Mirle — Audit Report / Information 2022

Nov 30, 2022

Mirle Automation Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2022 and 2021 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2022 are all the same as the companies required to be included in the consolidated financial statements of the parent company and its subsidiaries under International Financial Reporting Standard 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of the parent company and its subsidiaries. Hence, we did not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

MIRLE AUTOMATION CORPORATION

By

Sun Houng Chairman

March 14, 2023

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Mirle Automation Corporation

Opinion

We have audited the accompanying consolidated financial statements of Mirle Automation Corporation and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2022 and 2021, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group 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 consolidated financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated 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 Group’s consolidated financial statements for the year ended December 31, 2022 is described as follows:

Recognition of income

Construction contract revenue is the Group’s major source of revenue (accounting for about 82% of total revenue). According to the International Financial Reporting Standards, the recognition of income is subject to contracts approved by all parties, and they have promised to fulfill their respective obligations.

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Due to the fact that the contract or order may be started before the contract or order is confirmed, there is a risk that the amount of revenue recognized is overestimated; therefore, we considered the authenticity of the contract or order as a significant risk and deemed it as a key audit matter.

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

1. We understood the internal controls of the contracts and orders, and tested the operating effectiveness of the controls.

2. We confirmed that the recognized construction contract revenue was based on actual contracts or orders.

Other Matter

We have also audited the parent company only financial statements of Mirle Automation Corporation as of and for the years ended December 31, 2022 and 2021, on which we have issued an unmodified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2022, 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 Yu-Feng Huang.

Deloitte & Touche Taipei, Taiwan Republic of China

March 14, 2023

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and 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 consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated 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 consolidated financial statements shall prevail.

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MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4, 6 and 30) Financial assets at fair value through profit or loss - current (Notes 4, 7 and 30) Contract assets - current (Notes 4, 5, and 24) Notes receivable (Notes 4, 10, 24 and 30) Accounts receivable (Notes 4, 10, 24 and 30) Receivables from related parties (Notes 4, 24, 30 and 31) Other receivables (Notes 4, 10 and 30) Other receivables from related parties (Notes 4, 30 and 31) Inventories (Notes 4, 5 and 11) Other current assets (Notes 4, 18 and 31) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 4, 8 and 30) Financial assets at amortized cost - non-current (Notes 4, 9 and 30) Investments accounted for using the equity method (Notes 4 and 13) Property, plant and equipment (Notes 4, 14 and 36) Right-of-use assets (Notes 4, 15 and 36) Other intangible assets (Notes 4, 17, 31 and 32) Goodwill (Notes 4 and 16) Deferred income tax assets (Notes 4 and 26) Prepayments for equipment Refundable deposits (Note 30) Total non-current assets TOTAL		2022 Amount % $ 1,977,745 15 25,080 - 5,095,810 39 50,713 - 346,207 3 5,956 - 77,098 1 1,109 - 1,645,076 12 118,793 1 9,343,587 71 55,422 - 132,283 1 87,393 1 2,941,081 23 307,548 2 65,743 1 43,134 - 16,023 - 2,335 - 117,922 1 3,768,884 29 $ 13,112,471 100		2021 Amount % LIABILITIES AND EQUITY CURRENT LIABILITIES $ 3,152,743 27 Short-term bank loans (Notes 19 and 30) Contract liabilities - current (Notes 4, 5, 24, and 31) 100,078 1 Notes payable (Note 30) 2,950,299 25 Accounts payable (Note 30) 62,585 1 Accounts payable to related parties (Notes 30 and 31) 487,299 4 Current tax liabilities (Notes 4 and 26) 2,083 - Provisions - current (Notes 4 and 21) 124,097 1 Lease liabilities - current (Notes 4, 15 and 30) 380 - Current portion of long-term bank loans (Notes 19 and 30) 1,449,655 12 Accrued expenses and other current liabilities (Notes 20, 30 and 31) 164,440 1 Total current liabilities 8,493,659 72 NON-CURRENT LIABILITIES Long-term bank loans (Notes 19 and 30) Deferred income tax liabilities (Notes 4 and 26) 48,697 1 Lease liabilities - non-current (Notes 4, 15 and 30) - - Net defined benefit liabilities - non-current (Notes 4 and 22) 44,991 - Guarantee deposits received (Note 30) 2,627,425 22 Other non-current liabilities (Notes 20 and 30) 334,043 3 54,962 1 Total non-current liabilities 42,389 - 7,779 - Total liabilities 25,046 - 102,094 1 EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE CORPORATION (Notes 4 and 23) 3,287,426 28 Share capital Ordinary 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 valuation gain (loss) on financial assets at fair value through other comprehensive income Total equity attributable to shareholders of the Corporation NON-CONTROLLING INTERESTS (Notes 4, 23 and 29) Total equity $ 11,781,085 100 TOTAL		2022 Amount % $ 1,413,000 11 1,078,112 8 93,216 1 3,475,784 26 1,488 - 130,355 1 11,301 - 26,232 - 464,723 4 651,079 5 7,345,290 56 936,988 7 11,140 - 209,845 2 260,524 2 291 - 4,178 - 1,422,966 11 8,768,256 67 1,955,312 15 270,290 2 953,456 7 167,859 1 1,104,072 9 (128,817) (1) 1,440 - 4,323,612 33 20,603 - 4,344,215 33 $ 13,112,471 100		2021
								Amount % $ 300,000 3 1,338,964 11 107,786 1 3,083,183 26 13,133 - 162,977 1 11,626 - 25,931 - 42,724 - 754,548 7 5,840,872 49 1,188,643 10 - - 234,484 2 302,945 3 318 - 77 - 1,726,467 15 7,567,339 64 1,955,312 17 254,964 2 902,775 8 152,050 1 1,103,145 9 (160,814) (1) (7,045) - 4,200,387 36 13,359 - 4,213,746 36 $ 11,781,085 100

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

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MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET SALES (Notes 4, 24, 31 and 36) OPERATING COSTS (Notes 4, 11, 25 and 31) GROSS PROFIT OPERATING EXPENSES (Notes 25 and 31) Selling and marketing expense General and administrative expense Research and development expense Expected credit gain (Note 10) Total operating expenses OTHER OPERATING INCOME AND EXPENSES (Note 25) PROFIT FROM OPERATIONS NONOPERATING INCOME AND EXPENSES Interest income (Note 25) Other income (Notes 17, 25, 28 and 31) Other gains and losses (Notes 25 and 31) Finance costs (Note 25) Share of loss of associates (Note 13) Foreign exchange gain (loss), net (Note 34) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 26) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 22, 23 and 30) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instruments at fair value through other comprehensive income		2022 Amount % $ 10,769,016 100 8,892,088 82 1,876,928 18 483,653 4 536,240 5 499,116 5 (2,476) - 1,516,533 14 (3,453) - 356,942 4 24,479 - 28,060 - (15,219) - (22,178) - (31,506) - 253,722 2 237,358 2 594,300 6 72,227 1 522,073 5 (17,138) - 8,485 -		2021
				Amount % $ 9,861,403 100 7,816,372 79 2,045,031 21 454,971 5 510,421 5 396,118 4 (8,414) - 1,353,096 14 (537) - 691,398 7 20,979 - 30,834 - (6,233) - (11,658) - (29,116) - (79,604) (1) (74,798) (1) 616,600 6 85,198 1 531,402 5 (21,082) - 600 - (Continued)

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MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences on the translation of the financial statements of foreign operations Other comprehensive income (loss) for the year TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO Shareholders of the Corporation Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO Shareholders of the Corporation Non-controlling interests EARNINGS PER SHARE (Note 27) Basic Diluted		2022 Amount % $ 32,002 - 23,349 - $ 545,422 5 $ 514,724 5 7,349 - $ 522,073 5 $ 538,068 5 7,354 - $ 545,422 5 $ 2.63 $ 2.63		2021
				Amount % $ (16,507) - (36,989) - $ 494,413 5 $ 527,896 5 3,506 - $ 531,402 5 $ 491,004 5 3,409 - $ 494,413 5 $ 2.70 $ 2.70

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

(Concluded)

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MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

BALANCE, JANUARY 1, 2021 Appropriation of 2020 earnings Legal reserve Special reserve Cash dividends distributed by the Corporation - 20% Other changes in capital surplus Changes in percentage of ownership interests in subsidiaries Changes in capital surplus from investments in associates accounted for using the equity method Net profit for the year ended December 31, 2021 Other comprehensive (loss) income for the year ended December 31, 2021 Total comprehensive income (loss) for the year ended December 31, 2021 Non-controlling interests BALANCE, DECEMBER 31, 2021 Appropriation of 2021 earnings Legal reserve Special reserve Cash dividends distributed by the Corporation - 22% Other changes in capital surplus Changes in percentage of ownership interests in subsidiaries Changes in capital surplus from investments in associates accounted for using the equity method Net profit for the year ended December 31, 2022 Other comprehensive (loss) income for the year ended December 31, 2022 Total comprehensive income for the year ended December 31, 2022 Non-controlling interests BALANCE, DECEMBER 31, 2022			Equity Attributable to Shareholders of the Corporation	Equity Attributable to Shareholders of the Corporation	Equity Attributable to Shareholders of the Corporation	Equity Attributable to Shareholders of the Corporation			Non-controlling Total Interests $ 4,099,210 $ 9,952 - - - - (391,062 ) - 2 - 1,233 - 527,896 3,506 (36,892) (97) 491,004 3,409 - (2) 4,200,387 13,359 - - - - (430,169 ) - 10 (10 ) 15,316 - 514,724 7,349 23,344 5 538,068 7,354 - (100) $ 4,323,612 $ 20,603	Total Equity $ 4,109,162 - - (391,062 ) 2 1,233 531,402 (36,989) 494,413 (2) 4,213,746 - - (430,169 ) - 15,316 522,073 23,349 545,422 (100) $ 4,344,215
	Share Capital		Capital Surplus			Retained Earnings		Other Equity Unrealized Valuation Exchange Gain (Loss) on Differences on Financial Translation Assets of the Financial at Fair Value Statements of Through Other Foreign Comprehensive Operations Income $ (144,404 ) $ (7,645 ) - - - - - - - - - - - - (16,410) 600 (16,410) 600 - - (160,814 ) (7,045 ) - - - - - - - - - - - - 31,997 8,485 31,997 8,485 - - $ (128,817) $ 1,440
			Equity Component of Convertible Investments Bonds Issued Accounted for by the Using the Corporation Equity Method $ 234,579 $ - - - - - - - - 2 - 1,233 - - - - - - - - 234,579 1,235 - - - - - - - 10 - 15,316 - - - - - - - - $ 234,579 $ 16,561	Treasury Shares Transactions $ 19,150 - - - - - - - - - 19,150 - - - - - - - - - $ 19,150	Total $ 253,729 - - - 2 1,233 - - - - 254,964 - - - 10 15,316 - - - - $ 270,290
	Shares (In Thousands) 195,531 - - - - - - - - - 195,531 - - - - - - - - - 195,531	Amount $ 1,955,312 - - - - - - - - - 1,955,312 - - - - - - - - - $ 1,955,312
						Unappropriated Legal Reserve Special Reserve Earnings $ 852,644 $ 173,348 $ 1,016,226 50,131 - (50,131 ) - (21,298 ) 21,298 - - (391,062 ) - - - - - - - - 527,896 - - (21,082) - - 506,814 - - - 902,775 152,050 1,103,145 50,681 - (50,681 ) - 15,809 (15,809 ) - - (430,169 ) - - - - - - - - 514,724 - - (17,138) - - 497,586 - - - $ 953,456 $ 167,859 $ 1,104,072	Total $ 2,042,218 - - (391,062 ) - - 527,896 (21,082) 506,814 - 2,157,970 - - (430,169 ) - - 514,724 (17,138) 497,586 - $ 2,225,387

