Nishoku - Annual Report 2020 | FinancialReports.eu

Stock Code：3679

This annual report can be found on websites below: Market Observation Post System：http://mops.twse.com.tw Company Website：http://www.nishoku.com.tw

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Nishoku Technology Inc.

2020 Annual Report

Published on April 30, 2021

一、 Names, Job Titles, and Telephone Numbers of the Company's Spokesperson and Acting Spokesperson :

Spokesperson:

Name: Tsai, Chien-Sheng

Title: General Manager Tel: (02)2998-3578

E-mail:[email protected]

Deputy Spokesperson: Name: Lin, Tzu-Hsuan Title:CFO Tel: (02)2998-3578

E-mail:[email protected]

二、CORPORATE HEADQUATERS AND MANUFACTURING SITE

Address: No. 36, Ln. 11, Huacheng RD., Xinzhuang Dist., New Taipei City Tel.: (02)2998-3578

三、COMMON SHARE TRANSFER AGENT AND REGISTRAR

Name: The Transfer Agency Department of CTBC Bank

Address:5F, 83, Sec. 1, Chung-Ching S. Rd., Taipei City Website:http://www.chinatrust.com.tw Tel.: (02) 6636-5566

四、AUDITORS

CPA Firm: KPMG

Name of CPA: Cheng-Chien Chen and Sheng-He Yu

Address: 68F, TAIPEI 101 TOWER, No. 7, Sec. 5, Xinyi Road, Taipei City Website:www.kpmg.com.tw Tel.: 886(2) 8101-6666

五、OVERSEAS SECURITIES EXCHANGE：None.
六、FOR MORE INFORMATION ABOUT NISHOKU：http://www.nishoku.com.tw

Letter to Shareholders ....................................................................................................... 01 2. Company Profile ............................................................................................................... 05 3. Corporate Governance 3.1 Organization Structure ................................................................................................ 08 3.2 Board of Directors and Management Team ............................................................. 08 3.3 Remuneration and Compensation Paid to Directors, the President, andVice President ................................................................................................................. 19 3.4 Implementation of Corporate Governance .................................................................... 24 3.5 Information Regarding CPA Fees ................................................................................ 71 3.6 Information on Change of CPA. .................................................................................. 71 3.7 Management Team Who Had Worked for the Independent Auditor ............................... 71 3.8 Status of Net Change in Shareholding and Shares Pledged ............................................ 72 3.9 The Relation of the Top Ten Shareholders.................................................................... 74 3.10 Long-Term Investment Ownership ............................................................................. 75 4. Capital and Shares 4.1 Sources of Capital ....................................................................................................... 75 4.2 Composition of Shareholders ....................................................................................... 77 4.3 Distribution of Shareholdings ...................................................................................... 78 4.4 Register of Major Shareholders ................................................................................... 78 4.5 Market Price,Net Worth,Earnings and Dividends Per Common Share ................... 79 4.6 Dividend Policy and Execution Status ..................................................................... 79 4.7 The impact of stock dividend distributions proposed by the Shareholders Meeting for the current fiscal year on company operating performance and earnings per share 80 4.8 Compensation to Empolyees and Remuneration to Directors ................................. 80 4.9 Buyback of Common Stock ..................................................................................... 81 4.10 Issuance of Corporate Bond ....................................................................................... 81 4.11 Preferred Shares ........................................................................................................ 81 4.12 Issuance of Global Depository Receipts ..................................................................... 82 4.13 Employee Stock Option ............................................................................................. 82 4.14 Employee Restricted Stocks .................................................................................. 84 4.15 New Shares Issuance in Connection with Mergers and Acquisitions ............................ 84 4.16 Financing Plan and Implementation ........................................................................... 84 5. Overview of Business Operation 5.1 Business Activities ...................................................................................................... 85

5.2 Market and Sales Overview ......................................................................................... 91 5.3 Status of Employees .................................................................................................... 99 5.4 Expenditure on Environmental Protection .................................................................. 100 5.5 Employee Relations .................................................................................................. 100 5.6 Important Contracts .................................................................................................. 103 6. Financial Information 6.1 Five-Year Financial Summary .......................................................................................... 104 6.2 Five-Year Financial Analysis............................................................................................ 108 6.3 Audit Committee Review Report ............................................................................... 112 6.4 Consolidated Financial Statements ............................................................................. 113 6.5 Non-Consolidated Financial Statements ..................................................................... 171 6.6 Financial Difficulties ................................................................................................ 221 7. Review of Financial Position, Management Performance and Risk Management 7.1 Analysis of Financial Status ...................................................................................... 222 7.2 Analysis of Operating Results.................................................................................... 223 7.3 Analysis of Cash Flow .............................................................................................. 224 7.4 Major Capital Expenditure ........................................................................................ 226 7.5 Investment Policy ..................................................................................................... 226 7.6 Analysis of Risk Management ................................................................................... 227 7.7 Other Major Risks..................................................................................................... 234 8. Other Special Notes 8.1 Affiliated Companies ................................................................................................ 235 8.2 Private Placement Securities ...................................................................................... 240 8.3 The Shares of the Company Held or Disposed of by the Subsidiaries ........................... 240 8.4 Special Notes ............................................................................................................ 240 8.5 Events with Significant Impacts ................................................................................. 240

1. Letter to Shareholders

Dear Shareholders,

We thank each and every of our shareholder’s support of Nishoku Group. With your busy schedule, we are grateful for your participation in the Company's 2021 General Shareholders Meeting. On behalf of everyone at Nishoku, your presence is most welcome.

Looking back at 2020, the net annual consolidated operating revenue amounted to NT$ 4.808 billion, which is a rise of 22% from the previous year. Due to the optimization of product manufacturing processes, the gross profit was 32%, which is a rise of 10% from the previous year. Although affected by exchange loss in the current year. The earnings after tax was NT$11.57 per share, with an increase of NT$ 6.15 from the previous year. The annual profit is still at a record high since the listing

Looking into the year of 2021, despite that the COVID-10 pandemic shows no signs of significant mitigation, and the trade war between China and the U.S. continues to drive the shift of the industrial supply chains, the Company will continue to dedicate its effort in the development of various automation of manufacturing processes and integration of group resources, and will also accelerate the expansion of the production economic scale in Vietnamese market, thereby achieving the goal of stable growth in both revenue and profit through global market planning and distributed management.

Below is 2020 operating report and 2021 operating plans:

1. The 2020 Business result:

(1) Performance Of Business Plan

At the beginning of 2020, the outbreak of COVID-19 pandemic took place worldwide, and to control the pandemic, all counties established border lockout polices such that the markets around the globe were in panic. Despite that, subsequently, all countries started to lifting the border restrictions, relax the social control measures and reactivate the economy nowadays, the industrial chains in all sectors were still significantly affected by the pandemic and the global economic was still in its downtime.

At the beginning of the year, the Company was affected by the pandemic such that the commencement of work was postponed to a later day; however, as the pandemic in China was mitigated, and as the pandemic had caused change in the corporate management and personal living and working model, demands related to home economy and remote

office were driven to grow, such that the 2020 consolidated operating revenue was NT$4.808 billion, an increase of 22% from last year. Through product combination and manufacturing process optimization, the whole-year gross margin was 32%, an increase of 10% from last year. Although the Company was affected by the exchange loss in 2020, the earnings per share (EPS) still reached NT$11.57, an increase of NT$6.15 from last year, and the whole-year profit also reached the record high since the public offering of the Company.

