financial statements:

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

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

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

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

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

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B. Subsidiaries included in the consolidated financial statements:

Investor Subsidiary Main activities Ownership (%) Ownership (%) Remarks
December
31,2020		 December
31,2019
MiTAC Holdings
Corp.
MiTAC Holdings
Corp.
MiTAC Holdings
Corp.
MiTAC
International Corp.
MiTAC
International Corp.
MiTAC Computing
Technology Corp.
MiTAC Computing
Technology Corp.
MiTAC Computing
Technology Corp.
MiTAC Computing
Technology Corp.
MiTAC Digital
Technology Corp.
MiTAC Digital
Technology Corp.		 MiTAC
International Corp.
MiTAC Computing
Technology Corp.
MiTAC Digital
Technology Corp.
Tsu Fung Investment
Corp.
Silver Star
Developments Ltd.
MiTAC Technology
UK Ltd.
MiTAC Telematics
Technology
Corporation
MiTAC Information
Technology Czech
s.r.o.
Hyve Design
Solutions Corporation
Access Wisdom
Holdings Ltd.
Mio International Ltd.		 Computer and its peripherals:
design, manufacture and sell
communications products
Computer and its peripherals:
design, manufacture and sell
communications products
Sales and service of electronic
telecommunication,
communication and software, etc
General investments
General investments
General investments
Sales of self-produced products
and related after-sale services
Assemble and sales of computer
and peripheral equipment
Assemble and sales of computer
and peripheral equipment
General investments
Sale of communication and
related products		 100%
100%
97.17%
100%
100%
100%
100%
-
-
100%
100%		 100%
100%
97.17%
100%
100%
100%
100%
100%
50%
100%
100%		 Note 1
Note 3
Note 2

127

Investor Subsidiary Main activities Ownership (%) Ownership (%) Remarks
December
31,2020		 December
31,2019
Tsu Fung
Investment Corp.
Silver Star
Developments Ltd.
Pacific China Corp.
Pacific China Corp.
Pacific China Corp.
Pacific China Corp.
Access Wisdom
Holdings Ltd.
MiTAC Technology
UK Ltd.
MiTAC Technology
UK Ltd.
MiTAC Technology
UK Ltd.
Hyve Design
Solutions
Corporation
MiTAC Europe
Ltd.
MiTAC Europe
Ltd.
Silver Star
Developments Ltd.
Silver Star
Developments Ltd.		 MiTAC Digital
Technology Corp.
Pacific China Corp.
MiTAC Star Service
Ltd.
Software Insights Ltd.
Start Well
Technology Ltd.
Huge Extent Ltd.
MiTAC Europe Ltd.
Tyan Computer
Corp. (USA)
MiTAC Logistics
Corp.
MiTAC Information
Systems Corp.
Hype Design
Solutions(Taiwan)
Corporation
MiTAC Digital
Corp.
MiTAC Australia
Pty Ltd.
MiTAC Japan Corp.
MiTAC Benelux
N.V.		 Sales and service of electronic
telecommunication,
communication and software, etc
General investments
General investments
General investments
General investments
General investments
Sale of communication products
and related after-sale services
Sales of computer peripherals,
hardware/ software and related
products
Sale of computer peripherals,
hardware/software and related
products
Assembling and sale of
computer peripherals,
hardware/software and related
products
Assemble and sales of computer
and peripheral equipment
Sale of communication products
and related after-sale services
Sale of communication products
and related after-sale services
Sale of communication
products, computer peripherals,
hardware/software and related
products and related after-sale
services
Sale of communication products
and related after-sale services		 0.001%
100%
100%
100%
100%
100%
100%
100%
-
100%
-
100%
100%
100%
100%		 0.001%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%		 Note 1
Note 3
Note 2

128

Investor Subsidiary Main activities Ownership (%) Ownership (%) Remarks
December
31,2020		 December
31,2019
Silver Star
Developments Ltd.
Start Well
Technology Ltd
MiTAC Investment
Holding Ltd.
MiTAC Investment
Holding Ltd.
MiTAC Investment
Holding Ltd.
MiTAC Investment
Holding Ltd.
MiTAC Star
Service Ltd.
MiTAC Computer
(Kunshan) Ltd		 MiTAC Pacific
(H.K.) Ltd.
MiTAC Investment
Holding Ltd.
MiTAC Computer
(Kunshan) Ltd.
MiTAC Technology
(Kunshan) Co., Ltd.
MiTAC Logistic
Service (Kunshan)
Ltd.
MiTAC Information
Technology Ltd.
MiTAC Computer
(Shunde) Corp.
MiTAC Information
Systems (Kunshan)
Co., Ltd.		 Sale of computer peripherals,
hardware/software and related
products
Investment holdings
Manufacture of computers,
computer peripherals,
hardware/software and related
products and sale of own-
produced products
Testing, maintenance and
display of computer components
and related technical advisory
services and after-sale services
Agency of freight transport,
export and import trading and
warehousing services.
After-sale maintenance, testing
and technical advisory services
of computers, communication
products and consumer
electronic products;
establishment of customer
service centers; customer data
processing, analysis and
integrated services and business
administration services
Manufacture of computer frame,
motherboard, interface card,
display, power supply, keyboard,
related metal stamping parts and
plastic parts and maintenance of
motherboard
Sales and manufacturing of
computer accessories, hardware,
software and related services		 100%
100%
100%
100%
100%
100%
100%
100%		 100%
100%
100%
100%
100%
100%
100%
100%

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Investor Subsidiary Main activities Ownership (%) Ownership (%) Remarks
December
31,2020		 December
31,2019
Software Insights
Ltd.
Software Insights
Ltd.
Mio International
Ltd.		 MiTAC Research
(Shanghai) Ltd.
MiTAC Innovation
(Kunshan) Ltd.
Mio Technology
(Suzhou) Ltd.		 Research, development and
manufacture of computer
software, sale of own-produced
products and related technical
advisory services
Research and development of
calculator, server, mobile phone,
PDA and GPS, and technical
transfer, technical advisory and
technical services of related
R&D products
Sale of communication products
and related after-sale services		 100%
100%
100%		 100%
100%
100%		 
  - Note 1:On May 23, 2019, MiTAC Digital Technology Corp. increased its capital by issuing new shares amounting to 6,000 thousand shares. MiTAC Holdings Corp. acquired 3,000 thousand shares, and Tsu Fung Investment Corp. acquired 1,000 thousand shares.

  - Note 2: Newly established subsidiary in the third quarter of 2019, the Group has substantial control over Hyve Design Solutions Corporation, thus was listed as a consolidated entity. However, on August 19, 2020, the group lost control over it as the Group has no current ability to direct its relevant activities, thus, it was removed as a consolidated entity.

  - Note 3: It completed the liquidation in 2020.

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

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

  • E. Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.

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

  • (4) Foreign currency translation

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

  • A. Foreign currency transactions and balances

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

  • (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences

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arising upon re-translation at the balance sheet date are recognised in profit or loss.

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

  • B. Translation of foreign operations

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

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

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

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

  • (b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

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

(5) Classification of current and non-current items

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

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

  • (b) Assets held mainly for trading purposes;

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

  • (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to

131

be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

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

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

    • (b) Liabilities arising mainly from trading activities;

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

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

  • (6) Cash equivalents

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

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

  • A. Financial assets at amortized cost or fair value through other comprehensive income are designated as at fair value through profit or loss at initial recognition when they eliminate or significantly reduce a measurement or recognition inconsistency.

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

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

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

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

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

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

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

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

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

132

The Group subsequently measures the financial assets at fair value:

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

(9) Financial assets at amortised cost

  • A. Financial assets at amortised cost are those that meet all of the following criteria:

  • (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

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

  • B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.

  • C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.

(10) Accounts and notes receivable

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

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

(11) Impairment of financial assets

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

(12) Derecognition of financial assets

The Group derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

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

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

  • B. The contractual rights to receive cash flows of the financial asset have been transferred and the

133

Group has transferred substantially all risks and rewards of ownership of the financial asset.

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

  • (13) Leasing arrangements(lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

  • (14) Inventories

  • A. The perpetual inventory system is adopted for inventory recognition. Inventories are stated at standard cost, and adjusted at the end of reporting period to approximate them to the cost calculated on a weighted average method.

  • B. At the end of period, inventories are evaluated at the lower of cost or net realizable value, and the individual item approach is used in the comparison of cost and net realizable value. The calculation of net realizable value should be based on the estimated selling price in the normal course of business, net of estimated costs of completion and estimated selling expenses.

  • (15) Non-current assets held for sale

  • Non-current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use, and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

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

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

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

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

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

134

  • E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for using the equity method’ shall be adjusted for the increase or decrease. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

  • F. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

  • G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.

  • (17) Property, plant and equipment

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

  • B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of discarded assets is derecognised when critical repairs are incurred, and other repair expenses are charged to profit or loss for the period when they incur.

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

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

135

Buildings and structures (included utility equipment) 5 ~ 55 years
Machinery and equipment 2 ~ 10 years
Transportation equipment 4 ~ 5 years
Leasehold improvements 2 ~ 5 years
Other equipment 2 ~ 7 years

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

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

  • B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:

  • (a) Fixed payments, less any lease incentives receivable; and

  • (b) Variable lease payments that depend on an index or a rate.

The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

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

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

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

(19) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 20 ~ 55 years.

(20) Intangible assets

The use right of computer software was capitalised based on the acquisition cost and cost to prepare the specific software to become usable. Computer software was amortized based on the contract or on a straight-line basis over 5 years.

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(21) Impairment of non-financial assets

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

(22) Borrowings

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

(23) Notes and accounts payable

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

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

(24) Derecognition of financial liabilities

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

(25) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(26) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date. Provisions are not recognised for future operating losses.

(27) Employee benefits

  • A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expense in that period when the employees render service.

137

B. Pensions

(a) Defined contribution plans

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

(b) Defined benefit plans

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

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

  • C. Employees’ compensation and directors’ and supervisors’ remuneration

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

  • (28) Employee share based payment

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

138

(29) Income tax

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

  • B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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

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

  • E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

  • F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from research and development expenditures to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

139

(30) Share capital

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

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

  • (31) Dividends

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

  • (32) Revenue recognition

  • A. Sales of goods

    • (a) The Group manufactures and sells cloud computing products and mobile communication products. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

    • (b) Revenue from sales is recognised based on the price specified in the contract, net of the sales returns and sales discounts. The Group provides to customers the sales return right and sales discounts and recognises refund liability for expected sales discounts payable to customers in relation to sales by using the expected value method.

    • (c) The Group’s obligation to provide maintenance services for faulty products under the standard warranty terms is recognised as a provision.

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

  • B. Sales of services

    • (a) The Group provides technology services and installment repairs and maintenance services. Revenue from providing services is recognised in the accounting period in which the services are rendered. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the

140

services rendered, a contract liability is recognised. 

  - (b) Some contracts include multiple deliverables. Such services are accounted for as a single performance obligation as they are highly interrelated and indistinguishable.

  • C. Incremental costs of obtaining a contract The Group recognises as an asset the incremental costs of obtaining a contract with a customer if the Group expects to recover those costs. The recognised asset is amortized on a systematic basis that is consistent with the transfers to the customer of the goods or services to which the asset relates.

  • (33) Business combinations and organization restructuring

  • A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. There is a choice on an acquisition-by-acquisition basis to measure the noncontrolling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

  • B. If the total of the fair values of the consideration of acquisition and any non-controlling interest in the acquiree as well as the previous equity interest in the acquiree is higher than the fair value of the Group’s identifiable assets acquired and obligations borne, goodwill is recognised at the acquisition-date. If the fair value of the Group’s identifiable assets acquired and obligations borne is higher than the total of the fair values of the consideration of acquisition, non-controlling interest in the acquiree, as well as previous equity interest in the acquire, the difference is recognised in profit or loss for the period at the acquisition date.

  • C. The newly established investment holding company through share swap is jointly controlled under business combination. Under regulations of competent authority, the investment holding company is recorded at the carrying value and is included in the consolidated financial statements at the date of establishment.

  • (34) Operating segments

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

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

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are

141

continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below：

(1) Critical judgements in applying the Group’s accounting policies

None.

  • (2) Critical accounting estimates and assumptions

  • Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Therefore, there might be material changes to the evaluation.

As of December 31, 2020, the carrying amount of inventories is described in Note 6 (6).

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash:
Cash on hand and petty cash
Checking accounts and demand deposits
Cash equivalents:
Time deposits
Repurchased bonds
Total		 December 31,2020
753
$ 4,145,332
1,659,212
-
5,805,297
$		 December 31,2019
655
$ 4,173,574
2,045,199
445,138
6,664,566
$

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

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

142

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

Financial assets at fair value through profit or loss
Items
Current items:
Financial assets mandatorily measured at fair value
through profit or loss
Beneficiary certificates
Derivatives
Subtotal
Valuation adjustment - Beneficiary certificates
Valuation adjustment - Derivatives
Total		 December 31,2020 December 31,2019
-
$ -
-
-
6,107
6,107
$		 78,000
$ -
78,000
-
21,948
99,948
$

  • A. The Group recognised net loss of ($15,747) and net gain of $17,170 on financial assets at fair value through profit or loss for the years ended December 31, 2020 and 2019, respectively.

  • B. The non-hedging derivative instrument transactions and contract information are as follows：

Financial Instrument
MiTAC Computing Technology Corp.
Forward foreign exchange - Sell
Forward foreign exchange - Buy
MiTAC Digital Technology Corp.
Forward foreign exchange - Sell
Forward foreign exchange - Buy
MiTAC Technology (KunShan) Co., Ltd.
Forward foreign exchange - Sell		 December 31,2020 December 31,2020
Item
Advance booking USD to buy NTD
Advance booking USD to sell NTD

Advance booking USD to buy NTD
Advance booking USD to sell NTD
Advance booking USD to buy CNY		 Notional Amount
(in thousands)
USD 20,500
USD 13,000
USD 2,500
USD 4,000
USD 300		 Fair Market Value
(in thousands)
NTD 4,014
NTD 1,376
NTD 567
NTD 130
CNY 5
Financial Instrument
MiTAC Computing Technology Corp.
Forward foreign exchange - Sell
Forward foreign exchange - Buy
Swap - Sell
MiTAC Digital Technology Corp.
Forward foreign exchange - Sell
Forward foreign exchange - Buy
Swap - Sell		 December 31,2019 December 31,2019
Item
Advance booking USD to buy NTD
Advance booking USD to sell NTD

Advance booking USD to buy NTD

Advance booking USD to buy NTD
Advance booking USD to sell NTD
Advance booking USD to buy NTD		 Notional Amount
(in thousands)
USD 24,000
USD 10,000
USD 27,500
USD 9,000
USD 3,000
USD 17,000		 Fair Market Value
(in thousands)
NTD 5,596
NTD 786
NTD 8,323
NTD 2,254
NTD 233
NTD 4,756
  • C. The Group has no financial assets at fair value through profit or loss pledged to others.

143

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

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

Items
Current items:
Equity instruments
Listed stocks
Valuation adjustment
Total
Non-current items:
Equity instruments
Listed stocks
Unlisted stocks
Subtotal
Valuation adjustment
Total		 December 31,2020
800,614
$ 432,229
1,232,843
$ 1,225,051
$ 1,794,303
3,019,354
3,046,395
6,065,749
$		 December 31,2019
718,157
$ 173,893
892,050
$ 1,225,051
$ 1,802,315
3,027,366
1,648,472
4,675,838
$

  • A. The Group recognised $1,644,487 and $1,263,333 in other comprehensive income (loss) for fair value change for the years ended December 31, 2020 and 2019, respectively.

  • B. The Group has elected to designate the above investments, which were held mainly for medium to long-term trading purposes, as investments in equity instruments measured at fair value through other comprehensive income. As of December 31, 2020 and 2019, the fair value of investments was $7,298,592 and $5,567,888, respectively.

  • C. The Group sold $16,211 and $37,299 of its investments at fair value and resulted in cumulative gains (losses) on disposal of ($11,382) and $10,671 during the years ended December 31, 2020 and 2019, respectively.

(4) Financial assets at amortised cost

Items
Current items:
Structured deposits		 December31,2020
-
$		 December31,2019
490,770
$

  • A. As of December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group was $0 and $490,770, respectively.

  • B. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

144

(5) Accounts receivable

Accounts receivable
December 31,2020 December 31,2019
Third parties $ 5,073,532
 $ 6,260,109
Less: Allowance for bad debts ( 91,482) ( 77,034)
4,982,050 6,183,075
Related parties 215,960 289,650
$ 5,198,010 $ 6,472,725
  • A. The ageing analysis of accounts receivable that were past due but not impaired is as follows:
Not past due
Up to 90 days
91 to 180 days
Over 181 days		 5,011,648
$ 248,007
1,680
28,157
5,289,492
$ December 31,2020		 December 31,2019
5,304,457
$ 1,190,641
9,085
45,576
6,549,759
$

The above ageing analysis was based on past due date.

  • B. As of December 31, 2020 and 2019, accounts receivable and notes receivable were all from contracts with customers. And as of January 1, 2019, the balance of accounts receivable from contracts with customers amounted to $5,179,203.

  • C. As of December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s accounts receivable was $5,198,010 and $6,472,725, respectively.

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

(6) Inventories

Inventories
Expense and loss incurred on inventories:
Raw materials
Work in process
Finished goods
Total
Cost of goods sold
Loss on decline in market value		 December 31,2020
Book value
6,699,085
$ 643,449
1,780,470
9,123,004
$ For the year ended
December 31,2020
36,383,655
$ 137,040
36,520,695
$		 December 31,2019
Book value
4,851,569
$ 1,030,705
1,879,394
7,761,668
$
For the year ended
December 31,2019
30,410,330
$ 231,906
30,642,236
$

145

(7) Other financial assets

Other financial assets
Current:
Pledged deposits
Non-current:
Pledged deposits
Total		 December 31,2020
8,754
$ 35,253
44,007
$		 December 31,2019
8,761
$
35,185
43,946
$

  • A. Information relating to credit risk of other financial assets is provided in Note 12(2).

  • B. Information about other financial assets that were pledged to others as collateral are described in Note 8.

(8) Investments accounted for using equity method

A.

Investee company
Getac Technology Corp.
3 Probe Technology Co., Ltd.
Lian Jie Investment Co., Ltd.
Lian Jie II Investment Co., Ltd.
Shen-Tong Construction & Development Co.,
Ltd.
Mainpower International Ltd.
Concentrix Corp.
Synnex Corp.
Suzhou MiTAC Preclusion Technology Co., Ltd.
Loyal Fidelity Aerospace Corp.
Harbinger Ruyi Venture Ltd.
Harbinger Ruyi II Venture Ltd.
Infopower Technologies Ltd.		 December 31,2020
5,249,079
$ 13,962
168,258
42,467
86,012
240,230
6,677,974
5,977,703
354,254
123,406
18,970
49,096
70,278
19,071,689
$		 December 31,2019
4,891,103
$ 12,850
109,468
33,239
86,216
211,748
-
11,551,123
311,984
127,083
20,117
26,334
74,439
17,455,704
$

B. The Group’s recognised share of profit from associates accounted for using equity method for the years ended December 31, 2020 and 2019 were $2,415,388 and $2,239,887, respectively, and recognised share of other comprehensive income (loss) from associates accounted for using equity method were $203,184 and ($361,182), respectively.

146

C. The basic information of the associates that are material to the Group is as follows:

Company
name
Getac Technology
Corp.
Synnex Corp.
Concentrix Corp.		 Principal place
of business
Taiwan
USA
USA		 December 31,2020
December 31,2019
32.31%
32.66%
10.28%
10.19%
10.28%
-
Shareholdingratio		 Nature of
relationship		 Methods of
measurement
December 31,2020
32.31%
10.28%
10.28%
Owned over 20%
ownership
Significant
influence
Significant
influence		 Equity method
Equity method
Equity method

D. The summarized financial information of the associates that are material to the Group is as follows:

Balance sheet

Getac TechnologyCorp. Getac TechnologyCorp. Getac TechnologyCorp.
December 31,2020 December 31,2019
Current assets $ 19,825,742
 $ 18,561,740
Non-current assets 14,029,191 12,045,855
Current liabilities ( 11,735,921)
 ( 10,341,481)
Non-current liabilities ( 4,125,717)
 ( 3,593,374)
Non-controlling interest ( 1,748,248) ( 1,696,010)
Total net assets $ 16,245,047 $ 14,976,730
Share in associate’s net assets $ 5,249,079 $ 4,891,103
Synnex Corp.
December 31,2020 December 31,2019
Current assets $ 209,922,862
 $ 223,440,700
Non-current assets 27,111,310 145,870,358
Current liabilities ( 132,336,507)
 ( 138,121,517)
Non-current liabilities ( 46,502,998) ( 117,790,970)
Total net assets $ 58,194,667 $ 113,398,571
Share in associate’s net assets $ 5,977,703 $ 11,551,123

147

Statement of comprehensive income
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total net assets
Share in associate’s net assets
Revenue
Profit for the period from continuing
operations
Other comprehensive gain (loss) - net of tax
Total comprehensive income
Dividends received from associates
Revenue
Profit for the period from continuing
operations
Other comprehensive gain (loss) - net of tax
Total comprehensive income
Dividends received from associates		 December 31,2020
December 31,2019
40,537,748
$ -
$ 106,421,273
-
28,782,657)
(
-
53,166,720)
(
-
65,009,644
$ -
$ 6,677,974
$ -
$ Concentrix Corp.
For the year ended
For the year ended
December31,2020
December31,2019
27,837,743
$ 26,952,910
$ 2,668,793
$ 2,369,928
$ 95,120
385,738)
(
2,763,913
$ 1,984,190
$ 532,345
$ 570,870
$ Getac TechnologyCorp.
For the year ended
For the year ended
December 31,2020
December 31,2019
729,177,445
$ 734,381,402
$ 15,514,505
$ 14,914,583
$ 415,068
2,498,726)
(
15,929,573
$ 12,415,857
$ 63,107
$ 242,966
$ Synnex Corp.

Note: Concentrix Corp. was established on December 1, 2020 and its fiscal year ends on November

  1. Thus, the information related to its statement of comprehensive income was not available in 2020.

  2. E. 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:

As of December 31, 2020 and 2019, the carrying amount of the Group’s individually immaterial associates amounted to $1,166,933 and $1,013,478, respectively.

