Mirle - Audit Report / Information 2020

Mirle Automation Corporation

Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Mirle Automation Corporation

Opinion

We have audited the accompanying parent company only financial statements of Mirle Automation Corporation (the “Corporation”), which comprise the parent company only balance sheets as of December 31, 2020 and 2019, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Corporation as of December 31, 2020 and 2019, and the parent company only financial performance and the 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 audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Corporation in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2020. 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, and we do not provide a separate opinion on these matters.

The key audit matter of the Corporation’s parent company only financial statements for the year ended December 31, 2020 is described as follows:

The Corporation is mainly engaged in the design, development, production and sale of medical equipment and its components, and provides after-sales services for these products. The Corporation also develops and sells software and databases used in automation equipment, and provides construction planning, installation, consulting and maintenance services for the above products.

Construction contract revenue is the Corporation’s major source of revenue (accounting for about 59% of total revenue). According to the International Financial Reporting Standards, construction contract revenue should be recognized based on the percentage of completion method. If the contract is expected to incur losses, the total loss should be recognized all at once.

Due to the fact that the contract or order may be started before the contract or order is confirmed, and the revenue recognized in advance according to the percentage of completion of the job, there is a risk that the

amount of revenue recognized is incorrect; therefore, we considered the authenticity of the contract or order as a significant risk and deemed it as a key audit matter. Please refer to Notes 4 and 20 of the parent company only financial statements for the relevant accounting policies on revenue.

The audit procedures performed in response to the aforementioned key audit matter are as follows:

We understood the internal controls of the contracts and orders, and tested the operating effectiveness of the controls.
We confirmed that the recognized construction contract revenue is based on actual contracts or orders.

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 Corporation’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 Corporation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the supervisor, are responsible for overseeing the Corporation’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 auditing standards generally accepted 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 auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 Corporation’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 Corporation’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
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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 Corporation 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 and appropriate audit evidence regarding the financial information of entities or business activities within the Corporation 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 were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2020 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.

The engagement partners on the audits resulting in this independent auditors’ report are Mei-Chen Tsai and Ming Hui Chen.

Deloitte & Touche Taipei, Taiwan Republic of China

March 18, 2021

Notice to Readers

The accompanying parent company only financial statements are intended only to present the parent company only financial position, parent company only financial performance and parent company only cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and parent company only financial statements shall prevail.

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4, 6 and 25) Contract assets - current (Notes 4, 5, 20 and 26) Notes receivable (Notes 4, 8, 20 and 25) Accounts receivable (Notes 4, 8, 20 and 25) Receivables from related parties (Notes 4, 20, 25 and 26) Other receivables (Notes 4, 8 and 25) Other receivables from related parties (Notes 4, 25 and 26) Inventories (Notes 4, 5 and 9) Other current assets (Note 14) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 4, 7 and 25) Investments accounted for using the equity method (Notes 4 and 10) Property, plant and equipment (Notes 4, 11 and 26) Right-of-use assets (Notes 4 and 12) Intangible assets (Notes 4, 13 and 27) Deferred income tax assets (Notes 4 and 22) Prepayments for equipment Refundable deposits (Note 25) Prepayments for investments (Note 14) Total non-current assets TOTAL		2020 Amount % $ 1,867,376 18 2,495,667 24 10,982 - 180,723 2 57,292 1 47,800 - 84 - 1,276,743 13 98,726 1 6,035,393 59 39,098 1 1,951,474 19 1,742,367 17 275,610 3 35,564 - 7,779 - 2,999 - 114,772 1 10,000 - 4,179,663 41 $ 10,215,056 100		2019 Amount % $ 1,431,540 14 2,637,698 26 39,158 - 220,231 2 53,086 1 54,476 1 6,058 - 1,684,032 17 109,829 1 6,236,108 62 39,316 1 1,780,256 18 1,548,691 15 290,309 3 39,054 - 7,779 - 480 - 136,415 1 - - 3,842,300 38 $ 10,078,408 100

LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term bank loans (Notes 15 and 25) Contract liabilities - current (Notes 4, 5, 20 and 26) Notes payable (Note 25) Accounts payable (Note 25) Accounts payable to related parties (Notes 25 and 26) Current income tax liabilities (Notes 4 and 22) Provisions - current (Notes 4 and 17) Lease liabilities - current (Notes 4, 12 and 25) Current portion of long-term debt (Notes 15 and 25) Accrued expenses and other current liabilities (Notes 16, 21, 25 and 26) Total current liabilities NON-CURRENT LIABILITIES Long-term debt (Notes 15 and 25) Lease liabilities - non-current (Notes 4, 12 and 25) Net defined benefit liabilities - non-current (Notes 4 and 18) Guarantee deposits received (Note 25) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE CORPORATION (Notes 4 and 19) Common shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Exchange differences on the translation of the financial statements of foreign operations Unrealized loss on investments in financial assets at fair value through other comprehensive income Total equity attributable to shareholders of the Corporation Total shareholders’ equity TOTAL		2020 Amount % $ 300,000 3 1,643,586 16 20,476 - 1,720,190 17 6,867 - 158,310 2 3,131 - 24,241 - 5,000 - 611,138 6 4,492,939 44 1,058,967 10 257,252 3 306,390 3 298 - 1,622,907 16 6,115,846 60 1,955,312 19 253,729 2 852,644 8 173,348 2 1,016,226 10 (144,404) (1) (7,645) - 4,099,210 40 4,099,210 40 $ 10,215,056 100		2019
				Amount % $ 900,000 9 1,462,212 15 43,365 1 2,122,581 21 9,067 - 136,709 1 7,087 - 24,625 - - - 716,069 7 5,421,715 54 10,000 - 267,997 3 308,447 3 298 - 586,742 6 6,008,457 60 1,955,312 19 258,245 3 785,624 8 108,311 1 1,135,806 11 (164,948) (2) (8,399) - 4,069,951 40 4,069,951 40 $ 10,078,408 100

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

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

REALIZED GROSS PROFIT NET OPERATING REVENUE (Notes 20 and 26) OPERATING COSTS (Notes 9, 21 and 26) GROSS PROFIT REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 12, 21 and 26) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss (gain) (Note 8) Total operating expenses OTHER OPERATING INCOME AND EXPENSES (Note 21) OPERATING INCOME NONOPERATING INCOME AND EXPENSES Interest income (Notes 21 and 26) Other income (Notes 13, 21 and 24) Other gains and losses (Notes 21 and 26) Finance costs (Note 21) Share of gain of subsidiaries and associates (Note 10) Foreign exchange loss, net Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 22) NET PROFIT FOR THE YEAR		2020 Amount % $ 7,484,989 100 5,800,638 77 1,684,351 23 760 - 1,685,111 23 311,748 4 353,533 5 391,330 5 3,465 - 1,060,076 14 49 - 625,084 9 4,052 - 21,738 - (5,499) - (13,656) - 73,077 1 (133,141) (2) (53,429) (1) 571,655 8 58,288 1 513,367 7		2019
				Amount % $ 10,033,116 100 7,979,470 80 2,053,646 20 195 - 2,053,841 20 437,007 4 355,168 4 423,393 4 (12,320) - 1,203,248 12 (227) - 850,366 8 8,456 - 7,614 - (3,193) - (10,647) - 47,783 1 (61,662) (1) (11,649) - 838,717 8 157,047 1 681,670 7 (Continued)

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) (Notes 19 and 25) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss Exchange differences on the translation of the financial statements of foreign operations Total other comprehensive income (loss) TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 23) Basic Diluted		2020 Amount % $ (11,169) - 754 - (10,415) - 20,544 - 10,129 - $ 523,496 7 $ 2.63 $ 2.63		2019
				Amount % $ (11,469) - (2,904) - (14,373) - (62,133) (1) (76,506) (1) $ 605,164 6 $ 3.49 $ 3.49

The accompanying notes are an integral part of the parent company only financial statements. (Concluded)

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Share Capital Issued and Outstanding Number of Shares (In Thousands) Amount 195,531 $ 1,955,312 - - - - - - - - - - - - - - - - 195,531 1,955,312 - - - - - - - - - - - - - - 195,531 $ 1,955,312		Capital Surplus	Capital Surplus	Retained Earnings
	Equity Component of Convertible Bonds Issued by the Corporation $ 234,579 - - - - - - - - 234,579 - - - - - - - $ 234,579	Investments in Associates Accounted for Using the Equity Method $ 8,776 - - - (4,395 ) 135 - - - 4,516 - - - (4,516 ) - - - $ -	Treasury Shares $ 19,150 - - - - - - - - 19,150 - - - - - - - $ 19,150
Number of Shares (In Thousands) 195,531 - - - - - - - - 195,531 - - - - - - - 195,531
				Unappropriated Legal Reserve Special Reserve Earnings $ 690,243 $ 74,865 $ 1,239,685 95,381 - (95,381 ) - 33,446 (33,446 ) - - (645,253 ) - - - - - - - - 681,670 - - (11,469) - - 670,201 785,624 108,311 1,135,806 67,020 - (67,020 ) - 65,037 (65,037 ) - - (488,828 ) - - (893 ) - - 513,367 - - (11,169) - - 502,198 $ 852,644 $ 173,348 $ 1,016,226

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

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss (gain) Finance costs Interest income Share of loss of subsidiaries and associates (Gain) loss on disposal of property, plant and equipment Write-downs (reversal of write-downs) of inventories Realized gain on transactions with subsidiaries and associates Net loss on foreign currency exchange Net gain on fair value change of financial assets designated as at fair value through profit or loss Lease modification benefits Changes in operating assets and liabilities Contract assets Notes receivable Accounts receivable Accounts receivable from related parties Other receivables Inventories Other current assets Contract liabilities Notes payable Accounts payable Accounts payables to related parties Provisions Accrued expenses and other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Disposal of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of long-term investments accounted for using the equity method Increase in prepayments for long-term investments Net cash outflow on acquisition of subsidiaries	2020 $ 571,655 111,669 20,869 3,465 13,656 (4,052) (73,077) (49) (17,297) (760) 65,944 (204) (10) 132,887 28,610 (44,776) 23,305 6,700 424,586 11,103 181,374 (22,889) (404,595) (2,200) (3,956) (63,731) (13,226) 945,001 (36,687) 908,314 972 (530,000) 530,204 (39,280) (10,000) (42,966)	2019 $ 838,717 112,305 19,963 (3,176) 10,647 (8,456) (47,783) 227 4,050 (195) 53,831 (1,602) (1) 551,492 70,629 122,826 (630) 66,397 (41,450) 77,980 355,489 (5,156) (1,675,350) 3,351 4 (131,491) (33,004) 339,614 (231,802) 107,812 - (300,000) 752,304 - - (82,769) (Continued)

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Acquisition of property, plant and equipment Disposal of property, plant and equipment Decrease in refundable deposits Decrease in other receivables from related parties Acquisition of intangible assets Increase in prepayments for equipment Interest received Dividends received Net cash (used in) generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term bank loans Decrease in short-term bank loans Proceeds from long-term bank loans Repayments of long-term bank loans Repayment of the principal portion of lease liabilities Dividends paid Interest paid Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF THE YEAR	2020 $ (320,277) 2,324 21,643 6,172 (17,379) (2,519) 4,028 - (397,078) 2,780,000 (3,380,000) 1,058,967 (5,000) (25,011) (488,828) (13,608) (73,480) (1,920) 435,836 1,431,540 $ 1,867,376	2019 $ (60,430) - 4,459 16,250 (26,753) (97) 8,530 2,680 314,174 3,050,000 (2,500,000) - (377,857) (22,832) (645,253) (10,718) (506,660) (18,663) (103,337) 1,534,877 $ 1,431,540

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

(Concluded)

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

MIRLE AUTOMATION CORPORATION

1. GENERAL INFORMATION

Mirle Automation Corporation (the “Corporation”) was incorporated in Hsinchu Science Industrial Park, Republic of China (ROC) on February 2, 1989 and commenced business on March 16, 1989. The Corporation is mainly engaged in the business of automation equipment systems and its components, various parking facilities, medical equipment and the design, development, production and sale of the automation equipment used in these products, and also provides after-sales services for the products. The Corporation is also engaged in the leasing business, and develops and sells software and databases that are used in automation equipment. Moreover, the Corporation also provides construction planning, installation, consulting and maintenance services for the above products.