Unit: NT$ thousand

Year Item	2020	2019	Percentage of change(%)
Net operatingincome	4,808,261	3,957,144	22%
Operatingcost	3,268,381	3,078,431	6%
Grossprofit	1,539,880	878,713	75%
Operating profit	1,069,052	379,003	182%
Non-Operating Income	(194,495)	45,548	(527%)
Profit before tax	874,557	424,551	106%
Profit after tax	721,362	337,622	114%
Grossprofit(%)	32%	22%
Operating profit(%)	22%	9%

(2) Status of Budget Execution

Not available as Nishoku Technology Inc. had not declared 2020 financial forecast.

(3) Financial Receipt and Expenditure, and Profitability Analysis

	Items of analysis	2020	2019
Financial Structure & Solvency	Current ratio(%)	252.34	299.43
	Quick ratio(%)	227.87	274.28
	Interest coverage ratio	42.75	16.98
	Debt to assets ratio(%)	48.28	49.32

Profitability	ROA(%)	9.00	4.74
	Return on shareholders’ equity (%)	17.17	8.58
	Income before tax as a percentage of paid-in capital(%)	140.05	68.15
	Netprofit rate(%)	15.00	8.53
	After tax EPS(NTD)	11.57	5.42

(4) Status of R&D

Besides discussing with the end customers about the design in aim to grasp the opportunities, the Company also has been dedicating itself in studying the key technologies and production capabilities. With the coupling of existing mature technologies, the Company has extended the technology to multiple compound production process and continued to develop new production processes. For example, the waterproof TPR materials, electronic parts such as FPC flexible board, IMR laser spraying production technologies. The technologies not only provides customers with diverse and refined choices, but also become the core for saving post processing costs and creating profits.

2. 2021 Business Prospects

(1)Business strategy

Introduce the environmentally friendly processes and use environmentally friendly materials to improve the Company's competitiveness as a green industry.
Accelerate the expansion of the Vietnamese market development and production scale to achieve synergy in the production economy.
Proactively cultivate and recruit talents, optimize the performance reward system and enhance the completeness of key talents to enhance competitiveness.
Continue to optimize the product portfolio, effectively implement cost control, and pursue the maximization of shareholders' equity.
(2) Forecast of Sales Quantity and Its Basis

The Company took into the account the the overall external environmental changes and future developments in the estimation of future sales volume, based on which, the Company formulates with reference to past business operation, Company’s current status and future development trend. As the Company does not disclose its 2021 financial forecast, the estimated sales volume shall not be disclosed.

(3) Policies on Production and Marketing

Continue to improve production process capability and yield, improve operating efficiency, and enhance cost control.
Actively develop new market applications, expand product width, and maintain the market competitiveness.
Continue to expand global product lines and sales regions to reduce the operational risk of excessively concentrated product development.

3. Future Developing Strategies of Company

In face of the rapid changes and challenges of the domestic and international environment, the

future development strategies are as follows:

In response to the transfer of orders due to the Sino-US trade war, we will accelerate the expansion of the production base in Vietnam to meet the order demands.
Improve industrial green technology, we are expected to add water-based spraying process, and solidify the core competitiveness of enterprises.
We will accelerate the development of various automated processes to improve efficiency and streamline manpower.
We will take an proactive approach in the development of new market application areas and further research on the compound process. We will seek the integration of the midstream and downstream industry chains to create comprehensive benefits.

4. Impacts of the external competitive environment, regulatory environment, and the overall business environment

Looking into the year of 2021, as the pandemic has changed the corporate management method and persona living and working styles, such new style and models are expected to become common in the future. The new U.S. Government will likely continue to maintain the polices of the former government for a short period of time, and the trade war between China and the U.S. Will continue to drive the transfer of the industrial supply chains. The Company values such occurrence as an opportunity and has accelerated the expansion of the Vietnamese market and economy scale of development and production. At the same time, we continue to commit to the integration of group resources and organizations to improve internal efficiency and strengthen risk management to meet future challenges with a stable operating robustness. Moreover, the Company lay emphasis on the dynamics of the external competitive environment to respond to changes in the market environment and fully grasp the changes in relevant regulations. We stay prepared and take appropriate response measures to reduce the operational risks of future industry and overall environmental changes.

Once again, I thank each of our shareholder’s support, trust and encouragement for the Company.

I wish you all Healthy and well

Chairman Chen, Piao-Fu

General Manager Tsai, Chien-Sheng

2. Company Profile

2.1 Date of Incorporation: June 27th, 1980

2.2 Company Milestones

Time	Company Milestones
1980	� Established as Chi-Hsing Enterprise Co., Ltd. to specialize in the manufacture of steelplastic injection molds and single injection moldproducts.
Dec 2001	� Established as Chi-Hsing Enterprise Co., Ltd. to specialize in the manufacture of steelplastic injection molds and single injection moldproducts.
Oct 2003	� Cultivated the European market in collaboration with strategicpartner T&J.
Jun 2007	� Changed the companyname toNishoku TechnologyInc.
May2008	� Set up Nishoku Technology VietnamCo.,Ltd.in Hanoi, Vietnam
July 2008	� Acquired 100% shares of Hsin Jin Li Holdings and indirectly invested 100% shares of Kunshan Nishoku Plastics and Electronics Co., Ltd., Kunshan Nishoku Mold Industrial Co., Ltd., and Nishoku Plastic Mold (Shenzhen) Co., Ltd. through Sun Nice Ltd. (Samoa) to establish production bases in China for expanding the scale of production to meet the needs for market expansion and groupoperations.
Nov 2008	� Implemented the NCVMprocess in Kunshan and Shenzhenplants.
May2009	� Plans to build the Taipei headquarters building
Aug2009	� Initialpublic offering.
Nov 2009	� Registered for trading at the Emerging Market at TPEx. � Construction for Taipei headquarters buildingstarted.
Dec 2009	� As a means to integrate the Group’s internal resources, 100 equity of SUN NICE LTD.(SAMOA) was acquired through investment and 100% equity of Kunshan Xinrisheng Electronics Co., Ltd. and Xinzhihong Electronics Co., Ltd. are held in directly.
Dec 2010	� For the purpose of maximizing the distribution efficiency of the Group’s internal resources, 2 companies: Kunshan Xinrisheng Electronics Co., Ltd. and Xinzhihong Electronics Co., Ltd. were merged through SUN NICE LTD. (SAMOA) which it directly owned. � Selected in the Deloitte Technology Fast 500 Asia Pacific and ranked the fifth largest in Taiwan.
Jan 2011	� Nishoku Technology Vietnam Co., Ltd. passed ISO-9001and ISO14000 certification. � Completion of Taipei headquarters building
Mar 2011	� Completion of the TaipeiOperational HQBuilding.