148

For the year ended For the year ended
December 31,2020 December 31,2019
Profit for the year from continuing $ 234,673
 $ 93,262
operations
Other comprehensive gain (loss) - net of tax 357,805 ( 46,530)
Total comprehensive income $ 592,478 $ 46,732
The fair value of the Group’s material associates with quoted market prices is as follows:
December 31,2020 December 31,2019
Getac Technology Corp. $ 9,310,410
 $ 8,891,537
Synnex Corp. 12,292,833 20,233,785
Concentrix Corp. 14,898,117 -
$ 36,501,360 $ 29,125,322

  • F. The fair value of the Group’s material associates with quoted market prices is as follows:

  • G. The Group increased its investment in Synnex Corp. amounting to $131,207 for the year ended December 31, 2020.

  • H. The Group holds 13.28% ownership in Mainpower International Ltd. but has significant influence over Mainpower International Ltd. as the Group serves as this company’s corporate director.

  • I. The Group holds 10.28% ownership in Synnex Corp. but has significant influence over Synnex Corp. as the Group is the major shareholder of Synnex Corp. and the Company’s chairman Feng Chiang Miau serves as this company’s honorary chairman.

  • J. On December 1, 2020, Synnex Corp. completed the spin-off and established Concentrix Corp. The numbers of shares of Concentrix Corp. acquired by the shareholders of Synnex Corp. is equivalent to the numbers of shares in Synnex Corp. they held. Given that the Group is the major shareholder and one of the directors of Concentrix Corp., these indicate that the Group has significant influence over it.

  • K. Synnex Corp. and Concentrix Corp.’s fiscal year ends on November 30, thus, the Group uses the financial information from December 1, 2019 to November 30, 2020 as the basis for the preparation of annual consolidated financial statements; Infopower Technologies Ltd.’s fiscal year ends on March 31, thus, the Group uses the financial information from January 1 to December 31 as the basis for the preparation of annual consolidated financial statements; other associates’ fiscal year all end on December 31.

  • L. On August 19, 2020, the Group has no current ability to direct the decisions of relevant activities on meetings of their Board of Directors of Hyve Design Solutions Corporation. Thus, the Group lost control, but has significant influence over the associate. As a result, the Group derecognised the assets, liabilities and non-controlling interest of Hyve Design Solutions Corporation in their carrying amount on the date that control ceased from the consolidated financial statements according to IAS 10. The Group recognised the retained 50% share of the investment as the investment accounted for using equity method – associate at fair value on August 19, 2020 and reclassified the other comprehensive income previously recognised into profit or loss, resulting in

149

  • a total disposal loss of $2,044. As of December 31, 2020, the carrying amount of the associate was ($22,604), shown as other non-current liabilities.

  • M. The Group is the single largest shareholder of certain associates. Given that the Group has no majority voting rights, which indicates that the Group has no current ability to direct the decisions of relevant activities on meetings of their Board of Directors and shareholders after the comprehensive assessment. Thus, the Group has no control, but only has significant influence, over the associates.

150

(9) Property, plant and equipment

At January 1, 2020
Cost
Accumulated depreciation
and impairment
2020
At January 1
Additions
Disposal
Reclassifications
Effects from disposal of
subsidiaries
Depreciation
Effects of foreign exchange

At December 31
At December 31, 2020
Cost
Accumulated depreciation
and impairment		 Construction
Computer and
in progress
Buildings
communication
Transportation
Office
Leasehold
Molding
Other
and equipment
Land
and structures
Machinery
equipment
equipment
equipment
improvements
equipment
equipment
under inspection
Total
1,094,943
$ 6,425,643
$ 2,547,343
$ 201,072
$ 72,293
$ 192,175
$ 132,544
$ 122,834
$ 1,083,777
$ 937,087
$ 12,809,711
$ -
2,546,673)
(
1,408,956)
(
138,320)
(
45,991)
(
148,115)
(
42,481)
(
32,358)
(
635,822)
(
-
4,998,716)
(
1,094,943
$ 3,878,970
$ 1,138,387
$ 62,752
$ 26,302
$ 44,060
$ 90,063
$ 90,476
$ 447,955
$ 937,087
$ 7,810,995
$ 1,094,943
$ 3,878,970
$ 1,138,387
$ 62,752
$ 26,302
$ 44,060
$ 90,063
$ 90,476
$ 447,955
$ 937,087
$ 7,810,995
$ -
6,959
210,600
16,818
8,701
9,700
36,651
57,366
175,319
257,889
780,003
-
1,836)
(
1,297)
(
263)
(
-
33)
(
60)
(
-
4,906)
(
-
8,395)
(
-
9,825
63,288
378
-
295
6,242
-
18,213
85,827)
(
12,414
-
-
-
-
-
3,925)
(
10,706)
(
-
16,295)
(
-
30,926)
(
-
223,466)
(
313,311)
(
34,016)
(
9,940)
(
19,595)
(
26,376)
(
48,156)
(
160,571)
(
-
835,431)
(
9,561)
(
4,259)
(
14,028
228
115
46
123
-
5,051
18,656
24,427
1,085,382
$ 3,666,193
$ 1,111,695
$ 45,897
$ 25,178
$ 30,548
$ 95,937
$ 99,686
$ 464,766
$ 1,127,805
$ 7,753,087
$ 1,085,382
$ 6,450,874
$ 2,825,267
$ 179,594
$ 78,039
$ 187,613
$ 156,264
$ 160,589
$ 1,187,180
$ 1,127,805
$ 13,438,607
$ -
2,784,681)
(
1,713,572)
(
133,697)
(
52,861)
(
157,065)
(
60,327)
(
60,903)
(
722,414)
(
-
5,685,520)
(
1,085,382
$ 3,666,193
$ 1,111,695
$ 45,897
$ 25,178
$ 30,548
$ 95,937
$ 99,686
$ 464,766
$ 1,127,805
$ 7,753,087
$		 Total
12,809,711
$ 4,998,716)
(
7,810,995
$
7,753,087
$
13,438,607
$ 5,685,520)
(
7,753,087
$

151

At January 1, 2019
Cost
Accumulated depreciation
and impairment
2019
At January 1
Additions
Disposal
Reclassifications(Note)
Depreciation
Effects of foreign exchange

At December 31
At December 31, 2019
Cost
Accumulated depreciation
and impairment		 Construction
Computer and
in progress
Buildings
communication
Transportation
Office
Leasehold
Molding
Other
and equipment
Land
and structures
Machinery
equipment
equipment
equipment
improvements
equipment
equipment
under inspection
Total
1,099,628
$ 6,617,508
$ 2,134,328
$ 214,103
$ 68,235
$ 195,983
$ 78,337
$ 100,873
$ 965,207
$ 453,616
$ 11,927,818
$ -
2,448,102)
(
1,345,283)
(
167,487)
(
42,882)
(
144,141)
(
25,180)
(
42,666)
(
557,466)
(
-
4,773,207)
(
1,099,628
$ 4,169,406
$ 789,045
$ 46,616
$ 25,353
$ 51,842
$ 53,157
$ 58,207
$ 407,741
$ 453,616
$ 7,154,611
$ 1,099,628
$ 4,169,406
$ 789,045
$ 46,616
$ 25,353
$ 51,842
$ 53,157
$ 58,207
$ 407,741
$ 453,616
$ 7,154,611
$ -
9,940
560,147
44,012
13,176
11,686
22,178
63,287
203,692
694,398
1,622,516
-
3)
(
13,854)
(
1,450)
(
1,425)
(
189)
(
-
-
345)
(
-
17,266)
(
-
12,414)
(
101,381
6,405
-
836
34,242
-
1,321
175,934)
(
44,163)
(
-
229,838)
(
259,726)
(
32,391)
(
10,563)
(
19,632)
(
19,223)
(
31,018)
(
153,464)
(
-
755,855)
(
4,685)
(
58,121)
(
38,606)
(
440)
(
239)
(
483)
(
291)
(
-
10,990)
(
34,993)
(
148,848)
(
1,094,943
$ 3,878,970
$ 1,138,387
$ 62,752
$ 26,302
$ 44,060
$ 90,063
$ 90,476
$ 447,955
$ 937,087
$ 7,810,995
$ 1,094,943
$ 6,425,643
$ 2,547,343
$ 201,072
$ 72,293
$ 192,175
$ 132,544
$ 122,834
$ 1,083,777
$ 937,087
$ 12,809,711
$ -
2,546,673)
(
1,408,956)
(
138,320)
(
45,991)
(
148,115)
(
42,481)
(
32,358)
(
635,822)
(
-
4,998,716)
(
1,094,943
$ 3,878,970
$ 1,138,387
$ 62,752
$ 26,302
$ 44,060
$ 90,063
$ 90,476
$ 447,955
$ 937,087
$ 7,810,995
$		 Total
11,927,818
$ 4,773,207)
(
7,154,611
$
7,810,995
$
12,809,711
$ 4,998,716)
(
7,810,995
$

Note: For the year ended December 31, 2019, the Group reclassified property, plant and equipment to investment property in the amount of $40,965.

152

－ (10) Leasing arrangements lessee

  • A. The Group leases various assets including land, buildings and structures, machinery, office equipment and transportation equipment. Rental contracts are typically made for periods of 1 to 20 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.

  • B. Certain leased buildings with lease terms under 12 months are short-term lease agreements. Additionally, the leased office equipment were low-value assets.

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

Land
Buildings and structures
Machinery
Transportation equipment		 December 31,2020 December 31,2019
Carryingamount Carryingamount

$ 238,179
118,168
389
3,138
359,874
$
$ 303,651
77,120
716
-
381,487
$
Land
Buildings and structures
Machinery
Transportation equipment		 Year ended December
31,2020		 Year ended December
31,2019
Depreciation charge Depreciation charge

$ 14,160
38,803
334
897
54,194
$
$ 17,362
41,965
322
-
59,649
$

  • D. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets were $95,650 and $1,031, respectively.

  • E. The right-of-use assets reclassified to non-current assets held for sale amounted to $56,602 for the year ended December 31, 2020. Please refer to Note 6(14)B for details.

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

Items affecting profit or loss
Interest expense on lease liabilities
Expense on short-term lease contracts
Expense on leases of low-value assets		 Year ended December
31,2020		 Year ended December
31,2019
$ 4,143
20,528
4,910		 $ 5,768
46,097
8,721
  • G. For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases was $80,836 and $104,791, respectively.

153

  • －

  • (11) Leasing arrangements lessor

  • A. The Group leases various assets including buildings and structures. Rental contracts are typically made for periods of 1 to 8 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

  • B. For the years ended December 31, 2020 and 2019, the Group recognised rent income in the amounts of $103,990 and $119,315, respectively, based on the operating lease agreement, which does not include variable lease payments.

  • C. The maturity analysis of the lease payments under the operating leases is as follows:

Later than one year but not later than five years
Over five years
Not later than one year		 December 31,2020
108,941
$ 141,206
6,211
256,358
$		 December 31,2019
86,470
$ 184,601
9,502
280,573
$

(12) Investment property

At January 1, 2020
Cost
Accumulated depreciation and
impairment
2020
At January 1
Depreciation
Effects of foreign exchange
At December 31
At December 31, 2020
Cost
Accumulated depreciation and
impairment		 Buildings
Land
and structures
Total
954,213
$ 598,434
$ 1,552,647
$ -
309,826)
(
309,826)
(
954,213
$ 288,608
$ 1,242,821
$ 954,213
$ 288,608
$ 1,242,821
$ -
19,351)
(
19,351)
(
622
5,339
5,961
954,835
$ 274,596
$ 1,229,431
$ 954,835
$ 609,265
$ 1,564,100
$ -
334,669)
(
334,669)
(
954,835
$ 274,596
$ 1,229,431
$

154

Buildings
Land and structures Total
At January 1, 2019
Cost $ 829,131
 $ 613,313
 $ 1,442,444
Accumulated depreciation and
impairment - ( 314,152) ( 314,152)
$ 829,131 $ 299,161 $ 1,128,292
2019
At January 1 $ 829,131
 $ 299,161
 $ 1,128,292
Additions 125,783 - 125,783
Reclassified as non-current assets
held for sale - ( 21,263)
 ( 21,263)
Reclassifications - 40,965 40,965
Depreciation - ( 20,601)
 ( 20,601)
Effects of foreign exchange ( 701) ( 9,654) ( 10,355)
At December 31 $ 954,213 $ 288,608 $ 1,242,821
At December 31, 2019
Cost $ 954,213
 $ 598,434
 $ 1,552,647
Accumulated depreciation and
impairment - ( 309,826) ( 309,826)
$ 954,213 $ 288,608 $ 1,242,821
  • A. Rental income from investment property and direct operating expenses arising from investment property are shown below：
Rental income from the lease of the
investment property
Direct operating expenses arising from
the investment property that
generated rental income in the period
Direct operating expenses arising from
the investment property that did not
generate rental income in the period		 For the year ended
December 31,2020
21,995
$ 16,722
$ 13,180
$		 For the year ended
December 31,2019
30,490
$
18,212
$
10,698
$

B. The fair value of the investment property held by the Group on December 31, 2020 and 2019 were $3,502,285 and $3,482,639, respectively, which were revalued by independent appraisers and with reference to market transaction prices. Valuations were made using the market approach and cost approach which is categorised within Level 3 in the fair value hierarchy.

155

(13) Intangible assets

Intangible assets
December 31,2020 December 31,2019
At January 1
Cost $ 264,109
 $ 353,188
Accumulated amortization and impairment ( 174,661) ( 250,400)
$ 89,448 $ 102,788
At January 1 $ 89,448
 $ 102,788
Additions 76,994 71,351
Amortization ( 89,722)
 ( 84,614)
Effects of disposal of subsidiaries ( 835)
 -
Effects of foreign exchange 19 ( 77)
At December 31 $ 75,904 $ 89,448
At December 31
Cost $ 275,844
 $ 264,109
Accumulated amortization and impairment ( 199,940) ( 174,661)
$ 75,904 $ 89,448
Details of amortization of intangible assets are as follows:
For the year ended For the year ended
December 31,2020 December 31,2019
Operating costs 1,309
$		 1,029
$
Selling expenses 16,544 18,130
Administrative expenses 13,982 12,228
Research and development expenses 57,887 53,227
89,722
$		 84,614
$

(14) Non-current assets held for sale

  • A. To cooperate with the local government’s urban development plan through land-use-right expropriation, the Board of Directors adopted a resolution on November 7, 2019 to dispose of the land-use-right and related buildings located in the Shunde District, Foshan City, China through public auction by the Land Arrangement and Reserve Center of Shunde District, Foshan City ( "Foshan-Shunde Land Development Center" ) by way of land-use-right requisition on credit. The titles of land-use-right and related buildings have been transferred to and would be managed by Foshan-Shunde Land Development Center. The disposal of the land-use-right and buildings meets the criteria of sales to be highly probable, therefore the Group reclassified related assets as non-current assets held for sale in December 2019. The transaction will be completed in 2021.

  • B. To cooperate with the local government’s need of upgrading and reconstructing rural-level industrial park through land-use-right expropriation, the Board of Directors adopted a resolution

156

on December 25, 2020 to dispose of the land-use-right of certain land located in the Shunde District, Foshan City, China to Foshan-Shunde Land Development Center. The disposal of the land-use-right meets the criteria of sales to be highly probable, therefore the Group reclassified related assets from right-of-use assets as non-current assets held for sale.

Non-current assets held for the sale:

Non-current assets held for the sale:
Short-term borrowings
Right-of-use assets
Investment property
Unsecured bank borrowings
Interest rates		 December 31,2020 December 31,2019
68,515
$ 21,618
90,133
$ December 31,2020
1,443,851
$ 0.56~0.63%		 12,268
$ 21,263
33,531
$ December 31,2019
3,803,871
$ 0.78%~2.60%

(15) Short-term borrowings

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

Items
Current items:
Financial liabilities held for trading
Valuation adjustment - Derivatives		 December 31,2020
11,691
$		 December 31,2019
8,637
$

A.The Group recognised net loss of ($3,108) and ($7,342) for the years ended December 31, 2020 and 2019, respectively.

  • B. The non-hedging derivative instrument transactions and contract information are as follows:
Financial Instrument
MiTAC Computing Technology Corp.
Forward foreign exchange - Sell
Forward foreign exchange - Buy
MiTAC Digital Technology Corp.
Forward foreign exchange - Sell
Forward foreign exchange - Buy
Forward foreign exchange - Sell
Forward foreign exchange - Sell
Silver Star Developments Ltd.
Forward foreign exchange - Sell
Mitac Australia Pty Ltd.
Forward foreign exchange - Buy		 December 31,2020
Item
Advance booking USD to buy NTD
Advance booking USD to sell NTD
Advance booking USD to buy NTD
Advance booking USD to sell NTD
Advance booking EUR to buy USD
Advance booking AUD to buy USD
Advance booking EUR to buy USD
Advance booking USD to sell AUD		 Notional Amount
(in thousands)
USD 14,000
USD 12,500
USD 6,000
USD 3,500
EUR 800
AUD 3,250
EUR 2,200
USD 100		 Fair Market Value
(in thousands)
(NTD 1,085)
(NTD 1,562)
(NTD 1,141)
(NTD 319)
(NTD 722)
(NTD 4,471)
(USD 79)
(AUD 6)

157

(17) Long-term borrowings
Notional Amount
Financial Instrument
Item
(in thousands)
MiTAC Computing Technology Corp.
Forward foreign exchange - Sell
Advance booking USD to buy JPY
USD 554
Forward foreign exchange - Buy
Advance booking USD to sell NTD
USD 17,000
MiTAC Digital Technology Corp.
Forward foreign exchange - Buy
Advance booking USD to sell NTD
USD 4,000
Forward foreign exchange - Sell
Advance booking EUR to buy USD
EUR 5,091
Forward foreign exchange - Sell
Advance booking AUD to buy USD
AUD 6,100
Silver Star Developments Ltd.
Forward foreign exchange - Sell
Advance booking EUR to buy USD
EUR 2,300
December 31,2019		 December 31,2019 December 31,2019
Notional Amount
(in thousands)
USD 554
USD 17,000
USD 4,000
EUR 5,091
AUD 6,100
EUR 2,300		 Fair Market Value
(in thousands)
(NTD 49)
(NTD 2,103)
(NTD 453)
(NTD 2,062)
(NTD 2,919)
(USD 35)
Type of borrowings
Long-term bank
borrowings
Taipei Fubon
Bank
Bank of Taiwan
Taishin Bank		 Borrowing period
and repayment term
Interest rate range
The borrowing period was
from October 15, 2019 to
October 15, 2024 and the
interest was paid monthly.
The grace period was 2
years, if the grace period
was over, the borrowing
should be repaid monthly in
37 installments.
0.49%
The borrowing period was
from October 15, 2019 to
October 15, 2026 and the
interest was paid monthly.
The grace period was 2
years, if the grace period
was over, the borrowing
should be repaid monthly in
60 installments.
0.50%
The borrowing period was
from October 15, 2019 to
October 15, 2024 and the
interest was paid monthly.
After 3 years from the date
of first drawing, the
borrowing should be repaid
monthly in 24 installments.
0.50%		 Collateral
December 31,2020
None
500,000
$ None
201,813
None
50,248

158

Borrowing period
Type of borrowings
and repayment term		 Interest rate range Collateral December 31,2020
E.SUN The borrowing period was
Commercial from October 29, 2019 to
Bank October 15, 2026 and the
interest was paid monthly.
The grace period was 3
years, if the grace period
was over, the borrowing
should be repaid monthly in
48 installments. 0.50% None 39,500
Taipei Fubon The borrowing period was
Bank from August 28, 2020 to
October 15, 2026 and the
interest was paid monthly.
The grace period was 3
years, if the grace period
was over, the borrowing
should be repaid monthly in
39 installments. 0.49% None 72,000
HSBC Bank The borrowing period was
USA from May 8, 2020 to May 7,
2022. After 6 months from
the date of first drawing, the
principal and interest should
be repaid monthly in 18
installments. As the loan is
during the moratorium
period applied to the United
States Government, the
repayment of the principal
and interest was not
commenced as of December
31, 2020. 1.00% None 47,073
910,634
Less: Current portion (Note) ( 47,268)
$ 863,366
Note: Shown as ‘other current liabilities’

159

Type ofborrowings
Long-term bank
borrowings
Taipei Fubon Bank
Bank of Taiwan
Taishin International
Bank
E.SUN Commercial
Bank
Less: Current portion		 Borrowing period
andrepayment term
Interestraterange
The borrowing period
was from October 15,
2019 to October 15,
2024 and the interest was
paid monthly. The grace
period was 2 years, if the
grace period was over,
the borrowing should be
repaid monthly in 37
installments.
0.70%
The borrowing period
was from October 15,
2019 to October 15,
2026 and the interest was
paid monthly. The grace
period was 2 years, if the
grace period was over,
the borrowing should be
repaid monthly in 60
installments.
0.70%
The borrowing period
was from October 15,
2019 to October 15,
2024 and the interest was
paid monthly. After 3
years from the date of
first drawing, the
borrowing should be
repaid monthly in 24
installments.
0.75%
The borrowing period
was from October 29,
2019 to October 15,
2026 and the interest was
paid monthly. The grace
period was 3 years, if the
grace period was over,
the borrowing should be
repaid monthly in 48
installments.
0.75%		 Collateral
None
None
None
None		 December31,2019
500,000
$ 201,813
50,248
39,500
791,561
-
791,561
$

160

(18) Pensions

  • A.(a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Company and its domestic subsidiaries will make contributions to cover the deficit by next March.