The Corporation’s shares were listed and have been trading on the Taiwan Stock Exchange (TWSE) since September 2001.

The parent company only financial statements are presented in the Corporation’s functional currency, the New Taiwan dollar.

2. APPROVAL OF PARENT COMPANY ONLY FINANCIAL STATEMENTS

The parent company only financial statements were approved by the board of directors and authorized for issue on March 18, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The initial application of the amendments to the IFRS’s endorsed and issued into effect by the FSC did not have a material impact on the Corporation’s accounting policies.

b. The IFRSs endorsed by the FSC for application starting from 2021

New, Amended or Revised Standards and Interpretations 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” Amendment to IFRS 16 “Covid-19-Related Rent Concessions”	Effective Date Announced by IASB
	Effective immediately upon promulgation by the IASB January 1, 2021 June 1, 2020

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c. New IFRSs issued by the IASB but not yet endorsed and issued into effect by the FSC

Effective Date Announced by New, Amended or Revised Standards and Interpretations the IASB (Note 1) “Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 6) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 7) Amendments to IAS 16 “Property, Plant and Equipment - Proceeds January 1, 2022 (Note 4) before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a January 1, 2022 (Note 5) Contract”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

As of the date the parent company only financial statements were authorized for issue, the Corporation is continuously assessing the possible impact that the application of the above standards and interpretations will have on the Corporation’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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

b. Basis of preparation

The parent company only financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing its parent company only financial statements, the Corporation used the equity method to account for its investment in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same as the amounts attributable to the owner of the Corporation in its consolidated financial statements, adjustments arising from the differences in accounting treatment between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates, the share of other comprehensive income (loss) of subsidiaries and associates, as appropriate, in the parent company only financial statements.

c. Classification of current and non-current assets and liabilities

Current assets include:

Assets held primarily for the purpose of trading;
Assets expected to be realized within 12 months after the reporting period; and
Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

Liabilities held primarily for the purpose of trading;
Liabilities due to be settled within 12 months after the reporting period; and
Liabilities for which the Corporation does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

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The Corporation is engaged in the construction business, which has an operating cycle of over 1 year. The normal operating cycle applies when considering the classification of the Corporation’s construction-related assets and liabilities.

d. Foreign currencies

In preparing the Corporation’s financial statements, transactions in currencies other than the Corporation’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

e. Inventories

Inventories consist of raw materials, supplies, finished goods and work in progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

f. Investments in subsidiaries

The Corporation uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Corporation.

Under the equity method, investments in subsidiaries are initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the subsidiary. The Corporation also recognizes the changes in the Corporation’s share of equity of subsidiaries.

Changes in the Corporation’s ownership interest in a subsidiary that do not result in the Corporation losing control of the subsidiary are accounted for as equity transactions. The Corporation recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized.

The Corporation assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole.

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Profit or loss resulting from downstream transactions is eliminated in full only in the parent company only financial statements. Profit or loss resulting from upstream transactions and transactions between subsidiaries is recognized only in the parent company only financial statements and only to the extent of interests in the subsidiaries that are not related to the Corporation.

g. Investments in associates

An associate is an entity over which the Corporation has significant influence and which is neither a subsidiary nor an interest in a joint venture.

The Corporation uses the equity method to account for its investments in associates.

Under the equity method, investments in associates are initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the associate. The Corporation also recognizes the changes in the Corporation’s share of the equity of associates.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

When the Corporation transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Corporation’s parent company only financial statements only to the extent of interests in the associate that are not related to the Corporation.

h. Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each year, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

i. Intangible assets
1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each year, with the effect of any changes in the estimates accounted for on a prospective basis.

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When the Corporation has the right to charge for the usage of concession infrastructure (as a consideration for providing construction services in a service concession arrangement), it is recognized as an intangible asset. The intangible asset is subsequently measured at cost less accumulated amortization and any accumulated impairment loss.

2) Internally-generated intangible assets - research and development expenditures

Expenditures on research activities are recognized as expenses in the period in which they are incurred.

3) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

j. Impairment of property, plant and equipment, right-of-use assets, intangible assets and assets related to contract costs

At the end of each reporting period, the Corporation reviews the carrying amounts of its property, plant and equipment, right-of-use assets and intangible assets any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Corporation estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

Before the Corporation recognizes an impairment loss from assets related to contract costs, any impairment loss on inventories, property, plant and equipment and intangible assets related to the contract applicable under IFRS 15 shall be recognized in accordance with applicable standards. Then, impairment loss from the assets related to the contract costs is recognized to the extent that the carrying amount of the assets exceeds the remaining amount of consideration that the Corporation expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services and which have not been recognized as expenses. The assets related to the contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating impairment of that cash-generating unit.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset, cash-generating unit or contract costs is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset, cash-generating unit or contract costs in prior years. A reversal of an impairment loss is recognized in profit or loss.

k. Financial instruments

Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial

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recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

Financial assets are classified into the following categories: financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at fair value through other comprehensive income (FVTOCI).

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are mandatorily classified or designated as at FVTPL.

Financial assets at FVTPL are subsequently measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income and interest income, respectively; any remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 25.

ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable, accounts receivable and other receivables, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and
ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.
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A financial asset is credit impaired when one or more of the following events have occurred:

i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default;
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv) The disappearance of an active market for that financial asset because of financial difficulties.
iii. Investments in equity instruments at FVTOCI

On initial recognition, the Corporation may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Corporation’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets and contract assets

The Corporation recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable), lease receivables, as well as contract accounts.

The Corporation always recognizes lifetime expected credit losses (ECLs) for trade receivables, lease receivables and contract assets. For all other financial instruments, the Corporation’s recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Corporation measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Corporation determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Corporation):

i. Internal or external information shows that the debtor is unlikely to pay its creditors.
ii. Financial asset is more than 90 days past due unless the Corporation has reasonable and corroborative information to support a more lagged default criterion.
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The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

c) Derecognition of financial assets

The Corporation derecognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, and the cumulative gain or loss is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Debt and equity instruments issued by the Corporation are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Corporation are recognized at the proceeds received, net of direct issue costs.

3) Financial liabilities

a) Subsequent measurement

Except the following situations, all financial liabilities are measured at amortized cost using the effective interest method:

i. Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when such financial liabilities are either held for trading or are designated as at FVTPL.

Financial liabilities held for trading are stated at fair value, and remseasurement gains or losses (including any dividends or interests paid on the financial assets) arising from the remseasurement are recognized in profit or loss.

Fair value is determined in the manner described in Note 25.

b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

4) Derivative financial instruments

The Corporation enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts.

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Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

l. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Provisions for the expected cost of warranty obligations to assure that products comply with agreed-upon specifications are recognized on the date of sale of the relevant products at the best estimate by the management of the Corporation of the expenditures required to settle the Corporation’s obligations.

m. Revenue recognition

The Corporation identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

For contracts where the period between the date on which the Corporation transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Corporation does not adjust the promised amount of consideration for the effects of a significant financing component.

1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of information products. The Corporation recognizes income and accounts receivable in accordance with the terms as stated in the contract.

The Corporation does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

2) Revenue from the rendering of services

As the Corporation provides hardware and software installation services and extended warranty services, customers simultaneously receive and consume the benefits provided by the Corporation’s satisfaction of performance obligations. Consequently, the related revenue is recognized when services are rendered.

3) Construction contract revenue

For construction contracts that are under the control of the customer during the progress of construction, the Corporation recognizes revenue over time. The Corporation measures the progress of completion on the basis of costs incurred relative to the total expected costs as there is a direct relationship between the costs incurred and the progress of satisfaction of the performance obligations. Contract assets are recognized during the construction and are reclassified to trade receivables at the point at which the customer is invoiced. If the milestone payments exceed the revenue recognized to date, the Corporation recognizes contract liabilities for the difference. Certain payments, which are retained by the customer as specified in the contract, are intended to ensure that the Corporation adequately completes all of its contractual obligations. Such retention

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receivables are recognized as contract assets until the Corporation satisfies its performance obligations.

When the outcome of a performance obligation cannot be reasonably measured, contract revenue is recognized only to the extent of contract costs incurred in the satisfaction of the performance obligation for which recovery is expected.

n. Leases

At the inception of a contract, the Corporation assesses whether the contract is, or contains, a lease.

1) The Corporation as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2) The Corporation as lessee

The Corporation recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, less any lease incentives received, and plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the parent company only balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Corporation uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term resulting from a change in future lease payments, the Corporation remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the parent company only balance sheets.

o. Government grants

Government grants are not recognized until there is reasonable assurance that the Corporation will comply with the conditions attached to them and that the grants will be received.

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Government grants related to income are recognized as a reduction of the related costs or in other income on a systematic basis over the periods in which the Corporation recognizes as expenses the related costs that the grants are intended to compensate. Specifically, government grants whose primary condition is that the Corporation should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Corporation with no future related costs are recognized in profit or loss in the period in which they are received.

p. Employee benefits
1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Corporation’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

3) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Corporation can no longer withdraw the offer of the termination benefit and when the Corporation recognizes any related restructuring costs.

q. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (refundable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

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Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, research and development expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Corporation is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and such temporary differences are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Corporation expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Corporation’s accounting policies, management is required to make judgments, estimations, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Corporation considers the economic implications of the COVID-19 when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

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Key Sources of Estimation Uncertainty

a. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience in the sale of product of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

b. Construction contracts

Contract revenue and costs are recognized by reference to the stage of completion of each contract. The stage of completion of a contract is measured based on the proportion of contract costs incurred for work performed to date to the estimated total contract costs. Incentives and penalties stipulated in the contract are considered as variable consideration and should be included in the contract revenue only when it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The estimated total contract costs and contractual items are assessed and determined by management based on the nature of the work, expected sub-contracting charges, construction periods, processes, methods, etc., for each construction contract. Changes in these estimates might affect the calculation of the percentage of completion and related profit and loss from the construction contracts. See Note 20 for the details.

6. CASH AND CASH EQUIVALENTS

Cash on hand Demand deposits Checking accounts Cash equivalent Time deposits with original maturities within 3 months Time deposits with original maturities of more than 3 months but less than 1 year		December 31	December 31
		2020 $ 8,700 1,716,875 737 118,179 22,885 $ 1,867,376	2019 $ 8,700 1,406,685 556 - 15,599 $ 1,431,540

Cash equivalents include time deposits with original maturities within 1 year from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. The Corporation’s cash is held for the purpose of meeting short-term cash commitments.

The market rates of cash in bank at the end of the reporting period were as follows:

Bank deposits	December 31
	2020 2019 0.001%-2.55% 0.001%-2.50%

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7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instruments FVTOCI Foreign investments Unlisted shares		December	31
		2020 $ 39,098 $ 39,098	2019 $ 39,316 $ 39,316

The Corporation invested in TIEF FUND, L.P. for medium to long-term strategic purposes, and expects to make a profit through long-term investment. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Corporation’s strategy of holding these investments for long-term purposes.

8. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Notes receivable Operating Less: Allowance for impairment loss Accounts receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables Business tax Others Less: Allowance for impairment loss		December 31	December 31
		2020 $ 11,104 (122) $ 10,982 $ 202,404 (21,681) $ 180,723 $ 43,404 7,335 50,739 (2,939) $ 47,800	2019 $ 39,714 (556) $ 39,158 $ 238,013 (17,782) $ 220,231 $ 43,997 13,418 57,415 (2,939) $ 54,476

a. Notes receivable and accounts receivable

The average credit period of sales of goods was 30 to 180 days.