Time	Company Milestones
Jun 2011	� Approved for listing by the Financial Supervisory Commission, Executive Yuan.
Aug 2011	� Acquired ISO14001:2004 certification, and Nishoku Technology Vietnam Co., Ltd. passedOHSAS18000certification.
Sep 2001	� NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. passed OHSAS18000 certification.
Oct 2011	� Officially listed on the Taipei Stock Exchange to become a newcomer of the stock market.
Dec 2011	� For the purpose of maximizing the distribution efficiency of the Group’s internal resources, 3 companies: Kunshan Xinzhisheng Plastic Electronics Co., Ltd., Kunshan Xinzhisheng Mold Industry Co., Ltd., and Kunshan Xinrisheng Electronics Co., Ltd., were merged through SUN NICE LTD. (SAMOA) which it directlyowned.
Apr 2012	� Completion ofNishoku Technology VietnamCo.,Ltd.Phase 2.
May 2012	� NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. acquired the National High-tech Enterprise recognition.
Jun 2012	� The Taipei HQ Building passed the LEED Gold certification for green buildings.
Jul 2012	� NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. acquired the Certificate of Honor for Industryand Enterprise SafetyManagement
Oct 2012	� KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD. acquired the National High-tech Enterprise recognition.
May 2013	� Rated as one of the “Top 2000 Enterprises” and the “Top 150 Computer Peripherals and Components Manufacturers” byCommonWealth.
Dec 2013	� NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. won the 2013 Manufacturer with Outstanding Contribution in Guangdong and rated one of the Top500 Manufacturers.
May 2014	� Rated as one of the “Top 2000 Enterprises” and the “Top 100 Computer Peripherals and Components Manufacturers” byCommonWealth.
Jun 2014	� KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD.passed ISO/TS 16949:2009 certification.。
Jan 2015	� Nishoku Technology Vietnam Co., Ltd passed ISO/TS 16949:2009 certification.
Apr 2015	� Merged Kunshan Nishoku Plastics and Electronics Co., Ltd., Nishoku Mold Co.,Ltd.,and KunshanNishoku ElectronicsCo.,Ltd.into KunshanNishoku

Time	Company Milestones
	Plastics and Electronics Co., Ltd. to maximize the efficiency of internal resource allocation.
May 2015	� Rated as one of the “Top 2000 Enterprises” and the “Top 100 Computer Peripherals andComponents Manufacturers” by CommonWealth.
Jul 2015	� KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD.passed OHSAS1800:2007 certification.
Nov 2015	� KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD. acquired the National High-tech Enterprise recognition.
Dec 2015	� NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. acquired the National High-tech Enterprise recognition.
May 2016	� Rated as one of the “Top 2000 Enterprises” and the “Top 100 Computer Peripherals andComponents Manufacturers” by CommonWealth.
May 2017	� Rated as one of the “Top 2000 Enterprises” and the “Top 100 Computer Peripherals andComponents Manufacturers” by CommonWealth.
Jul 2017	� Rated as one of the “Top 5000 Enterprises in Taiwan” by China Credit InformationService Ltd.” in 2017
May 2018	� Rated as one of the “Top 2000 Enterprises” and the “Top 100 Computer Peripherals and Components Manufacturers” byCommonWealth.
Jul 2018	� Completed phase II of KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD. to expand the scale ofproduction.
Nov 2018	� NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. acquired the National High-tech Enterprise recognition.
Nov 2018	� KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD. acquired the National High-tech Enterprise recognition.
Mar 2019	� KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD.passed ISO13485:2016 certificaiton。
May 2019	� Rated as one of the “Top 2000 Enterprises” and the “Top 100 Computer Peripherals andComponents Manufacturers” by CommonWealth.
Sep 2019	� NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD.passed GB/T24001:2016、ISO14001:2015、ISO45001:2018 certification.
Feb 2020	� Nishoku Technology Vietnam Co., Ltd passed ISO9001:2015、 ISO14001:2015 certification.
Mar 2020	� Nishoku Technology VietnamCo.,Ltdpassed ISO45001:2018certification.
May 2020	� Rated as one of the “Top 2000 Enterprises” and the “Top 100 Computer Peripherals and Components Manufacturers” byCommonWealth.

3. Corporate Governance

3.1 Organization Structure

3.1.1 Organization Chart (As of 2020/12/31)

There are a Board of Directors and Shareholders Meeting above the Company’s management and the Board of Directors has established the Audit Office. The management’s priority is making decisions. There are also a Chairperson’s Office and President’s Office; 4 divisions have been established under the Board of Director’s office and the President’s office: Finance and Accounting Division, Management Division, Business Division and R&D Division. There are also 10 Offices, including: Labor Safety and Health Management Office, Finance Department, Accounting Department, Information Department, Human Resources Administration Department, Procurement Department, Business Department, Engineering Department, Production Department and Quality Management Department.

The Company’s organization is as the following chart:

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

Meeting of Shareholders
Audit Committee Board of Directors
Compensation Audit Office
Committee
Chairman
Chairman’s
Office
President
President’s
Office
Finacial & Sales R&D
Accounting Division Division
Division
- 8 -
Human Resources Sales Department QC Department
Financial Departemt
Office of Occupational Accounting Department Information Department Procurement Depatrmant Engineering Department
Administration Department Manufacturing Department
Safety and Health Managemant
----- End of picture text -----

3.1.2 Department Functions

.2 Department	Functions
Department	Main Responsibilities
Chairman’s Office	Executes the Board of Directors’ important decisions and each business’ management strategies, plans of long-term development and their promotion; strategy establishment and plans of the integration development within the Group’s businesses.
President’s Office	1. Assists the President in executing tasks relating to unit communication coordination and management. 2. Leads the Company'sperformance and management.
Audit Office	Assists the Board of Directors and the management in checking and reviewing the deficiency of the internal control system and evaluates operation result and its productivity. Provides improvement suggestions in a timely manner, ensuring that the internal control system may continue to be performed with efficiency. The suggestions will be used as a reference when reviewing and amending the internal control system.
Financial & Accounting Division	Finance Department: 1. Fund raising, management, uses of funds,etc.; financial report analysis, etc.; budget planning and controlling; convening of Board of Directors meetings and Shareholders meetings, relationship maintenance of shareholders, and promotion of corporate governance. 2. Holds a concurrent position at the Company’s corporate ethical management and corporategovernance unit.
	Accounting Department: Routine accounting affairs, periodical preparation of financial statements and management statements, account management of investee companies, and reporting andplanningof tax affairs.
Sales Division	Development of customers, customer management and maintenance as well as coordination of production and sales in terms of the products produced and manufactured bythe Company.
R&D Division	1. Development and testing of new products, new dies and fixtures as well as R&D and supervision of new technology. 2. Technical assistance and solving production issue. 3. Preparation of trial material. 4. New dieproduction, parts outsourcingcontrol and manufacturing processing.
Human Resources Administration Department	1. HR planning, personnel recruiting and change, wages and labor and health insurance, education and training, performance appraisal, management for when personnel leaves their job, and personnel regulation system. 2. Fixed assets management and maintains the Company's normal operation and related matters. 3. Corporate responsibility concurrent unit - facilitates events including corporate commitments,social involvement and environmentalprotection.
Information Department	Responsible for the the integration and development of the application system, information and management of information and website structureplans,

	construction and management of information security plans relating to the Group’s operating procedures.
Procurement Department	Grasps of prices and market situation of raw materials, management of procurement procedures,procurement negotiation and supplier management.
Manufacturing Department	1. Production process scheduling, shipment date control, management of raw materials and waste, shipment. 2. Producing and manufacturing products and semi-finished products that meet quality specifications. 3. Dies and machinerymaintenance and repair, production of figs and fixtures.
QC Department	1. Supervises instrument calibration, production quality statistics, handling of complaints and promotion of company quality management system, and document control. 2. Incoming inspection of raw materials and outsourced parts, manufacturing process inspection, shipment inspection, measurements of sizes of sample parts and measurements ofparts inproduction.
Office of Occupational Safety and Health Management	1. Plans and supervises the labor safety and health management of all departments and implement labor safety and health education and trainings. 2. Formulates occupational disaster prevention plans and guides related departments to carry out disaster statistics. 3. Plans labor health examinations and implements health management.