  • (b) The amounts recognised in the balance s heet are determined as follows:

December 31,2020 December 31,2019
Present value of defined benefit ($ 558,954)
 ($ 570,152)
obligations
Fair value of plan assets 276,726 272,159
Net defined benefit liability ($ 282,228) ($ 297,993)
  • (c) Movements in net defined benefit liabilities are as follows:
Present value of
defined benefit
obligations
2020
Balance at January 1
570,152)
($ Current service cost
3,220)
(
Interest (expense) income
4,276)
(
577,648)
(		 Fair value of
Net defined
plan assets
benefit liability
272,159
$ 297,993)
($ -
3,220)
(
2,074
2,202)
(
274,233
303,415)
(

161

Present value of
defined benefit Fair value of Net defined
obligations plan assets benefit liability
Remeasurements:
Return on plan assets - 9,009 9,009
(excluding amounts
included in interest
income or expense)
Change in demographic ( 124)
 - ( 124)
assumptions
Change in financial ( 14,146)
 - ( 14,146)
assumptions
Experience adjustments 6,410 - 6,410
( 7,860) 9,009 1,149
Pension fund contribution - 8,330 8,330
Paid pension 26,554 ( 14,846) 11,708
Balance at December 31 ($ 558,954) $ 276,726 ($ 282,228)
Present value of
defined benefit Fair value of Net defined
obligations plan assets benefit liability
2019
Balance at January 1 ($ 542,954)
 $ 266,521
 ($ 276,433)
Current service cost ( 3,269)
 - ( 3,269)
Interest (expense) income ( 5,896) 2,863 ( 3,033)
( 552,119) 269,384 ( 282,735)
Remeasurements:
Return on plan assets - 7,106 7,106
(excluding amounts
included in interest
income or expense)
Change in demographic ( 1,850)
 - ( 1,850)
assumptions
Change in financial ( 19,631)
 - ( 19,631)
assumptions
Experience adjustments ( 10,585) - ( 10,585)
( 32,066) 7,106 ( 24,960)
Pension fund contribution - 8,767 8,767
Paid pension 14,033 ( 13,098) 935
Balance at December 31 ($ 570,152) $ 272,159 ($ 297,993)

162

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

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

  • A. MiTAC International Corp. :

A. MiTAC International Corp. :
B. MiTAC Computing Technology Corp. :
C. MiTAC Digital Technology Corp. :
Discount rate
Future salary increase
Discount rate
Future salary increase
Discount rate
Future salary increase		 For the year ended
December 31,2020
0.375%
2.000%
For the year ended
December 31,2020
0.500%
2.000%
For the year ended
December 31,2020
0.500%
2.000%		 For the year ended
December 31,2019
0.750%
2.000%
For the year ended
December 31,2019
0.750%
2.000%
For the year ended
December 31,2019
0.750%
2.000%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory. Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

163

A. MiTAC International Corp. :

. MiTAC International Corp. :
Discount rate Future salaryincreases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2020
Effect on present value of
defined benefit
obligation $ 2,353 ($ 2,426) ($ 2,347) $ 2,289
December 31, 2019
Effect on present value of
defined benefit
obligation $ 2,737 ($ 2,828) ($ 2,746) $ 2,671
MiTAC Computing Technology Corp. :
Discount rate Future salaryincreases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2020
Effect on present value of
defined benefit
obligation $ 7,317 ($ 7,585) ($ 7,344) $ 7,123
Discount rate Future salaryincreases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2019
Effect on present value of
defined benefit
obligation $ 7,927 ($ 8,225) ($ 7,984) $ 7,736
MiTAC Digital Technology Corp. :
Discount rate Future salaryincreases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2020
Effect on present value of
defined benefit
obligation $ 3,325 ($ 3,451) ($ 3,340) $ 3,236
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2019
Effect on present value of
defined benefit
obligation $ 3,448 ($ 3,585) ($ 3,480) $ 3,366

B. MiTAC Computing Technology Corp. :

C. MiTAC Digital Technology Corp. :

The sensitivity analysis above is based on other conditions that are unchanged but only one assumption is changed. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

  • (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $8,467.

164 

  - (g)As of December 31, 2020, the weighted average duration of that retirement plan is 7.6~10.6 years.

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

    • (b)The Company’s Mainland China subsidiaries have a defined contribution plan. Monthly contributions 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 percentages of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.

    • (c) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2020 and 2019 were $109,786 and $109,467, respectively.

  • (19) Share-based payment

  • A. The share-based payment arrangement of the subsidiary, MiTAC Digital Technology Corp., was as follows:

Type of arrangement Grant date Quantity granted Contract period Vesting conditions Cash capital increase reserved for employee 2019.4.16 900 thousand shares Not applicable Vested immediately preemption of 2019

  • B.The fair value of stock options granted by MiTAC Digital Technology Corp. on grant date is measured using the Black-Scholes option-pricing model. Relevant information is as follows:
Type of
arrangement
Cash capital
increase reserved
for employee
preemption
of 2019		 Grant
date
2019.4.16		 Stock price
(in dollars)
15.95		 Exercise price
(in dollars)
15.5		 Expected price
volatility
(Note)
28.31%		 Expected
option
life
0.08 years		 Expected
dividends
0%		 Risk-free
interest rate
0.4639%		 Fair value
per unit
0.7976

Note: Expected price volatility rate was the forecast of future stock price measured by the

  • historical stock price of similar companies which the industry that MiTAC Digital Technology Corp. belongs to. Referenced to the historical price volatility rate of prior year.

165

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

(20)
(21)		 Provisions
Analysis of total provisions:
Share capital
A. As of December 31, 2020, the Company’s authorized capital was $15,000,000, consisting of 1.5
billion shares, and the paid-in capital was $12,065,568 with a par value of $10 dollars per share.
Movements in the number of the Company’s ordinary shares outstanding are as follows:
Unit: in thousands of shares
For the year ended
For the year ended
December 31,2020
December 31,2019
Equity settlement
-
$ 718
$ Warranty
For the year ended
For the year ended
December 31,2020
December 31,2019
Beginning balance
252,306
$ 257,297
$ Additional provisions
102,389
145,115
Used during the period
98,866)
(
149,029)
(
Effects of foreign exchange
245
1,077)
(
Ending balance
256,074
$ 252,306
$ December 31,2020
December 31,2019
Current
132,169
$ 142,592
$ Non-current
123,905
$ 109,714
$ 2020
2019
Outstanding shares as of January 1
1,061,382
922,941
Disposal of the Company’s treasury share by
subsidiaries
5,816
-
Capital increase of earnings
129,274
140,515
Capital increase of treasury share acquired by
the subsidiaries
1,294)
(
2,074)
(
Outstanding shares as of December 31
1,195,178
1,061,382

166

  • B. Treasury shares

  • (a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

shares are as follows:
Name of company
holdingthe shares
Subsidiary - Tsu Fung
Investment Corp.
Subsidiary - SSDL
Name of company
holdingthe shares
Subsidiary - Tsu Fung
Investment Corp.
Subsidiary - SSDL		 Reason for
reacquisition
Stock conversion
"
Reason for
reacquisition
Stock conversion
"		 December 31,2020
Number of shares
(shares in thousands)
9,250
2,128
December		 Carrying
amount
162,874
$ 77,002
31,2019
Number of shares
(shares in thousands)
14,000
1,900		 Carrying
amount
276,085
$ 77,002

  • (b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury shares should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus.

  • (c) Pursuant to the R.O.C. Securities and Exchange Act, treasury stock should not be pledged as collateral and is not entitled to dividends before it is reissued to the employees.

  • (d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within five years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

  • (e) In accordance with the “Rule No. Financial-Supervisory-Commission, Securities and Futures Bureau, 1010047490,” the Company shall not appropriate special reserve proportionately to the shareholding ratio for the difference of ending market price below the carrying amount of the parent’s stock held by the subsidiaries. If the market price reverses subsequently, the reversal amount shall be appropriated as special reserve proportionately to the shareholding ratio.

  • (f) In 2020, the subsidiary, Tsu Fung Investment Corp. disposed 5,816 thousand shares of the Company amounting to $196,628.

167

(22) Capital surplus

Capital surplus Capital surplus
Net equity of
associates and
Treasury
joint ventures
Changes in
Share
stock
accounted for using
ownership interests
Employee
premium
trnsactions
equitymethod
in subsidiaries
stock options
Others
At January 1, 2020
21,571,329
$ 362,997
$ 1,118,253
$ 609
$ 346,814
$ -
$ Disposal of company’s
share by subsidiaries
recognised as treasury
share transactions
-
83,417
-
-
-
-
Subsidiaries received cash
dividends paid by the
parent company
-
10,784
-
-
-
-
Changes from associates
and joint ventures
accounted for using
the equity method
-
-
87,108
-
-
-
Capital surplus - dividends
unclaimed by the
subsidiaries’
shareholders
-
-
-
-
-
1,100
At December 31, 2020
21,571,329
$ 457,198
$ 1,205,361
$ 609
$ 346,814
$ 1,100
$ Net equity of
associates and
Treasury
joint ventures
Changes in
Share
stock
accounted for using ownership interests
Employee
premium
trnsactions
equitymethod
in subsidiaries
stock options
Others
At January 1, 2019
21,571,329
$ 342,257
$ 1,110,499
$ -
$ 346,814
$ -
$ Changes in ownership
interests in subsidiaries
-
-
-
609
-
-
Subsidiaries received cash
dividends paid by the
parent company
-
20,740
-
-
-
-
Changes from associates and
joint ventures accounted
for using the equity method
-
-
7,754
-
-
-
At December 31, 2019
21,571,329
$ 362,997
$ 1,118,253
$ 609
$ 346,814
$ -
$		 Total
23,400,002
$ 83,417
10,784
87,108
1,100
23,582,411
$ Total
23,370,899
$ 609
20,740
7,754
23,400,002
$
-
$ -
-
-		 23,370,899
$ 609
20,740
7,754
-
$		 23,400,002
$

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 paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

168

(23) Retained earnings

  • A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ accumulated deficit and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall also be set aside or reversed pursuant to the regulations. Appropriation of the remainder along with prior year’s accumulated unappropriated retained earnings shall be proposed by the Board of Directors, and shall be resolved by the stockholders when they are appropriated by issuing new shares. If the appropriation of retained earnings was appropriated in the form of cash, the appropriation should be in line with Article 240-5 of the Company Act, as resolved by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, and reported to the shareholders’ meeting.

  • B. Earnings appropriation ratio and cash dividends ratio are decided by the Board of Directors, taking into account the Company’s financial structure, future capital requirements and profitability, and cash dividends shall account for at least 10% of the total dividends appropriated. Earnings appropriation ratio and cash dividends ratio are subject to adjustments once approved by the stockholders.

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

  • In line with Article 241 of the Company Act, all or part of the legal reserve and capital reserve could be appropriated as cash dividends as resolved by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, and reported to the shareholders’ meeting.

  • D. 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.

169

  • E. On May 28, 2020, the appropriation of earnings for the year ended December 31, 2019 resolved by the shareholders is as follows:
by the shareholders is as follows:
For theyear ended December 31,2019
Dividend per share
Amount (in dollars)
Legal reserve $ 283,976
 $ -
Reversal of special reserve ( 12,265)
 -
Cash dividend 1,077,283 1.0
Stock dividend 1,292,739 1.2
Total $ 2,641,733 $ 2.2
  • F. On March 8, 2021, the appropriation of earnings for the year ended December 31, 2020 proposed by the Board of Directors and to be approved by the shareholders is as follows:
Legal reserve
Cash dividend
Total		 For theyear ended December 31,2020 For theyear ended December 31,2020
Amount
293,325
$ 1,206,557
1,499,882
$		 Dividend per share
(in dollars)
-
$ 1.0
1.0
$

(24) Other equity items

Unrealised
gains (losses)
Currency
on valuation
translation
Total
At January 1
1,753,427
$ 1,081,728)
($ 671,699
$ Reclassified to profit or loss
upon disposal
- Group
-
6,674
6,674
Reclassified to profit or loss
upon disposal
- Group
11,370
-
11,370
- Associates
25,693)
(
-
25,693)
(
Revaluation
- Group
1,644,487
-
1,644,487
- Associates
163,142
-
163,142
Currency translation differences:
- Group
-
769,181)
(
769,181)
(
- Associates
-
40,785
40,785
At December 31
3,546,733
$ 1,803,450)
($ 1,743,283
$ 2020		 2020
Total
1,743,283
$

170

2019

2019
Unrealised
gains (losses) Currency
on valuation translation Total
At January 1 $ 511,888
 ($ 62,976)
 $ 448,912
Reclassified to profit or loss
upon disposal
- Group - 5,444 5,444
Reclassified to retained earnings
upon disposal
- Group ( 39,681)
 - ( 39,681)
- Associates ( 4,624)
 - ( 4,624)
Reclassified as non-controlling
interest - ( 770)
 ( 770)
Revaluation
- Group 1,263,333 - 1,263,333
- Associates 22,511 - 22,511
Currency translation differences:
- Group - ( 642,251)
 ( 642,251)
- Associates - ( 381,175) ( 381,175)
At December 31 $ 1,753,427 ($ 1,081,728) $ 671,699
Operating revenue
For the year ended For the year ended
December 31,2020 December 31,2019
Revenue from contracts with customers $ 41,145,756 $ 35,831,960
A. Disaggregation of revenue from contracts with customers
For the year ended For the year ended
December 31,2020 December 31,2019
Cloud computing product $ 32,838,299
 $ 26,624,689
Automotive electronics and AIoT product 4,747,921 5,602,184
Others 3,559,536 3,605,087
$ 41,145,756 $ 35,831,960

(25) Operating revenue

B. Contract liabilities

The Group has recognised the following revenue-related contract liabilities:

Contract liabilities
– sales of goods
Contract liabilities
– others		 December 31,2020
122,771
$ 5,095
127,866
$		 December 31,2019
271,321
$ 3,647
274,968
$

171

(26) Interest income

Interest income
Other income
Interest income from bank deposits
Interest income from financial assets measured
at amortised cost
Total
Rental revenue
Dividend income
Other income
Total		 For the year ended
December 31,2020
41,469
$ 3,013
44,482
$ For the year ended
December 31,2020
103,990
$ 214,428
163,468
481,886
$		 For the year ended
December 31,2019
47,199
$ 42,205
89,404
$
For the year ended
December 31,2019
119,315
$ 190,145
97,364
406,824
$

(27) Other income

(28) Other gains and losses

Other gains and losses
For the year ended For the year ended
December 31,2020 December 31,2019
Gains on disposals of property, plant and $ 564
 $ 255
equipment
Losses on disposal of investments ( 6,674)
 ( 5,444)
Net currency exchange gains (losses) 99,944 ( 34,712)
(Losses) gains on financial assets liabilities at
fair value through profit or loss ( 18,855)
 9,828
Other losses ( 64,563) ( 68,189)
Total $ 10,416 ($ 98,262)
Financial costs
For the year ended For the year ended
December 31,2020 December 31,2019
Interest expense on bank borrowings $ 42,336
 $ 50,137
Interest expense on lease liabilities 4,143 5,768
$ 46,479 $ 55,905
Exprense by nature
For the year ended For the year ended
December 31,2020 December 31,2019
Employee benefit expense $ 5,515,583
 $ 5,423,670
Depreciation on property, plant and equipment,
investment property and right-of-use assets 908,976 836,105
Amortization charges 89,722 84,614
Total $ 6,514,281 $ 6,344,389

(29) Financial costs

(30) Exprense by nature

172

(31) Employee benefit expenses

Wages and salaries
Shared-based payments
Labor and health insurance fees
Pension costs
Other personnel expenses		 For the year ended
December 31,2020
4,906,351
$ -
326,282
115,208
167,742
5,515,583
$		 For the year ended
December 31,2019
4,787,730
$ 718
341,538
115,769
177,915
5,423,670
$

  • A. According to the amended Articles of Incorporation, the profit (pre-tax profit before deduction of employees’ compensation and directors’ remuneration) of the current year shall be distributed as employees’ compensation and directors’ remuneration, which will be resolved by the Board of Directors. The ratio shall not be lower than 0.1% for employees and not be higher than 1% for directors. If a company has an accumulated deficit, earnings should be reserved to cover losses. Employees’ compensation can be distributed by stock or dividends, and employees must be working for the Company. The Chairman of the Board is authorised to set the qualification requirements.

  • B. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at 0.1% of gain on pre-tax profit before deduction of employees’ compensation and directors’ remuneration. Directors’ remuneration were accrued under 1% of gain on pre-tax profit before deduction of employees’ compensation and directors’ remuneration.

  • C. For the years ended December 31, 2020 and 2019, employees’ compensation were accrued at $2,937 and $2,859, respectively; and directors’ remuneration were accrued at $5,000 and $4,800, respectively. The aforementioned amounts were recognised in salary expenses. Employees’ cash bonus and directors’ and supervisors’ remuneration of 2020 and 2019 as resolved at the Board of Directors of the Company were in agreement with those amounts recognised in the 2020 and 2019 consolidated financial statements.

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

173

(32) Income tax

A. Income tax expense

(a) Components of income tax expense:

(a) Components of income tax expense:
For the year ended For the year ended
December 31,2020 December 31,2019
Current tax:
Current tax on profits for the year $ 164,933
 $ 321,518
Tax on undistributed surplus earnings 9,901 19,858
Prior year income tax (over)
underestimation ( 12,573) 2,289
Total current tax 162,261 343,665
Deferred tax:
Origination and reversal of temporary
differences ( 32,970) ( 34,546)
Total deferred tax ( 32,970) ( 34,546)
Income tax expense $ 129,291 $ 309,119
(b) The income tax (charge)/credit relating to components of other comprehensive income is as
follows:
For the year ended For the year ended
December 31,2020 December 31,2019
Actuarial gain on defined benefit
obligations $ 230 ($ 4,992)
B. Reconciliation between income tax expense and accounting profit
For the year ended For the year ended
December 31,2020 December 31,2019
Tax calculated based on profit before
tax and statutory tax rate $ 687,274
 $ 690,495
Tax on undistributed earnings 9,901 19,858
Unrecognised deferred income tax liabilities ( 334,003)
 ( 367,439)
Tax exempt income by tax regulation ( 216,975)
 ( 184,827)
Change in assessment of realisation of
deferred tax assets ( 4,333)
 ( 29,996)
Effects from foreign income - 75,141
Prior year income tax (over) underestimation ( 12,573)
 2,289
Income tax effect from return of dividends
arising from overseas investments - 103,598
Income tax expense $ 129,291 $ 309,119

174

  • C. Amounts of deferred tax assets or liabilities as a result of temporary differences and tax losses are as follows：
Beginning
balance
Deferred tax assets:
Temporary differences:
Warranty provision
44,278
$ Loss from decline in
inventory price to
market value
108,611
Unrealised estimate
payable
124,439
Unused compensated
absences
15,107
Accrued pension liability
82,133
Others
78,451
Loss carryforward
28,067
Subtotal
481,086
$ Deferred tax liabilities:
Temporary differences:
Equity investments
377,028)
(
Others
5,545)
(
Subtotal
382,573)
(
Total
98,513
$		 For theyear ended December 31,2020 For theyear ended December 31,2020 For theyear ended December 31,2020
Recognised
in profit or
loss		 Recognised
in other
comprehensive
income		 Effects of
exchange
Ending
rate changes
balance
-
$ 47,450
$ 1,997)
(
110,835
1,191)
(
151,765
174)
(
23,363
-
78,983
542)
(
41,481
1,897)
(
50,447
5,801)
($ 504,324
$ -
377,028)
(
-
1,844)
(
-
378,872)
(
5,801)
($ 125,452
$		 Ending
balance
3,172
$ 4,221
28,517
8,430
2,920)
(
36,428)
(
24,277
29,269
$ -
3,701
3,701
32,970
$		 -
$ -
-
-
230)
(
-
-
230)
($ -
-
-
230)
($		 47,450
$ 110,835
151,765
23,363
78,983
41,481
50,447
504,324
$
125,452
$

175

Beginning
balance
Deferred tax assets:
Temporary differences:
Warranty provision
43,608
$ Loss from decline in
inventory price to
market value
59,568
Unrealised estimate
payable
154,203
Others
182,675
Subtotal
440,054
$ Deferred tax liabilities:
Temporary differences:
Equity investments
377,028)
(
Others
1,236)
(
Subtotal
378,264)
(
Total
61,790
$		 For theyear ended December 31,2019 For theyear ended December 31,2019 For theyear ended December 31,2019 For theyear ended December 31,2019
Recognised
in profit or
loss		 Recognised
in other
comprehensive
income		 Effects of
exchange
Ending
rate changes
balance
-
$ 44,278
$ 1,262)
(
108,611
-
124,439
1,553)
(
203,758
2,815)
($ 481,086
$ -
377,028)
(
-
5,545)
(
-
382,573)
(
2,815)
($ 98,513
$		 Ending
balance
670
$ 50,305
29,764)
(
17,644
38,855
$ -
4,309)
(
4,309)
(
34,546
$		 -
$ -
-
4,992
4,992
$ -
-
-
4,992
$		 44,278
$ 108,611
124,439
203,758
481,086
$
98,513
$
  • D. Expiration dates of unused net operating tax losses of the Company and its subsidiaries and amounts of unrecognised deferred tax assets are as follows：

December 31, 2020

December 31,2020 December 31,2020
Year incurred
2012
2014		 Amount filed /
assessed
Assessed
Assessed		 Unrecognised
deferred tax
Unused amount
assets
31,991
$ 31,991
$ 33,143
33,143
December 31,2019		 Expiry year
2022
2024
Year incurred
2011
2012
2014		 Amount filed /
assessed
Assessed
Assessed
Assessed		 Unused amount
15,425
$ 53,663
36,388		 Unrecognised
deferred tax
assets
15,425
$ 53,663
36,388		 Expiry year
2021
2022
2024
  • E. The amounts of deductible temporary differences that are not recognised as deferred tax assets are as follows：
are as follows：
Deductible temporary differences December 31,2020
758,760
$		 December 31,2019
995,072
$
  • F. The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2020 and 2019, the amounts of

176

temporary difference unrecognised as deferred tax liabilities were $15,306,892 and $13,606,211, respectively.

  • G. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

(33) Earnings per share

Earnings per share
Weighted average
number of ordinary
Amount
shares outstanding
Earnings per share
Basic earnings per share
after tax
(shares in thousands)
(in dollars)
Profit attributable to ordinary shareholders
of the parent
2,918,705
$ 1,193,649
2.45
$ Diluted earnings per share
Profit attributable to ordinary shareholders
of the parent
2,918,705
$ Less: Effect of dilutive potential common
stocks issued by investee companies
26,233)
(
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
-
113
Net income attributable to common
stockholders plus dilutive effect of
common stock equivalents
2,892,472
$ 1,193,762
2.42
$ For theyear ended December 31,2020
Weighted average
number of ordinary
Amount
shares outstanding
Earnings per share
Basic earnings per share
after tax
(shares in thousands)
(in dollars)
Profit attributable to ordinary shareholders
of the parent
2,817,880
$ 1,188,748
2.37
$ Diluted earnings per share
Profit attributable to ordinary shareholders
of the parent
2,817,880
$ Less: Effect of dilutive potential common
stocks issued by investee companies
22,531)
(
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
-
118
Net income attributable to common
stockholders plus dilutive effect of
common stock equivalents
2,795,349
$ 1,188,866
2.35
$ For theyear ended December 31,2019		 For theyear ended December 31,2020
Earnings per share
(in dollars)
2.45
$
2.42
$
Weighted average
number of ordinary
shares outstanding
(shares in thousands)
1,188,748
118
1,188,866		 Earnings per share
(in dollars)
2.37
$
2.35
$

A. Basic earnings per share is calculated with the gain or loss attributable to the shareholders of the ordinary shares issued by the Company, divided with outstanding weighted average ordinary shares during the period, and deducted with weighted average treasury shares.