In order to minimize credit risk, the management of the Corporation has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debt. In addition, the Corporation reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made

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for possible irrecoverable amounts. In this regard, the management believes the Corporation’s credit risk was significantly reduced.

The Corporation measures the loss allowance for accounts receivable at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix prepared by reference to the past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date. As the Corporation’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Corporation’s different customer base.

The Corporation writes off an accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation. For accounts receivable that have been written off, the Corporation continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of notes receivable and accounts receivable based on the Corporation’s provision matrix.

December 31, 2020

Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2019 Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Up to 30 Days $ 70,926 (1,057) $ 69,869 Up tp 30 Days $ 86,676 (1,281) $ 85,395	31 to 90 Days $ 110,961 (1,544) $ 109,417 31 to 90 Days $ 148,836 (1,997) $ 146,839	91 to 180 Days $ 11,023 (151) $ 10,872 91 to 180 Days $ 34,464 (7,309) $ 27,155	Over 180 Days $ 20,598 (19,051) $ 1,547 Over 180 Days $ 7,751 (7,751) $ -	Total $ 213,508 (21,803) $ 191,705 Total $ 277,727 (18,338) $ 259,389

The movements of the loss allowance of notes receivable and accounts receivable were as follows:

For the Year Ended December 31

Balance at January 1 Add: Net remeasurement of loss allowance Less: Net remeasurement of loss allowance Less: Amounts written off Balance at December 31	2020 $ 18,338 3,465 - - $ 21,803	2019 $ 24,942 - (3,176) (3,428) $ 18,338

As of December 31, 2020 and 2019, the amounts of loss allowance which included individually impaired notes receivable and accounts receivable of debtors in significant financial difficulty were $19,041 thousand and $18,285 thousand, respectively. The expected credit losses recognized are the carrying amounts of notes receivable and accounts receivable. The Corporation does not hold any collateral over the balance of these notes receivable and accounts receivable.

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9. INVENTORIES

December 31 2020 2019 Finished goods $ 27,920 $ 55,657 Work in progress 1,044,963 1,293,022 Raw materials 199,815 284,680 Inventory in transit 4,045 50,673 $ 1,276,743 $ 1,684,032 The components of operating costs related to inventories are as follows: For the Year Ended December 31 2020 2019 Cost of goods sold $ 5,800,638 $ 7,979,470 (Reversal of) write downs of inventories $ (17,297) $ 4,050 Sale of scraps $ (643) $ (488)		December 31	December 31
		2020 $ 5,800,638 $ (17,297) $ (643)	2019 $ 7,979,470 $ 4,050 $ (488)

The Corporation did not pledge inventories as collateral for bank borrowings.

10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31
		2020 $ 1,914,100 37,374 $ 1,951,474	2019 $ 1,755,838 24,418 $ 1,780,256

a. Investments in subsidiaries

Unlisted shares MIRTEK (BVI) CORP. LTD. MIRLE AUTOMATION INTER CO., LTD. David Investment Co., Ltd. Factory Automation International Co., Ltd.		December 31	December 31
		2020 $ 1,703,233 90,594 78,198 42,075 $ 1,914,100	2019 $ 1,591,507 91,362 72,969 - $ 1,755,838

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Name of Subsidiary MIRTEK (BVI) CORP. LTD. MIRLE AUTOMATION INTER CO., LTD. David Investment Co., Ltd. Factory Automation International Co., Ltd.	Proportion of Ownership and Voting Rights
	December 31
	2020 2019 100% 100% 100% 100% 99% 99% 51% -

The Corporation originally held a 49% interest in MIRLE AUTOMATION INTER CO., LTD. In order to dominate the Southeast Asian market, the Corporation acquired the remaining 51% interest held by the other shareholders for an amount not exceeding THB80,000 thousand, which was approved by the board of directors on March 25, 2019. On November 4, 2019, the Corporation remitted THB61,861 thousand and obtained control of MIRLE AUTOMATION INTER CO., LTD, and remitted THB20,908 thousand on December 31, 2019 to acquire the remaining equity.

For the disclosure of the Corporation’s acquisition of MIRLE AUTOMATION INTER CO., LTD., please refer to Note 27 of the Corporation’s consolidated financial statements for the year ended December 31, 2020.

On August 10, 2020, the Corporation’s board of directors approved the capital increase of US$30 thousand in MIRTEK (BVI) CORP. LTD., remitted NT$891 thousand on August 20, 2020.

On November 9, 2020, the Corporation’s board of directors approved the reinvestment in Factory Automation International Co., Ltd. for an amount not more than NT$50,000 thousand. On December 25, 2020, the Corporation remitted NT$42,075 thousand to acquire 51% interest and obtained control of the aforementioned company. For the details, please refer to Note 27 to the consolidated financial statements for the year ended December 31, 2020.

The share of profit or loss and other comprehensive income (loss) of the investments in subsidiaries accounted for using the equity method for the years ended December 31, 2020 and 2019 were based on the subsidiaries’ audited financial statements for the same years.

b. Investments in associates

Material associate MAIN DRIVE CORPORATION		December	31
		2020 $ 37,374	2019 $ 24,418

Refer to Note 31(b) for the nature of activities, principal place of business and country of incorporation of the aforementioned associate.

The above - mentioned associate was accounted for using the equity method.

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1) Material associates

Name of Associate MAIN DRIVE CORPORATION	Proportion of Ownership and Voting Rights
	December 31
	2020 2019 27.61% 20.4%

On April 30, 2019, the Corporation subscribed for the shares of MAIN DRIVE CORPORATION at a percentage different from its existing shareholding percentage, which caused the proportion of ownership to decrease from 22% to 20.4%.

The Corporation subscribed for 3,928 thousand common shares of MAIN DRIVE CORPORATION for NT$39,280 thousand in cash after approval was obtained from the board of directors on May 11, 2020, which increased the proportion of ownership from 20.4% to 27.61%.

The summarized financial information below represents amounts shown in the associate’s financial statements prepared in accordance with IFRSs adjusted by the Corporation for equity accounting purposes.

MAIN DRIVE CORPORATION

Current assets Non-current assets Current liabilities Non-current liabilities Equity Proportion of the Corporation’s ownership Equity attributable to the Corporation Goodwill Carrying amount Operating revenue Net loss for the year		December 31	December 31
	2020 $ 85,563 133,939 (43,255) (40,880) $ 135,367 27.61% $ 37,374 - $ 37,374 For the Year Ended		2019 $ 88,264 91,566 (39,975) (20,160) $ 119,695 20.40% $ 24,418 - $ 24,418 December 31
		2020 $ 7,759 $ (84,344)	2019 $ 243 $ (40,502)

2) The share of profit or loss and other comprehensive income (loss) of the investments in the associate accounted for using the equity method for the years ended December 31, 2020 and 2019 were based on the associate’s audited financial statements for the same years.

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11. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2020 Additions Disposals Reclassified Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expenses Disposals Balance at December 31, 2020 Accumulated impairment Balance at January 1, 2020 and December 31, 2020 Carrying amount at December 31, 2020 Cost Balance at January 1, 2019 Additions Disposals Reclassified Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation expenses Disposals Balance at December 31, 2019 Accumulated impairment Balance at January 1, 2019 and December 31, 2019 Carrying amount at December 31, 2019	Freehold Land Buildings and Ancillary Equipment $ 179,901 $ 1,548,344 - 4,375 - (6,970 ) - - $ 179,901 $ 1,545,749 $ - $ 381,652 - 40,734 - (6,970) $ - $ 415,416 $ - $ - $ 179,901 $ 1,130,333 $ 179,901 $ 1,545,958 - 4,332 - (7,442 ) - 5,496 $ 179,901 $ 1,548,344 $ - $ 344,089 - 45,005 - (7,442) $ - $ 381,652 $ - $ - $ 179,901 $ 1,166,692	Machinery Equipment Transportation Equipment $ 238,089 $ 24,411 21,410 3,075 (28,685 ) (2,363 ) 3,423 - $ 234,237 $ 25,123 $ 121,501 $ 12,455 32,345 3,234 (27,221) (1,894) $ 126,625 $ 13,795 $ 4,658 $ - $ 102,954 $ 11,328 $ 224,549 $ 24,837 31,071 2,543 (17,531 ) (2,969 ) - - $ 238,089 $ 24,411 $ 106,489 $ 12,092 32,316 3,332 (17,304) (2,969) $ 121,501 $ 12,455 $ 4,658 $ - $ 111,930 $ 11,956	Office Equipment $ 44,791 4,137 (1,760 ) - $ 47,168 $ 23,109 6,765 (1,418) $ 28,456 $ - $ 18,712 $ 44,471 4,173 (3,853 ) - $ 44,791 $ 20,456 6,506 (3,853) $ 23,109 $ - $ 21,682	Work in Progress $ 56,530 246,032 - (3,423) $ 299,139 $ - - - $ - $ - $ 299,139 $ 4,149 57,877 - (5,496) $ 56,530 $ - - - $ - $ - $ 56,530	Total $ 2,092,066 279,029 (39,778 ) - $ 2,331,317 $ 538,717 83,078 (37,503) $ 584,292 $ 4,658 $ 1,742,367 $ 2,023,865 99,996 (31,795 ) - $ 2,092,066 $ 483,126 87,159 (31,568) $ 538,717 $ 4,658 $ 1,548,691

There was no indication of impairment on the Corporation’s property, plant and equipment for the years ended December 31, 2020 and 2019.

The Corporation’s property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings and ancillary equipment 3-50 years Machinery equipment 2-20 years Transportation equipment 4-9 years Office equipment 2-10 years

The major component of the Corporation’s buildings comprise the main building of the plant and electromechanical power equipment, and are depreciated on a straight-line basis over their estimated useful lives of 40-50 years and 3-15 years, respectively.

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12. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Buildings Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Transportation equipment		December 31	December 31
	2020 $ 271,620 - 3,990 $ 275,610 For the Year Ended		2019 $ 288,176 453 1,680 $ 290,309 December 31
		2020 $ 14,825 $ 27,006 453 1,132 $ 28,591	2019 $ 108,124 $ 22,835 922 1,389 $ 25,146

b. Lease liabilities

Carrying amount Current Non-current Range of discount rate for lease liabilities was as follows: Land Buildings Transportation equipment		December 31
		2020 2019 $ 24,241 $ 24,625 $ 257,252 $ 267,997 December 31
	2020 2019 1.90%-2.10% 1.40%-2.10% - 1.40% 1.40% 1.40%

c. Material leasing activities and terms

The Corporation leases land, buildings and transportation equipment for office space and operational uses with lease terms of 2-50 years, 2 years and 2-3 years, respectively. The Corporation does not have bargain purchase options to acquire the land, buildings and transportation equipment at the end of the lease terms.