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

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MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit gain Net gain on fair value changes of financial assets at fair value through profit or loss Finance costs Interest income Share of loss of associates Loss on disposal of property, plant and equipment Reclassify property, plant and equipment as expenses Loss on disposal of other intangible assets Inventory write-downs (reversed) Net (gain) loss on foreign currency exchange Changes in operating assets and liabilities Contract assets Notes receivable Accounts receivable Receivable from related parties Other receivables Other receivables from related parties Inventories Other current assets Contract liabilities Notes payable Accounts payable Accounts payable to related parties Provisions Accrued expenses and other current liabilities Net defined benefit liabilities Cash (used in) generated from operations Income tax paid Net cash (used in) generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Cash returns from capital reduction of investments in financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost 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	2022 $ 594,300 164,865 33,274 (2,476) (186) 22,178 (24,479) 31,506 3,353 49 100 8,258 (168,081) (2,145,511) 11,975 258,212 (3,873) 47,484 (729) (203,314) 45,647 (260,852) (14,570) 385,977 (11,645) (325) (73,940) (59,559) (1,362,362) (101,953) (1,464,315) 1,760 (134,464) (125,000) 200,184 (58,560)	2021 $ 616,600 150,904 28,764 (8,414) (384) 11,658 (20,979) 29,116 537 - - (7,122) 6,354 (335,275) 171,807 163,799 (90) (65,096) (380) 60,973 10,659 (337,707) 44,339 444,369 7,855 7,270 129,322 (24,527) 1,084,352 (83,044) 1,001,308 1,001 - (420,000) 320,306 (35,371) (Continued)

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MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

Acquisition of property, plant and equipment Disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Acquisition of intangible assets Increase in prepayments for equipment Decrease in prepayments for equipment Interest received Acquisition of additional interests in subsidiary Net cash used in 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 Decrease in guarantee deposits received Repayment of the principal portion of lease liabilities Dividends paid Interest paid Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2022 $ (480,589) 5,251 (15,828) - (37,927) - 22,711 23,819 (100) (598,743) 3,113,000 (2,000,000) 228,960 (58,616) (27) (26,271) (430,169) (21,187) 805,690 82,370 (1,174,998) 3,152,743 $ 1,977,745	2021 $ (272,473) 175 - 25,843 (32,158) (1,899) - 22,029 - (392,547) 320,000 (320,000) 172,400 (5,000) - (24,859) (391,062) (11,623) (260,144) (37,657) 310,960 2,841,783 $ 3,152,743

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

(Concluded)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

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 consolidated financial statements are presented in the Corporation’s functional currency, the New Taiwan dollar.

2. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors and authorized for issue on March 14, 2023.

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

• a. Initial application of the amendments to 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 IFRSs endorsed and issued into effect by the FSC did not have a material impact on the Corporation and the entities controlled by the Corporation (collectively, the “Group”) accounting policies.

• b. The IFRSs endorsed by the FSC for application starting from 2023

New, Amended and Revised Standards and Interpretations Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”	Effective Date Announced by International Accounting Standards Board (IASB)
	January 1, 2023 (Note 1) January 1, 2023 (Note 2) January 1, 2023 (Note 3)

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• Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 2: The amendments will be 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.

• Note 3: Except for deferred taxes that were recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments were applied prospectively to transactions that occur on or after January 1, 2022.

As of the date the consolidated financial statements were authorized for issue, the Group has assessed that the application of the above standards and interpretations will not have a material impact on the Group’s financial position and financial performance.

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

New, Amended and Revised Standards and Interpretations Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 - Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Non-current Liabilities with Covenants”

Effective Date Announced by IASB (Note 1)

To be determined by IASB January 1, 2024 (Note 2) January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2024 January 1, 2024

• Note 1: Unless stated otherwise, the above IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

• Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

The consolidated 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.

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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.

• 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 Group 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.

The Group 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 Group’s construction-related assets and liabilities.

• d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Corporation and the entities controlled by the Corporation (i.e., its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the shareholders of the Corporation and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

• 13 -

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the shareholders of the Corporation.

See Note 12, Table 5 and Table 6 for detailed information on subsidiaries (including percentages of ownership and main businesses).

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interests in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets.

f. Foreign currencies

In preparing the financial statements of each individual entity, transactions in currencies other than the entity’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 denominated in foreign currencies that are measured at fair value are retranslated at the rates prevailing at the date when the fair value is 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 item denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency.

For the purpose of presenting consolidated financial statements, the financial statements of the Group’s foreign operations (including subsidiaries and associates in other countries) that are prepared using functional currencies which are different from the currency of the Group are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the shareholders of the Corporation and non-controlling interests as appropriate).

• 14 -

g. 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.

h. Investments in associates

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

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

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

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Corporation subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

The entire carrying amount of an investment is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount (including goodwill). Any impairment loss recognized is not allocated to any asset 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 Group transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

i. Property, plant and equipment

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

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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 reporting period, 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.

• j. Goodwill

Goodwill arising from the acquisition of a business is measured at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that are expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently whenever there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. Any impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the Group disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

• k. 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 reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

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

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• 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.

• l. Impairment of property, plant and equipment, right-of-use assets, intangible assets other than goodwill and assets related to contract costs

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use assets and intangible assets, excluding goodwill, to determine whether there is 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 Group 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 Group recognizes an impairment loss from assets related to contract costs, any impairment loss on inventories and property, plant and equipment 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 Group 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 assets related to 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 assets related to contract costs in prior years. A reversal of an impairment loss is recognized in profit or loss.

• m. Financial instruments

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

• 17 -

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 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 30: Financial Instruments.

• 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, other receivables and refundable deposits 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 asset, 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 asset that is not credit impaired on purchase or origination but has 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.

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;

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• 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.

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 are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

• iii. Investments in equity instruments at FVTOCI

On initial recognition, the Group 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 Group’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 Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable), as well as contract assets.

The Group always recognizes lifetime expected credit losses (ECLs) for accounts receivable and contract assets. For all other financial instruments, the Group 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 Group 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 Group considers the following situations as indications that a financial asset is in default (without taking into account any collateral held by the Group):

• 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 Group 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.

• c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the 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. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

• 2) Equity instruments

Equity instruments issued by the Group are classified as equity in accordance with the substance of the contractual arrangements and the definitions of an equity instrument.

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

• 3) Financial liabilities

• a) Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

• 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.

• n. 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.

Warranties

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 Group’s obligations.

• o. Revenue recognition

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

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For contracts where the period between the date on which the Group 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 Group 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 Group recognizes income and accounts receivable in accordance with the terms stated in the contract.

The Group 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 Group provides hardware and software installation services, customers simultaneously receive and consume the benefits provided by the Group’s performance. Consequently, the related revenue is recognized when services are rendered.

• 3) Construction contract revenue

Customers control properties while the construction is in progress; thus, the Group recognizes revenue over time. The Group measures the progress 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 satisfying the performance obligations. Contract assets are recognized during the construction and are reclassified to accounts receivable at the point at which the customer is invoiced. If the milestone payments exceed the revenue recognized to date, then the Group 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 Group adequately completes all of its contractual obligations. Such retention receivables are recognized as contract assets until the Group 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 satisfying the performance obligation for which recovery is expected.

• p. Leases

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

1) The Group 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 Group as lessee

The Group 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 by applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

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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, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. 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 consolidated 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, which comprise fixed payments, variable lease payments which depend on an index or a rate. 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 lessee’s incremental borrowing rate will be used.

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 future lease payments resulting from a change in an index or a rate used to determine those payments, the Group 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 consolidated balance sheets.

• q. Borrowing costs

Borrowing costs are recognized in profit or loss in the period in which they are incurred.

• r. Government grants

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

Government grants related to income are recognized as a reduction of the related costs and expenses or in other income on a systematic basis over the periods in which the Group recognizes as expenses the related costs that the grants intend to compensate. Specifically, government grants whose primary condition is that the Group 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 Group with no future related costs are recognized in profit or loss in the period in which they are received.

• s. 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.

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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 Group’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 Group can no longer withdraw the offer of the termination benefit and when the Group recognizes any related restructuring costs.

• t. 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 Law in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

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, and 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 Group 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

• 23 -

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 Group 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.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimations, and assumptions on 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 Group considers the possible impact of the recent development of the COVID-19 and its economic environment implications when making its critical accounting estimates on cash flow, growth rate, discount rate, profitability, etc. 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.

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 products 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 24 for the details.