177

  • B. For the year ended December 31, 2019, the outstanding weighted average shares was retrospectively adjusted based on retained earnings capitalization ratio in 2020.

  • (34) Transactions with non-controlling interest

  • A. Acquisition of subsidiary

    • The Group’s subsidiary, MiTAC Computing Technology Corporation newly established a subsidiary, Hyve Design Solutions Corporation, in July 2019 in order to expand the market in America and acquired 50% equity interests in Hyve Design Solutions Corporation. The transaction increased non-controlling interest and equity attributable to owners of parent both by $62,920.

  • B. Cash capital increase raised by subsidiaries

    • The Group’s subsidiary, MiTAC Computing Technology Corp. and the non-controlling interest increased their investment in the subsidiary, Hyve Design Solutions Corporation, in January 2020 proportionally to their interests. The amount of $90,150 was invested by the non-controlling interest.

  • C. On May 23, 2019, the Group’s subsidiary, MiTAC Digital Technology Corp., increased its capital by issuing new shares. However, the Group did not subscribe to those shares proportionately, and the Group’s shareholding ratio was decreased by 2.827%. This transaction increased noncontrolling interest by $46,661, equity attributable to owners of parent increased by $609. For the year ended December 31, 2019, the effect on equity attributable to owners of parent arising from changes in the equity of MiTAC Digital Technology Corp. are listed below:

Cash
Increase in the carrying amount of non-controlling interest
Currency translation differences
Capital surplus, changes in ownership interests in subsidiaries		 Year ended December 31,
2019
46,500
$ 46,661)
(
770
609
$

D. Proceeds from disposal of subsidiaries

The Group’s subsidiary, MiTAC Computing Technology Corp. lost substantial control over Hyve Design Solutions Corporation (please refer to Note 4(3)B.), resulting in a decrease in noncontrolling interests amounting to $33,330.

178

(35) Supplemental cash flow information

A. Financing activities with partial cash payments：

For the year ended For the year ended
December 31,2020 December 31,2019
Cash dividends declared but $ 1,077,283
 $ 1,405,152
yet to be paid – the Company
Add: Cash dividends to minority 4,462 -
interests paid by subsidiaries
Less: subsidiaries received cash
dividends paid from parent
company ( 10,784) ( 20,740)
Cash paid during the year $ 1,070,961 $ 1,384,412
B. The Group lost control over Hyve Design Solutions Corporation on August 19, 2020 (please refer
to Note 4(3)B.). The details of assets and liabilities relating to the subsidiary are as follows:
August 19,2020
Cash $ 78,615
Accounts receivable 107,066
Other receivables 2,743
Prepayments 4,776
Property, plant and equipment 30,926
Intangible assets 835
Accounts payable to related parties ( 25)
Other payables ( 156,412)
Other current liabilities ( 1,864)
Total net assets $ 66,660
Fair value of the Group’s retained equity on the
date of loss of control		 33,330
Book value of the non-controlling interest on the
date of loss of control 33,330
$ 66,660

179

(36) Changes in liabilities from financing activities

At January 1, 2020
Changes in cash flow
Impact of changes in foreign exchange
rate
Changes in other non-cash items
At December 31, 2020
At January 1, 2019
Changes in cash flow
Impact of changes in foreign exchange
rate
Changes in other non-cash items
At December 31, 2019		 Short-term
borrowings		 Guarantee
deposit
received		 Lease
liabilities		 Long-term
borrowings
(including
current
portion)		 Long-term
borrowings
(including
current
portion)		 Liabilities
from financing
activities-gross
3,803,871
$ 2,349,843)
(
10,177)
(
-
1,443,851
$ Short-term
borrowings		 23,645
$ 671)
(
231
-
23,205
$ Guarantee
deposit
received		 189,228
$ 55,398)
(
2,415)
(
99,793
231,208
$ Lease
liabilities		 791,561
$ 119,073
-
-
910,634
$ Long-term
borrowings		 4,808,305
$ 2,286,839)
(
12,361)
(
99,793
2,608,898
$ Liabilities
from financing
activities-gross
-
$ 3,834,646
30,775)
(
-
3,803,871
$		 27,195
$ 3,250)
(
300)
(
-
23,645
$		 233,433
$ 49,973)
(
-
5,768
189,228
$		 -
$ 791,561
-
-
791,561
$		 260,628
$ 4,572,984
31,075)
(
5,768
4,808,305
$

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties

Getac Technology Corp. and subsidiaries Synnex Corp. and subsidiaries Infopower Technologies Ltd. Loyal Fidelity Aerospace Co., Ltd. Synnex Technology International Corp. and subsidiaries Harbinger Venture Management Company Ltd. Lien Hwa Industrial Corp. and subsidiaries UPC Technology Corp.

Relationship with the Group

Associates Associates Associates Associates

Common Chairman

Common Chairman Common Chairman Common Chairman

The Group’s Chairman was this company’s ShenTong Information Co., Ltd. and subsidiaries director Hyve Design Solutions Corporation and subsidiaries Associates (Note) Note: It became an associate of the Group since August 19, 2020.

180

(2) Significant related party transactions and balances

A. Operating revenue:

(a)

Sales of goods:
-Associates-Synnex Corp. and subsidiaries
-Associates-Others
-Other related parties
-Associates-Synnex Corp. and subsidiaries
-Associates-Others
-Other related parties
Total		 For the year ended
December 31,2020
1,536,462
$ 70,358
5,499
1,612,319
179,909
$ 4,220
52
184,181
1,796,500
$		 For the year ended
December 31,2019
1,796,232
$ 69,912
53
1,866,197
185,431
$ 3,251
10
188,692
2,054,889
$

  • (b) The selling price to related parties is determined based on the economic environment and market competition in the region of the related party.

  • (c) The Group’s term of credit for related parties is the same with third party clients. The payment is generally due around 3 months after delivery.

B. Purchases:

(a)

Purchases of goods:
-Associates
-Other related parties - Synnex
Techonology International Corp. and
subsidiaries
Total		 For the year ended
December 31,2020
56,013
$ 352,402
408,415
$		 For the year ended
December 31,2019
283,905
$ 674,819
958,724
$

  • (b) The purchase price from related parties cannot be compared with the prices to third parties due to differences in product specifications.

  • (c) The Group’s term of payment for related parties is generally due around 3 months after counterparty’s delivery.

181

C. Receivables from related parties:

Payables to related parties:
Accounts receivable:
-Associates-Synnex Corp. and subsidiaries
-Associates-Others
-Other related parties
Subtotal
Other receivables:
-Associates-Getac Technology Corp.
and subsidiaries
-Associates-Synnex Corp. and subsidiaries
-Associates-Others
-Other related parties
Subtotal
Total
Accounts payable:
-Associates
-Other related parties - Synnex Technology
International Corp.
and subsidiaries
Subtotal
Other payables:
-Associates
-Other related parties
Subtotal
Total		 December 31,2020
215,717
$ 70
173
215,960
22,203
335
1,324
6,723
30,585
246,545
$ December 31,2020
6,483
$ 13,739
20,222
3,344
3,603
6,947
27,169
$		 December 31,2019
288,577
$ 1,073
-
$
289,650
16,413
93,045
116
4,190
113,764
403,414
$
December 31,2019
24,639
$ 38,353
62,992
66,153
3,543
69,696
132,688
$

D. Payables to related parties:

E. Property transactions:

(a) Acquisition of property, plant and equipment:

cquisition of property, plant and equipment:
Associates
Other related parties		 For the year ended
December 31,2020
2,441
$ 3,161
5,602
$		 For the year ended
December 31,2019
-
$ 8,825
8,825
$

(b) Acquisition of financial assets:

For the year ended December 31, 2020:None.

182

Account
Associates
Investments
accounted
for using
equity method		 Transaction share
(Shares in thousands)
Item
4,562
Shen-Tong
Construction &
Developments
Co., Ltd.		 for the year ended
December 31,2019
Acquisition amount
45,620
$

－ F. Lease transactions leasee

  • (a) The Group leases buildings from Getac Technology Corp. and subsidiaries. Rental contracts are typically made for periods from years 2019 to 2023.

  • (b) Acquisition of right-of-use assets:

On January 1, 2019 (the date of initial application of IFRS 16), the Group increased right-ofuse assets by $51,551.

  • (c) Lease liabilities

  • (i) Outstanding balance:

(i) Outstanding balance:
(ii) Interest expense
Lease transactions－lessor
Expenses
Associates
Associates
Rent income
Associates
Other related parties
Total
Associates
Other related parties
Total		 December 31,2020
32,101
$ For the year ended
December31,2020
2,175
$ For the year ended
December 31,2020
36,211
$ 1,424
37,635
$ For the year ended
December31,2020
83,451
$ 3,820
87,271
$		 December 31,2019
40,875
$
For the year ended
December31,2019
2,844
$
For the year ended
December 31,2019
31,182
$ 1,384
32,566
$
For the year ended
December31,2019
78,211
$ 2,895
81,106
$

  • －

  • G. Lease transactions lessor

  • H. Expenses

183

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits
Post-employment benefits
Total		 For the year ended
December 31,2020
45,940
$ 567
46,507
$		 For the year ended
December 31,2019
45,032
$ 563
45,595
$

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset
Time deposits (shown as "other
non-current assets")

Time deposits
(shown as "other current assets")

Time deposits (shown as "other
non-current assets")		 December 31,2020
December 31,2019
$ 10,253 $ 10,185
8,754 8,761
25,000
25,000
44,007
$ 43,946
$ Book Value		 Purpose
December 31,2020
$ 10,253
8,754
25,000
44,007
$
Guarantee deposit
Customs guarantee
Pledged margin for commodity
tax guarantee

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

Capital expenditure contracted but not provided are as follows:

Property, plant and equipment December 31,2020
60,288
$		 December 31,2019
150,828
$

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.

184

(2) Financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets
Financial assets at fair value through profit or loss
Financial assets mandatorily measured at fair
value through profit or loss
Financial assets at fair value through other
comprehensive income
Designation of equity instrument
Financial assets at amortised cost
Cash and cash equivalents
Financial assets at amortised cost
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Refundable deposits
Other financial assets
Financial liabilities
Financial liabilities at fair value through profit
or loss
Financial liabilities held for trading
Financial liabilities at amortised cost
Short-term borrowings
Accounts payable
Accounts payable - related parties
Other accounts payable
Refundable deposits
Long-term borrowings (including current
portion)
Lease liabilities		 December 31,2020
6,107
$ 7,298,592
$ 5,805,297
$ -
31,689
4,982,050
215,960
60,168
23,600
44,007
11,162,771
$ 11,691
$ 1,443,851
$ 6,662,560
20,222
3,366,781
23,205
910,634
12,427,253
$ 231,208
$		 December 31,2019
99,948
$
5,567,888
$
6,664,566
$ 490,770
92,751
6,183,075
289,650
131,562
17,483
43,946
13,913,803
$
8,637
$
3,803,871
$ 5,783,558
62,992
3,362,875
23,645
791,561
13,828,502
$
189,228
$

B. Financial risk management policies

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. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance. The Group uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2), 6(16)).

185

  • C. Significant financial risks and degrees of financial risks

  • (a)Market risk

Foreign exchange risk

  • i. 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, EUR, AUD, JPY and CNY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:
exchange rate fluctuations is as follows: follows:
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
USD:CNY
Non-monetary items
CNY:USD
Financial liabilities
Monetary items
USD:NTD
USD:CNY		 December 31,2020
Foreign curency
amount
(In thousands)
420,414
$ 127,552
80,935
462,736
154,042		 Exchange
rate
28.480
6.507
0.154
28.480
6.507		 Book value
(NTD)
11,973,379
$ 3,632,690
354,254
13,178,719
4,387,124


186

December 31, 2019

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
EUR:NTD
AUD:NTD
USD:CNY
Non-monetary items
CNY:USD
Financial liabilities
Monetary items
USD:NTD
EUR:NTD
AUD:NTD
USD:CNY		 Foreign curency
amount
(In thousands)
494,255
$ 6,081
8,264
106,092
72,470
489,384
6,031
6,100
180,376		 Exchange
rate
29.980
33.590
21.005
6.964
0.144
29.980
33.590
21.005
6.964		 Book value
(NTD)
14,817,755
$ 204,271
173,595
3,180,631
311,984
14,671,731
202,597
128,131
5,407,668




  • ii. Total exchange gain (loss), including realized and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2020 and 2019, amounted to $99,944 and ($34,712), respectively.

  • iii. When the exchange rates for USD, AUD, EUR and CNY to NTD and USD to CNY increased or decreased by 1%, with all other factors the same at December 31, 2020 and 2019, net profit (loss) before tax would increase or decrease by ($19,598) and ($20,339) for the years ended December 31, 2020 and 2019, 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 and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio.

187

  • ii. The Group’s investments in equity securities comprise shares and open-end funds issued by the domestic or foreign 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 1% with all other variables held constant, post-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $0 and $780, 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 $72,986 and $55,679, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

  • i. The Group’s main interest rate risk arises from long-term and short-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. During 2020 and 2019, the Group’s borrowings at variable rate were mainly denominated in New Taiwan dollars and US Dollars.

  • ii. If the borrowing interest rate had increased/decreased by 0.01% with all other variables held constant, profit, net of tax for the years ended December 31, 2020 and 2019 would have increased/decreased by $235 and $380, 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 financial instruments settled based on the agreement.

  • ii. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience, the forecastability of the impact of global economic information to the future and other factors.

  • iii. Individual risk limits are set based on internal or external factors in accordance with limits set by credit control manager. The utilisation of credit limits is regularly monitored.

  • iv. For banks and financial institutions, only the institutions with good credit quality are accepted as counterparties.

  • v. The default occurs when it expects that the contact payments cannot be recovered and are transferred to overdue receivables.

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

    • (i) It becomes probable that the issuer will enter bankruptcy or other financial

188

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.

  • vii. The Group classifies customers’ repayment ability in accordance with the contract term and macroeconomic forecast included in the forecastability and related industry information. The Group applies the modified approach using group methodology to estimate expected credit loss.

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

  • ix.The Group considered the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable. As of December 31, 2020 and 2019, the loss rate methodology is as follows:

he loss rate methodology is as follows:
At December 31,2020
Expected loss rate
Value
Allowance
At December 31,2019
Expected loss rate
Value
Allowance		 GroupA
10% - 100%
454,571
$ 85,151
GroupA
10% - 100%
394,068
$ 76,174		 GroupB
0.012% - 0.7%
4,834,921
$ 6,331
GroupB
0.014% - 0.02%
6,155,691
$ 860		 Total
5,289,492
$ 91,482
Total
6,549,759
$ 77,034

Group A- High-risk accounts: The evaluation module is based on payment records, financial indicators, contract fulfillment status, and related industry information. Group B- Low- and medium-risk accounts: Entities provide good payment records, strong prospects, transparent financials or collateral.

  • x. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable is as follows:
2020
At January 1 $ 77,034
Provision for impairment 17,494
Write-offs ( 3,496)
Effect of foreign exchange 450
At December 31 $ 91,482

189

2019
At January 1 $ 97,765
Reversal of impairment loss ( 14,812)
Write-offs ( 4,932)
Effect of foreign exchange ( 987)
At December 31 $ 77,034

(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. 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.

Non-derivative financial liabilities:

December 31,2020
Short-term borrowings
Accounts payable
Other payables
Lease liabilities
Guarantee deposits
Long-term borrowings
December 31,2019
Short-term borrowings
Accounts payable
Other payables
Lease liabilities
Guarantee deposits
Long-term borrowings		 Less than
1year
1,444,893
$ 6,682,782
3,366,781
38,661
8,257
52,075
Less than
1year
3,813,539
$ 5,846,550
3,362,875
47,435
7,076
5,586		 Between 1
and 2years
-
$ -
-
37,419
2,911
261,139
Between 1
and 2years
-
$ -
-
31,798
3,790
52,828		 Between 2
and 3years
-
$ -
-
35,154
6,615
249,203
Between 2
and 3years
-
$ -
-
23,295
1,716
215,052		 Over
3years
-
$ -
-
132,940
5,422
361,425
Over
3years
-
$ -
-
121,086
11,063
538,915

Derivative financial liabilities

As of December 31, 2020 and 2019, the Group’s derivative financial liabilities mature within one year.

  • iii.The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

190

(3) Fair value information

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

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

  • Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

  • Level 3: Inputs for the asset or liability that are not based on observable market data.

  • B. Fair value information of investment property at cost is provided in Note 6(12).

  • C. Financial instruments not measured at fair value

  • Including the carrying amounts of cash and cash equivalents, financial assets at amortised cost, notes receivable, accounts receivable, other receivables, refundable deposits, short-term borrowings, notes payable, accounts payable, other payables, long-term borrowings and guarantee deposits received are approximate to their fair values.

  • D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

  • (a) The related information of natures of the assets and liabilities is as follows:

December 31, 2020
Level 1
Recurring fair value measurements
Financial assets:
Forward exchange contracts
-
$ Equity securities
3,892,858
Total
3,892,858
$ Recurring fair value measurements
Financial liabilities:
Forward exchange contracts
-
$ December 31, 2019
Level 1
Recurring fair value measurements
Financial assets:
Forward exchange contracts
-
$ Equity securities
2,884,002
Total
2,884,002
$ Recurring fair value measurements
Financial liabilities:
Forward exchange contracts
-
$		 Level 2
6,107
$ 283,970
290,077
$ 11,691
$ Level 2
21,948
$ 276,589
298,537
$ 8,637
$		 Level 3
-
$ 3,121,764
3,121,764
$ -
$ Level 3
-
$ 2,485,297
2,485,297
$ -
$		 Total
6,107
$ 7,298,592
7,304,699
$
11,691
$
Total
21,948
$ 5,645,888
5,667,836
$
8,637
$

Financial liabilities:
Forward exchange contracts

191

  • (b) The methods and assumptions the Group used to measure fair value are as follows:

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

      • Listed shares Open-end fund

      • Market quoted price Closing price Net worth

    • 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.

    • iii. When assessing non-standard and low-complexity financial instruments, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

    • iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate.

    • v. 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, for example, model risk or liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

    • vi. The Group takes into account adjustments for credit risk to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.

  • E. The private placement shares of COMPUCASE ENTERPRISE CO., LTD. have been listed in the Taiwan Stock Exchange from October 2019, therefore, the Group transferred the fair value from Level 2 to Level 1 at the end of the month when the event occurred.

  • F. For the year ended December 31, 2020, there was no transfer between Level 1 and Level 2.

  • G. The following table presents the changes in Level 3 instruments as at December 31, 2020 and 2019:

192

Equitysecurities Equitysecurities
2020 2019
January 1 $ 2,485,297
 $ 458,025
Proceeds from capital reduction - ( 45,389)
for the year
Decreased in the year ( 12,303)
 -
Acquired in the year 17,095 50,274
Transfer into level 3 - 1,088,481
Gains recognised in other
comprehensive income		 632,564 934,181
Effects of foreign exchange ( 889) ( 275)
December 31 $ 3,121,764 $ 2,485,297

  • H. For the year ended December 31, 2019, MITAC Incorporated Co., Ltd. terminated trading its stocks on TPEx starting from April 23, 2019, and there is insufficient observable market information. As a result, the Group has transferred the fair value from Level 1 into Level 3 at the end of the month when the event occurred.

  • I. Investment department is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, and reviewing the information periodically.

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

Non-derivative
equityinstrument:
Unlisted shares
Non-derivative
equityinstrument:
Unlisted shares		 Fair value at
December31,2020
$ 3,121,764
Fair value at
December31,2019
$ 2,485,297		 Valuation
technique
Net asset
value
Valuation
technique
Net asset
value		 Significant
unobservable input
Net asset value
Significant
unobservable input
Net asset value		 Range (weighted
average)		 Relationship of
inputs to fairvalue
-
Range (weighted
average)		 The higher the net asset
value, the higher the
fair value.
Relationship of
inputs to fairvalue
- The higher the net asset
value, the higher the
fair value.
  • K. The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in difference 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:

193

Financial assets
Input
Equity instrument
Net asset
value
Financial assets
Input
Equity instrument
Net asset
value		 Change
±1%
Change
±1%		 December 31,2020 31,2020
Recognised in Unfavourable
change
-
$ profit or loss
December		 comprehensive income
Recognised in other
Favourable
change
-
$		 Favourable
change
31,218
$ 31,2019		 Unfavourable
change
31,218
$
Recognised in Unfavourable
change
-
$ profit or loss		 Recognised in other
comprehensive income
Favourable
change
-
$		 Favourable
change
24,853
$		 Unfavourable
change
24,853
$

- ’ (4) Impact of COVID 19 pandemic on the Group s operations in 2020

  • Since the outbreak of COVID-19 pandemic in early 2020, the subsidiaries, customers and suppliers in certain areas must comply with the policies such as quarantine enforcement and transportation limitation due to the widespread pandemic. However, it had no significant impact on the Group’s overall financial business, and there are no issues with the Group’s ability to continue as a going concern, impairment of assets and financing risks after the assessment.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

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

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

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

  • D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None.

  • E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

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

  • G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: Please refer to table 4.

  • H. Receivables from related parties reaching NT$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 Notes 6(2) and (16).

  • J. Significant inter-company transactions during the reporting periods: 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.

194

  • B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 4 and table 8.

(4) Major shareholders information

Major shareholders information: Please refer to table 9.

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. The Group’s Chief Operating Decision-Maker manages business from the perspectives of cloud computing product business group and automotive electronics and AIoT business group.