10 -

3.2 Board of Directors and Management Team 3.2.1 Introduction of Board of Directors

3.2.1.1 Director & Supervisor

																	As of 2021/04/19	As of 2021/04/19	As of 2021/04/19	As of 2021/04/19
T i t l e	Natio nality	Name	Gend er	Date First Elected	Date Elected	Term (Year s)	Shareholding when Elected		Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Selected Current Positions	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person			N o t e (Note 1 )
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relati o n
Chair man	R.O.C	Ghi Yang Investment Limited	-	2008/12/26	2019/6/18	3	1,839,621	2.95%	1,880,621	3.01%	0	0%	0	0%	－	－	－	－	－	－
	R.O.C	Rep.: Chen, Piao-Fu	Male	2008/12/26	2019/6/18	3	0	0%	222,682	0.36%	336,476	0.54%	3,600,000	5.75%	Lee-Ming College of Technology QC supervisor of Sampo Corporation QC Assistant Manager of Dixing Industrial Co., Ltd. Chairman of Nishoku Industrial Inc. Chairman of Nishoku Technology INC.	Chairman of Nishoku Technology Inc. Chairman of SAME START LIMITED Chairman of Nishoku Hong Kong Holding Limited Chairman of Nishoku Platic Mold (Shenzhen) Co., Ltd. Director of SUN NICE LIMITED(SAMOA) Director of Nishoku Boueki Co., Ltd. Chairman of Nishoku Technology Vietnam Co., Ltd.	None	None	None	None
Direct or	R.O.C	Heng Sheng Investment Limited	-	2008/12/26	2019/6/18	3	2,243,956	3.60%	2,263,956	3.62%	0	0%	0	0%	－	－	－	－	－	－
	R.O.C	Rep.: Tsai, Chien-Sheng	Male	2008/12/26	2019/6/18	3	0	0%	2,130	0.00%	445,197	0.71%	4,500,000	7.19%	EMBA of National Taiwan University Engineering Supervisor of Dixing Industrial Co., Ltd. President of Nishoku Industrial Inc. President of Nishoku Technology Inc.	President of Nishoku Technology Inc. Director of SAME START LIMITED Director of Nishoku Hong Kong Holding Limited Director of Nishoku Platic Mold (Shenzhen) Co., Ltd. Chairman of SUN NICE LIMITED(SAMOA) Director of Nishoku Boueki Co., Ltd. Director of Nishoku Technology Vietnam Co., Ltd. Chairman of Kunshan Nishoku Plastic ElectronicCo., Ltd. Chairman of SUN NICE LIMITED(B.V.I)	Direc otr	Wu, Ying- Lan	Spou se	None

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T i t l e	Natio nality	Name	Gend er	Date First Elected	Date Elected	Term (Year s)	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Selected Current Positions	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	N o t e (Note 1 )
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relati o n
	R.O.C	Rep.: Wu, Ying-Lan	Femal e	2019/6/18	2019/6/18	3	0	0%	31,805	0.05%	415,522	0.66%	4,500,000	7.19%	Ming Chuan College Chairman of Nishoku Boueki Co., Ltd.	Chairman of Nishoku Boueki Co., Ltd.	Direc otr	Tsai, Chie n- Shen g	Spou se	None
Direct or	R.O.C	Cyuan Guan Investment Limited	-	2008/12/26	2019/6/18	3	1,855,308	2.98%	1,855,308	2.97%	0	0%	0	0%	－	－	－	－	－	－
	R.O.C	Rep.: Chang, Wen-Hsien	Male	2008/12/26	2019/6/18	3	0	0%	117,309	0.19%	9,316	0.01%	4,050,000	6.47%	Ta Hwa Technical College Manafacturing Supervisor of Dixing Industrial Co., Ltd. Vice President of Nishoku Industrial Inc. Executive Vice President of Nishoku Technology Inc. President of Kunshan Nishoku Plastic ElectronicCo., Ltd.	Executive Vice President of Nishoku Technology Inc. Supervisor of Nishoku Boueki Co., Ltd. Director of SAME START LIMITED Director of Nishoku Hong Kong Holding Limited Director of Nishoku Platic Mold (Shenzhen) Co., Ltd Director of SUN NICE LIMITED(SAMOA) Director of Nishoku Technology Vietnam Co., Ltd. Director of Kunshan Nishoku Plastic ElectronicCo., Ltd.	None	None	None	None
Direct or	R.O.C	Jhan Yu Investment Limited	-	2008/12/26	2019/6/18	3	2,683,082	4.31%	2,683,082	4.29%	0	0%	0	0%	－	－	－	－	－	－
	R.O.C	Rep.: Hsieh, Xin- Yi(Note2)	Male	2009/1/29	2019/6/18	3	0	0%	3,883,968	6.21%	38,400	0.06%	0	0%	MBA of International University of Monaco Sales of Spring Machinery Company	Principal of Zhanyu Investment Co., Ltd. Sales Manger of Well-achieve Co., Ltd.	None	None	None	None
Direct or	R.O.C	Chang Shun Investment Limited	-	2019/6/18	2019/6/18	3	2,705,932	4.34%	2,705,932	4.33%	0	0%	0	0%	－	－	－	－	－	－
	R.O.C	Rep.: Fan, Chia-Wen	Femal e	2019/6/18	2019/6/18	3	0	0%	194,409	0.31%	0	0%	0	0%	National Kaohsiung University of Hospitality and Tourism Flight attendants of EVA Air	CFO of Changshun Investment Co., Ltd	None	None	None	None

12 -

T i t l e	Natio nality	Name	Gend er	Date First Elected	Date Elected	Term (Year s)	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Selected Current Positions	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	N o t e (Note 1 )
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relati o n
Indepe ndent Direct or	R.O.C	Chan, Chin- Hung	Male	2010/6/30	2019/6/18	3	0	0%	0	0%	0	0%	0	0%	Ph.D. in Economics, Kyushu University Executive Director of College of Management, ChangGungUniversity	Professor of Chang Gung University concurrently serves as the CEO of the School of Business Management. Supervisor of PODAK CO., LTD	None	None	None	None
Indepe ndent Direct or	R.O.C	Lin, Horng Chang	Male	2019/6/18	2019/6/18	3	0	0%	0	0%	0	0%	0	0%	MBA of George Washington University EMBA of National Taiwan University Financial Senior Manager and Spokeman of Senao International Co., Ltd CFO of HEALTHCONN CORP.	Chairman of OMNI MEDIA INTERNATIONAL INCORPORATION Independent Director of Taiwan Fertilizer company International Holdings Limited Supervisor of BRIGHT LED ELECTRONICS CORP. Supervisor of Provision Information Co Ltd	None	None	None	None
Indepe ndent Direct or	R.O.C	Ko, Shun- Hsiung	Male	2011/7/28	2019/6/18	3	0	0%	0	0%	0	0%	0	0%	Mater of Bussiness Administraion of National TaiwanUniversity Senior Manager of Ruentex Development Co.,Ltd. Director of China Development Industrial Bank	CPA of Jianda United Accounting FirmIndependent Director ofSilergy Corp. Independent Director of Ruentex Development Co.,Ltd.	None	None	None	None

Note 1: Where the chairperson of the board of directors and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto

Note2:Director Hsieh, Hong-Chang changed his name to Hsieh, Xin-Yi in December 2020