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6. CASH AND CASH EQUIVALENTS

Cash on hand Demand deposits Checking accounts Cash equivalents Time deposits with original maturities of 3 months or less Time deposits with original maturities of more than 3 months but less than 1 year		December 31	December 31
		2022 $ 9,810 1,273,329 120 172,951 521,535 $ 1,977,745	2021 $ 9,611 1,649,905 1,080 800,550 691,597 $ 3,152,743

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

Bank balance	December 31
	2022 2021 0.00%-4.37% 0.001%-2.65%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

FVTPL-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Mutual funds		December 31	December 31
		2022 $ 25,080	2021 $ 100,078

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instruments at FVTOCI Domestic investments Unlisted shares Foreign investments Unlisted shares		December	31
		2022 $ 55,422 $ 9,955 45,467 $ 55,422	2021 $ 48,697 $ 12,125 36,572 $ 48,697

The Corporation invested in TIEF FUND, L.P. and PHOENIX II INNOVATION VENTURE CAPITAL CO., LTD. for medium to long-term strategic purposes, and expects to make profit through long-term investments. 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

• 25 -

or loss would not be consistent with the Corporation’s strategy of holding these investments for long-term purposes.

9. FINANCIAL ASSETS AT AMORTIZED COST

December 31 2022 2021 Non-current - Time deposits with original maturities of more than 1 year $ 132,283 $

The interest rate for time deposits with original maturities of more than 1 year was approximately 2.60% per annum as of December 31, 2022.

10. 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
		2022 $ 50,809 (96) $ 50,713 $ 357,652 (11,445) $ 346,207 $ 58,493 21,719 80,212 (3,114) $ 77,098	2021 $ 62,784 (199) $ 62,585 $ 504,222 (16,923) $ 487,299 $ 100,186 26,850 127,036 (2,939) $ 124,097

• 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 Group 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 Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

• 26 -

The Group 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 customer, the customer’s current financial position, economic condition of the industry in which the customer operates, as well as the GDP forecasts and industry outlook. As the Group’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 Group’s different customer base.

The Group writes off an accounts receivable when there is evidence 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 Group 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 Group’s provision matrix:

December 31, 2022

Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2021 Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Up to 30 Days $ 82,201 (744) $ 81,457 Up to 30 Days $ 140,496 (1,060) $ 139,436	31 to 90 Days $ 204,100 (1,581) $ 202,519 31 to 90 Days $ 164,138 (1,748) $ 162,390	91 to 180 Days $ 48,894 (486) $ 48,408 91 to 180 Days $ 158,049 (1,323) $ 156,726	Over 180 Days $ 73,266 (8,730) $ 64,536 Over 180 Days $ 104,323 (12,991) $ 91,332	Total $ 408,461 (11,541) $ 396,920 Total $ 567,006 (17,122) $ 549,884

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

Balance at January 1 Less: Amounts written off Less: Net remeasurement of loss allowance Foreign exchange gains and losses Balance at December 31	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31
		2022 $ 17,122 (3,029) (2,651) 99 $ 11,541	2021 $ 29,735 (4,165) (8,414) (34) $ 17,122

As of December 31, 2022 and 2021, the amounts of loss allowance which included individually impaired notes receivable and accounts receivable of debtors in significant financial difficulty were $5,123 thousand and $8,151 thousand, respectively. The expected credit losses recognized are the carrying amounts of notes receivable and accounts receivable. The Group does not hold any collateral over the balance of these notes receivable and accounts receivable.

• 27 -

The movements of the loss allowance of other receivables were as follows:

Balance at January 1 Add: Net remeasurement of loss allowance Balance at December 31	For the Years Ended December 31	For the Years Ended December 31	For the Years Ended December 31
		2022 $ 2,939 175 $ 3,114	2021 $ 2,939 - $ 2,939

11. INVENTORIES

Finished goods Work in progress Raw materials Inventory in transit		December 31	December 31
		2022 $ 14,878 1,056,760 523,596 49,842 $ 1,645,076	2021 $ 24,406 929,233 442,055 53,961 $ 1,449,655

The components of operating costs related to inventories are as follows:

Cost of inventories sold Inventory write-downs (reversed) Sale of scraps	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 8,892,088 $ 8,258 $ (2,176)	2021 $ 7,816,372 $ (7,122) $ (8,686)

12. SUBSIDIARIES

a. Subsidiaries included in the consolidated financial statements

Investor Investee Nature of Activities The Corporation MIRTEK (BVI) CORP. LTD. Investment MIRLE AUTOMATION INTER CORP. LTD. Machinery installation construction, automatic warehousing and logistics equipment and cybernation equipment construction DAVID INVESTMENT CO., LTD. Investment FACTORY AUTOMATION INTERNATIONAL CO., LTD. Design of computer application package software and sale of computer peripheral equipment MIRTEK (BVI) CORP. LTD. MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) 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	Proportion of Ownership (%)
	December 31
	2022 2021 100 100 100 100 100 99 51 51 100 100

• 28 -

(Continued)

Investor Investee Nature of Activities MIRTEK (BVI) CORP. LTD. MIRLE HOLDING CO., LTD. Investment MIRLE HOLDING CO., LTD. MIRLE AUTOMATION (KUNSHAN) CO., LTD. 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 DAVID INVESTMENT CO., LTD. IOT SERVICES INFORMATION SYSTEM CORPORATION Machinery and equipment manufacturing and installation construction, wholesale and retail sale of computing and business machinery equipment IOT SERVICES INFORMATION SYSTEM CORPORATION VAN QUOC INFORMATION TECHNOLOGY CONSULTING SERVICES CO., LTD. Machinery and equipment installation construction, wholesale and retail sale of computing and business machinery equipment	Proportion of Ownership (%)
	December 31
	2022 2021 100 100 100 100 100 100 100 100 (Concluded)

On May 10, 2021, DAVID INVESTMENT CO., LTD. acquired 1% of the shares released by other shareholders of IOT SERVICES INFORMATION SYSTEM CORPORATION for NT$100 thousand, and the shareholding ratio increased from 99% to 100%.

On November 10, 2021, the Corporation’s board of directors approved the capital increase of NT$2,700 thousand in cash for 300 thousand ordinary shares of MIRLE AUTOMATION INTER CO., LTD.

On April 29, 2022, the Corporation acquired 1% of the shares released by other shareholders of DAVID INVESTMENT CO., LTD. for NT$100 thousand, and the shareholding ratio increased from 99% to 100%. Refer to Note 29 for the details.

The consolidated financial statements of the subsidiaries for the years ended December 31, 2022 and 2021 were based on the audited financial statements of the subsidiaries for the same years.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates Associates that are not individually material MAIN DRIVE CORPORATION MIRLE AUTOMATION TECHNOLOGY (GUANGDONG) CO., LTD. HICHAIN & MIRLE AUTOMATION CO., LTD.		December	31
		2022 $ 47,772 21,983 17,638 $ 87,393	2021 $ 34,310 10,681 - $ 44,991

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a. Aggregate information of associates that are not individually material

The Group’s share of: Net loss for the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ (31,506)	2021 $ (29,116)

The Corporation subscribed for 2,485 thousand common shares of MAIN DRIVE CORPORATION for NT$24,850 thousand in cash after approval was obtained from the board of directors on May 12, 2021, which decreased the proportion of ownership from 27.61% to 26.85%.

The Corporation reinvested Mirle Automation Technology (Guangdong) Co., Ltd. with its own funds through Mirle Automation Technology (Shanghai) Co., Ltd. for RMB2,450 thousand in cash after approval was obtained from the board of directors on August 11, 2021. As of December 31, 2021, the shareholding ratio was 49%.

The Corporation subscribed for 2,000 thousand ordinary shares of MAIN DRIVE CORPORATION for NT$30,000 thousand in cash after approval was obtained from the board of directors on March 17, 2022, which decreased the proportion of ownership from 26.85% to 23.43%.

MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD. subscribed for the cash capital increase of MIRLE AUTOMATION TECHNOLOGY (GUANGDONG) CO., LTD. on August 26, 2022 with RMB2,450 thousand. After the capital increase, the shareholding ratio was 49%.

On March 17, 2022, the board of directors decided to set up a company with HICHAIN LOGISTICS (JIANGSU) CO., LTD., and on August 26, 2022, HICHAIN LOGISTICS (JIANGSU) CO., LTD. was transferred to HICHAIN & MIRLE AUTOMATION CO., LTD. through MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD. The investment amount is RMB4,000 thousand in cash, and the shareholding ratio is 40%.

• b. Except for MIRLE AUTOMATION TECHNOLOGY (GUANGDONG) CO., LTD., the share of profit or loss and other comprehensive income (loss) of the investments in associates accounted for using the equity method for the years ended December 31, 2022 and 2021 were based on the associate’s audited financial statements for the same years. Management considers that even if these financial statements are to be reviewed, they would not have a significant impact on the Group.

14. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Group Assets leased under operating leases		December 31	December 31
		2022 $ 2,824,391 116,690 $ 2,941,081	2021 $ 2,626,656 769 $ 2,627,425