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d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 8,764 $ 2,408 $ (42,047)	2019 $ 20,735 $ 4,491 $ (48,058)

The Corporation’s leases of certain buildings and office equipment qualify as short-term leases and certain office equipment qualify as low-value asset leases. The Corporation has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

13. OTHER INTANGIBLE ASSETS

Cost Balance at January 1, 2020 Additions Decrease Balance at December 31, 2020 Accumulated amortization Balance at January 1, 2020 Amortization expense Decrease Balance at December 31, 2020 Carrying amount at December 31, 2020 Cost Balance at January 1, 2019 Additions Decrease Balance at December 31, 2019 Accumulated amortization Balance at January 1, 2019 Amortization expense Decrease Balance at December 31, 2019 Carrying amount at December 31, 2019	Franchises $ 9,389 - - 9,389 3,286 469 - 3,755 $ 5,634 $ 9,389 - - 9,389 2,816 470 - 3,286 $ 6,103	Computer Software $ 47,599 10,034 (14,871) 42,762 20,622 14,462 (14,871) 20,213 $ 22,549 $ 40,058 23,189 (15,648) 47,599 22,438 13,832 (15,648) 20,622 $ 26,977	Others $ 24,104 7,345 - 31,449 18,130 5,938 - 24,068 $ 7,381 $ 20,540 3,564 - 24,104 12,469 5,661 - 18,130 $ 5,974	Total $ 81,092 17,379 (14,871) 83,600 42,038 20,869 (14,871) 48,036 $ 35,564 $ 69,987 26,753 (15,648) 81,092 37,723 19,963 (15,648) 42,038 $ 39,054

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The Corporation signed several power purchase agreements with Taiwan Power Company that would expire in 20 years starting from the date of interconnection of the electric generators. The gains for the years ended December 31, 2020 and 2019, which were recognized as other income amounted to $2,501 thousand and $2,359 thousand, respectively.

Other intangible assets pledged as collateral for bank borrowings are set out in Note 27.

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Franchises 20 years Computer software 3 years Others 10 years

14. OTHER CURRENT ASSETS

Current Prepayments for construction Temporary payments Prepayments for rent Prepayments for software maintenance Others Non-current Prepayment for investments		December 31	December 31
		2020 $ 37,386 22,074 5,522 5,111 28,633 $ 98,726 $ 10,000	2019 $ 63,717 22,080 3,916 5,222 14,894 $ 109,829 $ -

The Corporation plans to invest in Phoenix II innovation Venture Capital Co., Ltd. and has injected capital of NT$10,000 thousand in 2020. As of December 31, 2020, the investee company has not completed registration.

15. BORROWINGS

a. Short-term bank loans

Unsecured borrowings Working capital loan		December 31	December 31
		2020 $ 300,000	2019 $ 900,000

The interest rates of the working capital loan were 0.51% and 0.78%-0.86% as of December 31, 2020 and 2019, respectively.

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b. Long-term bank loans

Unsecured borrowings Bank loans - expiring before April 15, 2025 Less: Current portion		December 31	December 31
		2020 $ 1,063,967 (5,000) $ 1,058,967	2019 $ 10,000 - $ 10,000

The effective interest rates of the long-term bank loans were 0.41%-0.85% and 1.10% as of December 31, 2020 and 2019, respectively.

16. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Bonuses Salaries Outsourcing costs Payables for equipment Employees’ compensation and remuneration of directors and supervisors Others		December 31	December 31
		2020 $ 241,837 97,611 43,771 15,539 14,658 197,722 $ 611,138	2019 $ 350,995 99,366 33,022 56,787 21,506 154,393 $ 716,069

17. PROVISIONS - CURRENT

Warranties Balance at January 1 Additional provisions recognized Amount used Balance at December 31		December	31
	2020 2019 $ 3,131 $ 7,087 For the Year Ended December 31
		2020 $ 7,087 24,269 (28,225) $ 3,131	2019 $ 7,083 16,327 (16,323) $ 7,087

The provision for warranty claims represents the present value of management’s best estimate of the future outflow of economic benefits that will be required under the Corporation’s obligations for warranties under contracts for the sale of goods. The estimate had been made on the basis of historical warranty trends and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality.

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18. RETIREMENT BENEFIT PLANS

a. Defined contribution plan

The Corporation adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Corporation makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plan

The defined benefit plan adopted by the Corporation in accordance with the Labor Standards Act is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Corporation contributes amounts equal to 11% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Corporation assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Corporation is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Corporation has no right to influence the investment policy and strategy.

The amounts included in the parent company only balance sheets in respect of the Corporation’s defined benefit plans are as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities Movements in net defined benefit liabilities were as follows: Present Value of the Defined Benefit Obligation Balance at January 1, 2019 $ 696,473 Service cost Current service cost 5,568 Net interest expense (income) 6,965 Recognized in profit or loss 12,533 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss Changes in demographic assumptions 8,029 Changes in financial assumptions 15,342 Experience adjustments 1,278 Recognized in other comprehensive loss (income) 24,649		December 31
	2020 2019 $ 637,231 $ 683,329 (330,841) (374,882) $ 306,390 $ 308,447 Fair Value of the Plan Assets Net Defined Benefit Liabilities $ (366,491) $ 329,982 - 5,568 (3,730) 3,235 (3,730) 8,803 (13,180) (13,180) - 8,029 - 15,342 - 1,278 (13,180) 11,469 (Continued)

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	Present Value	Present Value
	of the Defined			Net Defined
		Benefit	Fair Value of	Benefit
	Obligation		the Plan Assets	Liabilities
Contributions from the employer	$	-	$ (41,807)	$ (41,807)
Benefits paid		(50,326)	50,326	-
Balance at December 31, 2019		683,329	(374,882)	308,447
Service cost
Current service cost		3,830	-	3,830
Net interest expense (income)		5,125	(2,857)	2,268
Recognized in profit or loss		8,955	(2,857)	6,098
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-	(12,623)	(12,623)
Actuarial loss
Changes in demographic assumptions		627	-	627
Changes in financial assumptions		14,141	-	14,141
Experience adjustments		9,024	-	9,024
Recognized in other comprehensive loss
(income)		23,792	(12,623)	11,169
Contributions from the employer		-	(19,324)	(19,324)
Benefits paid		(78,845)	78,845	-
Balance at December 31, 2020	$	637,231	$ (330,841)	$ 306,390
				(Concluded)

Through the defined benefit plans under the Labor Standards Act, the Corporation is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond and corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase	December 31
	2020 2019 0.50% 0.75% 4.00% 4.00%

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If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease		December	31
		2020 $ (14,143) $ 14,670 $ 13,952 $ (13,533)	2019 $ (15,464) $ 16,039 $ 15,291 $(14,831)

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plan for the next year Average duration of the defined benefit obligation		December 31	December 31
		2020 $ 10,152 9.3 years	2019 $ 12,192 9.2 years

19. EQUITY

a. Share capital

1) Common shares

Shares authorized (in thousands of shares) Shares authorized Shares issued and fully paid (in thousands of shares) Shares issued		December 31	December 31
		2020 226,000 $ 2,260,000 195,531 $ 1,955,312	2019 226,000 $ 2,260,000 195,531 $ 1,955,312

Fully paid common shares, which have a par value of $10, carry one vote per share and a right to dividends.

A total of 20,000 thousand common shares are reserved for the exercise of employee share options, preferred shares with share options or bonds with attached share options.

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b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Conversion of bonds Treasury share transactions May be used to offset a deficit only Share of changes in capital surplus of joint ventures (2) May not be used for any purpose Changes in ownership interests in subsidiaries		December 31	December 31
		2020 $ 234,579 19,150 253,729 - - $ 253,729	2019 $ 234,579 19,150 253,729 135 4,381 $ 258,245

1) The premium from shares issued in excess of par may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to capital (limited to a certain percentage of the Corporation’s capital surplus and once a year).
2) Pursuant to IAS 28, if the Corporation subscribes for the shares of its associates at a percentage different from its existing ownership percentage, causing the proportion of ownership to change but still having significant influence on the associate, its adjusted capital surplus may only be used to offset deficit.

c. Retained earnings and dividends policy

Under the dividends policy as set forth in the Corporation’s articles of incorporation (the “Articles”), where the Corporation made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Corporation’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors after the amendment, refer to “Employees’ compensation and remuneration of directors” in Note 21(h).

In accordance with the Corporation’s Articles, the dividends policy is to enable the shareholders to have a share in the Corporation’s profit, for continuous expansion of its business and stabilization of profitability. The total cash dividends paid in any given year should be at least 40% of total dividends distributed.

Appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Corporation’s paid-in capital. The legal reserve may be used to offset deficits. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

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Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Corporation.

The appropriations of earnings for 2019 and 2018 were approved in the shareholders’ meetings on June 12, 2020 and June 14, 2019, respectively. The appropriations and dividends per share were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)	Appropriation of Earnings	Appropriation of Earnings	Appropriation of Earnings
	For the Year Ended		December 31
		2019 $ 67,020 $ 65,037 $ 488,828 $ 2.5	2018 $ 95,381 $ 33,446 $ 645,253 $ 3.3

The appropriation of earnings for 2020 had been proposed by the Corporation’s board of directors on March 18, 2021. The appropriations and dividends per share were as follows:

	For the Year	For the Year
		Ended
	December 31,
		2020
Legal reserve	$	50,131
Special reserve	$	(21,298)
Cash dividends	$	391,062
Cash dividends per share (NT$)	$	2.0

The appropriation of earnings for 2020 is subject to the resolution of the shareholders in their meeting to be held on June 11, 2021.

d. Special reserve

Balance at January 1 Appropriations in respect of Debits to other equity items Balance at December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 2019 $ 108,311 $ 74,865 65,037 33,446 $ 173,348 $ 108,311

e. Other equity items
1) Exchange differences on the translation of the financial statements of foreign operations

The relevant exchange differences arising from the conversion of the net assets of foreign operations from their respective functional currencies to the Corporation's presentation currency (i.e., new Taiwan dollars) are recognized directly as exchange differences on the translation of financial statements of foreign operations under other comprehensive income.

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2) Unrealized valuation gain (loss) on financial assets at FVTOCI

Balance at January 1 Recognized for the year Unrealized gain (loss) - equity instruments Other comprehensive income (loss) recognized for the year Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (8,399) 754 754 $ (7,645)	2019 $ (5,495) (2,904) (2,904) $ (8,399)

20. REVENUE

a. Revenue from contracts with customers

Revenue from contracts with customers Construction contract revenue Revenue from the sale of goods Revenue from the rendering of services Contract balances December 31, 2020 Notes receivable (Note 8) $ 10,982 Accounts receivable (Note 8) $ 180,723 Receivables from related parties $ 57,292 Contract assets - current Construction of properties $ 2,495,667 Contract liabilities - current Construction of properties $ 1,643,586	For the Year Ended December 31	For the Year Ended December 31
	2020 $ 4,387,475 2,719,496 378,018 $ 7,484,989 December 31, 2019 $ 39,158 $ 220,231 $ 53,086 $ 2,637,698 $ 1,462,212	2019 $ 8,035,308 1,603,157 394,651 $ 10,033,116 January 1, 2019 $ 98,725 $ 388,652 $ 52,491 $ 3,189,190 $ 1,106,723

b. Contract balances

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c. Disaggregation of customer contract revenue

For the year ended December 31, 2020 Type of goods or services Construction contract revenue Revenue from the sale of goods Revenue from the rendering of services For the year ended December 31, 2019 Type of goods or services Construction contract revenue Revenue from the sale of goods Revenue from the rendering of services		Reportable Segments
		Automatic Production Line and Equipment Segment Information and Controller Segment $ 3,699,544 $ 687,931 84,715 2,634,781 65,582 312,436 $ 3,849,841 $ 3,635,148 Reportable Segments	Total $ 4,387,475 2,719,496 378,018 $ 7,484,989
		Automatic Production Line and Equipment Segment Information and Controller Segment $ 6,224,362 $ 1,810,946 113,848 1,489,309 62,420 332,231 $ 6,400,630 $ 3,632,486	Total $ 8,035,308 1,603,157 394,651 $ 10,033,116

21. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

a. Other operating income and expenses

Gain (loss) on disposal of property, plant and equipment Interest income Bank deposits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2020 2019 $ 49 $ (227) For the Year Ended December 31
		2020 $ 4,052	2019 $ 8,456

b. Interest income

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c. Other income

Government grant income (Note 24) Franchise income (Note 13) Other income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 12,533 2,501 6,704 $ 21,738	2019 $ 3,798 2,359 1,457 $ 7,614

d. Other gains and losses

For the Year Ended	For the Year Ended	December 31
2020 $ 204 (5,703) $ (5,499) For the Year Ended		2019 $ 1,602 (4,795) $ (3,193) December 31
2020 $ 7,792 5,864 $ 13,656 For the Year Ended		2019 $ 5,907 4,740 $ 10,647 December 31
	2020 $ 32,978 78,691 $ 111,669 $ 5,233 1,521 8,615 5,031 469 $ 20,869	2019 $ 43,426 68,879 $ 112,305 $ 6,476 1,223 7,026 4,768 470 $ 19,963

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g. Employee benefits expense

Post-employment benefits (Note 18) Defined contribution plan Defined benefit plan Termination benefits Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 43,486 6,098 49,584 4,347 1,206,550 $ 1,260,481 $ 611,127 649,354 $ 1,260,481	2019 $ 41,623 8,803 50,426 1,164 1,328,708 $ 1,380,298 $ 717,549 662,749 $ 1,380,298

h. Employees’ compensation and remuneration of directors and supervisors

According to the Corporation’s Articles, the Corporation accrued employees’ compensation and remuneration of directors at rates of no less than 1% and no higher than 2%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors.