13 -

3.2.1.2 Director、Supervisor Major Shareholders of the Major Shareholders that are Juridical Persons：

3.2.1.2.1 Major Shareholders of the Institutional Shareholders

As of 2021/04/19

	As of 2021/04/19
Name of Institutional Shareholders	Major Shareholders of the Institutional Shareholders
Ghi Yang Investment Limited	FAST GROW CO., LTD.(100%)
Heng Sheng Investment Limited	LEADING PIONEER CO., LTD. (100%)
Cyuan Guan Investment Limited	STAR GATE CO., LTD. (100%)
Jhan Yu Investment Limited	PAN OCEAN INTERNATIONAL CO., LTD.(100%)
Chang Shun Investment Limited	Quansheng Investment Co., Ltd

3.2.1.3Major Shareholders of the Major Shareholders that are Juridical Persons

As of 2021/04/19

	As of 2021/04/19
Name of Institutional Shareholders	Major Shareholders of the Institutional Shareholders
FAST GROW CO., LTD.	SONIC PLUS GROUP LIMITED.(100%)
LEADING PIONEER CO., LTD.	FAMOUS DRAGON LIMITED.(100%)
STAR GATE CO., LTD.	ELITE ALLY LIMITED.(100%)
PAN OCEAN INTERNATIONAL CO.,LTD.	ADVANCE SUCCESS INTERNATIONAL LIMITED.(100%)
Quansheng Investment Co., Ltd	CFC Limited(100%)

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3.2.1.4 Professional Qualifications and Independence Analysis of the Board Directors

Criteria Name	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Numb er of Other Publi c Comp anies in Whic h the Indivi dual is Conc urrent ly Servi ng as an Indep enden t Direct or
	An Instructor or Higher Position in a Department of Commerce Law,Finance,Accountin g,or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College,College or University	A Judge, Public Prosecutor , Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce ,Law, Finance ,or Accountin g, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Ghi Yang Investment Limited Rep.: Chen,Piao-Fu			�					�	�	�	�	�	�	�		None
Heng Sheng Investment Limited Rep.: Tsai, Chien- Sheng			�					�	�	�	�	�		�		None
Heng Sheng Investment Limited Rep.: Wu, Ying- Lan			�					�	�	�	�	�		�		None
Cyuan Guan Investment Limited Rep.: Chang, Wen- Hsien			�						�	�	�	�	�	�		None
Jhan Yu Investment Limited Rep.: Hsieh, Xin-Yi			�	�	�		�	�	�	�	�	�	�	�		None
Chang Shun Investment Limited Rep.: Fan, Chia- Wen			�	�	�	�	�	�	�	�	�	�	�	�		None
Chan, Chin-Hung	�		�	�	�	�	�	�	�	�	�	�	�	�	�	None
Ko, Shun-Hsiung		�	�	�	�	�	�	�	�	�	�	�	�	�	�	1

15 -

Criteria Name	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Numb er of Other Publi c Comp anies in Whic h the Indivi dual is Conc urrent ly Servi ng as an Indep enden t Direct or
	An Instructor or Higher Position in a Department of Commerce Law,Finance,Accountin g,or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College,College or University	A Judge, Public Prosecutor , Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce ,Law, Finance ,or Accountin g, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Lin, Horng Chang			�	�	�	�	�	�	�	�	�	�	�	�	�	2

Note1: Directors, during the two years before being elected and during the term of office, meet any of the following situations, please tick the appropriate corresponding boxes:

Not an employee of the company or any of its affiliates;
Not a director or supervisor of the company or any of its affiliates.;
Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders;
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding 1 subparagraph, or of any of the above persons in the preceding subparagraphs 2 and 3;
Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the company, ranks as of its top five shareholders, or has representative director(s) serving on the company’s board based on Article 27 of the Company Law.
Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company;
Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the company’s chairman or CEO (or equivalent);
Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company;
Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, and the service provided is an “audit service” or a “non-audit service which total compensation within the recent two years exceeds NTD500,000”;
Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company;
Not been a person of any conditions defined in Article 30 of the Company Law; and
Not a governmental, juridical person or its representative as defined in Aticle 27 of the Company Law. Note2: Director Hsieh, Hong-Chang changed his name to Hsieh, Xin-Yi in December 2020
16 -

As of 2021/04/19

3.2.2 Introduction of the Management Team

Title	Natio nality	Name	Gen der	On-board Date	Current Shareholding (Note)	Current Shareholding (Note)	Spouse & Minor S h a r e h o l d i n g	Spouse & Minor S h a r e h o l d i n g	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Selected Current Positions	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Note (Note 1)
					Shares	%	Shares	%	Shares	%			Title	Name	Relati o n
Chairma n	R.O.C	Chen, Piao-Fu	Male	2011/12/2 7	222,682	0.36%	336,476	0.54%	3,600,00 0	5.75%	Lee-Ming College of Technology Chairman of Nishoku Technology Inc.	Chairman of SAME START LIMITED Chairman of Nishoku Hong Kong Holding Limited Chairman of Nishoku Platic Mold (Shenzhen) Co., Ltd. Director of SUN NICE LIMITED(SAMOA) Director of Nishoku Boueki Co., Ltd. Chairman of Nishoku Technology Vietnam Co., Ltd.	None	None	None	N.A.
President	R.O.C	Tsai, Chien- Sheng	Male	2007/3/1	2,130	0.00%	445,197	0.71%	4,500,00 0	7.19%	EMBA of National Taiwan University President of Nishoku Technology Inc.	Director of SAME START LIMITED Director of Nishoku Hong Kong Holding Limited Director of Nishoku Platic Mold (Shenzhen) Co., Ltd. Chairman of SUN NICE LIMITED(SAMOA) Director of Nishoku Boueki Co., Ltd. Director of Nishoku Technology Vietnam Co., Ltd. Chairman of Kunshan Nishoku Plastic ElectronicCo., Ltd. Chairman of SUN NICE LIMITED(B.V.I)	Vice Preside nt	Wu, Ying- Lan	Spou se
Executiv e Vice President and R&D Head	R.O.C	Chang, Wen- Hsien	Male	2008/1/1	117,309	0.19%	9,316	0.01%	4,050,00 0	6.47%	Ta Hwa Technical College Executive Vice President of Nishoku Technology Inc. President of Kunshan Nishoku Plastic ElectronicCo., Ltd.	Director of SAME START LIMITED Director of Nishoku Hong Kong Holding Limited Director of Nishoku Platic Mold (Shenzhen) Co., Ltd Director of SUN NICE LIMITED(SAMOA) Director of Nishoku Technology Vietnam Co., Ltd. Director of Kunshan Nishoku Plastic ElectronicCo.,Ltd	None	None	None
Vice President	R.O.C	Wu, Ying- Lan （Ｎote2）	Fema le	2021/1/1	31,805	0.05%	415,522	0.66%	4,500,00 0	7.19%	Ming Chuan College Chairman of Nishoku Boueki Co., Ltd.	Chairman of Nishoku Boueki Co., Ltd.	Direcot r	Tsai, Chien- Sheng	Spou se
CFO	R.O.C	Lin, Tzu- Husan	Fema le	2010/5/1	400	0.00%	0	0%	0	0%	Master degree in Accounting, National Taipei University Manager of Alchip Technologies, Limited Assistant Manager of Deloitte.	Accounting Supervisor of Nishoku Boueki Co., Ltd. Accounting Supervisor of Same Start Ltd.(Anguilla) Accounting Supervisor of Nishoku Hong Kong Holding Limited Accounting Supervisor of Sun Nice Ltd. (Samoa) AccountingSupervisor of Sun Nice Ltd.(B.V.I.)	None	None	None