• 30 -

Cost Balance at January 1, 2022 Additions Disposals Transfers to assets leased under operating leases Transfers from assets leased under operating leases Reclassified Effects of foreign currency exchange differences Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation expenses Disposals Transfers to assets leased under operating leases Transfers from assets leased under operating leases Reclassified Effects of foreign currency exchange differences Balance at December 31, 2022 Accumulated impairment Balance at January 1, 2022 Disposals Balance at December 31, 2022 Carrying amount at December 31, 2022 Cost Balance at January 1, 2021 Additions Disposals Transfers to assets leased under operating leases Reclassified Effects of foreign currency exchange differences Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expenses Disposals Transfers to assets leased under operating leases Effects of foreign currency exchange differences Balance at December 31, 2021 Accumulated impairment Balance at January 1, 2021 Disposals Balance at December 31, 2021 Carrying amount at December 31, 2021				Assets	Used by the Grou	p				Assets Lease Operating	d under Leases Machinery Equipment $ 1,142 - - - (1,142 ) - - $ - $ 869 273 - - (1,142 ) - - $ - $ - - $ - $ - $ - - - 1,142 - - $ 1,142 $ - 228 - 641 - $ 869 $ - - $ - $ 273	Total - $ 3,496,817 448,069 (66,131 ) - - (741 ) 13,935 $ 3,891,949 $ 864,964 135,238 (57,256 ) - - - 3,765 $ 946,711 $ 4,428 (271) $ 4,157 $ 2,941,081 $ 3,241,678 302,326 (43,012 ) - - (4,175) $ 3,496,817 $ 787,567 120,681 (42,070 ) - (1,214) $ 864,964 $ 4,658 (230) $ 4,428 $ 2,627,425
	F	reehold Land $ 179,901 - - - - - - $ 179,901 $ - - - - - - - $ - $ - - $ - $ 179,901 $ 179,901 - - - - - $ 179,901 $ - - - - - $ - $ - - $ - $ 179,901	Buildings and Ancillary Equipment $ 2,336,298 1,608 (620 ) (117,531 ) - 855,059 11,544 $ 3,086,358 $ 593,596 73,237 (611 ) (89 ) - - 2,141 $ 668,274 $ - - $ - $ 2,418,084 $ 2,315,874 2,694 (3,516 ) - 24,411 (3,165) $ 2,336,298 $ 532,869 64,351 (3,103 ) - (521) $ 593,596 $ - - $ - $ 1,742,702	Machinery Equipment T $ 326,598 46,567 (49,709 ) - 1,142 1,576 1,163 $ 327,337 $ 177,557 41,215 (41,277 ) - 1,142 (410 ) 685 $ 178,912 $ 4,428 (271) $ 4,157 $ 144,268 $ 305,432 32,580 (26,881 ) (1,142 ) 16,801 (192) $ 326,598 $ 166,453 38,466 (26,659 ) (641 ) (62) $ 177,557 $ 4,658 (230) $ 4,428 $ 144,613	ransportation Equipment $ 49,943 4,545 (6,269 ) - - - 467 $ 48,659 $ 33,838 4,914 (6,055 ) - - - 382 $ 33,079 $ - - $ - $ 15,580 $ 48,849 5,038 (3,822 ) - - (392) $ 49,943 $ 32,636 5,181 (3,633 ) - (346) $ 33,838 $ - - $ - $ 16,105	Office Equipment $ 94,423 31,824 (9,506 ) - - 222 679 $ 117,642 $ 58,253 13,272 (9,313 ) - - 410 488 $ 63,110 $ - - $ - $ 54,532 $ 90,879 12,690 (8,793 ) - - (353) $ 94,423 $ 54,976 12,194 (8,675 ) - (242) $ 58,253 $ - - $ - $ 36,170	Leasehold Improvement $ 2,057 1,476 - - - - 75 $ 3,608 $ 813 1,073 - - - - 68 $ 1,954 $ - - $ - $ 1,654 $ 1,068 1,060 - - - (71) $ 2,057 $ 610 249 - - (46) $ 813 $ - - $ - $ 1,244	Work in Progress $ 505,921 362,049 - - - (857,598 ) - $ 10,372 $ - - - - - - - $ - $ - - $ - $ 10,372 $ 299,139 247,994 - - (41,212 ) - $ 505,921 $ - - - - - $ - $ - - $ - $ 505,921		Buildings and Ancillary Equipment $ 534 - - 117,531 - - 7 $ 118,072 $ 38 1,254 - 89 - - 1 $ 1,382 $ - - $ - $ 116,690 $ 536 - - - - (2) $ 534 $ 23 12 - - 3 $ 38 $ - - $ - $ 496

Operating leases relate to leases of buildings and ancillary equipment and machinery equipment with lease terms between 0.5 and 5 years. The lessees do not have bargain purchase options to acquire the assets at the expiry of the lease periods.

The maturity analysis of lease payments receivable under operating lease payments was as follows:

Year 1 Year 2 Year 3 Year 4 Year 5		**December **	**31 **
		2022 $ 3,120 2,756 2,756 2,756 1,608 $ 12,996	2021 $ 2,657 91 - - - $ 2,748

• 31 -

There was no indication of impairment on the Group’s property, plant and equipment for the years ended December 31, 2022 and 2021.

The above items of 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 1-20 years Transportation equipment 3-8 years Office equipment 3-30 years Leasehold improvement 1-2 years

The major component of the Group’s buildings comprises the main building of the plant and electromechanical power equipment, which are depreciated on a straight-line basis over their estimated useful lives of 40-50 years and 4-15 years, respectively.

15. LEASE ARRANGEMENTS

• a. Right-of-use assets

Carrying amount Land Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Transportation equipment Lease liabilities Carrying amount Current Non-current Range of discount rate for lease liabilities was as follows: Land Transportation equipment		December 31	December 31
	2022 $ 304,697 2,851 $ 307,548 **For the Years Ended **		2021 $ 328,483 5,560 $ 334,043 **December 31 **
		2022 $ 1,933 $ 26,918 2,709 $ 29,627 **December **	2021 $ 3,781 $ 28,012 2,211 $ 30,223 **31 **
		2022 2021 $ 26,232 $ 25,931 $ 209,845 $ 234,484 **December 31 **
	2022 2021 1.92%-2.16% 1.92%-2.16% 1.44% 1.44%

b. Lease liabilities

• 32 -

• c. Material leasing activities and terms

The Group leases land and transportation equipment for office space and operational uses with lease terms of 9-50 years and 3 years, respectively. The Group does not have bargain purchase options to acquire the land and transportation equipment at the end of the lease terms.

d. Other lease information

Other lease information
Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Years Ended December 31
		2022 $ 12,297 $ 21 $ (43,620)	2021 $ 8,482 $ 141 $ (38,944)

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

16. GOODWILL

Cost Balance at January 1 Effect of foreign currency exchange differences Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 42,389 745 $ 43,134	2021 $ 43,906 (1,517) $ 42,389

17. OTHER INTANGIBLE ASSETS

Service Concession Arrangements Cost Balance at January 1, 2022 $ 9,389 Additions - Disposals - Effect of foreign currency exchange differences - Balance at December 31, 2022 $ 9,389 Accumulated amortization Balance at January 1, 2022 $ 4,225 Amortization expense 469 Disposals - Effect of foreign currency exchange differences - Balance at December 31, 2022 $ 4,694 Carrying amount at December 31, 2022 $ 4,695	Computer Software Licenses and Franchises $ 51,668 $ - 14,961 8,000 (22,932) - 203 - $ 43,900 $ 8,000 $ 33,599 $ - 12,756 216 (22,832) - 138 - $ 23,661 $ 216 $ 20,239 $ 7,784	Others Total $ 74,380 $ 135,437 20,966 43,927 (1,681) (24,613) 254 457 $ 93,919 $ 155,208 $ 42,651 $ 80,475 19,833 33,274 (1,681) (24,513) 91 229 $ 60,894 $ 89,465 $ 33,025 $ 65,743 (Continued)

• 33 -

Service Concession Arrangements Cost Balance at January 1, 2021 $ 9,389 Additions - Disposals - Effect of foreign currency exchange differences - Balance at December 31, 2021 $ 9,389 Accumulated amortization Balance at January 1, 2021 $ 3,755 Amortization expense 470 Disposals - Effect of foreign currency exchange differences - Balance at December 31, 2021 $ 4,225 Carrying amount at December 31, 2021 $ 5,164	Computer Software Licenses and Franchises $ 56,043 $ - 5,157 - (9,479) - (53) - $ 51,668 $ - $ 29,024 $ - 14,089 - (9,479) - (35) - $ 33,599 $ - $ 18,069 $ -	Others Total $ 49,436 $ 114,868 27,001 32,158 (1,945) (11,424) (112) (165) $ 74,380 $ 135,437 $ 30,428 $ 63,207 14,205 28,764 (1,945) (11,424) (37) (72) $ 42,651 $ 80,475 $ 31,729 $ 54,962 (Concluded)

The Group 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, 2022 and 2021, which were recognized as other income, amounted to $5,697 thousand and $2,452 thousand, respectively.

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

Service concession arrangements 20 years Computer software 3-5 years Licenses and Franchises 10 years Others 1-10 years

Other intangible assets pledged as collateral for bank borrowings are set out in Note 32.

18. OTHER CURRENT ASSETS

Current Payments in advance Temporary payments Prepayments foreign travel Overpaid VAT Prepayments rents Prepayments for software maintenance Prepayments for construction Others		December 31	December 31
		2022 $ 26,189 13,703 11,851 8,979 7,048 6,884 4,684 39,455 $ 118,793	2021 $ 40,039 13,707 11,545 47,571 5,960 3,663 13,724 28,231 $ 164,440

• 34 -

19. BORROWINGS

a. Short-term bank loans

Unsecured borrowings Working capital loan		**December 31 **	**December 31 **
		2022 $ 1,413,000	2021 $ 300,000

The effective interest rate of the working capital loan were 1.28%-1.95% and 0.51% as of December 31, 2022 and 2021, respectively.

• b. Long-term bank loans

Unsecured borrowings Bank loans - expiring before February 15, 2027 Less: Current portion Long-term bank loans		December 31	December 31
		2022 $ 1,401,711 (464,723) $ 936,988	2021 $ 1,231,367 (42,724) $ 1,188,643

The effective interest rates of the long-term bank loans were 0.85%-1.14% and 0.41%-0.50% as of December 31, 2022 and 2021, respectively.

20. OTHER LIABILITIES

Current Accrued expenses and other current liabilities Bonus Salaries Outsourcing fee Temporary receipts Compensation of employees and remuneration of directors and supervisors Purchases of equipment Others Non-current Other non-current liabilities Long-term payables Others		**December 31 **	**December 31 **
		2022 $ 260,650 145,804 52,981 37,000 14,856 12,872 126,916 $ 651,079 $ 4,000 178 $ 4,178	2021 $ 297,488 103,523 68,759 24,631 15,655 45,392 199,100 $ 754,548 $ - 77 $ 77

• 35 -

21. PROVISIONS - CURRENT

Warranties Balance at January 1 Additional provisions recognized Amount used Effect of foreign currency exchange differences Balance at December 31		**December **	**31 **
	2022 2021 $ 11,301 $ 11,626 For the Year Ended December 31
		2022 $ 11,626 17,835 (18,173) 13 $ 11,301	2021 $ 4,356 30,736 (23,461) (5) $ 11,626

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 Group’s obligations for warranties under contracts for the sale of goods. The estimate has 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.

22. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation, DAVID INVESTMENT CO., LTD., IOT SERVICES INFORMATION SYSTEM CORPORATION and FACTORY AUTOMATION INTERNATIONAL CO., LTD. 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.

In accordance with the relevant local laws and ordinances, MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD., MIRLE AUTOMATION (KUNSHAN) CO., LTD. and MIRLE AUTOMATION INTER CORP LTD. contribute a specific ratio of the local employees’ monthly salary to the pension funds of their respective countries.

b. Defined benefit plans

The defined benefit plan adopted by the Corporation in accordance with the Labor Standards Act is operated by the government of the ROC. 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.