The Group’s company organization, basis of department segmentation and principles for measuring segment information for the period were not significantly changed.

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

The segment information provided to the Chief Operating Decision-Maker for the reportable segments and reconciliations are as follows:

Item
Revenue
Segment gain (loss)
Item
Revenue
Segment gain (loss)		 For theyear ended December 31,2020
Cloud computing
businessgroup
32,838,299
$ 122,664		 Automotive
electronics and
AIoT businessgroup
Others
4,747,921
$ 3,559,536
$ 45,069
93,350)
(
For theyear ended December 31,2019		 Total
41,145,756
$ 74,383
Cloud computing
businessgroup
26,624,689
$ 230,085		 Automotive
electronics and
AIoT businessgroup
Others
5,602,184
$ 3,605,087
$ 289,076
18,201)
(		 Total
35,831,960
$ 500,960

(3) Reconciliation for segment income (loss)

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.

195

A reconciliation of reportable segment income or loss to the income/(loss) before tax from continuing operations for the years ended December 31, 2020 and 2019 is provided as follows:

Information on products and services
Item
Profit for reportable segments
Unallocated:
Share of profits and losses from affiliates
and joint ventures accounted for using
the equity method
Dividend revenue
Interest revenue
Net currency exchange gain (loss)
Rent income
Other income(loss)
Income before tax from operations
Sales
Other revenue
Total		 For the year ended
For the year ended
December 31,2020
December 31,2019
74,383
$ 500,960
$ 2,415,388
2,239,887
214,428
190,145
44,482
89,404
99,944
34,712)
(
103,990
119,315
27,461
22,091)
(
2,980,076
$ 3,082,908
$ For the year ended
For the year ended
December 31,2020
December 31,2019
40,649,210
$ 35,388,203
$ 496,546
443,757
41,145,756
$ 35,831,960
$		 For the year ended
December 31,2019
3,082,908
$
For the year ended
December 31,2019
35,388,203
$ 443,757
35,831,960
$

(4) Information on products and services

(5) Geographical information

For the years ended December 31, 2020 and 2019, revenues and non-current assets from certain regions are listed below:

For theyear ended Assets - non-current
5,313,211
$ 688,111
110,276
3,436,866
9,548,464
$ December 31,2020		 For theyear ended December 31,2019
Revenue
1,157,516
$ 23,009,897
4,403,958
12,574,385
41,145,756
$		 Revenue
827,127
$ 17,333,518
4,565,210
13,106,105
35,831,960
$		 Assets - non-current
5,004,965
$ 688,236
116,902
3,798,324
9,608,427
$

(6) Major customer information

For the years ended December 31, 2020 and 2019, the major customer information of the Group are listed below:

196

For theyear ended December 31,2020 For theyear ended December 31,2020 For theyear ended December 31,2020
Customer
Customer A
Customer B
Customer C
Customer D		 Revenue
4,618,786
$ 11,717,045
4,656,177
4,347,822		 Percentage of
total revenue
Segment
11%
Cloud computing business group
28%
Cloud computing business group
11%
Cloud computing business group
11%
Cloud computing business group		 Segment

For the year ended December 31, 2019

Customer
Customer A
Customer B
Customer C
Customer D		 Revenue
5,355,068
$ 5,321,094
4,349,024
3,781,545		 Percentage of
total revenue
Segment
15%
Cloud computing business group
15%
Cloud computing business group
12%
Cloud computing business group
11%
Cloud computing business group		 Segment

197

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Loans to others

For the year ended December 31, 2020

No.
（Note1）		 Creditor Borrower General ledger account Is a related
party		 Maximum
outstanding
balance during the
year ended
December 31,
2020		 Balance at
December 31,
2020		 Actual amount
drawn down		 Interest rate Nature of
loan
（Note 2）		 Amount of
transactions
with the
borrower		 Reason for short-
term financing		 Allowance
for doubtful
accounts		 Collateral Collateral Limit on loans
granted to a single
party
（Note 3）		 Ceiling on total
loans granted
（Note 3）		 Footnote
Item Value
0 MiTAC Holdings Corp. MiTAC International Corp. Other receivables-
related parties		 Y 2,000,000
$		 2,000,000
$		 -
$		 0 2 -
$		 Operations -
$		 None -
$		 4,105,942
$		 8,211,884
$
0 MiTAC Holdings Corp. MiTAC Computing Technology Corp.
Other receivables-
related parties		 Y 3,000,000 3,000,000 1,355,648 0.22%-1.33% 2 - Operations - None - 4,105,942 8,211,884
0 MiTAC Holdings Corp. MiTAC Digital Technology Corp.
Other receivables-
related parties		 Y 1,000,000 1,000,000 10,538 0.26% 2 - Operations - None - 4,105,942 8,211,884
1 MiTAC International Corp. MiTAC Holdings Corp.
Other receivables-
related parties		 Y 1,000,000 1,000,000 60,000 0.5337%-0.6167% 2 - Operations - None - 3,741,341 7,482,682
1 MiTAC International Corp. MiTAC Computing Technology Corp.
Other receivables-
related parties		 Y 2,900,000 2,900,000 279,104 0.27%-2.70% 2 - Operations - None - 3,741,341 7,482,682
1 MiTAC International Corp. MiTAC Digital Technology Corp.
Other receivables-
related parties		 Y 2,000,000 1,000,000 421,504 0.30%-2.75% 2 - Operations - None - 3,741,341 7,482,682
1 MiTAC International Corp. MiTAC Technology (KunShan) Co., Ltd.
Other receivables-
related parties		 Y 30,250 - - 2.70% 2 - Operations - None - 3,741,341 7,482,682
2 MiTAC Computing Technology Corp. MiTAC Holdings Corp.
Other receivables-
related parties		 Y 1,120,000 1,120,000 1,120,000 0.6293% 2 - Operations - None - 1,509,740 1,509,740
2 MiTAC Computing Technology Corp. MiTAC International Corp.
Other receivables-
related parties		 Y 370,000 - - 0.5%-0.75% 2 - Operations - None - 1,509,740 1,509,740
3 MiTAC Digital Technology Corp. MiTAC Holdings Corp.
Other receivables-
related parties		 Y 600,000 600,000 600,000 0.5337% 2 - Operations - None - 686,277 686,277
3 MiTAC Digital Technology Corp. MiTAC International Corp.
Other receivables-
related parties		 Y 500,000 - - 0.7207%-0.980% 2 - Operations - None - 686,277 686,277
3 MiTAC Digital Technology Corp. MiTAC Europe Ltd.
Other receivables-
related parties		 Y 27,310 - - 1.9% 2 - Operations - None - 686,277 686,277
4 Silver Star Developments Ltd. MiTAC International Corp.
Other receivables-
related parties		 Y 3,418,250 1,936,640 712,000 0 2 - Operations - None - 7,891,312 7,891,312
4 Silver Star Developments Ltd. MiTAC Holdings Corp.
Other receivables-
related parties		 Y 1,512,500 1,424,000 1,366,186 0 2 - Operations - None - 39,456,562 39,456,562
4 Silver Star Developments Ltd. Software Insights Ltd.
Other receivables-
related parties		 Y 30,250 28,480 28,480 0 2 - Operations - None - 39,456,562 39,456,562
4 Silver Star Developments Ltd. Start Well Technology Ltd.
Other receivables-
related parties		 Y 925,650 871,488 871,488 0 2 - Operations - None - 39,456,562 39,456,562
4 Silver Star Developments Ltd. MiTAC Benelux N.V.
Other receivables-
related parties		 Y 80,684 80,546 77,044 0 2 - Operations - None - 39,456,562 39,456,562
5 Tyan Computer Corp.(USA) Mitac Information Systems Corp.
Other receivables-
related parties		 Y 226,875 213,600 213,600 2.83% 2 - Operations - None - 1,161,464 1,161,464
6 MiTAC Investment Holding Ltd. MiTAC Technology (KunShan) Co., Ltd.
Other receivables-
related parties		 Y 63,496 63,467 63,467 4.35% 2 - Operations - None - 6,107,991 6,107,991 
Table 1,Page 1

198

No.
（Note1）		 Creditor Borrower General ledger account Is a related
party		 Maximum
outstanding
balance during the
year ended
December 31,
2020		 Balance at
December 31,
2020		 Actual amount
drawn down		 Interest rate Nature of
loan
（Note 2）		 Amount of
transactions
with the
borrower		 Reason for short-
term financing		 Allowance
for doubtful
accounts		 Collateral Collateral Limit on loans
granted to a single
party
（Note 3）		 Ceiling on total
loans granted
（Note 3）		 Footnote
Item Value
6 MiTAC Investment Holding Ltd. MiTAC Information Systems (Kunshan) Co., Ltd. Other receivables-
related parties		 Y 341,562 341,406 341,406 0 2 - Operations - None - 6,107,991 6,107,991
7 MiTAC Research (ShangHai) Ltd. MiTAC Investment Holding Ltd.
Other receivables-
related parties		 Y 275,877 275,751 275,751 0 2 - Operations - None - 925,407 925,407
8 Access Wisdom Holdings Ltd. MiTAC Digital Technology Corp.
Other receivables-
related parties		 Y 32,439 31,328 31,328 0 2 - Operations - None - 38,318 38,318
9 Mio International Ltd. MiTAC Digital Technology Corp.
Other receivables-
related parties		 Y 20,643 19,936 19,936 0 2 - Operations - None - 20,397 20,397
9 Mio International Ltd. Access Wisdom Holdings Ltd.
Other receivables-
related parties		 Y 20,643 19,936 19,936 0 2 - Operations - None - 101,983 101,983

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

(2) The subsidiaries are numbered in order starting from ‘1’. Note 2: The nature of loan are as follows:

Note 3: (1) MiTAC Holdings Corp. (the Company)'s total borrowing amount of short-term financing should not exceed 20% of the net worth on the latest financial statements audited or reviewed by independent auditors.

The borrowing amount for each borrowing company should not exceed 10% of the net worth of the Company.

(2) MiTAC International Corp. (the Company)'s total borrowing amount of short-term financing should not exceed 20% of the net worth on the latest financial statements audited or reviewed by independent auditors.

The borrowing amount for each borrowing company should not exceed 10% of the net worth of the Company.

MiTAC Computing Technology Corp.’s short-term financing limit should not exceed 40% of the net worth on the latest financial statements audited.

MiTAC Digital Technology Corp.’s short-term financing limit should not exceed 40% of the net worth on the latest financial statements audited.

(5) If Silver Star Developments Ltd. was lending to foreign subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing amount should not be higher than 200% of the net worth on the latest financial statements audited by independent auditors.

(6) If Silver Star Developments Ltd. was lending to domestic subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing amount should not be higher than 40% of the net worth on the latest financial statements audited by independent auditors.

(7) The borrowing amount and the total borrowing amount of Tyan Computer Corp. (USA) lending to the ultimate parent company's direct and indirect wholly-owned foreign subsidiaries should not exceed 200% of the net worth on the latest financial statements audited by independent auditors.

(8) If MiTAC Holdings Corp. was lending to domestic subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing amount should not be higher than 200% of the net worth on the latest financial statements audited by independent auditors. (9) If MiTAC Research (Shanghai) Ltd. was lending to domestic subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing amount should not be higher than 200% of the net worth on the latest financial statements audited by independent auditors.

(10) If Access Wisdom Holdings Ltd. was lending to domestic subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing amount should not be higher than 40% of the net worth on the latest financial statements audited by independent auditors.

(11) If Mio International Ltd. was lending to foreign subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing

amount should not be higher than 200% of the net worth on the latest financial statements audited by independent auditors.

(12) If Mio International Ltd. was lending to domestic subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing amount should not be higher than 40% of the net worth on the latest financial statements audited by independent auditors. 

Table 1,Page 2

199

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Provision of endorsements and guarantees to others For the year ended December 31, 2020

Table 2

Expressed in thousands of NTD

(Except as otherwise indicated)

Number
（Note 1）		 Endorser/
guarantor		 Party being
endorsed/guaranteed		 Party being
endorsed/guaranteed		 Limit on
endorsements/
guarantees
provided for a
single party
(Note 3)		 Maximum
outstanding
endorsement/
guarantee
amount as of
December 31,
2020		 Outstanding
endorsement/
guarantee
amount at
December 31,
2020		 Actual amount
drawn down		 Amount of
endorsements/
guarantees
secured with
collateral		 Ratio of
accumulated
endorsement/guaran
tee
amount to net asset
value
of the
endorser/guarantor		 Ceiling on
total amount of
endorsements/
guarantees
provided
（Note 3）		 Provision of
endorsements/
guarantees by
parent
company to
subsidiary		 Provision of
endorsements/
guarantees by
subsidiary to
parent
company		 Provision of
endorsements/
guarantees to
the
party in
Mainland
China		 Footnote
Companyname Relationship
with the
endorser/
guarantor
（Note 2）
0 MiTAC Holdings Corp. Tyan Computer Corp.(USA) 2 20,529,709
$		 281,205
$		 199,360
$		 199,360
$		 -
$		 0.49 20,529,709
$		 Y N N
0 MiTAC Holdings Corp. MiTAC Computing Technology Corp. 2 20,529,709 671,273 663,584 663,584 - 1.62 20,529,709 Y N N
0 MiTAC Holdings Corp. MiTAC International Corp. 2 20,529,709 230 230 230 - 0.00 20,529,709 Y N N
0 MiTAC Holdings Corp. MiTAC Digital Technology Corp. 2 20,529,709 4,003 3,798 3,798 - 0.01 20,529,709 Y N N
0 MiTAC Holdings Corp. MiTAC Information Systems Corp. 2 20,529,709 549,000 - - - 0.00 20,529,709 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 endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(3) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company. (4)The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company. (5)Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract. (6)Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership. (7) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.

Note 3: (1) The endorsement and guarantees amount provided by MiTAC Holdings Corp. to each entity which is directly or indirectly held 50% or more of the voting power by the company should not exceed 50% of the net worth on the latest financial statements audited or reviewed by independent auditors. (2) MiTAC Holding Corp's total endorsements and guarantees should not exceed 50% of the net worth on the latest financial statements audited or reviewed by independent auditors. 

Table 2,Page 1

200

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

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

Securities held by Marketable securities Marketable securities Relationship with the
securities issuer		 General ledger
account		 As of December 31, 2020 As of December 31, 2020 As of December 31, 2020 As of December 31, 2020 Footnote
Numberofshares Bookvalue Ownership (%) Fairvalue
MiTAC Holdings Corp. stocks Synnex Technology International Corp. Same board chairman Financial assets at fair value through other
comprehensive income-non current		 3,103,717 145,875
$		 0.19 145,875
$
MiTAC Holdings Corp. stocks Healthera Corporation None Financial assets at fair value through other
comprehensive income-non current		 90,141 2,976 0.35 2,976
MiTAC Holdings Corp. stocks JVP VIII, L.P. None Financial assets at fair value through other
comprehensive income-non current		 1,400,000 41,956 1.17 41,956
MiTAC Holdings Corp. stocks WHETRON ELECTRONICS CO., LTD. None Financial assets at fair value through other
comprehensive income-non current		 6,550,000 128,197 9.05 128,197
MiTAC Holdings Corp. stocks Harbinger VIII Venture Capital Corp. None Financial assets at fair value through other
comprehensive income-non current		 7,500,000 73,834 11.57 73,834
MiTAC International Corp. stocks Lien Hwa Industrial Holdings Corporation Same board chairman Financial assets at fair value through other
comprehensive income-non current		 35,750,667 1,522,978 2.79 1,522,978
MiTAC International Corp. stocks UPC Technology Corp. Same board chairman Financial assets at fair value through other
comprehensive income-non current		 16,179,561 310,648 1.21 310,648
MiTAC International Corp. stocks COMPUCASE ENTERPRISE CO., LTD. None Financial assets at fair value through other
comprehensive income-non current		 10,000,000 434,000 8.83 434,000
MiTAC International Corp. stocks Synnex Technology International Corp. Same board chairman Financial assets at fair value through other
comprehensive income-non current		 5,245,000 246,515 0.31 246,515
MiTAC International Corp. stocks MiTAC INC. The Company's chairman
was this company's		 Financial assets at fair value through other
comprehensive income-non current		 6,259,734 88,118 4.17 88,118
MiTAC International Corp. stocks MiTAC Information Technology Corp. Same board chairman Financial assets at fair value through other
comprehensive income-non current		 31,016,697 1,569,703 8.69 1,569,703
MiTAC International Corp. stocks Overseas Investment & Development Corp. None Financial assets at fair value through other
comprehensive income-non current		 1,000,000 10,630 1.11 10,630
MiTAC International Corp. stocks Harbinger Venture Capital Corp. Same board chairman Financial assets at fair value through other
comprehensive income-non current		 27,828 252 14.05 252
MiTAC International Corp. stocks Harbinger VI Venture Capital Corp. None Financial assets at fair value through other
comprehensive income-non current		 3,745,020 47,273 13.28 47,273
MiTAC International Corp. stocks Harbinger VII Venture Capital Corp. Same board chairman Financial assets at fair value through other
comprehensive income-non current		 10,000,000 136,396 9.39 136,396
Tsu Fung Investment Corp. stocks MiTAC Holdings Corp. Ultimate parent company Financial assets at fair value through other
comprehensive income-current		 9,250,594 272,893 0.77 272,893 Note 1
Tsu Fung Investment Corp. stocks Getac Technology Corp. None Financial assets at fair value through other
comprehensive income-current		 7,783,741 380,625 1.33 380,625
Tsu Fung Investment Corp. stocks UPC Technology Corp. None Financial assets at fair value through other
comprehensive income-current		 16,360,231 314,116 1.23 314,116
Tsu Fung Investment Corp. stocks Synnex Technology International Corp. None Financial assets at fair value through other
comprehensive income-current		 6,899,974 324,299 0.41 324,299
Tsu Fung Investment Corp. stocks Lien Hwa Industrial Holdings Corporation None Financial assets at fair value through other
comprehensive income-current		 4,302,166 183,272 0.34 183,272
Tsu Fung Investment Corp. stocks National Aerospace Fasteners Corporation None Financial assets at fair value through other
comprehensive income-current		 2,609,479 30,531 2.96 30,531
Tsu Fung Investment Corp. stocks PROMISE Technology Inc. None Financial assets at fair value through other
comprehensive income-non current		 4,594,672 64,679 3.06 64,679
Tsu Fung Investment Corp. stocks MiTAC INC. None Financial assets at fair value through other
comprehensive income-non current		 19,121,826 967,717 5.36 967,717
Tsu Fung Investment Corp. stocks MiTAC Information Technology Corp. None Financial assets at fair value through other
comprehensive income-non current		 4,848,125 137,647 19.99 137,647 Note 2
Tsu Fung Investment Corp. stocks Tung Da Investment Co., Ltd. None Financial assets at fair value through other
comprehensive income-non current		 862,922 15,472 19.99 15,472
Tsu Fung Investment Corp. stocks Lien Yung Investment Corp. None Financial assets at fair value through other
comprehensive income-non current		 9,217,196 120,838 19.99 120,838
Silver Star Developments Ltd. and its subsidiaries stocks MiTAC Holdings Corp. Ultimate parent company Financial assets at fair value through other
comprehensive income-non current		 2,127,954 62,775 0.18 62,775 Note 1
Silver Star Developments Ltd. and its subsidiaries stocks Budworth Investments Ltd. None Financial assets at fair value through other
comprehensive income-non current		 134,908 46 14.83 46
Silver Star Developments Ltd. and its subsidiaries stocks Panasas Inc. None Financial assets at fair value through profit or loss-
non current		 13,913 - 0.04 -

Note 1: The Company's shares held by Tsu Fung Investment Corp. and Silver Star Developments Ltd. are accounted for as treasury stocks.

Note 2: MiTAC International Corp. sold its shares of Tung Da Investment Co., Ltd. to Tsu Fung Investment Corp.,and such disposal gain has not yet been realised. 