The employees’ compensation and the remuneration of directors for the years ended December 31, 2020 and 2019, which were approved by the Corporation’s board of directors on March 18, 2021 and March 19, 2020, respectively, are as follows:

Accrual rate

Employees’ compensation Remuneration of directors and supervisors Amount Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31
	2020 2019 1% 1% 1.5% 1.5% For the Year Ended December 31
	2020 2019 $ 5,863 $ 8,602 8,795 12,903

If there is a change in the amounts after the parent company only financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of employees’ compensation and remuneration of directors and supervisors paid and the amounts recognized in the parent company only financial statements for the years ended December 31, 2019 and 2018.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Corporation’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

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22. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of income tax expense are as follows:

Current tax In respect of the current year Adjustments for prior year Deferred tax In respect of the current year Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 78,304 (20,016) - $ 58,288	2019 $ 178,876 (21,829) - $ 157,047

A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax Income tax expense calculated at the statutory rate Non-deductible expense in determining taxable income Unrecognized deductible temporary differences and investment credits Adjustments for prior years’ tax	For the Year Ended	For the Year Ended	December 31
		2020 $ 571,655 $ 114,331 (22,325) (13,702) (20,016) $ 58,288	2019 $ 838,717 $ 167,743 (2,854) 13,987 (21,829) $ 157,047

In July 2019, the president of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. When calculating the undistributed surplus tax, the corporation only deducts the amount of capital expenditure that has actually been reinvested.

b. Current tax liabilities

Current tax liabilities Income tax payable		December 31	December 31
		2020 $ 158,310	2019 $ 136,709

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c. Deferred tax assets

The movements of deferred tax assets were as follows:

For the year ended December 31, 2020

Deferred tax assets Temporary differences Associate For the year ended December 31, 2019 Deferred tax assets Temporary differences Associate Items not recognized as deferred income tax assets Deductible temporary differences Deferred revenue Allowance for impairment loss	Opening Balance $ 7,779 Opening Balance $ 7,779	Recognized in Profit or Loss $ - Recognized in Profit or Loss $ - December	Recognized in Profit or Loss $ - Recognized in Profit or Loss $ - December	Closing Balance $ 7,779 Closing Balance $ 7,779 31
			2020 $ 364 - $ 364	2019 $ 516 8,922 $ 9,438

d. Items not recognized as deferred income tax assets

e. Associated with investments for which deferred tax liabilities have not been recognized

As of December 31, 2020 and 2019, the taxable temporary differences associated with investments in subsidiaries and branches for which no deferred tax liabilities have been recognized were $139,017 thousand and $124,401 thousand, respectively.

f. Income tax assessments

Income tax returns of the Corporation through 2018 have been assessed by the tax authorities.

23. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2.63 $ 2.62	2019 $ 3.49 $ 3.48

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The earnings and weighted average number of common shares outstanding used in the computation of earnings per share from continuing operations were as follows:

Net Profit for the Year

Net profit attributable to the owners of the Corporation Earnings used in the computation of basic earnings per share Effect of dilutive potential common shares: Employees’ compensation Earnings used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
		2020 $ 513,367 513,367 - $ 513,367	2019 $ 681,670 681,670 - $ 681,670

Weighted average number of common shares outstanding (in thousands of shares):

Weighted average number of common shares used in the computation of basic earnings per share Effect of dilutive potential common share: Employees’ compensation Weighted average number of common shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
		2020 195,531 199 195,730	2019 195,531 277 195,808

The Corporation offered to settle the compensation paid to employees in cash or shares, therefore, the Corporation assumed the entire amount of the compensation will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

24. GOVERNMENT GRANTS

The Corporation participated in a project proposed by the Ministry of Economic Affairs called the “Hangzhou Aerospace Composite Materials Smart Manufacturing Production Pioneering Project”, with the Institute for Information Industry in October 2017. The subsidy provided by the Ministry of Economic Affairs was NT$31,740 thousand. As of September 30, 2019, the project had been closed, and the accumulated government grant income recognized was NT$31,652 thousand.

The Corporation applied for subsidies from the Ministry of Economic Affairs under “Salary and Working Capital of Businesses with Financial Difficulties in the Manufacturing and Technical Service Industries Affected by Severe Pneumonia with Novel Pathogens” in 2020, which was available for application from April 2020 to June 2020. The amount of subsidies allocated to the Corporation, recognized as government grant income, was NT$67,635 thousand, and as of September 30, 2020, the decrease in the accumulated salary expenses recognized was NT$57,285 thousand and other income recognized was NT$10,350 thousand.

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The Corporation participated in a project proposed by the Ministry of Economic Affairs called the “Smart Measuring Technology Applied to 3D Curved Glass Manufacturing Process”, with the Institute for Information Industry in June 2020. The subsidy provided by the Ministry of Economic Affairs was NT$12,893 thousand. As of December 31, 2020, the accumulated government grant income recognized was NT$2,183 thousand.

25. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not measured at fair value

The management believes that except for the financial assets at amortized cost whose fair values cannot be reliably measured, the carrying amounts of the other financial assets and financial liabilities approximate their fair values.

b. Fair value of financial instruments that are measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2020 Financial assets at FVTOCI Investments in equity instruments Foreign unlisted shares December 31, 2019 Financial assets at FVTOCI Investments in equity instruments Foreign unlisted shares	Level 1 $ - Level 1 $ -	Level 2 $ - Level 2 $ -	Level 3 $ 39,098 Level 3 $ 39,316	Total $ 39,098
				Total $ 39,316

There were no transfers between Levels 1 and 2 in the current and prior years.

2) Reconciliation of Level 3 fair value measurements of financial instruments

Financial Assets Balance at January 1 Recognized in other comprehensive income (loss) Refund of retired shares Balance at December 31		Financial Assets at FVTOCI	Financial Assets at FVTOCI
		Equity Instruments
		2020 39,316 754 (972) 39,098	2019 42,220 (2,904) - 39,316

3) Valuation techniques and inputs applied for Level 3 fair value measurement

The fair value of unlisted shares is estimated based on the financial statements of the issuer of such shares or based on the observable price of stock of comparable companies at the end of the period. The estimated fair value is further evaluated by comparing the financial position and financial performance of the issuer with the comparable companies and by applying the implied value multiplier to the estimated price at the balance sheet date.

46 -

c. Categories of financial instruments

Financial assets
Amortized cost
Cash and cash equivalents

Notes receivable - net (including related parties)
Accounts receivable - net (including related parties)
Other receivables (including related parties)
Refundable deposits
Financial assets at FVTOCI
Investments in equity instruments
Financial liabilities
Amortized cost
Short-term bank loans
Notes payable
Accounts payable (including related parties)
Accrued expenses and other current liabilities
Long-term bank loans (including current portion)
Lease liabilities
Guarantee deposits received

December 31

2020
2019
$ 1,867,376
$ 1,431,540
11,067
39,193
237,930
273,282
47,884
60,534
114,772
136,415
39,098
39,316
300,000
900,000
20,476
43,365
1,727,057
2,131,648
611,138
716,069
1,063,967
10,000
281,493
292,622
298
298

d. Financial risk management objectives and policies

The Corporation’s financial risk management objectives are to manage market risk, credit risk and liquidity risk relating to the operations of the Corporation. To reduce the related financial risks, the Corporation is committed to identify, evaluate and avoid the uncertainty of the market to reduce the potentially negative effects of market volatility on the Corporation’s financial performance.

The Corporation’s important financial activities were reviewed by the management in accordance with relevant regulations and the internal control system. During the execution of the financial plans, the Corporation strictly complied with the relevant financial operating procedures.

1) Market risk

The Corporation’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

There had been no change to the Corporation’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

Several subsidiaries of the Corporation have foreign currency denominated sales and purchases, which expose the Corporation to foreign currency risk.

The Corporation’s main operating activities are foreign currency denominated sales and purchases, which expose the Corporation to the risk of exchange rate changes.

The carrying amounts of the Corporation’s foreign currency denominated monetary assets and monetary liabilities are set out in Note 30.

47 -

Sensitivity analysis

The Corporation is mainly exposed to the exchange rate fluctuations of the USD, CNY and JPY.

The following table details the Corporation’s sensitivity to a 5% increase and decrease in the functional currency against the relevant foreign currencies. The sensitivity analysis included outstanding foreign currency denominated monetary items and adjusted their translation at the end of the reporting period for a 5% change in foreign currency rates. The sensitivity analysis included cash and cash equivalents, accounts receivable, accounts payable, and short-term bank loans. A positive (negative) number below indicates the increase (decrease) in pre-tax profit associated with the functional currency weakening (strengthening) 5% against the relevant foreign currency.

Profit or loss	USD Impact For the Year Ended December 31 2020 2019 $ (109,335) $ (115,889)	CNY Impact For the Year Ended December 31 2020 2019 $ (8,686) $ (2,609)	JPY Impact
			For the Year Ended December 31
			2020 2019 $ (412) $ 552

The Corporation’s sensitivity to foreign currency decreased during the current year mainly due to the decrease in USD denominated net assets.

b) Interest rate risk

The Corporation is exposed to interest rate risk because the Corporation borrow funds at both fixed and floating interest rates. The risk is managed by the Corporation by maintaining an appropriate mix of fixed and floating rate borrowings and using interest rate swap contracts and forward interest rate contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetites ensuring the most cost-effective hedging strategies are applied.

The carrying amounts of the Corporation’s financial assets and financial liabilities with exposure to interest rates at the end of the year were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2020 2019 $ 150,501 $ 24,855 - 600,000 1,716,875 1,406,685 1,363,967 310,000

Sensitivity analysis

The sensitivity analysis below was determined based on the Corporation’s exposure to interest rate risk for derivative and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liabilities outstanding at the end of the reporting period was outstanding for the whole year.

If interest rates had been 1% higher and all other variables were held constant, the Corporation’s pre-tax profit for the years ended December 31, 2020 and 2019 would have decreased by $13,640 thousand and $3,100 thousand, respectively, which was mainly attributable to the Corporation’s exposure to cash flow interest rate risk on its variable-rate borrowings.

48 -

The Corporation’s sensitivity to interest rate changed during the current year mainly due to the increase in variable-rate debt instruments.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in a financial loss to the Corporation. As at the end of the reporting period, the Corporation’s maximum exposure to credit risk, which will cause a financial loss to the Corporation due to failure of counterparties to discharge an obligation and financial guarantees provided by the Corporation, arises from the carrying amount of the respective recognized financial assets as stated in the parent company only balance sheets.

The Corporation’s concentration of credit risk was 53.43% and 39.59% of total accounts receivable as of December 31, 2020 and 2019, respectively, which was attributable to the Corporation’s ten largest customers in the property construction business segment. The concentration of credit risk of the remaining accounts receivable was not significant.