• 36 -

The amounts included in the consolidated 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, 2021 $ 637,231 Service cost Current service cost 2,518 Net interest expense (income) 3,186 Recognized in profit or loss 5,704 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss Changes in demographic assumptions 14,423 Changes in financial assumptions (6,267) Experience adjustments 17,534 Recognized in other comprehensive loss (income) 25,690 Contributions from the employer - Benefits paid (109,535) Balance at December 31, 2021 559,090 Service cost Current service cost 2,109 Net interest expense (income) 3,494 Recognized in profit or loss 5,603 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss Changes in financial assumptions 3,684 Experience adjustments 36,783 Recognized in other comprehensive loss (income) 40,467 Contributions from the employer - Benefits paid (78,671) Balance at December 31, 2022 $ 526,489		December 31
	2022 2021 $ 526,489 $ 559,090 (265,965) (256,145) $ 260,524 $ 302,945 Fair Value of the Plan Assets Net Defined Benefit Liabilities $ (330,841) $ 306,390 - 2,518 (1,680) 1,506 (1,680) 4,024 (4,608) (4,608) - 14,423 - (6,267) - 17,534 (4,608) 21,082 (28,551) (28,551) 109,535 - (256,145) 302,945 - 2,109 (1,626) 1,868 (1,626) 3,977 (23,329) (23,329) - 3,684 - 36,783 (23,329) 17,138 (63,536) (63,536) 78,671 - $ (265,965) $ 260,524

• 37 -

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 shall not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the government or 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 using the future salaries of plan participants. As such, an increase in the salaries 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 are as follows:

Discount rate Expected rate of salary increase	December 31
	2022 2021 1.500% 0.625% 5% 4%

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/decrease 0.25% increase 0.25% decrease		**December **	**31 **
		2022 $ (11,416) $ 11,810 $ 11,233 $ (10,923)	2021 $ (12,496) $ 12,943 $ 12,323 $ (11,968)

The above sensitivity analysis 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 will occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plans for the next year Average duration of the defined benefit obligation		December 31	December 31
		2022 $ 6,953 8.8 years	2021 $ 8,030 9.0 years

• 38 -

23. EQUITY

• a. Share capital

1) Ordinary shares

Shares authorized (in thousands of shares) Shares authorized Shares issued and fully paid (in thousands of shares) Shares issued		**December 31 **	**December 31 **
		2022 250,000 $ 2,500,000 195,531 $ 1,955,312	2021 250,000 $ 2,500,000 195,531 $ 1,955,312

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

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

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 only be used to offset a deficit Changes in percentage of ownership interests in subsidiaries (2) Share of changes in capital surplus of associates (3)		December 31	December 31
		2022 $ 234,579 19,150 12 16,549 $ 270,290	2021 $ 234,579 19,150 2 1,233 $ 254,964

• 1) Such capital surplus 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 share capital (limited to a certain percentage of the Corporation’s capital surplus and to once a year).

• 2) Such capital surplus arises from the effects of changes in ownership interests in subsidiaries resulting from equity transactions other than actual disposals or acquisitions or from changes in capital surplus of subsidiaries accounted for using the equity method.

• 3) 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

The shareholders of the Corporation held their regular meeting on July 29, 2021 and in that meeting, resolved the amendments to the Corporation’s Articles of Incorporation (the “Articles”). The board of

• 39 -

directors is authorized to adopt a special resolution to distribute dividends and bonuses in cash and a report of such distribution should be submitted in the shareholders’ meeting.

Under the dividends policy as set forth in the amended 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. If the surplus distribution is issued as cash dividends, the board of directors shall be authorized to distribute by special resolution and shall be reported to the shareholders' meeting.

In accordance with the Corporation’s Articles, the dividends policy is to enable the shareholders to have a share in the Group's profit, for continuous expansion of its business and stabilization of profitability. At least 30% of the dividends to be distributed to shareholders shall be allocated, and the total cash dividends paid in any given year should be at least 40% of total dividends distributed.

Under the dividends policy as set forth in the Articles before the amendments, 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.

In accordance with the Corporation’s Articles, the dividends policy is to enable the shareholders to have a share in the Group'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.

For the policies on the distribution of compensation of employees and remuneration of directors and supervisors after the amendment, refer to compensation of employees and remuneration of directors and supervisors in Note 25(h).

An appropriation of earnings to a 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.

When a special reserve is appropriated for cumulative net debit balance reserves from prior period, the special reserve is only appropriated from the prior unappropriated earnings.

The appropriations of earnings for 2021 and 2020 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
		2021 $ 50,681 $ 15,809 $ 430,169 $ 2.2	2020 $ 50,131 $ (21,298) $ 391,062 $ 2.0

• 40 -

The appropriation for cash dividends for 2021 had been resolved by the Corporation’s board of directors on March 17, 2022; the other proposed appropriations for 2021 had been resolved by the shareholders in their meeting on June 9, 2022. The appropriation of earnings for 2020 had been resolved by the shareholders in their meeting on July 29, 2021.

The appropriation of earnings for 2022, which were proposed by the Corporation’s board of directors on March 14, 2023, were as follows:

	For the Year	For the Year
		Ended
	December 31,
		2022
Legal reserve	$	49,758
Special reserve	$	(40,482)
Cash dividends	$	351,956
Cash dividends per share (NT$)	$	1.8

The above appropriation for cash dividends has been resolved by the Corporation’s board of directors; the other proposed appropriations will be resolved by the shareholders in their meeting to be held on May 30, 2023.

• d. Special reserve

Balance at January 1 Appropriations in respect of Debits to other equity items Reversals: Reversal of the debits to other equity items Balance at December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 2021 $ 152,050 $ 173,348 15,809 - - (21,298) $ 167,859 $ 152,050

• e. Other equity items

• 1) Exchange differences on the translation of the financial statements of foreign operations

Balance at January 1 Recognized for the year Exchange differences on the translation of the financial statements of foreign operations Other comprehensive income (loss) recognized for the year Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2022 $ (160,814) 31,997 31,997 $ (128,817)	2021 $ (144,404) (16,410) (16,410) $ (160,814)

• 41 -

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 f. Non-controlling interests Balance at January 1 Share in profit for the year Other comprehensive income (loss) during the year Exchange differences on translating the financial statements of foreign entities Acquisition of non-controlling interests in subsidiaries (see Note 29) Balance at December 31	For the Year Ended December 31	For the Year Ended December 31
	2022 2021 $ (7,045) $ (7,645) 8,485 600 8,485 600 $ 1,440 $ (7,045) **For the Year Ended December 31 **
		2022 2021 $ 13,359 $ 9,952 7,349 3,506 5 (97) (110) (2) $ 20,603 $ 13,359

24. REVENUE

Revenue from contracts with customers Construction contract revenue Revenue from the sale of goods Revenue from the rendering of services a. Contract balances December 31, 2022 Notes receivable (Note 10) $ 50,713 Accounts receivable (Note 10) $ 346,207 Receivables from related parties (Note 31) $ 5,956 Contract assets - current Construction contracts $ 5,095,810 Contract liabilities - current Construction contracts $ 670,670 Sale of goods 407,442 $ 1,078,112	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 8,827,370 1,430,118 511,528 $ 10,769,016 December 31, 2021 $ 62,585 $ 487,299 $ 2,083 $ 2,950,299 $ 1,103,158 235,806 $ 1,338,964	2021 $ 7,125,743 2,210,170 525,490 $ 9,861,403 January 1, 2021 $ 234,469 $ 625,506 $ 1,993 $ 2,615,024 $ 1,216,836 459,835 $ 1,676,671

• 42 -

The changes in the balance of contract assets and contract liabilities primarily result from the timing difference between the Group’s satisfaction of performance obligations and the respective customer’s payment.

• b. Disaggregation of revenue

For the years ended December 31, 2022 Type of goods or services Construction contract revenue Revenue from the sale of goods Revenue from the rendering of services For the years ended December 31, 2021 Type of goods or services Construction contract revenue Revenue from the sale of goods Revenue from the rendering of services		Reportable Segments
		Logistics System Segment Information and Controller Segment $ 8,329,895 $ 497,475 333,157 1,096,961 146,049 365,479 $ 8,809,101 $ 1,959,915 $ 6,709,552 $ 416,191 320,898 1,889,272 101,241 424,249 $ 7,131,691 $ 2,729,712	Total $ 8,827,370 1,430,118 511,528 $ 10,769,016 $ 7,125,743 2,210,170 525,490 $ 9,861,403

25. NET PROFIT FROM CONTINUING OPERATIONS

• a. Other operating income and expenses

Loss on disposal of property, plant and equipment Loss on disposal of other intangible assets Interest income Bank deposits Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2022 2021 $ (3,353) $ (537) (100) - $ (3,453) $ (537) **For the Year Ended December 31 **
		2022 $ 24,445 34 $ 24,479	2021 $ 18,568 2,411 $ 20,979

• b. Interest income

• 43 -

c. Other income

Concession income (Note 17) Rental income Litigation settlement gain Dividends Government grant income (Note 28) Others Other gains and losses Net gain on fair value changes of financial assets at fair value through profit or loss Other net losses Finance costs Interest on bank loans Interest on lease liabilities Depreciation and amortization Property, plant and equipment Right-of-use assets Other intangible assets An analysis of depreciation by function Operating costs Operating expense	For the Year Ended	For the Year Ended	December 31
	2022 $ 5,697 4,845 3,810 1,442 130 12,136 $ 28,060 For the Year Ended		2021 $ 2,452 2,171 - - 10,367 15,844 $ 30,834 December 31
	2022 $ 186 (15,405) $ (15,219) **For the Year Ended **		2021 $ 384 (6,617) $ (6,233) **December 31 **
	2022 $ 17,147 5,031 $ 22,178 For the Year Ended		2021 $ 6,196 5,462 $ 11,658 December 31
		2022 $ 135,238 29,627 33,274 $ 198,139 $ 51,411 113,454 $ 164,865	2021 $ 120,681 30,223 28,764 $ 179,668 $ 46,061 104,843 $ 150,904 (Continued)

d. Other gains and losses

e. Finance costs

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An analysis of amortization by function Operating costs Selling and marketing expense General and administrative expense Research and development expense Other expense	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2022 $ 9,915 1,955 17,626 3,309 469 $ 33,274	2021 $ 7,242 1,711 15,308 4,033 470 $ 28,764 (Concluded)

g. Employee benefits expense

Post-employment benefits (Note 22) Defined contribution plans Defined benefit plans 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
		2022 $ 57,183 3,977 61,160 1,034 1,681,732 $ 1,743,926 $ 1,085,277 658,649 $ 1,743,926	2021 $ 50,037 4,024 54,061 3,824 1,647,207 $ 1,705,092 $ 969,733 735,359 $ 1,705,092

• h. Compensation of employees and remuneration of directors and supervisors

According to the Corporation’s Articles, the Corporation accrues compensation of employees and remuneration of directors and supervisors at rates of no less than 1% and no higher than 2%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors and supervisors. The compensation of employees and the remuneration of directors and supervisors for the years ended December 31, 2022 and 2021, which were approved by the Corporation’s board of directors on March 14, 2023 and March 17, 2022, respectively, are as follows:

Accrual rate

Compensation of employees Remuneration of directors and supervisors	For the Year Ended December 31
	2022 2021 1% 1% 1.5% 1.5%

• 45 -

Amount

Compensation of employees Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 Cash $ 5,933 8,899		2021
				Cash $ 6,254 9,382

If there is a change in the amounts after the annual consolidated 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 compensation of employees and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2021 and 2020.