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Title	Natio nality	Name	Gen der	On-board Date	Current Shareholding (Note)	Current Shareholding (Note)	Spouse & Minor S h a r e h o l d i n g	Spouse & Minor S h a r e h o l d i n g	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Selected Current Positions	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Other Managers that Have Spousal Relationship or are within the Second Degree of Kinship with Number of the Concerned Person	Note (Note 1)
					Shares	%	Shares	%	Shares	%			Title	Name	Relati o n
Audit Manager	R.O.C	Cheng, Chao- Ming	Male	2017/6/27	15,000	0.02%	0	0%	0	0%	Bachelor degree of National Taipei University of Technology Engineering dep. Of Kuang Wu Industry and Commerce Junior College Manager of Nishoku Platic Mold (Shenzhen) Co., Ltd. Xiamen, Jien Tyen Industry Co., Ltd., manufacturingmanager.	None	None	None	None

Note 2:2021/12/29 The board of directors reached the resolution on the appointment of Vice President, and such appointment became effective on 2021/1/1。

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3.3 Remuneration and Compensation Paid to Directors, the President, and Vice President

3.3.1 Remuneration Paid to Director As of 2020/12/31，Unit：NTD thousand；%

	Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Total remuneratio A+B+C+D) as a of net income	Total remuneratio A+B+C+D) as a of net income	Compensation Earned by a Director Who is an Employee of Pegatron o its Consolidated Entities	Compensation Earned by a Director Who is an Employee of Pegatron o its Consolidated Entities	Compensation Earned by a Director Who is an Employee of Pegatron o its Consolidated Entities	Compensation Earned by a Director Who is an Employee of Pegatron o its Consolidated Entities	Compensation Earned by a Director Who is an Employee of Pegatron o its Consolidated Entities	Compensation Earned by a Director Who is an Employee of Pegatron o its Consolidated Entities	Compensation Earned by a Director Who is an Employee of Pegatron o its Consolidated Entities	Compensation Earned by a Director Who is an Employee of Pegatron o its Consolidated Entities	Total remuneratio A+B+C+D+E+F+ G) as a % of net income C	Total remuneratio A+B+C+D+E+F+ G) as a % of net income C	n ompensati n paid to directors from non- onsolidate affiliates
			Base Compensation (A)		Severance Pay an Pensions (B)		d Compensation to Directors(C)		Allowances (D)				n % Base Compensation, Bonuses, and Allowances (E)		Severance Pay and Pensions (F)		Employee Compensation (G)
			From Pegatron	From all onsolidat d entities	From Pegatron	From all onsolidat d entities	From Pegatron	From all onsolidat d entities	From Pegatron	From all onsolidat d entities	From Pegatron	From all onsolidat d entities	From Pegatron c	From all onsolidate entities P	d From egatro	n From all onsolidat d entities	From Pegatron		From all consolidated entities (Note 7)		From ~~P~~egatro~~n~~	c From all onsolidat d entities
																	Cash	Stock	Cash	Stock
Direct or	Chairman	Ghi Yang Investment Limited	0	0	0	0	8,010	8,010	360	360	1.16%	1.16%	21,848	28,754	216	216	9,365	0	9,365	0	5.52%	6.47%	0
	Rep	Chen, Piao-Fu
	Director	Heng Sheng Investment Limited
	Rep	Tsai, Chien- Sheng
	Director	Heng Sheng Investment Limited
	Rep	Wu, Ying-Lan
	Director	Cyuan Guan Investment Limited
	Rep	Chang, Wen- Hsien
	Director	Jhan Yu Investment Limited
	Rep	Hsieh, Xin-Yi
	Director	Chang Shun Investment Limited
	Rep	Fan, Chia-Wen
Indep enden t Direct or	Independe nt Director	Chan, Chin- Hung	0	0	0	0	3,695	3,695	200	200	0.54%	0.54%	0	0	0	0	0	0	0	0	0.54%	0.54%	0
	Independe nt Director	Ko, Shun- Hsiung
	Independe nt Director	Lin, Horng Chang
1.Please describe the independent directors’ remuneration policy, system, standards, and structure, and explain the factors including the independent directors’ duties, risks, and invested time connecting to the remuneration amount: The Company’s remuneration to independent directors is handled in accordance with the Company’s Articles of Incorporation. After the Remuneration Committee has been established on April 25, 2011, related remuneration motions are proposed by the Remuneration Committee and are implemented after being discussed by the Board of Directors. Remuneration to independent directors is determined by the

19 -

duties, risks, time invested and contribution carried out by them. The Company takes references from related results of the performance evaluation conducted each year and usual standards of peers in the same industry. After being reviewed by the Remuneration Committee, it will be determined by the Board of Directors and it may not exceed the amount stipulated in the Company’s Articles of Incorporation. As summarized above, the Company's policy of remuneration to independent directors and procedures for remuneration determination are positively linked to the management performance. The Company also reviews the remuneration system in a timely manner according to the actual operating situation and applicable acts and regulations, in order to balance the Company's sustainable management and risk control. 2. Remuneration received by directors for providing service to any company included in the financial statements (e.g. consultancy service without the title of an employee) in the last year: None.

Note 1：Pursuant to Article 20 of the Company’s Articles of Incorporation, in circumstances where the Company has an annual profit, the Company shall appropriate remuneration of no less than 1% and no higher than 5% to employees and directors, respectively.

Range of Remunerations for Directors

Bracket	Name of Directors	Name of Directors
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	The company	The company Companies in the financial report	The company	The company Companies in the financial report
Below NT$ 1,000,000
NT$1,000,000(Included) ~ NT$2,000,000(Excluded)	Ghi Yang Investment Limited Rep.: Chen, Piao-Fu、Heng Sheng Investment Limited Rep.: Tsai, Chien-Sheng、Heng Sheng Investment Limited Rep.: Wu, Ying-Lan、Cyuan Guan Investment Limited Rep.: Chang, Wen-Hsien、Jhan Yu Investment Limited Rep.: Hsieh, Hung-Xin-Yi.、Chang Shun Investment Limited Rep.: Fan, Chia-Wen、Chan, Chin-Hung、Ko, Shun-Hsiung、Lin, HorngChang	Ghi Yang Investment Limited Rep.: Chen, Piao-Fu、Heng Sheng Investment Limited Rep.: Tsai, Chien-Sheng、Heng Sheng Investment Limited Rep.: Wu, Ying-Lan、 Cyuan Guan Investment Limited Rep.: Chang, Wen-Hsien、Jhan Yu Investment Limited Rep.: Hsieh, Xin-Yi、Chang Shun Investment Limited Rep.: Fan, Chia-Wen、 Chan, Chin-Hung、Ko, Shun-Hsiung、Lin, Horng Chang	Heng Sheng Investment Limited Rep.: Wu, Ying- Lan、Jhan Yu Investment Limited Rep.: Hsieh, Xin- Yi、Chang Shun Investment Limited Rep.: Fan, Chia-Wen、Chan, Chin-Hung、Ko, Shun- Hsiung、Lin, Horng Chang	Jhan Yu Investment Limited Rep.: Hsieh, Xin- Yi、Chang Shun Investment Limited Rep.: Fan, Chia-Wen、Chan, Chin-Hung、Ko, Shun- Hsiung、Lin, Horng Chang
NT$2,000,000(Included) ~ NT$3,500,000(Excluded)
NT$3,500,000(Included) ~ NT$5,000,000(Excluded)				Heng Sheng Investment Limited Rep.: Wu, Ying- Lan
NT$5,000,000(Included) ~ NT$10,000,000(Excluded)			Ghi Yang Investment Limited Rep.: Chen, Piao- Fu、Heng Sheng Investment Limited Rep.: Tsai, Chien-Sheng、 Cyuan Guan Investment Limited Rep.: Chang, Wen-Hsien	Ghi Yang Investment Limited Rep.: Chen, Piao- Fu、Heng Sheng Investment Limited Rep.: Tsai, Chien-Sheng、Cyuan Guan Investment Limited Rep.: Chang, Wen-Hsien
NT$10,000,000(Included)~