3) Liquidity risk

The Corporation manages liquidity risk by monitoring and maintaining a level of cash deemed adequate to finance the Corporation’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

a) Liquidity and interest rate risk tables

The following tables detail the Corporation’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Corporation can be required to pay. The tables include both interest and principal cash flows.

Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are at variable interest rates, the undiscounted amount was derived from the interest rate curve at the end of the year.

December 31, 2020

On Demand or Less than 1 Month Non-interest bearing liabilities (Note) $ 264,096 Lease liabilities 2,383 Variable interest rate liabilities - $ 266,479	1-3 Months 3 Months to 1 Year $ 547,847 $ 205,625 4,693 21,117 - 305,000 $ 552,540 $ 531,742	1+ Years $ 43,485 287,104 1,058,967
		$ 1,389,556

Additional information about the maturity analysis for lease liabilities:

Lease liabilities	Less than 1 Year $ 28,193	1-5 Years $ 1126,625	5-10 Years $ 112,935	10-15 Years $ 61,544	15-20 Years $	20+ Years $

49 -

December 31, 2019

On Demand or Less than 1 Month Non-interest bearing liabilities (Note) $ 546,176 Lease liabilities 2,589 Variable interest rate liabilities 250,000 Fixed interest rate liabilities 250,000 $ 1,048,765	1-3 Months 3 Months to 1 Year $ 521,042 $ 146,667 5,178 22,498 50,000 - 350,000 - $ 926,220 $ 169,165	1+ Years $ 12,914 303,676 10,000 -
		$ 326,590

Additional information about the maturity analysis for lease liabilities:

Lease liabilities	Less than 1 Year $ 30,265	1-5 Years $ 109,933	5-10 Years $ 122,331	10-15 Years $ 71,412	15-20 Years $ -	20+ Years $ -

Note: Non-interest bearing liabilities do not include estimated accounts payable.

b) Financing facilities

Long-term bank loan facilities: Amount used Amount unused Short-term bank loan facilities: Amount used Amount unused		December 31	December 31
		2020 $ 1,063,967 1,649,313 $ 2,713,280 $ 988,825 4,520,666 $ 5,509,491	2019 $ 10,000 2,019,780 $ 2,029,780 $ 1,654,596 3,894,184 $ 5,548,780

26. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Corporation and its subsidiaries, which are related parties of the Corporation, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Corporation and other related parties are disclosed below:

a. Related party name and relationship

Related Party Name

Relationship with the Group

MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD. MIRLE AUTOMATION (KUNSHAN) CO., LTD. IOT SERVICES INFORMATION SYSTEM CORPORATION VAN QUOC INFORMATION TECHNOLOGY CONSULTING SERVICES CO., LTD. MIRLE AUTOMATION INTER CO., LTD.

Subsidiary Subsidiary Subsidiary Subsidiary

Associate before November 2019 (Continued)

50 -

Relationship with the Group

Related Party Name

MAIN DRIVE CORPORATION I-MEI FOODS CO., LTD.

I-MEI JISHENG CO., LTD. I-MEI BIOMEDICINE CO., LTD. JIANXUE RESTAURANT CO., LTD. I-MEI STORE COMPANY LTD.

I-MEI-I INFORMATION TECHNOLOGY CO., LTD.

OPENFIND INFORMATION TECHNOLOGY INC.

SHINE MEI FOODS MARKETING & DISTRIBUTION CO., LTD.

SOUTH POLE FOODS CO., LTD. GOLDEN SADDLE MACHINERY CO., LTD.

Associate

Key management personnel Subsidiary of key management personnel Subsidiary of key management personnel Subsidiary of key management personnel Substantive related party Substantive related party

Substantive related party

Substantive related party Substantive related party

(Concluded)

b. Operating transactions

Sales Subsidiaries Key management personnel Substantive related parties Associates Subsidiaries of key management personnel Purchases Subsidiaries Associates Manufacturing expenses Subsidiaries Substantive related parties	For the Year Ended	For the Year Ended	December 31
		2020 $ 120,665 7,547 6,689 2,453 463 $ 137,817 $ 5,909 5,181 $ 11,090 $ 18,780 - $ 18,780	2019 $ 99,782 9,031 7,055 - 96 $ 115,964 $ 11,082 182 $ 11,264 $ 21,450 50 $ 21,500 (Continued)

51 -

For the Year Ended	For the Year Ended	December 31
	2020 2019 $ 28,573 $ 32,590 871 685 79 - - 3 - 1 $ 29,523 $ 33,279 $ - $ 1,291 117 62 $ 117 $ 1,353 $ 16 $ - (Concluded) Purchase Price
For the Year Ended December 31
2020 2019 $ 90 $ - Proceeds Gain (Loss) on Disposal
For the Year Ended December 31
	2020 $ 2,677	2019 $ 898

There are no other appropriate counterparties of the Corporation’s sale and purchase transactions with related parties for comparison, hence, the payment terms of the transactions are the same as those of general customers. The Corporation’s manufacturing and operating expenses with related parties are outsourcing expenses and management support expenses, which are based on mutually negotiated prices and payment terms.

The transaction price and payment terms of the equipment acquired and disposed of by the Corporation and its related parties are determined based on negotiation between the parties of the transaction. The related gain on disposal is recognized as unrealized gain.

52 -

c. Balances on the balance sheet date

Contract assets Subsidiaries Substantive related parties Accounts receivables from related parties Subsidiaries Mirle Automation Technology (Shanghai) Co., Ltd. IOT Services Information System Corporation Other Key management personnel Substantive related parties Subsidiaries of key management personnel Notes receivable from related parties Substantive related parties Key management personnel Other receivables Subsidiaries Accounts payables to related parties Subsidiaries IOT Services Information System Corporation Other Associates MAIN DRIVE CORPORATION Contract liabilities Subsidiaries Substantive related parties		December	31
		2020 $ 17,206 1,000 $ 18,206 $ 49,231 335 5,733 172 1,693 43 $ 57,207 $ - 85 $ 85 $ 84 $ 1,589 - 5,278 $ 6,867 $ 51 - $ 51	2019 $ 27,511 - $ 27,511 $ 46,524 1,083 1,479 2,655 1,310 - $ 53,051 $ 32 3 $ 35 $ 6,058 $ 8,845 31 191 $ 9,067 $ 728 19 $ 747 (Continued)

53 -

Accrued expenses and other current liabilities Subsidiaries IOT Services Information System Corporation Associates Substantive related parties		December	31
		2020 $ 43,771 83 25 $ 43,879	2019 $ 33,022 - - $ 33,022 (Concluded)

No collateral is provided for the outstanding payables to related parties, which will be paid off by cash. The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2020 and 2019, no impairment losses were recognized for the trade receivables from related parties.

d. Remuneration of key management personnel

The remuneration of directors and the key management personnel for years ended December 31, 2020 and 2019 was as follows:

Short-term benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 54,992 1,983 $ 56,975	2019 $ 82,599 3,150 $ 85,749

The remuneration of directors and key management personnel, as determined by the remuneration committee, was based on the performance of individuals and market trends.

27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets had been pledged as collateral mainly for bank borrowings:

Other intangible assets		December 31
		2020 2019 $ 5,634 $ 6,103

28. SIGNIFICANT COMMITMENTS LIABILITIES AND UNRECOGNIZED CONTINGENCIES

The Corporation’s significant commitments and contingencies as of December 31, 2020 were as follows:

The balance of endorsements/guarantees provided by the Corporation for Mirle Automation Technology (Shanghai) Co., Ltd. was $512,640 thousand.

54 -

29. OTHER ITEMS

Due to the impact of the COVID-19 pandemic, the Corporation experienced a significant decline in operating revenue for the year ended December 31, 2020 compared to the previous year. Although the domestic epidemic situation has eased and government policies has begun to loosen up, many countries are still implementing lockdown measures and the global economy continues to tighten with changing consumer patterns. However, the Corporation expects that its operations will gradually return to normal as the epidemic eases and policies are relaxed.

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Corporation’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than the functional currency and the related exchange rates between the functional currency and the respective foreign currencies were as follows:

(Foreign currencies in thousands)

Financial assets

Monetary items

USD

JPY

RMB

EUR

Investments accounted for using the equity method

USD

THB

Financial liabilities

Monetary items

USD

JPY

RMB

EUR

CAD

Financial assets

Monetary items

USD

JPY

RMB

EUR

Investments accounted for using the equity method

USD

THB

December 31, 2020
Foreign
Currency
Exchange Rate

$ 78,360 28.480 (USD:NTD)

199,920 0.2763 (JPY:NTD)

43,954 4.377 (RMB:NTD)

582 35.02 (EUR:NTD)

59,891 28.480 (USD:NTD)

94,803 0.9556 (THB:NTD)

1,580 28.480 (USD:NTD)

170,073 0.2763 (JPY:NTD)

4,264 4.377 (RMB:NTD)

81 35.02 (EUR:NTD)

9 22.35 (CAD:NTD)
December 31, 2019
Foreign
Currency
Exchange Rate

$ 80,478 29.98 (USD:NTD)

194,387 0.2760 (JPY:NTD)

15,105 4.305 (RMB:NTD)

347 33.59 (EUR:NTD)

53,172 29.98 (USD:NTD)

90,476 1.0098 (THB:NTD)
(Continued)

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Financial liabilities Monetary items USD JPY RMB EUR CAD	December 31, 2019 Foreign Currency Exchange Rate $ 3,167 29.98 (USD:NTD) 234,396 0.2760 (JPY:NTD) 2,984 4.305 (RMB:NTD) 170 33.59 (EUR:NTD) 1 22.99 (CAD:NTD) (Concluded)

For the years ended December 31, 2020 and 2019, realized and unrealized net foreign exchange losses were $133,141 thousand and $61,662 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and currencies of the Corporation.

31. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions:
1) Financing provided to others (Table 1)
2) Endorsements/guarantees provided (Table 2)
3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (Table 3)
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (None)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (None)
9) Trading in derivative instruments (None)
b. Information on investees (Table 4)
56 -
c. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the year, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 5)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (Table 6)
d. Information about main shareholders: list all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares held, and percentage of ownership of each shareholder (Table 7)
57 -

TABLE 1

MIRLE AUTOMATION CORPORATION

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Party	Highest Balance for the Period (Note 4)	Ending Balance (Note 4)	Actual Amount Borrowed	Interest Rate (%)	Nature of Financing (Note 2)	Business Transaction Amount (Note 5)	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note 1)	Aggregate Financing Limit (Note 3)	Note
													Item	Value
0 1	MIRLE AUTOMATION CORPORATION Mirle Automation Technology (Shanghai) Co., Ltd.	VAN QUOC INFORMATION TECHNOLOGY CONSULITING SERVICES CO., LTD. MIRTEK (BVI) CORP. LTD. Mirle Automation (Kunshan) Co., Ltd. Mirle Automation (Kunshan) Co., Ltd.	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties	Yes Yes Yes Yes	$ 8,544 285 288,882 350,160	$ 8,544 285 288,882 350,160	$ - - - 65,655	3 - 3 -	2 2 2 2	$ - - - -	Working capital Working capital Working capital Working capital	$ - - - -	- - - -	$ - - - -	$ 1,639,684 1,639,684 1,639,684 472,869	$ 1,639,684 1,639,684 1,639,684 472,869	- - - -

Note 1: The total amount of financing provided to others shall not exceed 40% of the net value of the Corporation’s based on its most recent audited or reviewed financial statements. However, foreign companies in which the Corporation directly and indirectly held 100% of the voting shares are not subject to the preceding restrictions, but their total amount of financing provided to others shall not exceed 40% of the Corporation’s net value.