Information on the compensation of employees 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.

26. INCOME TAXES RELATING TO CONTINUING OPERATIONS

• a. Income tax recognized in profit or loss

Major components of income tax expense are as follows:

For the Year Ended 2022 Current tax In respect of the current year $ 93,335 Adjustments for prior year (24,004) Deferred tax In respect of the current year 2,896 Income tax expense recognized in profit or loss $ 72,227 A reconciliation of accounting profit and income tax expense is as follows:	**For the Year Ended **	**December 31 **
		2021 $ 125,875 (40,677) - $ 85,198

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Nondeductible (deductible) items in determining taxable income Unrecognized temporary differences Effect of different tax rates of group entities operating in other jurisdictions Adjustments for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2022 $ 594,300 $ 118,860 3,415 1,316 (35,372) 8,012 (24,004) $ 72,227	2021 $ 616,600 $ 123,320 4,890 (2,386) (14,995) 15,046 (40,677) $ 85,198

• 46 -

b. Current tax liabilities

Current tax liabilities Income tax payable		December 31	December 31
		2022 $ 130,355	2021 $ 162,977

c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2022

Deferred tax assets Temporary differences Associates Defined benefit obligations Deferred tax liabilities Temporary differences Unrealized exchange gains For the year ended December 31, 2021 Deferred tax assets Temporary differences Associates	Opening Balance Recognized in Profit or Loss $ 7,779 $ (3,925) - 12,169 $ 7,779 $ 8,244 $ - $ 11,140 Opening Balance Recognized in Profit or Loss $ 7,779 $ -	Closing Balance $ 3,854 12,169 $ 16,023 $ 11,140 Closing Balance $ 7,779

• d. Deductible temporary differences for which no deferred tax assets have been recognized in the consolidated balance sheets

Deductible temporary differences After-sales service guarantee Deferred revenue		December 31	December 31
		2022 $ 10,174 1,492 $ 11,666	2021 $ 10,689 1,912 $ 12,601

• e. The aggregate amount of temporary differences associated with investments for which deferred tax liabilities have not been recognized

As of December 31, 2022 and 2021, the taxable temporary differences associated with investments in subsidiaries and branches for which no deferred tax liabilities have been recognized were $140,034 thousand and $141,387 thousand, respectively.

• 47 -

f. Income tax assessments

The Corporation’s income tax returns through 2020 have been assessed by the tax authorities.

27. 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
		2022 $ 2.63 $ 2.63	2021 $ 2.70 $ 2.70

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share were as follows:

Net Profit for the Year

Profit for the year attributable to shareholders of the Corporation Earnings used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Compensation of employees Earnings used in the computation of diluted earnings per share	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2022 $ 514,724 514,724 - $ 514,724	2021 $ 527,896 527,896 - $ 527,896

The weighted average number of ordinary shares outstanding (in thousands of shares) was as follows:

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Compensation of employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2022 195,531 188 195,719	2021 195,531 169 195,700

The Group may settle the compensation of employees in cash or shares; therefore, the Group assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares are 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.

28. GOVERNMENT GRANTS

The Corporation participated in a project proposed by the Ministry of Economic Affairs called “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

• 48 -

NT$12,893 thousand. As of June 30, 2021, the accumulated government grant income recognized was NT$12,419 thousand.

29. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

On April 29, 2022, the Group acquired additional 1% equity interest in DAVID INVESTMENT CO., LTD., and increased its continuing interest from 99% to 100%.

The above transactions were accounted for as equity transactions, since the Group did not cease to have control over these subsidiaries.

	DAVID	DAVID
	INVESTMENT
	CO.,	LTD.
Consideration paid	$	(100)
The proportionate share of the carrying amount of the net assets of
the subsidiary transferred to non-controlling interests		110
Differences recognized from equity transactions	$	10
Line items adjusted for equity transactions
Capital surplus - changes in percentage of ownership interests in
subsidiaries	$	10

30. 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 measured at fair value on a recurring basis

• 1) Fair value hierarchy

December 31, 2022

Financial assets at FVTPL Mutual funds Financial assets at FVTOCI Investments in equity instruments Domestic unlisted shares Foreign unlisted shares	Level 1 $ 25,080 $ - - $ -	Level 2 $ - $ - - $ -	Level 3 $ - $ 9,955 45,467 $ 55,422	Total $ 25,080
				$ 9,955 45,467
				$ 55,422

• 49 -

December 31, 2021

Financial assets at FVTPL Mutual funds Financial assets at FVTOCI Investments in equity instruments Domestic unlisted shares Foreign unlisted shares	Level 1 $ 100,078 $ - - $ -	Level 2 $ - $ - - $ -	Level 3 $ - $ 12,125 36,572 $ 48,697	Total $ 100,078
				$ 12,125 36,572
				$ 48,697

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 Purchases Cash returns from capital reduction Balance at December 31	Financial Assets at FVTOCI	Financial Assets at FVTOCI	Financial Assets at FVTOCI
		Equity Instruments
		2022 $ 48,697 8,485 - (1,760) $ 55,422	2021 $ 39,098 600 10,000 (1,001) $ 48,697

• 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.

• c. Categories of financial instruments

Financial assets FVTPL Mandatorily classified as at FVTPL Amortized cost Cash and cash equivalents Notes receivable (including related parties) Accounts receivable (including related parties) Other receivables (including related parties) Financial assets at amortized cost - non-current Refundable deposits Financial assets at FVTOCI Equity instruments	December 31
	2022 2021 $ 25,080 $ 100,078 1,977,745 3,152,743 50,911 63,060 351,965 488,907 78,207 124,477 132,283 - 117,922 102,094 55,422 48,697 (Continued)

• 50 -

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 Long-term payables Guarantee deposits received	**December 31 **
	2022 2021 $ 1,413,000 $ 300,000 93,216 107,786 3,477,272 3,096,316 651,079 754,548 1,401,711 1,231,367 236,077 260,415 4,000 - 291 318

(Concluded)

• d. Financial risk management objectives and policies

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

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

1) Market risk

The Group’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 Group’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

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

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

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities are set out in Note 34.

Sensitivity analysis

The Group is mainly exposed to the USD, RMB and the JPY.

The following table details the Group’s sensitivity to a 5% increase and decrease in the New Taiwan dollar (i.e., 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 negative number below indicates a decrease in pre-tax

• 51 -

profit associated with the New Taiwan dollar strengthening 5% against the relevant currency. For a 5% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit and the balances below would be positive.

Profit or loss	USD Impact For the Year Ended December 31 2022 2021 $ (80,896 ) $ (107,895 )	RMB Impact For the Year Ended December 31 2022 2021 $ 2,649 $ (3,689 )	JPY Impact
			For the Year Ended December 31
			2022 2021 $ (5,843 ) $ 362

The Group’s sensitivity to USD and RMB decreased during the year mainly due to a decrease in USD denominated net assets and an increase in RMB denominated net liabilities; JPY increased during the year mainly due to an increase in JPY denominated net assets.

b) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group 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 Group’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
	2022 2021 $ 826,769 $ 1,492,147 1,349,077 260,415 1,273,329 1,649,905 1,701,711 1,531,367

Sensitivity analysis

The sensitivity analysis below was determined based on the Group’s exposure to interest rates for both derivative and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year. A 1% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1% higher and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2022 and 2021 would have decreased by $17,017 thousand and $15,314 thousand, respectively, which was mainly attributable to the Group’s exposure to cash flow interest rate risk on its variable-rate borrowings.

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

• 52 -

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 Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk, which would cause a financial loss to the Group due to the failure of counterparties to discharge an obligation and financial guarantee provided by the Group arises from the carrying amount of the respective recognized financial assets as stated in the consolidated balance sheets.

The Group’s concentration of credit risk of 53.27% and 39.08% of total amounts of accounts receivable and contract assets as of December 31, 2022 and 2021, respectively, was attributable to the Group’s ten largest customers in the property construction business segment. The concentration of credit risk of the remaining accounts receivable and contract assets was not significant.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’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 for non-derivative financial liabilities

The following table details the Group’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table have been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group 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 upon repayment dates.

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

December 31, 2022

On Demand or Less than 1 Month Non-interest bearing (Note) $ 582,370 Lease liabilities 2,571 Variable interest rate liabilities 5,980 Fixed interest rate liabilities 528,000 $ 1,118,921	1-3 Months 3 Months to 1 Year $ 838,941 $ 387,369 5,141 23,046 40,006 718,737 535,000 50,000 $ 1,419,088 $ 1,179,152	1+ Years $ 41,491 232,924 936,988 -
		$ 1,211,403

Further information on the maturity analysis of the above financial liabilities was as follows:

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 30,758 764,723 $ 795,481	1-5 Years $ 114,348 936,988 $ 1,051,336	5-10 Years $ 74,202 - $ 74,202	10-15 Years $ 44,374 - $ 44,374	15-20 Years $ - - $ -	20+ Years $ - -
						$ -

• 53 -

December 31, 2021 On Demand or Less than 1 Month Non-interest bearing (Note) $ 465,590 Lease liabilities 2,528 Variable interest rate liabilities - $ 468,118	1-3 Months 3 Months to 1 Year $ 1,191,682 $ 296,919 5,055 22,752 6,705 336,019 $ 1,203,442 $ 655,690	1+ Years $ 50,886 277,838 1,188,643
		$ 1,517,367

Further information on the maturity analysis of the above financial liabilities was as follows:

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 30,335 342,724 $ 373,059	1-5 Years $ 127,619 1,172,619 $ 1,300,238	5-10 Years $ 96,859 16,024 $ 112,883	10-15 Years $ 53,360 - $ 53,360	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 **
		2022 $ 1,401,711 836,099 $ 2,237,810 $ 2,292,003 3,365,567 $ 5,657,570	2021 $ 1,231,367 1,473,113 $ 2,704,480 $ 1,166,812 3,787,748 $ 4,954,560

31. 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 Group and other related parties are disclosed below:

• a. Related party name and relationship

Related Party Name

Related Party Category

MAIN DRIVE CORPORATION Associate MIRLE AUTOMATION TECHNOLOGY Associate (GUANGDONG) CO., LTD. I-MEI FOODS CO., LTD. I-MEI JISHENG CO., LTD. I-MEI BIOMEDICINE CO., LTD. I-MEI MACROBIOTICS CO., LTD. JIANXUE RESTAURANT CO., LTD. I-MEI STORE COMPANY LTD. I-ME-I INFORMATION TECHNOLOGY CO., LTD.