Table 3,Page 1

201

For the year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Table 4

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

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

Purchaser/seller Counterparty Relationship with
the
counterparty		 Transaction Transaction Transaction Transaction Differences in transaction terms Differences in transaction terms Notes/accounts receivable(payable) Notes/accounts receivable(payable) Footnote
Purchases
/sales		 Amount Percentage of total
purchases/sales		 Credit term Unitprice Credit term Balance Percentage of
total notes/accounts
receivable(payable)
MiTAC Computing Technology Corp. MiTAC Information Systems Corp. Subsidary Sales 12,647,856
$		 47.41% Note 1 Note 3 Note 1 4,435,284
$		 69.94%
MiTAC Computing Technology Corp. MiTAC Computer (Shunde) Ltd. Affiliate Purchases 434,309 1.73% Note 2 Note 3 Note 2 1,419,180)
(		 25.00%
MiTAC Computing Technology Corp. Tyan Computer Corp.(USA) Subsidary Sales 407,741 1.53% Note 1 Note 3 Note 1 - 0.00%
MiTAC Computing Technology Corp. MiTAC Telematics Technology
Corporation		 Subsidary Sales 715,740 2.68% Note 1 Note 3 Note 1 6,941 0.11%
MiTAC Computing Technology Corp. Synnex Corp. and its subsidiaries Associate of
affiliate		 Sales 747,472 2.80% Note 1 Note 3 Note 1 171,719 2.71%
MiTAC Computing Technology Corp. Synnex Technology International Corp. and its subsidiaries Others Purchases 342,301 1.36% Note 2 Note 3 Note 2 9,544)
(		 0.17%
MiTAC Computing Technology Corp. MiTAC Japan Corp. Affiliate Sales 168,562 0.63% Note 1 Note 3 Note 1 37,062 0.58%
MiTAC Digital Technology Corp. MiTAC Australia Pty Ltd. Subsidary Sales 154,309 3.51% Note 1 Note 3 Note 1 83,108 12.39%
MiTAC Digital Technology Corp. MiTAC Computer (Kunshan) Ltd. Affiliate Purchases 858,779 29.04% Note 2 Note 3 Note 2 835,634)
(		 68.35%
Silver Star Developments Ltd.(SSDL) and its subsidiaries MiTAC Computing Technology Corp. Affiliate Sales 521,779 3.59% Note 1 Note 3 Note 1 1,462,804 36.57%
Silver Star Developments Ltd.(SSDL) and its subsidiaries MiTAC Computing Technology Corp. Affiliate Purchases 168,597 1.22% Note 2 Note 3 Note 2 37,062)
(		 3.16%
Silver Star Developments Ltd.(SSDL) and its subsidiaries MiTAC Digital Technology Corp. Affiliate Sales 868,965 5.98% Note 1 Note 3 Note 1 847,161 21.18%
MiTAC Technology UK Ltd. and its subsidiaries MiTAC Computing Technology Corp. Parent
Company		 Purchases 13,055,596 69.59% Note 2 Note 3 Note 2 4,435,284)
(		 79.57%
MiTAC Technology UK Ltd. and its subsidiaries Synnex Corp. and its subsidiaries Associate of
affiliate		 Sales 782,857 4.11% Note 1 Note 3 Note 1 43,997 2.49%
Access Wisdom Holdings Ltd and its subsidiaries MiTAC Digital Technology Corp. Parent
Company		 Purchases 201,293 100.25% Note 2 Note 3 Note 2 100,115)
(		 77.16%
Hyve Design Solutions Corporation and its subsidiaries Synnex Corp. and its subsidiaries Associate of
affiliate		 Sales 185,871 100.00% Note 1 Note 3 Note 1 - - Note 4
Note 1: The Group’s credit term for subsidiaries is to collect within 5 months based on the net amount of receivables after offseting against payables. The Group’s credit term for related parties is within 3 months based on the net amount of receivables
after offsetting against payables; the credit term for third parties is an average of 3 months after the date of shipment.
Note 2: The Group’s payment term for subsidiaries is within 5 months based on the net amount of receivables after offsetting against payables. The Group's payment term related parties within 3 months based on the net amount of receivables after
offsetting against payables; the payment term for third parties is an average of 3 months after the date of shipment from the counterparty.
Note 3: The selling price to related parties is based on market value.
Note 4：Hyve Design Solutions Corporation and its subsidiaries became the associates of the Group since August 19, 2020.		 
Table 4,Page 1

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

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

December 31, 2020

Creditor Counterparty Relationship
with the
counterparty		 Amount
receivables		 Other
receivables		 Turnover
rate		 Overdue receivables Overdue receivables Amount collected
subsequent to the
balance sheet date		 Allowance for
doubtful accounts		 Footnote
Amount Action taken
MiTAC Holdings Corp. MiTAC Computing Technology Corp. Subsidiary -
$		 169,525
$		 - -
$		 Not Applicable -
$		 -
$
MiTAC Computing Technology Corp. MiTAC Information Systems Corp. Subsidiary 4,435,284 1,368 2.93 - Not Applicable 872,025 -
MiTAC Computing Technology Corp. Synnex Corp. and its subsidiaries Associate of
affiliate		 171,719 - 5.59 - Not Applicable 107,028 -
Silver Star Develpoments Ltd. and its subsidiaries MiTAC Computing Technology Corp. Affiliate 1,462,804 24,476 0.46 - Not Applicable 1,368,464 -
Silver Star Develpoments Ltd. and its subsidiaries MiTAC Digital Technology Corp. Affiliate 847,161 1,291 0.88 - Not Applicable 393,024 - 
Table 5,Page 1

203

Table 6

Expressed in thousands of NTD

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES Significant inter-company transactions during the reporting periods For the year ended December 31, 2020

(Except as otherwise indicated)

Number
(Note 1)		 Companyname Counterparty Relationship
(Note 2)		 Transaction Transaction Transaction Transaction
General ledger account Amount Transaction terms Percentage of consolidated
total operating revenues or
total assets(Note 3)
0 MiTAC Holdings Corp. MiTAC Computing Technology Corp. 1 Other receivables 1,525,173 2.67%
0 MiTAC Holdings Corp. MiTAC Digital Technology Corp. 1 Other receivables 100,206 0.18%
1 MiTAC International Corp. MiTAC Holdings Corp. 2 Other receivables 104,278 0.18%
1 MiTAC International Corp. MiTAC Computing Technology Corp. 3 Other operating revenue 123,355 0.22%
1 MiTAC International Corp. MiTAC Computing Technology Corp. 3 Other receivables 326,534 0.57%
1 MiTAC International Corp. MiTAC Digital Technology Corp. 3 Other receivables 431,574 0.75%
2 MiTAC Computing Technology Corp. MiTAC Technology UK Ltd. and its subsidiaries 3 Sales 13,055,596 Note 4 31.73%
2 MiTAC Computing Technology Corp. MiTAC Technology UK Ltd. and its subsidiaries 3 Accounts receivable 4,435,284 Note 4 7.76%
2 MiTAC Computing Technology Corp. Silver Star Develpoments Ltd. and its subsidiaries 3 Sales 168,597 Note 4 0.41%
2 MiTAC Computing Technology Corp. Silver Star Develpoments Ltd. and its subsidiaries 3 Purchases 521,779 Note 5 1.27%
2 MiTAC Computing Technology Corp. Silver Star Develpoments Ltd. and its subsidiaries 3 Accountspayable 1,462,804 Note 5 2.56%
2 MiTAC Computing Technology Corp. MiTAC Telematics Technology Corporation 3 Sales 715,740 Note 4 1.74%
3 Silver Star Develpoments Ltd. and its subsidiaries MiTAC Holdings Corp. 2 Other receivables 1,366,186 2.39%
3 Silver Star Develpoments Ltd. and its subsidiaries MiTAC International Corp. 3 Other receivables 715,389 1.25%
4 MiTAC Digital Technology Corp. Access Wisdom Holdings Ltd and its subsidiaries 3 Sales 201,293 Note 4 0.49%
4 MiTAC Digital Technology Corp. Access Wisdom Holdings Ltd and its subsidiaries 3 Accounts receivable 100,115 Note 4 0.18%
4 MiTAC Digital Technology Corp. Silver Star Develpoments Ltd. and its subsidiaries 3 Purchases 868,965 Note 5 2.11%
4 MiTAC Digital Technology Corp. Silver Star Develpoments Ltd. and its subsidiaries 3 Accountspayable 847,161 Note 5 1.48%
4 MiTAC Digital Technology Corp. MiTAC Holdings Corp. 2 Other receivables 600,000 1.05%

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

  • (1) Parent company is "0".

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

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

  • (1) Parent company to subsidiary.

  • (2) Subsidiary to parent company.

  • (3) 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.

Note 4: The Group's credit term for foreign related parties is 5 months for the collection of the net amount of receivables after offsetting against payables, which takes into consideration the reasonable amount of time for the Company to ship the products to each company and for the collection of the accounts. The company's sales price with related parties is based on the intermational market trends and the region the sales were made. Note 5: The Group's payment term for foreign related parties is 5 months for the collection of the net amount of receivables after offsetting against payables after checking and the transaction price is based on the international market trends and the region the sales were made.

Note 6: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle. 

Table 6,Page 1

204

Table 7

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Information on investees (Does not include Mainland China invested companies)

For the year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Investor Investee Location Main business
activities		 Initial investment amount Initial investment amount Shares held as at December 31,2020 Shares held as at December 31,2020 Shares held as at December 31,2020 Net profit (loss)
of the investee
For the year
ended
December 31,
2020		 Investment
income (loss)
recognised by the
Company For the
year ended
December 31,		 Footnote
Balance as at December
31,2020		 Balance as at
December 31,
2019		 Number of shares
（Note）		 Ownership
(%)		 Book value
MiTAC Holdings Corp. MiTAC International Corp. Taiwan Development, design and
manufacturing and sale of computers
and its peripherals,
telecommunication related products		 24,739,187
$		 24,739,187
$		 2,222,013,187 100.00 38,764,957
$		 2,813,362
$		 2,802,577
$		 Subsidiary
MiTAC Holdings Corp. MiTAC Computing Technology
Corp.		 Taiwan
Development, design and
manufacturing and sale of computers
and its peripherals,
telecommunication related products		 3,419,621 3,419,621 232,757,102 100.00 3,741,073 121,447 123,234 Subsidiary
MiTAC Holdings Corp. MiTAC Digital Technology Corp. Taiwan
Sales and service of electronic
telecommunication, communication
and software, etc.		 1,547,485 1,547,485 103,099,000 97.17 1,643,435 34,190 33,695 Subsidiary
MiTAC Holdings Corp. Infopower Technologies Ltd. India Manufacture and sale of electronic
product.		 75,084 75,084 6,774,199 33.33 70,278 3,792)
(		 1,491)
(		 Associate
MiTAC International Corp. Getac Technology Corp. Taiwan Manufacturing and sale of notebook
computers, military and industrial
computer systems,etc.		 1,391,549 1,391,549 190,396,939 32.31 5,249,079 2,577,039 Associate
MiTAC International Corp. Tsu Fung Investment Corp. Taiwan Investment 625,000 625,000 142,884,651 100.00 3,035,807 86,534 Subsidiary
MiTAC International Corp. 3Probe Technologies Corp. Taiwan Information process service, sales of
software and international trading.		 16,839 16,839 1,086,000 23.25 13,962 7,541 Associate
MiTAC International Corp. Lian Jie Investment Co., Ltd. Taiwan
Investment		 113,057 113,057 11,305,650 49.98 168,258 5,584 Associate
MiTAC International Corp. Lian Jie II Investment Co., Ltd. Taiwan Investment 32,500 32,500 3,250,000 32.50 42,467 10,463)
(		 Associate
MiTAC International Corp. Silver Star Developments Ltd.and its
subsidiary		 British Virgin
Islands		 Investment 5,021,004 5,021,004 176,299,302 100.00 22,086,728 1,824,157 Subsidiary
MiTAC International Corp. Shen-Tong Construction &
Development Co., ltd.		 Taiwan Building and factory construction,
leasing and sales		 90,349 90,349 9,034,922 47.55 86,012 430)
(		 Associate
MiTAC International Corp.
LFE AEROSPACE INDUSTRY CORP.		 Taiwan
Electronic components
manufacturing, aircraft and its parts
manufacturing and wholesale
industry.		 121,475 121,475 11,233,750 15.40 110,302 21,165)
(		 Associate
MiTAC Computing Technology
Corp.		 MiTAC Technology UK Ltd. and
its subsidiaries		 UK Investment 1,453,931 1,675,038 55,146,138 100.00 1,391,382 34,273)
(		 Subsidiary
MiTAC Computing Technology
Corp.		 Mitac Information Technology
Czech s.r.o.		 Czech Republic Assemble and sales of computer and
peripheral equipment.		 - 9,815 - 0.00 - 12)
(		 Subsidiary
(Note 1)		 
Table 7,Page 1
Investor Investee Location Main business
activities		 Initial investment amount Initial investment amount Shares held as at December 31,2020 Shares held as at December 31,2020 Shares held as at December 31,2020 Net profit (loss)
of the investee
For the year
ended
December 31,
2020		 Investment
income (loss)
recognised by the
Company For the
year ended
December 31,		 Footnote
Balance as at December
31,2020		 Balance as at
December 31,
2019		 Number of shares
（Note）		 Ownership
(%)		 Book value
MiTAC Computing Technology
Corp.		 Hyve Design Solutions
Corporation		 USA Assemble and sales of computer and
peripheral equipment.		 142,400 56,960 1,000,000 50.00 22,604)
(		 251,162)
(		 Associate
MiTAC Digital Technology
Corp.		 Mio International Ltd. and its
subsidiaries		 British Virgin
Islands		 Sale of communication products 64,868 64,868 1,275,001 100.00 78,171 1,694 Subsidiary
MiTAC Digital Technology
Corp.		 Access Wisdom Holdings Limited.
and its subsidiaries		 British Virgin
Islands		 Investment - - 48,500,000 100.00 90,406 5,728)
(		 Subsidiary
Silver Star Developments
Ltd. and its subsidiaries		 Mainpower International Ltd. British Virgin
Islands		 Investment 156,640 156,640 5,500,001 13.28 240,230 169,184 Associate
Silver Star Developments
Ltd. and its subsidiaries		 Synnex Corp. USA Information process services, sales of
computer peripheral, system and
network products		 1,092,561 966,108 5,299,980 10.28 5,977,703 15,379,326 Associate
Silver Star Developments
Ltd. and its subsidiaries		 Concentrix Corp. USA Information process services, sales of
computer peripheral, system and
network products		 6,677,974 - 5,299,980 10.28 6,677,974 - Associate
Silver Star Developments
Ltd. and its subsidiaries		 Harbinger Ruyi Venture Ltd. British Virgin
Islands		 Investment 28,480 28,480 1,000,000 28.57 18,970 1,343)
(		 Associate
Silver Star Developments
Ltd. and its subsidiaries		 Harbinger Ruyi II Venture Ltd. British Virgin
Islands		 Investment 28,480 28,480 10,000 32.26 49,096 380 Associate
Tsu Fung Investment Corp. LFE AEROSPACE INDUSTRY CORP. Taiwan Electronic components
manufacturing, aircraft and its parts
manufacturing and wholesale
industry.		 15,504 15,504 1,433,740 1.97 13,104 21,165)
(		 Associate
Tsu Fung Investment Corp. MiTAC Digital Technology Corp. Taiwan Sales and service of electronic
telecommunication, communication
and software, etc.		 16 16 1,000 0.001 16 34,190 Subsidiary

Note 1: This Company was liquidated in 2020. 

Table 7,Page 2

206

Expressed in thousands of NTD (Except as otherwise indicated)

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Information on investments in Mainland China

For the year ended December 31, 2020

Table 8

A. Invested information in Mainland China

A. Invested information in Mainland China
Investee in Mainland China Main business
activities		 Paid-in capital Investment
method
(Note 1)		 Accumulated amount
of remittance from
Taiwan to Mainland
China as of January
1,2020		 ~~Amount remitted from~~
Taiwan to
Mainland China/
Amount remitted back
to Taiwan For the year
ended December 31,2020		 Accumulated
amount of
remittance from
Taiwan to Mainland
China as of
December 31,2020		 Net income of
investee as of
December 31,
2020		 Ownership held
by the Company
(direct or
indirect)		 Investment
income (loss)
recognised by
the Company
For the year
ended
December 31,
2020(Note 2)		 Book value of
investments in
Mainland China
as of December
31,2020		 Accumulated amount of
investment income
remitted back to Taiwan
as of December 31,2020		 Footnote
Remitted to
Mainland
China		 Remitted
back
to Taiwan
MiTAC Computer (Shunde) Corp. Manufacturing of computer cases and monitors. Etc. 1,823,920
$		 2 1,136,373
$		 -
$		 -
$		 1,136,373
$		 126,546
$		 100.00 126,546
$		 2,864,290
$		 -
$
MiTAC Computer (Kunshan) Co., Ltd. Sales and manufacturing of computer accessories,
hardware, software and related services		 2,234,480 2 1,668,928 - - 1,668,928 33,090 100.00 33,090 2,843,230 -
MiTAC Technology (Kunshan) Co., Ltd. Testing, repair and display of computer components
and related products, and related technical advisory
services and after-sale services		 36,228 2 28,480 - - 28,480 3,312)
(		 100.00 3,312)
(		 27,537 -
MiTAC Research (ShangHai) Ltd. Research, development and production of computer
software, sales of own-produced products and
related technical advisory services		 188,386 2 148,096 - - 148,096 11,898 100.00 11,898 474,867 -
Shzhou MiTAC Precision Technology
Co., Ltd.
Design and manufacturing of computer chassis and
its components, percision plastic injection mould,
molding parts and molding equipment processing and
maintenance and repair services.		 1,544,983 2 384,480 - - 384,480 221,999 27.44 60,914 595,374 -
Mio Technology (Suzhou) Ltd.
Sales of communication products and related after-
sale services		 8,219 2 28,338 - - 28,338 1,694 100.00 1,694 33,710 -
MiTAC Logistic Service (Kunshan) Ltd. Agency of freight transport, export and import
trading and warehousing services		 29,854 2 28,480 - - 28,480 1,405 100.00 1,405 39,464 -
MiTAC Information Technology Ltd.
After-sales maintenance, testing, consulting services
and related support technology services		 8,966 2 8,544 - - 8,544 3,637 100.00 3,637 48,106 -
MiTAC Innovation (Kunshan) Ltd.
Research and development of computer, server,
mobile phone, PDA, GNSS and GPS, and related
technology transfer, technical services		 28,760 2 28,480 - - 28,480 3,858 100.00 3,858 75,740 -
MiTAC Telematics Technology
Corporation
Sales of self-produced products and related after-sale
services		 8,754 1 2,078 - - 2,078 7,767 100.00 7,767 16,811 -
MiTAC Investment Holding Ltd. Investment Holdings 2,054,091 2 854,400 - - 854,400 50,733 100.00 50,733 3,105,859 -
MiTAC Information Systems (Kunshan)
Co., Ltd.		 Sales and manufacturing of computer accessories,
hardware, software and related services		 1,050,480 3 - - - - 2,053)
(		 100.00 2,053)
(		 1,043,902 -
Note 1: Investment methods are classified into the following three categories:
(1) Directly invest in a company in Mainland China.
(2) Invest in the investees in Mainland China through the company which are located in the third area.
(3) Others:Invest in Mainland China through investees in Mainland Chian.
(1) It should be indicated if the investee was still in the incorporation arrangements and had not yet generated any profit during this period.
(2) Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:
A. The financial statements were audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C..
B. The financial statements were audited and attested by R.O.C. parent company's CPA.
C. The financial statements were not audited and attested by independent accountants.
Note 2: In the 'Investment income (loss)recognised by the Company For the year ended December 31, 2020 column:
  • (3) The basis for investment income (loss) recognition for MiTAC computer (Shunde) Corp., MiTAC Computer (Kunshan) Co., Ltd., MiTAC Research (ShangHai) Ltd., and Shzhou MiTAC Precision Technology Co., Ltd. is category B, the others are category C.

Note 3:Among the accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020 of MiTAC Computer (Kunshan) Co., Ltd., MiTAC Investment Holding Ltd remitted out USD 29,900 thousand. 

Table 8,Page 1

207

Companyname Accumulated amount of remittance from Taiwan to
Mainland China as of December 31,2020		 Investment amount approved by the Investment
Commission of the Ministry of Economic Affairs
(MOEA)		 Ceiling on investments in Mainland China imposed by the
Investment Commission of MOEA
MiTAC International Corp. 3,824,929
$		 4,643,729
$		 23,460,375
$
MiTAC Computing Technology Corp. 2,078 2,078 (Note 4)
MiTAC Digital Technology Corp. 21,218 21,218 1,014,392

Note 4: In accordance with the "Regulations Governing the Permission of Investment or Techical Cooperation in Mainland Area", MiTAC Computing Technology Corp. has acquired the Business Operation Headquarter Certificate

B. Significant transactions conducted with investees in Mainland China:

MiTAC Digital Technology Corp. and MiTAC Computing Technology Corp's delivery service expenses with investees in Mainland China for the year ended December 31, 2020 amounted to $17,399, for details of other significant transactions, please refer to table 1 and table 4. 

Table 8,Page 2

208

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Major shareholders information

December 31, 2020

Table 9

Name of major shareholders Shares Shares
Number of shares held Ownership (%)
MiTAC INCORPORATED 104,431,091 8.65%
UPC Technology Corporation 99,802,598 8.27%
Lien Hwa Industrial Holdings Corporation 85,941,944 7.12% 
Table 9,Page 1

209

MiTAC HOLDINGS CORPORATION

PARENT COMPANY ONLY FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’

REPORT

DECEMBER 31, 2020 AND 2019

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

210

INDEPENDENT AUDITORS’ REPORT

PWCR20000482

To the Board of Directors and Shareholders of MiTAC Holdings Corporation

Opinion

We have audited the accompanying parent company only balance sheets of MiTAC Holdings Corporation (the “Company”) as at December 31, 2020 and 2019, and the parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the audit reports of other independent auditors, as described in the Other matter section of our report, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of MiTAC Holdings Corporation as at December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

We conducted our audit of the parent company only financial statements as of and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China; and in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, “Rule No. Financial-Supervisory-Securities-Auditing1090360805 issued by the Financial Supervisory Commission on February 25, 2020” and generally accepted auditing standards in the Republic of China for our audit of the parent company only financial statements as of and for the year ended December 31, 2019. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the parent company only financial statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Based on our audits and the audit reports of the other independent auditors, we believe that the audit evidence we have obtained is

211

sufficient and appropriate to provide a basis for our opinion.

Key audit matters

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

As of December 31, 2020, the Company recognised MiTAC International Corporation and its subsidiaries, MiTAC Computing Technology Corporation and its subsidiaries and MiTAC Digital Technology Corporation and its subsidiaries, as investments accounted for using the equity method, please refer to Note 6(3) for the details. The aforementioned investments accounted for using equity method constitute 95% of the Company’s total assets. Thus, we consider the following key audit matters of the Company’s investees also as key audit matters of the Company.

Sales revenue recognition

Description

Given that revenues are material to the financial statements of the subsidiaries that are accounted for using equity method, the various types of products and sales terms, the timing of revenue recognition can only be determined when the controls of ownership for products are transferred to the customers based on contract terms of each different customer. Thus, we identified the sales revenue recognition of investees as a key audit matter.

How our audit addressed the matter

We conducted audit procedures, including: discussed with management and evaluated the policy of revenue recognition; assessed the effectiveness of design and implementation of internal controls over recognition of revenue; test sampled the sales transactions including their terms, performance obligations, and prices and verified the supporting documents for deliveries to ensure the proper timing and amounts of recognition; selected sales transactions for a specific period prior to and after the balance sheet date and verified transaction documents to ensure sales revenue are recorded in the proper period.

212

Valuation of inventory

Description

Subsidiaries accounted for using equity method were mainly engaged in manufacturing and selling computers and their peripherals and communications products. Since the industry involved rapidly changing technology and were affected by market demand, there was higher risk of incurring inventory valuation losses or having obsolete inventory. Inventories of investees were measured at the lower of cost and net realisable value. Considering that these inventories were significant, items were voluminous and the valuation is associated with subjective judgement, we identified valuation of inventory of the subsidiaries as a key audit matter.

How our audit addressed the matter

We performed audit procedures, including: discussed with management and evaluated the policy of inventory valuation, validated inventory aging report through checking the logic of calculating aged inventories and confirming the appropriateness of categorization of aged inventories; and validated the basis in determining net realizable values of obsolete or slow-moving inventories in order to evaluate the reasonableness of allowance for inventory valuation losses.