Note 2: Nature of financing:

For business
For short-term financing

Note 3: The total amount of financing provided to others shall not exceed 40% of the Corporation’s net value in its most recent audited or reviewed financial statements. The total amount of financing provided by Mirle Automation Technology (Shanghai) Co., Ltd. to others shall not exceed 40% of its net value in its most recent audited or reviewed financial statements.

Note 4: Financing limit approved by the board of directors.

58 -

TABLE 2

MIRLE AUTOMATION CORPORATION

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limit on Endorsement/ Guarantee Given on Behalf of Each Party (Note 2)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Amount Borrowed	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	MIRLE AUTOMATION CORPORATION	Mirle Automation Technology (Shanghai) Co., Ltd.	Note 1	$ 1,229,763	$ 512,640	$ 512,640	$ -	$ -	13	$ 2,049,605	Yes	No	Yes

Note 1: The Corporation’s indirect wholly-owned subsidiaries.

Note 2: The amount of guarantees provided by the Corporation to any individual entity shall not exceed 10% of the Corporation’s net worth. The aggregate amount of guarantees available shall not exceed 50% of the Corporation’s net worth. The aggregate amount of guarantees given by parent on behalf of subsidiaries or subsidiaries on behalf of parent shall not exceed 30% of the Corporation’s net worth.
59 -

TABLE 3

MIRLE AUTOMATION CORPORATION

MARKETABLE SECURITIES HELD DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2020	December 31, 2020		Note
				Number of Shares (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
Mirle Automation Corporation MIRTEK (BVI) CORP. LTD.	TIEF FUND, L.P. TSUKUBASEIKO CO., LTD. AMERICAN MERCHANTS HEAT CO., LTD.	- - -	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current	1,500 143 1,654	$ 39,098 - -	7 5 6	$ 39,098 - -	Note 1 Note 1 Note 1

Note 1: The market value was based on the fair value as of December 31, 2020.

Note 2: As of December 31, 2020, the above marketable securities had not been pledged or mortgaged.

Note 3: See Tables 4 and 5 for detailed information on subsidiaries and associates.

60 -

TABLE 4

MIRLE AUTOMATION CORPORATION

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December 31,	As of December 31,	2020	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2020	December 31, 2019	Number of Shares	Shareholding Percentage (%)	Carrying Amount
MIRLE AUTOMATION CORPORATION MIRTEK (BVI) CORP. LTD. DAVID INVESTMENT CO., LTD. IOT SERVICES INFORMATION SYSTEM CORPORATION	MIRTEK (BVI) CORP. LTD. DAVID INVESTMENT CO., LTD. MIRLE AUTOMATION INTER CO., LTD. Factory Automation International Co., Ltd. FORMOSA MEDICAL DEVICES INC. MAIN DRIVE CORPORATION MIRLE HOLDING CO., LTD. IOT SERVICES INFORMATION SYSTEM CORPORATION VAN QUOC INFORMATION TECHNOLOGY CONSULTING SERVICES CO., LTD.	British Virgin Islands Taipei City Thailand Taipei City Taipei City Hsinchu County Seychelles Taipei City Vietnam	Investment Investment Machinery installation construction, automatic warehousing and logistics equipment and cybernation equipment construction Computer application package software design, computer and peripheral equipment sales Medical equipment wholesale and retail Machinery and equipment manufacturing and installation construction, wholesale and retail sale of computing and business machinery equipment Investment Machinery and equipment manufacturing and installation construction, wholesale and retail sale of computing and business machinery equipment Machinery and equipment manufacturing and installation construction, wholesale and retail sale of computing and business machinery equipment	$ 951,348 76,000 101,221 42,075 21,911 72,280 544,745 76,000 15,520	$ 950,457 76,000 101,221 - 21,911 33,000 544,745 76,000 15,520	29,641 - 10,000 1,275 2,523 7,228 17,000 7,600 -	100 99 100 51 21 27.61 100 99 100	$ 1,703,233 78,198 90,594 42,075 - 37,374 520,293 78,192 22,296	$ 84,166 6,380 4,109 (4,953) - (84,344) (32,602) 6,388 3,390	$ 83,511 6,372 4,109 - - (20,915) (32,602) 6,379 33,90	Subsidiary Subsidiary Subsidiary Subsidiary Note 2 Associate Second-tier subsidiary Second-tier subsidiary Third-tier subsidiary

Note 1: Refer to Table 5 for information on investments in mainland China.

Note 2: FORMOSA MEDICAL DEVICES INC. was dissolved on May 27, 2020, but the liquidation procedures have not yet been completed.

61 -

TABLE 5

MIRLE AUTOMATION CORPORATION

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2020	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2020	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of December 31, 2020	Accumulated Repatriation of Investment Income as of December 31, 2020
					Outward	Inward
Mirle Automation Technology (Shanghai) Co., Ltd. Mirle Automation (Kunshan) Co., Ltd.	Developing, producing and selling of various packing machines, labeling machines, other food machinery, components of thermoforming models and automatic storage management equipment, logistics, other automated product systems and services and computer and network system integration and services Researching, developing and producing of welding robots and their welding equipment, automatic storage and management equipment, logistics and other automated product systems, industrial controller products and systems and providing industrial robot system, visual inspection system and computer and network system integrated application services	US$ 13.23 million (Note 2) US$ 17 million (Note 4)	Note 1 Note 1	US$ 11.61 million (Note 3) US$ 17 million	$ - -	$ - -	US$ 11.61 million US$ 17 million	$ 116,853 (32,602)	100 100	$ 116,853 (Note 5) (32,602) (Note 6)	$ 1,182,172 520,293	$ - -

(Continued)

62 -

Accumulated Outward Remittance for Investments in Mainland China as of December 31, 2020	Investment Amount Authorized by the Investment Commission, MOEA	Upper Limit on the Amount of Investments Stipulated by the Investment Commission, MOEA
US$28.61 million	US$31.56 million	$ 2,459,526

Note 1: Reinvestment in main-land China through the establishment and investment in MIRTEK (BVI) CORP. LTD. in a third region.
Note 2: Accumulated outward remittance for investment from Taiwan is US$7.9 million, the amount of retained earnings transferred to common shares is US$2.95 million and the investment amount of Xinji Photoelectric Co., Ltd. is US$2.38 million. After that, the Corporation acquired full ownership of Mirle Automation Technology (Shanghai) Co., Ltd. through MIRTEK (BVI) CORP. LTD.
Note 3: Accumulated outward remittance for investment from Taiwan is US$7.9 million. The Corporation obtained the shares of Mirle Automation Technology (Shanghai) Co., Ltd. by paying US$3.71 million to Xinji Photoelectric Co., Ltd.
Note 4: Accumulated outward remittance for investment from Taiwan is US$17 million. The Corporation established and invested in MIRLE HOLDING CO., LTD. through MIRTEK (BVI) CORP. LTD.; meanwhile, the Corporation acquired full ownership of Mirle Automation (Kunshan) Co., Ltd. through MIRLE HOLDING CO., LTD.
Note 5: Calculated based on the audited financial statements of the investees for the same reporting periods as those of the Corporation.

(Concluded)

63 -

TABLE 6

MIRLE AUTOMATION CORPORATION

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES

FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Transaction Type	Purchase/Sale	Purchase/Sale	Price	Transaction Details	Transaction Details	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Unrealized (Gain) Loss	Note
		Amount	%		Payment Terms	Comparison with Normal Transactions	Ending Balance	%
Mirle Automation Technology (Shanghai) Co., Ltd. Mirle Automation Technology (Shanghai) Co., Ltd. Mirle Automation (Kunshan) Co., Ltd. Mirle Automation (Kunshan) Co., Ltd. Mirle Automation (Kunshan) Co., Ltd.	Sales Purchase Sales Purchase Property transaction	$ 66,576 688 36,249 4,537 2,677	0.89 0.01 0.48 0.08 0.04	Calculated according to the contract Calculated according to the contract Calculated according to the contract Calculated according to the contract Calculated according to the contract	Based on mutual agreement Based on mutual agreement Based on mutual agreement Based on mutual agreement Based on mutual agreement	No other equivalent transactions for comparison No other equivalent transactions for comparison No other equivalent transactions for comparison No other equivalent transactions for comparison No other equivalent transactions for comparison	$ 49,231 - 128 - 31	19.77 - 0.05 - 0.01	$ - - - - 655	None None None None None

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TABLE 7

MIRLE AUTOMATION CORPORATION

INFORMATION ABOUT MAIN SHAREHOLDERS DECEMBER 31, 2020

No.	Name	Shares
		Number of Shares Held	Ownership Percentage
1	I-MEI FOODS CO., LTD.	11,496,066	5.87%

Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of common shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Corporation as of the last business day for the current year. The share capital in the parent company only financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

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THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM STATEMENT INDEX

MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND EQUITY
STATEMENT OF CASH AND CASH EQUIVALENTS	1
STATEMENT OF CONTRACT ASSETS - CURRENT	Note 20
STATEMENT OF NOTES RECEIVABLE	2
STATEMENT OF ACCOUNTS RECEIVABLE	3
STATEMENT OF INVENTORIES	4
STATEMENT OF OTHER CURRENT ASSETS	Note 14
STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE	Note 7
THROUGH OTHER COMPREHENSIVE INCOME - NONCURRENT
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR	5
USING THE EQUITY METHOD
STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT	Note 11
STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF	Note 11
PROPERTY, PLANT AND EQUIPMENT
STATEMENT OF CHANGES IN ACCUMULATED IMPAIRMENT OF	Note 11
PROPERTY, PLANT AND EQUIPMENT
STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS	6
STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF	6
RIGHT-OF-USE ASSETS
STATEMENT OF CHANGES IN INTANGIBLE ASSETS	Note 13
STATEMENT OF SHORT-TERM BANK LOANS	Note 15
STATEMENT OF CONTRACT LIABILITIES - CURRENT	Note 20
STATEMENT OF NOTES PAYABLE	7
STATEMENT OF ACCOUNTS PAYABLE	8
STATEMENT OF PROVISIONS - CURRENT	Note 17
STATEMENT OF ACCRUED EXPENSES AND OTHER CURRENT	Note 16
LIABILITIES
STATEMENT OF LEASE LIABILITIES	9
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF NET OPERATING REVENUE	10
STATEMENT OF OPERATING COSTS	11
STATEMENT OF MANUFACTURING OVERHEAD	12
STATEMENT OF OPERATING EXPENSES	13
STATEMENT OF OTHER GAINS AND LOSSES	Note 21
SUMMARY OF EMPLOYEE BENEFITS, DEPRECIATION AND	14
AMORTIZATION EXPENSES BY FUNCTION

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STATEMENT 1

MIRLE AUTOMATION CORPORATION

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Cash in banks Current accounts Foreign currency accounts (Note 1) Time deposits (Note 2) Checking accounts Cash on hand	Amount $ 1,108,190 608,685 141,064 737 1,858,676 8,700 $ 1,867,376

Note 1: Including US$18,739 thousand @28.48, ￥ $102,326 thousand @0.2763, CNY$6,938 thousand @4.377, €467 @35.02 and others.

Note 2: Expired by the end of July 2021, annual interest rate of 0.755%-2.55%.

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STATEMENT 2

MIRLE AUTOMATION CORPORATION

STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Client Name Client A Client B Client C Client D Client E Others (Note) Less: Allowance for impairment loss	Amount $ 2,848 2,625 1,607 1,270 718 2,036 11,104 (122) $ 10,982

Note: The amount of individual client in others does not exceed 5% of the account balance.

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STATEMENT 3

MIRLE AUTOMATION CORPORATION

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Client Name Client F Client G Client H Client I Others (Note) Less: Allowance for impairment loss	Amount $ 67,107 13,326 12,020 9,237 100,714 202,404 (21,681) $ 180,723

Note: The amount of individual client in others does not exceed 5% of the account balance.