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

(Continued)

• 54 -

Related Party Category

Related Party Name

OPENFIND INFORMATION TECHNOLOGY Substantive related party INC. SHINE MEI FOODS MARKETING & Substantive related party DISTRIBUTION CO., LTD. GOLDEN SADDLE MACHINERY CO., LTD. Substantive related party FU MEI CO., LTD. Substantive related party

(Concluded)

b. Operating transactions

Operating transactions
Sales Associates Substantive related parties Key management personnel Subsidiaries of key management personnel Purchases Associates Manufacturing expenses Associates Operating expenses Substantive related parties Associates Other gains and losses Substantive related parties	For the Year Ended		December 31
		2022 $ 99,651 7,231 5,591 135 $ 112,608 $ 10,693 $ 99 $ 153 10 $ 163 $ 585	2021 $ 21,455 6,006 1,998 123 $ 29,582 $ 16,555 $ 60 $ 645 165 $ 810 $ -

• Lease arrangements the Group is lessor

• Lease arrangements the Group is lessor under operating leases

The Group leases out plant to its associate, MAIN DRIVE CORPORATION, under operating leases with lease terms of 5 year. As of December 31, 2022 and 2021, the balance of the operating lease receivable were $12,632 thousand and $2,536 thousand, respectively. The amounts of lease income recognized for the years ended December 31, 2022 and 2021 was as follows:

Related Party Category/Name Associates MAIN DRIVE CORPORATION	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 3,684	2021 $ 1,811

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Acquisition of other assets

Related Party Category/Name Line Items Substantive related parties Other intangible assets	Purchase Price	Purchase Price	Purchase Price
	For the Year Ended December 31
		2022 $ 60	2021 $ 79

The products sold to related parties and purchases from related parties have no other suitable counterparties to compare with, so the collection and payment term are the same as general customers. Manufacturing expenses and operating expenses of the Group and related parties are outsourcing fee, management and support expenses, which are based on the prices decided by both parties and payment terms.

For the acquisition of other intangible assets between the Group and related parties, the transaction price and payment terms shall be negotiated by both parties.

c. Balances on the balance sheet date

Contract liabilities Associates Accounts receivable from related parties Substantive related parties I-MEI STORE COMPANY LTD. Others Key management personnel Associates Subsidiaries of key management personnel Notes receivable from related parties Substantive related parties I-MEI STORE COMPANY LTD. Key management personnel I-MEI FOODS CO., LTD. Other receivables from related parties Associates MAIN DRIVE CORPORATION		**December **	**31 **
		2022 $ 9,235 $ 5,201 240 182 69 66 $ 5,758 $ 198 - $ 198 $ 1,109	2021 $ - $ 1,550 1 50 7 - $ 1,608 $ 255 220 $ 475 $ 380 (Continued)

• 56 -

Prepayments Substantive related parties Accounts payable to related parties Associates MAIN DRIVE CORPORATION Accrued expenses and other current liabilities Associates		**December **	**31 **
		2022 $ 17 $ 1,488 $ 104	2021 $ - $ 13,133 $ 63 (Concluded)

No collateral is provided for the outstanding payables to related parties, which will be paid off by cash. The outstanding accounts receivable from related parties are unsecured. For the years ended December 31, 2022 and 2021, no impairment losses were recognized for the accounts receivable from related parties.

d. Remuneration of key management personnel

The remuneration of directors and the key management personnel for the years ended December 31, 2022 and 2021 was as follows:

Short-term employee benefits Post-employment benefits	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2022 $ 49,262 1,528 $ 50,790	2021 $ 63,567 1,708 $ 65,275

The remuneration of directors and key executives, as determined by the remuneration committee, is based on the performance of individuals and market trends.

32. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

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

Other intangible assets		**December **	**31 **
		2022 $ 4,695	2021 $ 5,164

• 57 -

33. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

The Group’s significant commitments and contingencies as of December 31, 2022 were as follows:

The endorsements/guarantees provided by the Corporation for MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD, MIRLE AUTOMATION (KUNSHAN) CO., LTD. and MIRLE AUTOMATION INTER CORP. LTD. amounted to $460,650 thousand, $122,840 thousand and $92,130 thousand, respectively.

On April 11, 2022, the Corporation received a notice from the Intellectual Property and Commercial Court that the Securities Investor and Futures Trader Protection Center (hereinafter referred to as the “Insurance Center”) filed a lawsuit against the Corporation’s financial statements from 2012 to 2017. For actual reasons, a lawsuit for damages was filed against the Corporation, its principal, directors, supervisors and accounting supervisors, and the requested amount was $158,959 thousand. The Corporation has appointed lawyers to deal with the lawsuit brought by Shanghai Kai Insurance Center, which has no significant impact on the Corporation’s financial and operation at this stage.

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

(In thousands of foreign currencies)

Financial assets Monetary items USD USD JPY RMB EUR Financial liabilities Monetary items USD USD JPY RMB EUR CAD	December 31, 2022
	Foreign Currency Exchange Rate $ 54,737 30.710 (USD:NTD) 105 6.9646 (USD:RMB) 776,039 0.2324 (JPY:NTD) 22,504 4.408 (RMB:NTD) 116 32.72 (EUR:NTD) 2,041 30.710 (USD:NTD) 117 6.9646 (USD:RMB) 273,199 0.2324 (JPY:NTD) 34,522 4.408 (RMB:NTD) 281 32.72 (EUR:NTD) - 22.67 (CAD:NTD)

• 58 -

Financial assets Monetary items USD USD JPY RMB EUR Financial liabilities Monetary items USD USD JPY RMB EUR CAD	December 31, 2021
	Foreign Currency Exchange Rate $ 84,408 27.680 (USD:NTD) 105 6.3674 (USD:RMB) 155,405 0.2405 (JPY:NTD) 22,853 4.344 (RMB:NTD) 325 31.32 (EUR:NTD) 6,449 27.680 (USD:NTD) 1,031 6.3674 (USD:RMB) 185,531 0.2405 (JPY:NTD) 5,870 4.344 (RMB:NTD) 376 31.32 (EUR:NTD) 1 21.62 (CAD:NTD)

For the years ended December 31, 2022 and 2021, realized and unrealized net foreign exchange gains (losses) were $253,722 and $(79,604) 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 functional currencies of the entities in the Group.

35. SEPARATELY DISCLOSED ITEMS

• a. Information on 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)

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• 9) Trading in derivative instruments (None)

• 10) Other: Intercompany relationships and significant intercompany transactions (Table 4)

• b. Information on investees (Table 5)

• 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 6)

• 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 7)

• d. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 8)

36. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods sold, which is measured on the same basis as the Group’s consolidated financial statements. The reported segments of the consolidated financial statements are the automatic production line and equipment segment and the information and controller segment.

• a. Segment revenue and results

Segment revenue and results
Automatic production line and equipment segment Information and controller segment Total amount from continuing operations Unallocated amount: Operating expenses Other gains and losses Non-operating income and expenses Income before income tax		Segment Revenue For the Year Ended December 31 2022 2021 $ 8,809,101 $ 7,131,691 1,959,915 2,729,712 $ 10,769,016 $ 9,861,403		Segment Income
				For the Year Ended December 31
		2022 $ 8,809,101 1,959,915 $ 10,769,016		2022 $ 1,299,471 577,457 1,876,928 (1,516,533) (3,453) 237,358 $ 594,300	2021 $ 1,550,125 494,906 2,045,031 (1,353,096) (537) (74,798) $ 616,600

The revenue reported above is generated from transactions with external customers. There were no sales between segments for the years ended December 31, 2022 and 2021.

Segment profit refers to the profit earned by various segments, which exclude allocated operating expenses, other gains and losses and non-operating income and expenses. These measured amounts will

• 60 -

be reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

b. Segment assets

The measured amounts of the Group’s assets were not reported to the chief operating decision maker, so the measured amount of segment assets was zero.

c. Revenue from major products and services

The following is an analysis of the Group’s revenue from continuing operations from its major products and services:

and services:
LCD devices Automatic storage systems Information product systems Semiconductor equipment Robot operating systems Industrial controllers	For the Year Ended December 31
		2022 $ 4,226,395 2,531,295 1,509,299 1,457,390 594,021 450,616 $ 10,769,016	2021 $ 3,571,569 1,805,118 2,086,282 1,177,394 577,610 643,430 $ 9,861,403

d. Geographical information

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below:

Revenue from External

		Revenue from External	Revenue from External
Taiwan China Others		Customers			Non-current Assets
		For the Year Ended December 31
					December 31
		2022 $ 5,500,363 5,131,593 137,060 $ 10,769,016	2021 $ 4,858,024 4,625,118 378,261 $ 9,861,403		2022 $ 2,491,280 757,129 220 $ 3,248,629	2021 $ 2,183,255 777,695 518 $ 2,961,468

Non-current assets exclude financial assets at fair value through other comprehensive income - non-current, financial assets at amortized cost - non-current, investments accounted for using the equity method, other intangible assets, goodwill, deferred income tax assets, prepayments for equipment and refundable deposits.

• e. Information on major customers

Customers that individually contributed 10% or more to the Group’s revenue were as follows:

Customer Name Customer FJ Customer B	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2022 Amount % $ 2,254,797 20.94 1,404,888 13.05	2021
		Amount % $ 2,017,469 20.46 176,287 1.79

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TABLE 1

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2022 (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	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	The Corporation MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD.	MIRLE AUTOMATION (KUNSHAN) CO., LTD. MIRLE AUTOMATION (KUNSHAN) CO., LTD.	Other receivables from related parties Other current assets	Yes Yes	$ 290,928 352,640	$ 290,928 352,640	$ - -	3 -	2 2	$ - -	Working capital Working capital	$ - -	- -	$ - -	$ 1,729,444 532,831	$ 1,729,444 532,831	- -

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

Note 2: Nature of financing:

1. For business

2. For short-term financing

Note 3: The total amount of financing provided to others shall not exceed 40% of the Group’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.