Other matter- Reference to the reports of other independent auditors

We did not audit certain investments accounted for under the indirect equity method that were included in the parent company only financial statements, whose financial statements were prepared under a different financial reporting framework. The Company converted the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Share of profit (loss) of associates and joint ventures accounted for using equity method amounted to NT$1,604,767 thousand and NT$1,585,642 thousand for the years ended December 31, 2020 and 2019, respectively. Investments accounted for using equity method amounted to NT$12,693,073 thousand and NT$11,569,372 thousand as at December 31, 2020 and 2019, respectively. Those financial statements before adjustments were audited by other independent auditors whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent auditors.

213

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

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

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

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

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

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

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

  1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one

214

resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2.

3.

4.

5.

6.

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

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

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that

215

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

Lin, Yu-Kuan Cheng, Ya-Huei

For and on behalf of PricewaterhouseCoopers, Taiwan March 8, 2021

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

216

MiTAC HOLDINGS CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
7
6(2)
6(3)
6(4)		 December31,2020
AMOUNT
%
$ 28,341
-
1,127
-
1,632,875
4
7,907
-
956
-
1,671,206
4
392,838
1
44,219,743
95
2,388
-
106
-
44,615,075
96
$ 46,286,281
100		 December31,2019 December31,2019
AMOUNT
$ 28,341
1,127
1,632,875
7,907
956
1,671,206
392,838
44,219,743
2,388
106
44,615,075
$ 46,286,281		 AMOUNT
$ 56,403
4
181,297
7,907
1,004
246,615
350,664
40,119,449
3,184
106
40,473,403
$ 40,720,018		 %
Current assets
1100
Cash and cash equivalents
1200
Other receivables
1210
Other receivables - related parties
1220
Current income tax assets
1410
Prepayments
11XX
Total Current Assets
Non-current assets
1517
Financial assets at fair value through
other comprehensive income - non-
current
1550
Investments accounted for using
equity method
1600
Property, plant and equipment
1920
Refundable deposits
15XX
Total Non-current assets
1XXX
Total assets		 -
-
1
-
-
1
1
98
-
-
99
100

(Continued)

217

MiTAC HOLDINGS CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December31,2020
December31,2019
Notes
AMOUNT
%
AMOUNT
%
6(5)
$ 100,000
-
$ 1,000,000
2
10,487
-
9,538
-
7
3,198,829
7
13,826
-
263,957
1
206,726
1
14
-
104
-
3,573,287
8
1,230,194
3
3,573,287
8
1,230,194
3
6(6)
12,065,568
26
10,772,829
27
6(7)
23,582,411
51
23,400,002
58
6(8)
1,451,388
3
1,167,412
3
-
-
12,265
-
4,110,220
9
3,818,704
9
6(9)
1,743,283
3
671,699
1
6(6)
(
239,876)
- (
353,087) (
1)
42,712,994
92
39,489,824
97
$ 46,286,281
100
$ 40,720,018
100
Current liabilities
2100
Current borrowings
2200
Other payables
2220
Other payables - related parties
2230
Current income tax liabilities
2300
Other current liabilities
21XX
Total Current Liabilities
2XXX
Total Liabilities
Equity
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
3500
Treasury stocks
3XXX
Total equity
3X2X
Total liabilities and equity

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

218

MiTAC HOLDINGS CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items Notes
6(2)(3)
6(11)(12) and 7
(
6(10) and 7
6(5) and 7
(
(
6(13)
(
6(2)(9)
6(3)(9)
6(3)(9)
(
(
6(14)
6(14)		 YearendedDecember31 YearendedDecember31
2020 2019
AMOUNT
$ 2,968,036



33,880 )(

2,934,156



3,487

268

59

8,702 )

4,888 )

2,929,268

10,563 )(
$ 2,918,705




$ 26,206

1,781,644

1,807,850



721,722 )(

721,722 )(
$ 1,086,128
$ 4,004,833

$
4000
Operating revenue
Operating expenses
6200
General and administrative expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
Other comprehensive income (loss) -
net
Components of other comprehensive
income (loss) that will not be
reclassified to profit or loss
8316
Unrealized gains (losses) from
investments in equity instruments
measured at fair value through other
comprehensive income (loss)
8330
Share of other comprehensive
income of associates and joint
ventures accounted for using equity
method, components of other
comprehensive income that will not
be reclassified to profit or loss
8310
Components of other
comprehensive income that will
not be reclassified to profit or loss
Components of other comprehensive
income (loss) that will be reclassified
to profit or loss
8380
Share of other comprehensive
income of subsidiaries, associates
and joint ventures accounted for
using equity method, components of
other comprehensive income that
will be reclassified to profit or loss
8360
Components of other
comprehensive loss that will be
reclassified to profit or loss
8300
Other comprehensive income for the
year
8500
Total comprehensive income for the
year
9750
Basic earnings per share
9850
Diluted earnings per share
$

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

219

MiTAC HOLDINGS CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Year 2019
Balance at January 1, 2019
Effects on adoption of IFRS 16
Balance at January 1, 2019 after adjustments
Profit for 2019
Other comprehensive income(loss) for 2019
Total comprehensive income(loss)
Distribution of 2018 earnings
Legal reserve
Special reserve appropriated
Cash dividends
Stock dividends
Subsidiaries received cash dividends paid by the parent company
Change of subsidiaries and associates accounted for using equity method
Proceeds from subsidiaries' disposal of investments accounted for using equity method
Proceeds from disposal of equity instruments measured at fair value through other
comprehensive income
Adjustments in equity due to non-subscription the new shares issued by subsidiaries
proportionately to ownership
Balance at December 31, 2019
Year 2020
Balance at January 1, 2020
Profit for 2020
Other comprehensive income(loss) for 2020
Total comprehensive income(loss)
Distribution of 2019 earnings
Legal reserve
Reversal of special reserve
Cash dividends
Stock dividends
Subsidiaries received cash dividends paid by the parent company
Subsidiaries change of associates accounted for using equity method
Proceeds from disposal of equity instruments measured at fair value through other
comprehensive income
Proceeds from disposal of equity instruments by subsidiaries measured at fair value through
other comprehensive income
Proceeds from disposal of investments by subsidiaries accounted for using equity method
Disposal of company’s share by subsidiaries recognised as treasury share transactions
Capital surplus - dividends unclaimed by the subsidiaries’ shareholders
Balance at December 31, 2020		 Notes Share capital -
commonstock		 Capital surplus,
additional paid-in
capital		 Retained earnings Otherequityinterest Otherequityinterest Otherequityinterest Treasury stocks Totalequity
Legal reserve Special reserve Unappropriated
retained earnings		 Financial statements
translation
differences of foreign
operations		 Unrealised gains
(losses) from
financial assets
measured at fair
value through other
comprehensive
income
6(8)
6(7)
6(7)(9)
6(9)
6(9)
6(7)
6(8)
6(7)
6(7)(9)
6(9)
6(9)
6(9)
6(7)
6(7)		 $ 9,367,677
-
9,367,677
-
-
-
-
-
-
1,405,152
-
-
-
-
-
$
10,772,829
$ 10,772,829
-
-
-
-
-
-
1,292,739
-
-
-
-
-
-
-
$ 12,065,568		 $ 23,370,899
-
23,370,899
-
-
-
-
-
-
-
20,740
7,754
-
-
609
$
23,400,002
$ 23,400,002
-
-
-
-
-
-
-
10,784
87,108
-
-
-
83,417
1,100
$ 23,582,411		 $ 837,787
-
837,787
-
-
-
329,625
-
-
-
-
-
-
-
-
$
1,167,412
$ 1,167,412
-
-
-
283,976
-
-
-
-
-
-
-
-
-
-
$ 1,451,388		 $ -
-
-
-
-
-
-
12,265
-
-
-
-
-
-
-
$
12,265
$ 12,265
-
-
-
-
(
12,265 )
-
-
-
-
-
-
-
-
-
$ -		 $ 4,131,139
(
50 )
4,131,089
2,817,880
(
22,376 )
2,795,504
(
329,625 )
(
12,265 )
(
1,405,152 )
(
1,405,152 )
-
4,624
(
341 )
40,022
-
$
3,818,704
$ 3,818,704
2,918,705
221
2,918,926
(
283,976 )
12,265
(
1,077,283 )
(
1,292,739 )
-
25,693
(
3,397 )
(
7,985 )
12
-
-
$ 4,110,220		 ($ 62,976 )
-
(
62,976 )
-
(
1,017,982 )
(
1,017,982 )
-
-
-
-
-
-
-
-
(
770 )
($
1,081,728 )
($ 1,081,728 )
-
(
721,722 )
(
721,722 )
-
-
-
-
-
-
-
-
-
-
-
($ 1,803,450 )		 $ 511,888
-
511,888
-
1,285,844
1,285,844
-
-
-
-
-
(
4,624 )
341
(
40,022 )
-
$
1,753,427
$ 1,753,427
-
1,807,629
1,807,629
-
-
-
-
-
(
25,693 )
3,397
7,985
(
12 )
-
-
$ 3,546,733		 ($ 353,087 )
-
(
353,087 )
-
-
-
-
-
-
-
-
-
-
-
-
($
353,087 )
($ 353,087 )
-
-
-
-
-
-
-
-
-
-
-
-
113,211
-
($ 239,876 )		 $ 37,803,327
(
50 )
37,803,277
2,817,880
245,486
3,063,366
-
-
(
1,405,152 )
-
20,740
7,754
-
-
(
161 )
$
39,489,824
$ 39,489,824
2,918,705
1,086,128
4,004,833
-
-
(
1,077,283 )
-
10,784
87,108
-
-
-
196,628
1,100
$ 42,712,994

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

220

MiTAC HOLDINGS CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation
Interest income
Interest expense
Dividend income
Share of profit of associates accounted for using
equity method
Changes in operating assets and liabilities
Changes in operating assets
Other receivables - related parties
Prepayments
Changes in operating liabilities
Other payables
Other payables - related parties
Other current liabilities
Cash outflow generated from operations
Payment of interest
Receipt of interest
Cash dividend received
Payment of income tax
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Loans lent to related parties
Loans repaid from related parties
Acquisition of financial assets at fair value through other
comprehensive income
Proceeds from disposal of financial assets at fair value
through other comprehensive income
Acquisition of investments accounted for using equity
method
Proceeds from disposal of investments accounted for
using equity method
Increase in refundable deposits
Net cash flows (used in) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease)increase in short-term borrowings
Increase in loans from related parties
Repayment of loans to related parties
Cash dividends paid
Net cash flows from (used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Year ended December 31
Notes
2020
2019
$ 2,929,268
$ 2,840,318
6(4)(11)
796
796
6(10)
(
3,487 ) (
14,812 )
8,702
2,084
6(2)
(
10,021 ) (
7,845 )
6(3)
(
2,958,015 ) (
2,853,652 )
3,918
54,381
48
(
63 )
1,082
406
-
(
41,889 )
(
90 )
-
(
27,799 ) (
20,276 )
(
7,926 ) (
1,913 )
3,217
15,481
6(2)(3)
223,285
432,980
(
4,461 ) (
14,322 )
186,316
411,950
7
(
2,647,786 ) (
2,787,274 )
7
1,281,600
3,186,569
(
20,071 ) (
49,900 )
2,976
-
6(3)
-
(
46,500 )
-
16
-
(
6 )
(
1,383,281 )
302,905
6(15)
(
900,000 )
1,000,000
6(15) and 7
4,677,786
2,437,374
6(15) and 7
(
1,531,600 ) (
2,836,669 )
6(8)
(
1,077,283 ) (
1,405,152 )
1,168,903
(
804,447 )
(
28,062 ) (
89,592 )
6(1)
56,403
145,995
6(1)
$ 28,341
$ 56,403

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

221

MiTAC HOLDINGS CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

1. HISTORY AND ORGANISATION

  • (1) MiTAC Holdings Corporation (the “Company”) was established by MiTAC International Corp. (“MiTAC International”) through a share conversion on September 12, 2013, and on the same date, the competent authority has approved for the Company’s shares to be listed on the Taiwan Stock Exchange (TWSE). MiTAC International became the Company’s wholly-owned subsidiary after conversion. The main business of the Company is investment holding.

  • (2) The Company in order to promote specialization of work for transforming and improving overall competitiveness, the Board of Directors of its subsidiary, MiTAC International, has resolved to divest its cloud computing products group to the newly established company, MiTAC Computing Technology Corporation (collectively referred herein as the “MiTAC Computing Technology”), as the consideration for the acquisition of 220,000 thousand newly issued ordinary shares of MiTAC Technology on the spin-off day, September 1, 2014. In addition, in 2017, the Board of Directors of MiTAC International has resolved to divest its mobile communication products group to the newly established company, MiTAC Digital Technology Corporation (collectively referred herein as the “MiTAC Digital Technology”), as the consideration for the acquisition of 100,000 thousand newly issued ordinary shares of MiTAC Digital Technology on the spin-off day, January 1, 2018. As a result, MiTAC International, MiTAC Computing Technology and MiTAC Digital Technology are the wholly-owned subsidiaries of the Company after the spin-off.

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

FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These parent company only financial statements were authorised for issuance by the Board of Directors on March 8, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATION

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting

Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”)

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

222

New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of
material’
Amendments to IFRS 3, ‘Definition of a business’
Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate benchmark
reform’
Amendment to IFRS 16, ‘Covid-19-related rent concessions’
Note：Earlier application from January 1, 2020 is allowed by FSC.		 January 1, 2020
January 1, 2020
January 1, 2020
June 1, 2020 (Note)

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

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

the Company

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

follows:
New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
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’		 January 1, 2021
January 1, 2021

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

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

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

New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’		 January 1, 2022
To be determined by
International Accounting
Standards Board

223

New Standards,Interpretations and Amendments the Company’s financial

Effective date by
International Accounting
Standards Board
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022
The above standards and interpretations have no significant impact to
condition and financial performance based on the Company’s assessment.
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, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Definition of accounting estimates’
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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation

  • A. Except for the following items, this parent company only financial statements have been prepared under the historical cost convention:

Financial assets at fair value through other comprehensive income.

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

(3) Foreign currency translation

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

Foreign currency transactions and balances

  • A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign

224

exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.

  • B. Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

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

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

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

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

    • (b) Assets held mainly for trading purposes;

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

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

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

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

    • (b) Liabilities arising mainly from trading activities;

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

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

  • (5) Cash equivalents

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

225

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

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

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

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

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

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

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

  • (7) Impairment of financial assets

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

(8) Derecognition of financial assets

  • The Company derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

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

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

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

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

226

(9) Investments accounted for using equity method / subsidiary/ associates

  • A. A subsidiary is an entity where the Company has the right to dominate its finance and operating policies (including special purpose entities), normally the Company owns more than 50% of the voting rights directly or indirectly in that entity. Subsidiaries are accounted for under the equity method in the Company's parent company only financial statements.

  • B. Unrealized gains or losses resulting from inter-company transactions with subsidiaries are eliminated. Necessary adjustments are made to the accounting policies of subsidiaries, to be consistent with the accounting policies of the Company.

  • C. After acquisition of subsidiaries, the Company recognizes proportionately the share of profit and loss and other comprehensive income in the statement of comprehensive income as part of the Company's profit and loss and other comprehensive income, respectively. When the share of loss from a subsidiary exceeds the carrying amount of Company’s interest in that subsidiary, the Company continues to recognize its share in the subsidiary's loss proportionately.

  • D. According to “Regulations Governing the Preparation of Financial Statements by Securities Issuers”, “Profit for the year” and “Other comprehensive income for the year” reported in an entity's parent company only statement of comprehensive income, shall equal to “profit for the year” and “Other comprehensive income” attributable to owners of the parent reported in that entity's consolidated statement of comprehensive income. Total equity reported in an entity's parent company only financial statements, shall be equal to equity attributable to owners of parent reported in that entity's consolidated financial statements.

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

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

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

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

227

by the Company.

  • I. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease. If the above condition causes a decrease in the Company’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

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

  • K. When the Company disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss proportionately.

  • (10) Property, plant and equipment

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

  • B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of discarded assets is derecognized when critical repairs are incurred, and other repair expenses are charged to profit or loss for the period when they incur.

  • C. Property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

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

228

are 5 years.

(11) Impairment of non-financial assets

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

(12) Derecognition of financial liabilities

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

(13) Borrowings

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

(14) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(15) Employee benefits

  • A. Short-term employee benefits

  • Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expense in that period when the employees render service.

  • B. Employees’ compensation and directors’ and supervisors’ remuneration

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

(16) Income tax

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

229

or items recognized directly in equity.

  • B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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

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

  • E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

  • (17) Share capital

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

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

230

(18) Dividends

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

(19) Business combinations and organization restructuring

  • A. The Company uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

  • B. If the total of the fair values of the consideration of acquisition and any non-controlling interest in the acquiree as well as the previous equity interest in the acquiree is higher than the fair value of the Company’s identifiable assets acquired and obligations borne, goodwill is recognized at the acquisition-date. If the fair value of the Company’s identifiable assets acquired and obligations borne is higher than the total of the fair values of the consideration of acquisition, non-controlling interest in the acquiree, as well as previous equity interest in the acquire, the difference is recognized in profit or loss for the period at the acquisition date.

  • C. The newly established investment holding company through share swap is jointly controlled under business combination. Under regulations of competent authority, the investment holding company is recorded at the carrying value and is included in the consolidated financial statements at the date of establishment.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The judgment and assumptions made by the Company in applying its accounting policies and concerning future events do not involve significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year. The Company has no uncertainty on critical judgements, estimates and assumptions of accounting policies.

231

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents:
Checking accounts and demand deposits
Repurchased bonds
Total		 December 31,2020
28,341
$ -
28,341
$		 December 31,2019
11,403
$ 45,000
56,403
$

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

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

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

Items December 31,2020 December 31,2019
Non-current items:
Equity instruments
Listed stocks $ 134,657
 $ 134,657
Unlisted stocks 382,292 369,722
Subtotal 516,949 504,379
Valuation adjustment ( 124,111) ( 153,715)
Total $ 392,838 $ 350,664

  • A. The Company recognized $26,206 and ($128,931) in other comprehensive income (loss) for fair value change for the years ended December 31, 2020 and 2019, respectively.

  • B. The Company has elected to designate the above investments, which were held mainly for medium to long-term trading purposes, as investments in equity instruments measured at fair value through other comprehensive income. As of December 31, 2020 and 2019, the fair value of investments were $392,838 and $350,664, respectively.

  • C. The Company received dividend income of $10,021 and $7,845 for the years ended December 31, 2020 and 2019, respectively.

  • D. The Company sold $20,071 of its investments at fair value and resulted in cumulative losses on disposal of $3,397 during the year ended December 31, 2020.

232

(3) Investments accounted for under the equity method

Investments accounted for under the equity method
A.
Investee company
Subsidiaries
Mitac International Corporation
Mitac Computing Technology Corporation
Mitac Digital Technology Corporation
Associates
Infopower Technologies Ltd.		 December 31,2020
38,764,957
$ 3,741,073
1,643,435
70,278
44,219,743
$		 December 31,2019
34,512,842
$ 3,758,629
1,773,539
74,439
40,119,449
$

  • B. The Company’s recognized share of profit from associates accounted for under the equity method for the years ended December 31, 2020 and 2019 were $2,958,015 and $2,853,652, respectively, and recognized share of other comprehensive income(loss) from associates accounted for under the equity method were $1,059,922 and $374,417, respectively.

  • C. The Company received the stock dividends from MiTAC International Corp. for the years ended December 31, 2020 and 2019 amounting to $2,349,919 and $2,919,947, respectively.

  • D. The Company received the cash dividends from MiTAC Computing Technology Corp. for the years ended December 31, 2020 and 2019 amounting to $59,882 and $275,472, respectively.

  • E. The Company received the cash dividends from MiTAC Digital Technology Corp. for the years ended December 31, 2020 and 2019 amounting to $153,382 and $149,663, respectively.

  • F. For the year ended December 31, 2019, the Company increased its investment in MiTAC Digital Technology in the amount of $46,500, equivalent to 3,000 thousand shares. Additionally, the Company sold 1,000 shares to Tsu Fung Investment Corporation at the price of $16 in 2019.

  • G. For the information on subsidiaries of the Company, please refer to Note 4(3) in the consolidated financial statements for the year ended December 31, 2020.

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

  • As of December 31, 2020 and 2019, the carrying amount of the Company’s individually immaterial associates amounted to $70,278 and $74,439, respectively.

For the year ended For the year ended
December 31,2020 December 31,2019
Loss for the period from continuing
operations ($ 3,792) ($ 15,206)
Total comprehensive loss ($ 3,792) ($ 15,206)
  • I. The financial year-end date of Infopower Technologies Ltd. is March 31. However, the preparation of the Company’s parent company only financial statements is based the financial information of Infopower Technologies Ltd. during the period from January 1 to December 31.

233

(4) Property, plant and equipment

Property, plant and equipment Property, plant and equipment Property, plant and equipment Property, plant and equipment Property, plant and equipment
Short-term borrowings
For the year ended
For the year ended
Transportation equipment
December 31,2020
December 31,2019
Opening net book amount as at January 1
3,184
$ 3,980
$ Depreciation
796)
(
796)
(
Closing net book amount as at December 31
2,388
$ 3,184
$ At December 31
Cost
3,980
$ 3,980
$ Accumulated depreciation
1,592)
(
796)
(
Total
2,388
$ 3,184
$ Type of borrowings
December 31,2020
December 31,2019
Unsecured bank borrowings
100,000
$ 1,000,000
$ Borrowing interest rate
0.63%
0.78%
$
$
100,000
$ 0.63%		 1,000,000
$ 0.78%

(5) Short-term borrowings

Interest expense recognised in profit or loss amounted to $3,922 and $2,084 for the years ended December 31, 2020 and 2019, respectively.

(6) Share capital

A. As of December 31, 2020, the Company’s authorized capital was $15,000,000, consisting of 1.5

billion shares, and the paid-in capital was $12,065,568 with a par value of $10 per share.