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STATEMENT 4

MIRLE AUTOMATION CORPORATION

STATEMENT OF INVENTORIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Finished goods Work in process Raw materials Inventory in transit		Amount
		Cost Market Value (Note 1) $ 27,920 $ 69,123 1,044,963 1,456,737 199,815 242,098 4,045 4,045 $ 1,276,743 $ 1,722,003

Note 1: Based on the net realizable value.

Note 2: The amount of inventory insured is NT$522,500 thousand.

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STATEMENT 5

MIRLE AUTOMATION CORPORATION

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

MIRTEK (BVI) CORP. LTD. DAVID INVESTMENT CO., LTD. MIRLE AUTOMATION INTER CO., LTD. FACTORY AUTOMATION INTERNATIONAL CO., LTD. MAIN DRIVE CORPORATION FORMOSA MEDICAL DEVICES INC.	Balance, January 1, 2020 Number of Shares (In Thousands) Amount 29,611 $ 1,591,507 - 72,969 10,000 91,362 - - 3,300 24,418 2,523 - $ 1,780,256	Share of Exchange Differences on Additions Profit or Translation Number of Shares Loss of Subsidiaries to the Presentation (In Thousands) Amount and Associates Currency 30 $ 891 $ 83,511 $ 26,564 - - 6,372 (1,143) - - 4,109 (4,877) 1,275 42,075 - - 3,928 39,280 (20,915) - - - - - $ 82,246 $ 73,077 $ 20,544	Equity Adjustment $ - - - - (5,409) - $ (5,409)	Deferred Credits Adjustment $ 760 - - - - - $ 760	Balance, December 31, 2020 Number of Shares (In Thousands) % Amount 29,641 100 $ 1,703,233 - 99 78,198 10,000 100 90,594 1,275 51 42,075 7,228 27.61 37,374 2,523 21 - $ 1,951,474	Net Asset Value Remarks $ 1,703,233 Note 1 78,198 Note 1 90,594 Note 1 42,075 Note 2 37,374 Note 1 - Note 1 $ 1,951,474
	Number of Shares (In Thousands) 29,611 - 10,000 - 3,300 2,523	Number of Shares (In Thousands) 30 - - 1,275 3,928 -			Number of Shares (In Thousands) % 29,641 100 - 99 10,000 100 1,275 51 7,228 27.61 2,523 21

Note 1: The net value was based on audited financial statements for the same period.

Note 2: Recognition is based on unaudited financial statements. However, the management of the Corporation believes that the unaudited financial statements of these investee companies will not have a significant impact.

Note 3: The above investments accounted for using the equity method were not pledged as security.

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STATEMENT 6

MIRLE AUTOMATION CORPORATION

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS AND ACCUMULATED DEPRECIATION OF RIGHT-OF-USE-ASSETS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Cost Land Buildings Transportation equipment Total Accumulated depreciation Land Buildings Transportation equipment Total Total	January 1, 2020 $ 311,011 1,216 3,069 315,296 22,835 763 1,389 24,987 $ 290,309	Additions $ 10,478 - 4,347 14,825 27,006 453 1,132 28,591 $ (13,766)	Disposals December 31, 2020 $ (2,579) $ 318,910 (1,216) - (2,158) 5,258 (5,953) 324,168 (2,551) 47,290 (1,216) - (1,253) 1,268 (5,020) 48,558 $ (933) $ 275,610

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STATEMENT 7

MIRLE AUTOMATION CORPORATION

STATEMENT OF NOTES PAYABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Client Name Client A Client B Client C Others (Note)	Amount $ 8,353 6,978 4,500 645 $ 20,476

Note: The amount of individual client in others does not exceed 5% of the account balance.

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STATEMENT 8

MIRLE AUTOMATION CORPORATION

MIRLE AUTOMATION CORPORATION
STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)
Client Name Others (Note)	Amount $ 1,720,190

Note: The amount of individual client in others does not exceed 5% of the account balance.

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STATEMENT 9

MIRLE AUTOMATION CORPORATION

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Rental Period Discount Rate Land From January 2019 to December 2038 1.90%-2.10% Transportation equipment From January 2019 to November 2023 - Total Less: Lease liabilities - current Lease liabilities -noncurrent	Amount $ 277,497 3,996 281,493 (24,241) $ 257,252

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STATEMENT 10

MIRLE AUTOMATION CORPORATION

STATEMENT OF NET OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Sale Quantity Information product systems Note LCD devices Note Industrial controllers 4,563 sets Semiconductor equipment Note Automatic storage systems Note Robot operating systems Note Others Note Less: Sales returns and discounts	Amount $ 2,923,256 2,405,894 713,174 509,594 501,655 401,385 31,470 7,486,428 (1,439) $ 7,484,989

Note: Designed in response to customer needs. Each system requires different accessories and equipment, so the quantity cannot be calculated based on it.

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STATEMENT 11

MIRLE AUTOMATION CORPORATION

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item
Raw materials
Balance, beginning of year

Raw material purchased
Raw materials, end of year
Transferred to property, plant and equipment
Others

Raw materials used this year
Direct labor
Manufacturing expenses

Manufacturing cost
Work in process, beginning of year
Work in process, end of year

Cost of finished goods
Finished goods, beginning of year
Finished goods, end of year

Cost of goods sold
Other operating costs

Total

Amount
$ 284,680
4,479,540
(199,815)
(4,061)

(71,618)
4,488,726
508,558

528,207
5,525,491
1,293,022
(1,044,963)
5,773,550
55,657

(27,920)
5,801,287

(649)
$ 5,800,638

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STATEMENT 12

MIRLE AUTOMATION CORPORATION

STATEMENT OF MANUFACTURING OVERHEAD FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Salary Outsourcing project Travel expenses Material requisition Depreciation Others (Note)	Amount $ 95,698 141,765 94,913 40,039 32,978 122,814 $ 528,207

Note: The amount of individual client in others does not exceed 5% of the account balance.

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STATEMENT 13

MIRLE AUTOMATION CORPORATION

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

	Selling and	General and	Research and
	Marketing	Administrative	Development
Item	Expense	Expense	Expense
Personnel expenses	$ 177,899	$ 149,015	$ 228,137
After sales service fee	21,455	-	-
Professional service fee	18,775	3,527	405
Export declaration fee	18,024	-	-
Travel expenses	16,300	3,618	5,485
Depreciation	2,706	69,101	6,884
Repair and maintenance costs	417	21,317	3,424
Electricity bill	58	18,198	-
Material requisition	-	-	51,394
Outsourcing project	-	-	28,936
Others (Note)	56,114	88,757	66,665
	$ 311,748	$ 353,533	$ 391,330

Note: The amount of each item in others does not exceed 5% of the account balance.

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STATEMENT 14

MIRLE AUTOMATION CORPORATION

SUMMARY OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION EXPENSES BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Employee benefits expenses Salary expense Employee insurance premium Pension Meal expenses Welfare Remuneration of directors Depreciation Amortization		For the Year Ended December 31, 2020 Classified as Classified as Cost of Revenue Operating Expenses Total $ 514,758 $ 555,051 $ 1,069,809 45,058 47,419 92,477 24,162 25,422 49,584 16,609 14,706 31,315 10,540 - 10,540 - 6,756 6,756 $ 611,127 $ 649,354 $ 1,260,481 $ 32,978 $ 78,691 $ 111,669 $ 5,233 $ 15,167 $ 20,400		For the Year Ended December 31, 2019	For the Year Ended December 31, 2019
		Classified as Classified as Cost of Revenue Operating Expenses $ 514,758 $ 555,051 45,058 47,419 24,162 25,422 16,609 14,706 10,540 - - 6,756 $ 611,127 $ 649,354 $ 32,978 $ 78,691 $ 5,233 $ 15,167		Classified as Classified as Cost of Revenue Operating Expenses $ 608,937 $ 572,132 49,460 44,214 26,927 23,499 18,088 13,160 14,137 - - 9,744 $ 717,549 $ 662,749 $ 43,426 $ 68,879 $ 6,476 $ 13,017	Total $ 1,181,069 93,674 50,426 31,248 14,137 9,744 $ 1,380,298 $ 112,305 $ 19,493

Note 1: As of December 31, 2020 and 2019, the number of employees was 1,085 and 1,082, respectively, including 4 directors who did not serve concurrently as employees for both years.

Note 2: Companies whose stocks are listed on the Taiwan Stock Exchange or on the Taipei Exchange should disclose the following information:
1) The average employee benefits expense for the current year is $1,160 thousand (“Total employee benefits expenses for the current year-Total directors’ remuneration”/“Number of employees for the current year-Number of directors who have not served concurrently as employees”).

The average employee benefits expense for the previous year is $1,271 thousand (“Total employee benefits expenses for the previous year-Total directors’ remuneration”/“Number of employees for the previous year-Number of directors who have not served concurrently as employees”).

2) The average employee payroll and related expense for the current year is $990 thousand (Total payroll and related expense for the current year/“Number of employees for the current year-Number of directors who have not served concurrently as employees”).

The average employee payroll and related expense for the previous year is $1,096 thousand (Total payroll and related expense of the previous year/“Number of employees for the previous year-Number of directors who have not served concurrently as employees”).

3) Changes in the average employee payroll and related expense adjustment (9.59)% (“Average employee payroll and related expense for the current year-Average employee payroll and related expense for the previous year”/Average employee payroll and related expense for the previous year).
4) The remuneration of supervisors for the current year is $2,578 thousand, and that for the previous year is $3,699 thousand.
5) The Corporation’s compensation policy (include directors, managers and employees).

Article 43 of the Corporation’s charter stipulates that if the corporation makes a profit each year, at least 1% shall be allocated for employee compensation, and no more than 2% shall be paid for directors and supervisors. The procedures for determining the remuneration, in addition to considering the corporation’s operational results, and taking into account its contribution to the corporation’s performance, as well as the corporation’s “Board of Directors Performance Evaluation Method” as the evaluation method, provide reasonable remuneration. The relevant performance appraisal and salary reasonableness have been reviewed by the Salary and Compensation Committee and the Board of Directors.

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AI assistant

Mirle — Audit Report / Information 2020

52102_rns_2020-11-30_e7c83595-49f2-4925-95a0-a7c1f0d81c4d.pdf

Mirle Automation Corporation

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Notice to Readers

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

MIRLE AUTOMATION CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

MIRLE AUTOMATION CORPORATION

1. GENERAL INFORMATION

2. APPROVAL OF PARENT COMPANY ONLY FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

d. Foreign currencies

2) Equity instruments

3) Financial liabilities

l. Provisions

1) Revenue from the sale of goods

2) Revenue from the rendering of services

3) Construction contract revenue

1) The Corporation as lessor

2) Deferred tax

3) Current and deferred taxes

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Key Sources of Estimation Uncertainty

a. Write-down of inventories

b. Construction contracts

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

8. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

December 31, 2020

For the Year Ended December 31

9. INVENTORIES

10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

1) Material associates

MAIN DRIVE CORPORATION

11. PROPERTY, PLANT AND EQUIPMENT

12. LEASE ARRANGEMENTS

a. Right-of-use assets

d. Other lease information

13. OTHER INTANGIBLE ASSETS

14. OTHER CURRENT ASSETS

15. BORROWINGS

a. Short-term bank loans

b. Long-term bank loans

16. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

17. PROVISIONS - CURRENT

18. RETIREMENT BENEFIT PLANS

a. Defined contribution plan

b. Defined benefit plan

19. EQUITY

1) Common shares

b. Capital surplus

c. Retained earnings and dividends policy

2) Unrealized valuation gain (loss) on financial assets at FVTOCI

20. REVENUE

a. Revenue from contracts with customers

b. Contract balances

21. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

c. Other income

d. Other gains and losses

g. Employee benefits expense

Accrual rate

22. INCOME TAXES

a. Income tax recognized in profit or loss

Mirle Audit Report / Information 2020