20 -

NT$15,000,000(Excluded)
NT$15,000,000(Included) ~ NT$30,000,000(Excluded)
NT$30,000,000(Included) ~ NT$50,000,000(Excluded)
NT$50,000,000(Included) ~ NT$100,000,000(Excluded)
Over NT$100,000,000
Total	9	9	9	9

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3.3.2. Remuneration Paid to Supervisor：The company has set up an audit committee to Replace the supervisors so it is not applicable 3.3.3 Compensation Paid to President and Vice President

3.3.3.1 Compensation Paid to President and Vice President

2020/12/31, Unit: NT$; %

												2020/12/31	2020/12/31	, Unit: NT$; %
Title	Name	Salary(A)		Severance Pay and Pensions (B)		Bonuses and Allowances (C)		Employee Compensation (D)				Total remuneration (A+B+C+D) as a % of net income		Compensation paid to directors from non- consolidated affiliates
		From Pegatron	From all consolidated entities	From Pegatron	From all consolidated entities	From Pegatron	From all consolidated entities	From Pegatron		From all consolidated entities		From Pegatron	From all consolidated entities
								Cash	Stock	Cash	Stock
Chief Strategy Officer	Chen, Piao-Fu	11,156	11,156	216	216	10,692	10,692	9,365	0	9,365	0	4.35%	4.35%	None
President	Tsai,Chien-Sheng
Executive Vice President and R&D Head	Chang, Wen-Hsien

Note 1: The Company’s distribution of remuneration to employees is according to the provisions stipulated in Article 20 in the Articles of Incorporation.

Remuneration Brackets Table

Bracket	Name of General Manager and Deputy General Manager	Name of General Manager and Deputy General Manager
	The company	The companyCompanies in the financial report E
Below NT$ 1,000,000
NT$1,000,000(Included)~ NT$2,000,000(Excluded)
NT$2,000,000(Included)~ NT$3,500,000(Excluded)
NT$3,500,000(Included)~ NT$5,000,000(Excluded)
NT$5,000,000(Included) ~ NT$10,000,000(Excluded)	Chen, Piao-Fu、Tsai, Chien-Sheng、 Chang,Wen-Hsien	Chen, Piao-Fu、Tsai, Chien-Sheng、Chang, Wen- Hsien
NT$10,000,000(Included)~NT$15,000,000(Excluded)
NT$15,000,000(Included)~ NT$30,000,000(Excluded)
NT$30,000,000(Included)~NT$50,000,000(Excluded)
NT$50,000,000(Included)~ NT$100,000,000(Excluded)
Over NT$100,000,000
Total	3	3

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3.3.3.2Employee Profit Sharing Granted to Management Team

unit：Thousand shares; NT$ thousand

					unit：Thou	sand shares; NT$ thousand
	Position	Name	Stock	Cash	Total	Ratio of Total Amount to Net Income(%)
Managers	Chief Strategy Officer President Executive Vice President and R&D Head CFO Accounting Officer Audit Officer	Chen, Piao- Fu	0	11,165	11,165	1.55%
		Tsai, Chien- Sheng
		Chang, Wen- Hsien
		Lin, Tzu-Husan
		Cheng, Chao-Ming

Note 1: The Company’s distribution of remuneration to employees is according to the provisions stipulated in Article 20 in the Articles of Incorporation. In case the Company has yearly profit, at least 1% shall be appropriated as staff reward and less than 5% as rewards for directors and supervisors. In case the company has accumulative losses (including adjusted unappropriated earnings), reserve shall be made as remuneration. The 2019 remuneration in cash to employees was NT$22,100 thousand which has been approved by the Board of Directors held on March 12, 2020 and has been submitted to the General Meeting of Shareholders for 2020.。

3.3.4 Compare and state the ratio of total remuneration paid to the Company’s Directors, President and Vice Presidents by the company and the companies in the consolidated financial statements to net income in the past two years. Please also describe the policy, criteria, packages and rules relating to the remuneration, as well as its relation to business performance and future risks.
3.3.4.1 Total amount of remuneration as a percentage of net income in the parent company only
- and consolidated financial statements

	Unit: NTD thousand; %	Unit: NTD thousand; %	Unit: NTD thousand; %	Unit: NTD thousand; %	Unit: NTD thousand; %	Unit: NTD thousand; %	Unit: NTD thousand; %	Unit: NTD thousand; %
Year	2020				2019
Title	Total Remuneration		Total amount of remuneration as a percentage of net i n c o m e %		Total Remuneration		Total amount of remuneration as a percentage of net i n c o m e %
	The company	Companies in the consolidated Financial statements	The company	Companies in the consolidated Financial statements	The company	Companies in the consolidated Financial statements	The company	Companies in the consolidated Financial statements
Director	12,265	12,265	1.70%	1.70%	7,735	7,735	2.29%	2.29%
President& Vice president	31,429	31,429	4.36%	4.36%	25,273	25,273	7.49%	7.49%
Supervisor	NA	NA	NA	NA	840	840	0.25%	0.25%
Total	43,694	43,694	6.06%	6.06%	33,848	33,848	10.03%	10.03%

Note 1: Since the Company has established the Audit Committee in replacement of the supervisors, this part is not applicable.

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3.3.4.2 Remuneration policy, standards and composition, procedures and the correlation with operation performance and future risks
(1) Directors, Supervisors

The Company’s remuneration distribution to directors and supervisors are in compliance with Article 20 of the Company’s Articles of Incorporation, in circumstances where the Company has an annual profit, the Company shall appropriate remuneration of no less than 1% and no higher than 5% to employees and Directors, respectively. In case the company has accumulative losses (including adjusted unappropriated earnings), reserve shall be made as remuneration. It has been passed via a special resolution by the Board of Directors and submitted to the Shareholders Meeting.

Remuneration to each director and supervisor is determined by the involvement and contribution carried out by them. The Company takes references from related results of the performance evaluation conducted each year and usual standards of peers in the same industry. After being reviewed by the Remuneration Committee, it will be determined by the Board of Directors and it may not exceed the amount stipulated in the Company’s Articles of Incorporation.

(2) President and Vice President

Remuneration to the President and Vice President is determined by the review of the Company’s Remuneration Committee then is submitted to the Board of Directors for resolution. In terms of the performance evaluation and salary remuneration for the Company’s managerial officers determined by the Remuneration Committee, aside from taking references from other peers in the same industry, the time invested and duties carried out by them, personal achievement reached, performance served other positions, salary remuneration given to the same position by the Company in recent years and achievement of short-term and long-term business goals set by Company, the Company’s operating performance and the reasonableness of future risks are also used on to determine remuneration to managerial officers. Determined by the review of the Company’s Remuneration Committee then is submitted to the Board of Directors for resolution.