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

Unit: in thousands of shares

Unit: in thousands of shares
2020 2019
Outstanding shares as of January 1 1,061,382 922,941
Disposal of the Company’s treasury share by 5,816 -
subsidiaries
Capital increase of earnings 129,274 140,515
Capital increase of treasury share acquired by
the subsidiaries ( 1,294) ( 2,074)
Outstanding shares as of December 31 1,195,178 1,061,382

B. Treasury shares

(a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

shares are as follows:
Name of company
holdingthe shares
Subsidiary - Tsu Fung
Investment Corp.
Subsidiary - SSDL		 Reason for
reacquisition
Stock conversion
"		 December 31,2020
Number of shares
(shares in thousands)
9,250
2,128		 Carrying
amount
162,874
$ 77,002

234

(b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as
treasury shares should not exceed 10% of the number of the Company’s issued and
outstanding shares and the amount bought back should not exceed the sum of retained
earnings, paid-in capital in excess of par value and realized capital surplus.
Name of company
Reason for
Number of shares
Carrying
holdingthe shares
reacquisition
(shares in thousands)
amount
Subsidiary - Tsu Fung
Investment Corp.
Stock conversion
14,000
276,085
$ Subsidiary - SSDL
"
1,900
77,002
December 31,2019		 December 31,2019
Carrying
amount

  • (c) Pursuant to the R.O.C. Securities and Exchange Act, treasury stock should not be pledged as collateral and is not entitled to dividends before it is reissued to the employees.

  • (d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within five years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

  • (e) In accordance with the Financial Supervisory Commission, Securities and Futures Bureau, No.1010047490, the Company shall not appropriate special reserve proportionately to the shareholding ratio for the difference of ending market price below the carrying amount of the parent’s stock held by the subsidiaries. If the market price reverses subsequently, the reversal amount shall be appropriated as special reserve proportionately to the shareholding ratio.

  • (f) In 2020, the subsidiary, Tsu Fung Investment Corp. disposed 5,816 thousand shares of the Company amounting of $196,628.

235

(7) Capital surplus

At January 1, 2020
Disposal of company’s
share by subsidiaries
recognised as treasury
share transactions
Subsidiaries received cash
dividends paid by the
parent company
Changes from associates
and joint ventures
accounted for using
the equity method
Capital surplus - dividends
unclaimed by the
subsidiaries’ shareholders
At December 31, 2020
At January 1, 2019
Change in ownership
interests in
subsidiaries
Subsidiaries received
cash dividends paid by
the parent company
Changes from associates
and joint ventures
accounted for using
the equity method
At December 31, 2019		 Share
premium		 Treasury
stock
transactions
362,997
$ 83,417
10,784
-
-
457,198
$ Treasury
stock
transactions
342,257
$ -
20,740
-
362,997
$		 Treasury
stock
transactions		 Net equity of
associates and joint
ventures accounted
for under the
equitymethod
1,118,253
$ -
-
87,108
-
1,205,361
$ Net equity of
associates and joint
ventures accounted
for under the
equitymethod
1,110,499
$ $ -
-
7,754
1,118,253
$ $		 Net equity of
associates and joint
ventures accounted
for under the
equitymethod
1,118,253
$ -
-
87,108
-
1,205,361
$ Net equity of
associates and joint
ventures accounted
for under the
equitymethod
1,110,499
$ $ -
-
7,754
1,118,253
$ $		 Changes in
ownership
interests
in subsidiaries
609
$ -
-
-
-
609
$ Changes in
ownership
interests
in subsidiaries
-

609
-
-
609		 Employee
stock options
346,814
$ -
-
-
-
346,814
$ Employee
stock options
346,814
$ -
-
-
346,814
$		 Others
-
$ -
-
-
1,100
1,100
$ Others
-
$ -
-
-
-
$		 Others
-
$ -
-
-
1,100
1,100
$ Others
-
$ -
-
-
-
$		 Total Total
21,571,329
$ -
-
-
-		 362,997
$ 83,417
10,784
-
-		 23,400,002
$ 83,417
10,784
87,108
1,100
21,571,329
$		 457,198
$		 23,582,411
$
Share
premium
21,571,329
$ -
-
-
21,571,329
$		 Total
$ -
$ -
-
-		 23,370,899
$ 609
20,740
7,754
$ -
$		 23,400,002
$

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 paidin capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

236

(8) Retained earnings

  • A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ accumulated deficit and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall also be set aside or reversed pursuant to the regulations. Appropriation of the remainder along with prior year’s accumulated unappropriated retained earnings shall be proposed by the Board of Directors, and shall be resolved by the stockholders when they are appropriated by issuing new shares. If the appropriation of retained earnings was appropriated in the form of cash, the appropriation should be in line with Article 240-5 of the Company Act, as resolved by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, and reported to the shareholders’ meeting.

  • B. Earnings appropriation ratio and cash dividends ratio are decided by the Board of Directors, taking into account the Company’s financial structure, future capital requirements and profitability, and cash dividends shall account for at least 10% of the total dividends appropriated. Earnings appropriation ratio and cash dividends ratio are subject to adjustments.

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

  • C. In line with Article 241 of the Company Act, all or part of the legal reserve and capital reserve could be appropriated as cash dividends as resolved by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, and reported to the shareholders’ meeting

  • D. 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.

237

  • E. On May 28, 2020, the appropriation of earnings for the year ended December 31, 2019 resolved by the shareholders was as follows:
For theyear ended December 31,2019 December 31,2019
Dividend per share
Amount (in dollars)
Legal reserve $ 283,976
Reversal of special reserve ( 12,265)
Cash dividend 1,077,283 $ 1.0
Stock dividend 1,292,739 1.2
Total $ 2,641,733 $ 2.2
  • F. On March 8, 2021, the appropriation of earnings for the year ended December 31, 2020 proposed by the Board of Directors and to be approved by the shareholders is as follows:
by the Board of Directors and to be approved by the shareholders is as follows: the shareholders is as follows:
Legal reserve
Cash dividend
Total		 For theyear ended December 31,2020
Amount
293,325
$ 1,206,557
1,499,882
$		 Dividend per share
(in dollars)
1.0
$
1.0
$

(9) Other equity items

Other equity items
2020
Unrealised
gains (losses) Currency
on valuation translation Total
At January 1 $ 1,753,427
 ($ 1,081,728)
 $ 671,699
Reclassified to profit or loss
upon disposal
- Subsidiaries and Associates - 6,674 6,674
Reclassified to retained earnings
upon disposal
- The Company 3,397 - 3,397
- Subsidiaries and Associates ( 17,720)
 - ( 17,720)
Revaluation- The Company 26,206 - 26,206
Revaluation-
Subsidiaries and Associates 1,781,423 - 1,781,423
Currency translation differences -
Subsidiaries and Associates - ( 728,396) ( 728,396)
At December 31 $ 3,546,733 ($ 1,803,450) $ 1,743,283

238

2019

2019
Unrealised
gains (losses) Currency
on valuation translation Total
At January 1 $ 511,888
 ($ 62,976)
 $ 448,912
Reclassified to profit or loss
upon disposal
- Subsidiaries and Associates - 5,444 5,444
Reclassified to retained earnings
upon disposal
- Subsidiaries and Associates ( 44,305)
 - ( 44,305)
Adjustment on the decrease of
shareholding ratio to
subsidiaries - ( 770)
 ( 770)
Revaluation- The Company ( 128,931)
 - ( 128,931)
Revaluation-
Subsidiaries and Associates 1,414,775 - 1,414,775
Currency translation differences -
Subsidiaries and Associates - ( 1,023,426) ( 1,023,426)
At December 31 $ 1,753,427 ($ 1,081,728) $ 671,699
(10)Interest income
For the year ended For the year ended
December 31,2020 December 31, 2019
Interest income from bank deposits 75 765
Interest income from loan to related parties 3,412 14,047
Total $ 3,487 $ 14,812
(11)Expenses by nature
For the year ended For the year ended
December 31,2020 December 31, 2019
Employee benefit expense $ 10,149
 $ 9,727
Depreciation 796 796
Total $ 10,945 $ 10,523
(12)Employee benefit expense
For the year ended For the year ended
December 31,2020 December 31,2019
Wage and salaries $ 4,149
 $ 4,027
Directors’ remuneration 6,000 5,700
$ 10,149 $ 9,727

A. According to the amended Articles of Incorporation, the profit (pre-tax profit before deduction of employees’ compensation and directors’ remuneration) of the current year shall be

239

distributed as employees’ compensation and directors’ remuneration, which will be resolved by the Board of Directors. The ratio shall not be lower than 0.1% for employees and not be higher than 1% for directors and supervisors. If a company has an accumulated deficit, earnings should be reserved to cover losses. Employees’ compensation can be distributed in cash or shares and shall be distributed to the employees of subsidiaries of the Company who meet certain specific requirements. The chairman of the Board is authorized to set the qualification requirements.

  • B. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at 0.1% of gain on pre-tax profit before deduction of employees’ compensation and directors’ and supervisors’ remuneration. Directors’ and supervisors’ remuneration were accrued under 1% of gain on pre-tax profit before deduction of employees’ compensation and directors’ and supervisors’ remuneration.

  • C. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at $2,937 and $2,859, respectively; and directors’ and supervisors’ remuneration was accrued at $5,000 and $4,800, respectively. The aforementioned amounts were recognized in salary expenses. Employees’ cash bonus and directors’ and supervisors’ remuneration of 2020 and 2019 as resolved at the Board of Directors of the Company were in agreement with those amounts recognized in the 2020 and 2019 parent company only financial statements.

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

(13) Income tax

  • A. Components of income tax expense:
omponents of income tax expense:
Current tax:
Current tax on profits for the year
Tax on undistributed surplus earnings
Prior year income tax underestimation
Income tax expense		 For the year ended
December31,2020
441
$ 9,901
221
10,563
$		 For the year ended
December31,2019
2,580
$ 19,858
-
22,438
$

240

B. Reconciliation between income tax expense and accounting profit

For the year ended For the year ended
December 31,2020 December 31,2019
Tax calculated based on profit before
tax and statutory tax rate $ 585,854
 $ 568,064
Tax effects from expense disallowed by
tax regulation 59 59
Tax exempt income by tax regulation ( 585,472)
 ( 565,543)
Prior year income tax underestimation 221 -
Tax on undistributed earnings 9,901 19,858
Income tax expense $ 10,563 $ 22,438
  • C. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

(14) Earnings per share

)Earnings per share
Weighted average
number of ordinary
Amount
shares outstanding
Earnings per share
Basic earnings per share
after tax
(shares in thousands)
(in dollars)
Profit attributable to ordinary shareholders
2,918,705
$ 1,193,649
2.45
$ Diluted earnings per share
Profit attributable to ordinary shareholders
2,918,705
$ Less: Effect of dilutive potential common
stocks issued by investee companies
26,233)
(
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
-
113
Net income attributable to common
stockholders plus dilutive effect of
common stock equivalents
2,892,472
$ 1,193,762
2.42
$ For theyear ended December 31,2020		 For theyear ended December 31,2020
Weighted average
number of ordinary
shares outstanding
(shares in thousands)
1,193,649
113
1,193,762		 Earnings per share
(in dollars)
2.45
$
2.42
$

241

For the year ended December 31, 2019

Amount
Basic earnings per share
after tax
Profit attributable to ordinary shareholders
2,817,880
$ Diluted earnings per share
Profit attributable to ordinary shareholders
2,817,880
$ Less: Effect of dilutive potential common
stocks issued by investee companies
22,531)
(
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
-
Net income attributable to common
stockholders plus dilutive effect of
common stock equivalents
2,795,349
$		 Weighted average
number of ordinary
shares outstanding
(shares in thousands)
1,188,748
118
1,188,866		 Earnings per share
(in dollars)
2.37
$
2.35
$

A. Basic earnings per share is calculated with the gain or loss attributable to the shareholders of the ordinary shares issued by the Company, divided with outstanding weighted average ordinary shares during the period, and deducted with weighted average treasury shares.

  • B. For the year ended December 31, 2019, the outstanding weighted average shares was retrospectively adjusted based on retained earnings capitalization ratio in 2020.

(15) Changes in liabilities from financing activities

Loan from Liabilities from financing Liabilities from financing
Current borrowings relatedparties activities-gross
At January 1, 2020 $ 1,000,000
 $ -
 $ 1,000,000
Changes in cash flow from
financing activities ( 900,000) 3,146,186 2,246,186
At December 31, 2020 $ 100,000 $ 3,146,186 $ 3,246,186
Loan from Liabilities from financing
Current borrowings relatedparties activities-gross
At January 1, 2019 $ -
 $ 399,295
 $ 399,295
Changes in cash flow from
financing activities 1,000,000 ( 399,295) 600,705
At December 31, 2019 $ 1,000,000 $ - $ 1,000,000

242

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of relatedparties
Mitac International Corporation
Mitac Computing Technology Corporation
Mitac Digital Technology Corporation
Tsu Fung Investment Corporation
Silver Star Development Ltd. and subsidiaries
Mitac Technology UK, Ltd. and subsidiary
Lien Hwa Industrial Corp. and subsidiaries		 Relationshipwith the Company
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Common Chairman

(2) Significant related party transactions and balances

A. Receivables from related parties:

Receivables from related parties:
Subsidiary - Mitac Computing Technology
Corp.
Other subsidiaries
Total
Other receivables
(excluding loans to subsidiaries):		 December 31,2020
169,525
$ 97,164
266,689
$		 December 31,2019
109,176
$ 72,121
181,297
$

Other receivables are mainly about tax paid on behalf of subsidiaries under consolidated tax return.

  • B. Payables to related parties:
Payables to related parties:
December 31,2020 December 31,2019
Other payables
(excluding loan from subsidiary):
Subsidiaries $ 52,643 $ 13,826
Other payables are mainly about tax refund received on behalf of subsidiaries under consolidated
tax return.
  • C. Property transactions

Disposal of financial assets

For the year ended December 31, 2020: None.

For the year ended December 31, 2020: None.
Account
No. of shares
Target
Subsidiary -
Tsu Fung
Investment
Corp.
Investments
accounted for using
equity method
1,000 shares
MiTAC Digital
Technology
Corp.		 December 31,2019
For the year ended
Disposal
proceeds
16
$		 Gains (losses)
on disposal
$-

243

  • －

  • D. Leasing arrangements lessee

  • (a) For the years ended December 31, 2020 and 2019, the Company leased offices from a subsidiary, Mitac International Corp. The lease terms are 5 years.

  • (b) Rent expense

Rent expense
Subsidiaries For the year ended
December 31,2020
23
$		 For the year ended
December 31,2019
22
$

  • E. Loans to /from related parties:

  • (c) Loans to related parties:

    • i. Outstanding balance:
. Outstanding balance:
Subsidiary - Mitac Computing
Technology Corp.
Other subsidiaries
Total		 December 31,2020
Balance
1,355,648
$ 10,538
1,366,186
$		 ExpiryDate
2021/3/8
2021/8/5

  • i.As of December 31, 2019 : None

  • ii. Interest income

Interest income
Subsidiary - Mitac Computing
Technology Corp.
Other subsidiaries
Total		 For the year ended
December31,2020
3,401
$ 11
3,412
$		 For the year ended
December31,2019
12,715
$ 1,332
14,047
$

The loans to subsidiaries are with a credit term of 1 year and carry interest at 0.22%-1.33% and 0.9800%-2.720% per annum for the years ended December 31, 2020 and 2019, respectively. The amounts of loan to and repayment from related parties were $2,647,786 and $1,281,600, respectively, for the year ended December 31, 2020. The amounts of loan to and repayment from to related parties were $2,787,274 and $3,186,569, respectively, for the year ended December 31, 2019.

244

(d)Loans from related parties:

A. Outstanding balance:

. Outstanding balance:
As of December 31, 2019: None.
Subsidiary - Mitac Computing
Technology Corp.
Subsidiary - Mitac Digital
Technology Corp.
Subsidiary - Silver Star
Development Ltd. And
subsidiaries
Other subsidiaries
Total		 December 31,2020
Balance
1,120,000
$ 600,000
1,366,186
60,000
3,146,186
$		 ExpiryDate
2021/8/9
2021/6/23
2021/7/30
2021/6/23
  • B. Interest expense
As of December 31, 2019: None.
Subsidiary - Mitac Computing
Technology Corp.
Subsidiary - Mitac Digital
Technology Corp.
Other subsidiaries
Total		 For the year ended
December 31,2020
2,781
$ 1,676
323
4,780
$

The loans from subsidiaries are with a credit term of 1 year and carry interest at 0% -0.6293% and 0% per annum for the years ended December 31, 2020 and 2019, respectively. The amounts of loan from and repayment to related parties were $4,677,786 and $1,531,600, respectively, for the year ended December 31, 2020. The amounts of loan from and repayment to related parties were $2,437,374 and $2,836,669, respectively, for the year ended December 31, 2019.

F. Endorsements and guarantees provided to related parties:

Subsidiary - Mitac Computing Technology
Corp.
Subsidiary - Mitac Technology UK, Ltd.
Subsidiary - Others
Total		 December 31,2020
663,584
$ 199,360
4,028
866,972
$		 December 31,2019
516,495
$ 830,205
4,144
1,350,844
$

245

G. Expenses:

Expenses:
Subsidiary - Mitac International Corp.
Other related parties
Total		 For the year ended
December 31,2020
12,400
$ 2,176
14,576
$		 For the year ended
December 31,2019
12,400
$ 1,736
14,136
$

Expenses mainly pertain to services and other miscellaneous expenses.

(3) Key management compensation

Key management compensation
Salaries and other short-term employee
benefits		 For the year ended
December 31,2020
8,784
$		 For the year ended
December 31,2019
8,268
$

8. PLEDGED ASSETS

None.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

None.

10. SIGNIFICANT DISASTER LOSS:

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE:

None.

12. OTHERS

(1) Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.

(2) Financial instruments

  • A. Financial instruments by category

246

Financial assets
Financial assets at fair value through other
comprehensive income
Designation of equity instruments
Financial assets at amortised cost/Loans and
receivables
Cash and cash equivalents
Other receivables
Other receivables - related parties
Refundable deposits
Financial liabilities
Financial liabilities at amortised cost
Current borrowings
Other accounts payable
Other accounts payable - related parties		 December 31,2020
392,838
$ 28,341
$ 1,127
1,632,875
106
1,662,449
$ 100,000
$ 10,487
3,198,829
3,309,316
$		 December 31,2019
350,664
$
56,403
$ 4
181,297
106
237,810
$
1,000,000
$ 9,538
13,826
1,023,364
$

B. Financial risk management policies

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial position and financial performance.

  • C. Significant financial risks and degrees of financial risks

  • (a) Market risk

Price risk

  • i. The Company’s equity securities, which are exposed to price risk, are financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio and controls the risk.

  • ii. The Company’s investments in equity securities comprise domestic listed and unlisted stocks. 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 1% with all other variables held constant, other components of equity would have increased/decreased by $3,928 and $3,507 for the years ended December 31, 2020 and 2019, respectively, as a result of gains/losses on equity securities classified as at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

The Company’s main interest rate risk arises from borrowings. However, the Company’s

247

borrowings were stated at fixed interest rate, thus the interest rate has no significant impact to the Company.

  • (b) Credit risk

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

  • ii. For banks and financial institutions, only the institutions with good credit quality are aaccepted as counterparties.

  • (c) Liquidity risk

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

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

Non-derivative financial liabilities:

December 31,2020
Current borrowings
Other payables
December 31,2019
Current borrowings
Other payables		 Less than
1year
100,115
$ 3,209,316
Less than
1year
1,000,470
$ 23,364		 Between 1
and 2years
-
$ -
Between 1
and 2years
-
$ -		 Between 2
and 3years
-
$ -
Between 2
and 3years
-
$ -		 Over
3years
-
$ -
Over
3years
-
$ -

(3) Fair value information

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

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

  • Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

  • Level 3: Inputs for the asset or liability that are not based on observable market data.

  • B. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, other receivables, guarantee deposits paid,

248

short-term borrowings and other payables are approximate to their fair values.

  • 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 at December 31, 2020 and 2019 is as follows:

  • (a) The related information of natures of the assets and liabilities is as follows:

December 31, 2020
Recurring fair value measurements
Equity securities
December 31, 2019
Recurring fair value measurements
Equity securities		 Level 1
145,875
$ Level 1
116,389
$		 Level 2
131,173
$ Level 2
137,317
$		 Level3
115,790
$ Level 3
96,958
$		 Total
392,838
$
Total
350,664
$

  • (b) The methods and assumptions the Company used to measure fair value are as follows:

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

Listed shares Market quoted price Closing price

  • 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.

  • iii. When assessing non-standard and low-complexity financial instruments, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

  • 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 Company’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Company’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the parent company only balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

  • v. The Company takes into account adjustments for credit risk to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Company’s credit quality.

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

249

  • E. The following table presents the changes in level 3 instruments as at December 31, 2020 and 2019:
January 1
Current purchase
Gains (losses) recognized in other
comprehensive income
December 31		 Equitysecurities Equitysecurities
2020
2019
96,958
$ 49,403
$ 17,095
49,900
1,737
2,345)
(
115,790
$ 96,958
$		 2019
96,958
$

  • F. Investment department is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, and reviewing the information periodically.

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

Non-derivative
equityinstrument:
Unlisted shares
Non-derivative
equityinstrument:
Unlisted shares		 Fair value at
December31,2020
$ 115,790
Fair value at
December31,2019
$ 96,958		 Valuation
technique
Net asset
value
Valuation
technique
Net asset
value		 Significant
unobservable input
Net asset value
Significant
unobservable input
Net asset value		 Range (weighted
average)		 Relationship of
inputs to fairvalue
-
Range (weighted
average)		 The higher the net asset
value, the higher the
fair value.
Relationship of
inputs to fairvalue
- The higher the net asset
value, the higher the
fair value.
  • H. The Company has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in difference 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:

250

Financial assets
Input
Equity instrument
Net asset
value
Financial assets
Input
Equity instrument
Net asset
value		 Change
±1%
Change
±1%		 December 31,2020 31,2020
Recognized in Unfavourable
change
-
$ profit or loss
December		 Recognized in other
comprehensive income
Favourable
change
-
$		 Favourable
change
1,158
$ 31,2019		 Unfavourable
change
1,158
$
Recognized in Unfavourable
change
-
$ profit or loss		 Recognized in other
comprehensive income
Favourable
change
-
$		 Favourable
change
970
$		 Unfavourable
change
970
$

13. SUPPLEMENTARY DISCLOSURES ： The details is on page 194 to 195 and page198 to 209.

251

MiTAC Holdings Corporation

Chairman： Miau, Matthew Feng Chiang

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