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TABLE 2

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limit on Endorsement/ Guarantee Given on Behalf of Each Party (Note 3)	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 3)	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
The Corporation	MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD. MIRLE AUTOMATION TECHNOLOGY (KUNSHAN) CO., LTD. MIRLE AUTOMATION INTER CORP. LTD.	Note 1 Note 1 Note 2	$ 1,297,083 1,297,083 1,297,083	$ 460,650 122,840 92,130	$ 460,650 122,840 92,130	$ - - 26,257	$ - - -	11 3 2	$ 2,161,806 2,161,806 2,161,806	Yes Yes Yes	No No No	Yes Yes No

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

Note 2: The Corporation’s direct wholly-owned subsidiaries.

Note 3: The amount of guarantees provided by the Group to any individual entity shall not exceed 10% of the Group’s net worth. The aggregate amount of guarantees available shall not exceed 50% of the Group’s net worth. The aggregate amount of guarantees given by the parent company on behalf of subsidiaries or subsidiaries on behalf of the parent company shall not exceed 30% of the Group’s net worth.

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TABLE 3

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2022

(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, 2022	December 31, 2022		Note
				Number of Shares (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
The Corporation	TIEF FUND, L.P.	-	Financial assets at fair value through other comprehensive income - non-current	1,500	$ 45,467	7	$ 45,467	Note 1
	TSUKUBASEIKO CO., LTD.	-	Financial assets at fair value through profit or loss- non-current	143	-	4	-	Note 1
	PHOENIX II INNOVATION VENTURE CAPITAL CO., LTD.	-	Financial assets at fair value through other comprehensive income - non-current	1,000	9,955	2	9,955	Note 1
MIRTEK (BVI) CORP. LTD.	AMERICAN MERCHANTS HEAT CO., LTD.	-	Financial assets at fair value through other comprehensive income - non-current	1,654	-	6	-	Note 1
FACTORY AUTOMATION INTERNATIONAL CO., LTD.	UNION MONEY MARKET FUND	-	Financial assets as fair value through profit or loss - current	1,869	25,080	-	25,080	Note 2

Note 1: The market value was based on the fair value as of December 31, 2022.

Note 2: The fair value was based on the net assets value of the fund as of December 31, 2022.

Note 3: As of December 31, 2022, the above marketable securities had not been pledged or mortgaged.

Note 4: See Tables 5 and 6 for detailed information on subsidiaries and associates.

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TABLE 4

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2022

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

No.	Investee Company	Counterparty	Relationship (Note 1)		Transaction Details	Transaction Details
				Financial Statement Account	Amount	Payment Terms (Note 2)	% of Total Sales or Assets
0	The Corporation	MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD.	1 1 1 1 1 1 1 1	Sales Purchases Manufacturing expenses Contract liabilities Accounts receivable from related parties Other receivables from related parties Accounts payable to related parties Accrued expenses and other current liabilities	$ 18,086 114,169 3,629 5,299 10,471 34 105,475 4,596	- - - - - - - -	- 1 - - - - 1 -
		IOT SERVICES INFORMATION SYSTEM CORPORATION	1 1 1 1 1 1 1 1 1 1 1	Sales Purchases Manufacturing expenses Operating expenses Acquisition of property, plant and equipment Payments for property, plant and equipment Acquisition for other intangible assets Accounts receivable from related parties Other receivables from related parties Accounts payable to related parties Accrued expenses and other current liabilities	1,498 57,124 23,502 13,452 194 181 120 244 190 3,042 15,845	- - - - - - - - - - -	- 1 - - - - - - - - -
		MIRLE AUTOMATION (KUNSHAN) CO., LTD.	1 1 1	Sales Contract assets Other receivables from related parties	84,638 77,290 16	- - -	1 1 -
		MIRLE AUTOMATION INTER CORP. LTD.	1 1	Sales Accounts receivable from related parties	311 1,190	- -	- -
		FACTORY AUTOMATIONI INTERNATIONAL CO., LTD.	1 1 1 1	Sales Purchases Accounts receivable from related parties Accounts payable to related parties	145 16,638 150 6,395	- - - -	- - - -
		VAN QUOC INFORMATION TECHNOLOGY CONSULTING SERVICES CO.,LTD.	1	Sales	1,178	-	-
1	MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD.	MIRLE AUTOMATION (KUNSHAN) CO., LTD.	3 3 3	Sales Purchases Accounts payable to related parties	32,375 89,868 30	- - -	- 1 -
		FACTORY AUTOMATION INTERNATIONAL CO., LTD.	3	Accounts receivable from related parties	573	-	-

Note 1: 1 represents transactions between the parent company and its subsidiaries, 3 represents transactions between subsidiaries.

Note 2: Sales and purchases between the parent company and its subsidiaries are handled in accordance with general sales and payment terms.

• 65 -

TABLE 5

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2022 (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,	2022	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2022	December 31, 2021	Number of Shares	%	Carrying Amount
The 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 CORP. 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 76,100 103,921 42,075 21,911 127,130 544,745 76,100 15,520	$ 951,348 76,000 103,921 42,075 21,911 97,130 544,745 76,100 15,520	29,641 - 10,300 1,275 2,523 11,713 17,000 7,610 -	100 100 100 51 21 23.43 100 100 100	$ 1,777,761 84,814 73,868 53,366 - 47,772 446,482 84,810 29,846	$ 16,035 7,346 (6,039) 14,988 - (131,250) (31,341) 7,346 2,775	$ 16,145 7,341 (6,039) 7,644 - (31,854) (31,341) 7,346 2,775	Subsidiary Subsidiary Subsidiary Subsidiary Note 2 Associate Second-tier subsidiary Second-tier subsidiary Third-tier subsidiary

Note 1: Refer to Table 6 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.

• 66 -

TABLE 6

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2022 (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, 2022	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2022	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of December 31, 2022	Accumulated Repatriation of Investment Income as of December 31, 2022
					Outward	Inward
MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) 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	US$ 13,230 thousand (Note 2)	Note 1	US$ 11,610 thousand (Note 3)	$ -	$ -	US$ 11,610 thousand	$ 47,419	100	$ 47,419 (Note 5)	$ 1,332,078	$ -
MIRLE AUTOMATION (KUNSHAN) CO., LTD.	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$ 17,000 thousand (Note 4)	Note 1	US$ 17,000 thousand	-	-	US$ 17,000 thousand	(31,341)	100	(31,341) (Note 5)	446,482	-
MIRLE AUTOMATION TECHNOLOGY (GUANGDONG) CO., LTD.	Selling and manufacturing of industrial automatic control system devices; technical services, development, consulting, communication, transfer and promotion; electronic components and electromechanical component equipment manufacturing and selling; hardware research development, manufacturing and wholesale; electronic product sales; distribution switcher control equipment manufacturing, power transmission and distribution and control equipment manufacturing; motor and its control system research and development; servo control mechanism manufacturing and sales; electromechanical coupling system research and development; electrical equipment manufacturing; intelligent control system integration	US$ 1,500 thousand (Note 2)	Note 1	-	-	-	-	526	49	348 (Note 6)	21,983	-

(Continued)

• 67 -

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2022	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2022	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of December 31, 2022	Accumulated Repatriation of Investment Income as of December 31, 2022
							Outward	Inward
HICHAIN & MIRLE AUTOMATION CO., LTD.	Engaged in technical services, technical development, technical consultation; general machinery installation; intelligent control system integration, software development, material handling equipment sales, internet equipment sales, computer hardware and software and auxiliary equipment retail		US$ 580 thousand (Note 2)		Note 1	$ -	$ -	$ -	$ -	$ 21	40	$ - (Note 5)	$ 17,638	$ -
Accumulated Outward Remittance for Investments in Mainland China as of December 31, 2022		Investment Amount Authorized by the Investment Commission, MOEA		Upper Limit on the Amount of Investments Stipulated by the Investment Commission, MOEA
US$ 28,610 thousand		US$31,560 thousand		$ 2,594,167

• Note 1: By establishing MIRTEK (BVI) CORP. LTD. through investment in the third region and then invested in companies in mainland China.

• Note 2: Accumulated outward remittance for investment from Taiwan is US$7,900 thousand. The amount of retained earnings transferred to ordinary shares is US$2,950 thousand and the investment amount of XINJI PHOTOELECTRIC CO., LTD. is US$2,380 thousand. After that, the Corporation acquired full ownership of MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD. through MIRTEK (BVI) CORP. LTD.; meanwhile, the Corporation reinvested in MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD. to acquire a 49% ownership of MIRLE AUTOMATION TECHNOLOGY (GUANGDONG) CO., LTD. and a 40% ownership of HAICHAIN MIRLE AUTOMATION CO., LTD.

• Note 3: Accumulated outward remittance for investment from Taiwan is US$7,900 thousand. The Corporation obtained the shares of MIRLE AUTOMATION TECHNOLOGY (SHANGHAI) CO., LTD. by paying US$3,710 thousand to XINJI PHOTOELECTRIC CO., LTD.

• Note 4: Accumulated outward remittance for investment from Taiwan is US$17,000 thousand. The Corporation invested and established 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 by audited financial statements of the investees for the same reporting periods as those of the Group.

• Note 6: Calculated by unaudited financial statements of the investees for the same reporting periods as those of the Group.

(Concluded)

• 68 -

TABLE 7

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

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, 2022

(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 (KUNSHAN) CO., LTD. MIRLE AUTOMATION TECHNOLOGY (GUANGDONG) CO., LTD.	Sales Purchase Sales Sales	$ 18,086 114,169 84,638 99,352	0.2 1.7 0.9 1.1	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	No other equivalent transactions for comparison No other equivalent transactions for comparison No other equivalent transactions for comparison No other equivalent transactions for comparison	$ 10,471 (105,475) - -	7.1 3.8 - -	$ - - - -	None None None None

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TABLE 8

MIRLE AUTOMATION CORPORATION AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2022

No.	Name of Major Shareholder	Shares	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 ordinary 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 Group as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

• 70 -