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3.4 Implementation of Corporate Governance

3.4.1 Board of Directors

A total of 6 (A) meetings of the Board of Directors were held in 2020. The directors’

attendance status is as follows:

Title	Name	Attendance in person (B)	By Proxy	Attendance rate (%) (Ｂ/Ａ)
Chairman	Ghi Yang Investment Limited Rep.: Chen, Piao-Fu	6	0	100%
Director	Heng Sheng Investment Limited Rep.: Tsai,Chien-Sheng	6	0	100%
Director	Heng Sheng Investment Limited Rep.: Wu,Ying-Lan	6	0	100%
Director	Cyuan Guan Investment Limited Rep.: Chang,Wen-Hsien	6	0	100%
Director	Jhan Yu Investment Limited Rep.: Hsieh, Xin-Yi	6	0	100%
Director	Chang Shun Investment Limited Rep.: Fan,Chia-Wen	6	0	100%
Independe nt Director	Lin, Horng Chang	6	0	100%
Independe nt Director	Ko, Shun-Hsiung	6	0	100%
Independe nt Director	Chan, Chin-Hung	6	0	100%
Other issues to be recorded: 1.If operation of the Board of Directors encounters one of the following circumstances, the date, session of the board meeting, content of the proposal, opinions of all Independent Directors, and the company s handling of the aforementioned opinions sh ould be clarified: 1) Article 14(3) of the Securities and Exchange Act: The company has set up an audit committee in accordance with the Article 14-5 of the Securities and Exchange Act so it is not applicable the Article 14-3 of the Securities and Exchange Act 2) Except for the preceding items, other resolutions expressed disapproval or reservations by Independent Directors through written statements or records: None. 2.In implementation of avoidance of conflict of interest for certain proposals, the names of the Direct ors, content of the proposals, reasons for the recusal, and the participation in the voting were clarified as follows: Date of the Board of Directors Meeting Motion Content Name of Director Reason Recusal Participation in the Voting Process March 12, 2020 Remuneration to independent Chan, Chin-Hung、 Ko, Shun-Hsiung、 A party to the motion Did not take part in voting

25 -

					directors	directors				Lin, Horng Chang
										Chen, Piao-Fu、
										Tsai, Chien-
					Remuneration to directors					Sheng、Chang, Wen-Hsien、 Wu, Ying-Lan、
										Hsieh, Xin-Yi、
										Fan, Chia-Wen
					Remuneration		and			Chen, Piao-Fu、
					year-end	bonus to			Tsai, Chien-Sheng、
					employees					Chang, Wen-Hsien
					Remuneration to					Chan, Chin-Hung、
					independent					Ko, Shun-Hsiung、
					directors					Lin, Horng Chang
										Chen, Piao-Fu、
										Tsai, Chien-
		February 26, 2021			Remuneration to directors					Sheng、Chang, Wen-Hsien、 Wu, Ying-Lan、
										Hsieh, Xin-Yi、
										Fan, Chia-Wen
					Remuneration and year-end bonus to employees					Chen, Piao-Fu、 Tsai, Chien- Sheng、Chang, Wen-Hsien
3.	TWSE/TPEx Listed Companies should							disclose information			including the evaluation cycle and
		period,	evaluation	scope, method and evaluation content of the Board’s self (or peer) evaluation
		and the Evaluation			of the Board of		Directors in Attachment should be filled in:
	Nature		Evaluation cycle		Evaluation period	Evaluation			scope Evaluation method			Evaluation content
												The measurement items for the performance
												evaluation of the board of directors of the
												Company include the following five major
												aspects:
												1. Participation in the operation of the
												company;
												2. Improvement of the	quality of the board of
												directors' decision making;
												3. Composition and structure of the board of
												directors;
	Board of Directors					Entire board of directors and individual board members Internal self- evaluation of board of directors and board member self-evaluation						4. Election and continuing education of the directors; and 5. Internal control. The measurement items for the self-evaluation of the members of the board of directors include the following six major aspects:
			Executed		2020.01.01~							1. Alignment of the goals and mission of the
			once a year		2020.12.31							company; 2. Awareness of the duties of a director;
												3. Participation in the operation of the
												company;
												4. Management of internal relationship and
												communication;
												5. The director's professionalism and
												continuing education; and
												6. Internal control.
	Functional											The measurement items for the internal self-
	committees											evaluation of the functional committee and
						Each functional committee				Committee members Internal self-		self-evaluation of members thereof include the following five major aspects: 1. Participation in the operation of the
										evaluation		company; 2. Awareness of the duties of the functional
												committee;
												3. Improvement ofqualityof decisions made

26 -

 - by the functional committee; 4. Composition of the functional committee and election of its members; and 5. Internal control.

Measures the objectives to strengthen the functionality of the Board and execution status in the current year and the recent years:
(1) The Company’s members of the Board of Directors attach great importance to the elements of diversification. In the election held in 2019, 2 female directors were newly elected who have different professional backgrounds in terms of knowledge, skills and industries needed for the position. The 2 directors take in reports discussed by the management team on the Board of Directors meeting and offer guidance and suggestions while maintaining sound communication with the management team, creating best interests for shareholders. In 2020, the Company held a total of 6 Board of Directors meetings which is in compliance with the provisions stipulated in the Rules and Procedures for Board Meetings that at least one meeting shall be conducted each quarter. Important motions are publicly announced on the MOPS in accordance with the law so as to make the information public.
(2) Create a good board governance system of the Company; strengthen the functions of supervision and management mechanism which meet the Company's Board Meeting rules. The Audit Committee was established in 2019.
(3) The “Regulations Governing the Board Performance Evaluation” was established in 2015. Action plans are drawn up each year after the annual evaluation regarding corresponding measures to further strengthen the operating efficiency of the Board. The 2020 evaluation result conducted by the Board in accordance with the Regulations Governing the Board Performance Evaluation is as follows; it has been submitted to the Board of Directors meeting on February 26, 2021. Evaluation period: January 1, 2020 - December 31, 2020
- (a) The total evaluation score for the Board is 5 and the evaluation result is 4.89.
- (b) The total evaluation score for the Board members is 5 and the evaluation result is 4.79.
- (c) The total score of each functional committee is 5 points, and the evaluation score result is 5 points.
- Regarding the aforementioned evaluation result:
- Entire board of directors - The board of directors performance evaluation indicators include five major aspects for a total 45 indicators, and the evaluation result is: Very Good (4.89) The board members and operation status are relative mature. In addition to certain level of understanding on the operation of the management team, all of the board members are able fulfill their supervisory responsibilities as directors, thereby complying the implementation standard for corporate governance.
- Individual board member - The board member performance evaluation indicators include six major aspects for a total of 23 indicators, and the evaluation result is: Very Good (4.79), indicating that each director receives positive evaluation result in the operation efficiency and effect for all indicators.
- Each functional committee - The board member performance evaluation indicators include six major aspects for a total of 24 indicators, and the evaluation result is “Excellent (5)” The Audit Committee and Remuneration Committee are composed of professionals and are actively engaged in the operation and internal relationship management of the Company, indicating the complete and thorough operation of the functional committees.

3.4.2 Operation status of the Audit Committee or participation of the supervisors in the operation of the Board:

The Company had supervisors, but with the goal of strengthening corporate governance, the Company established the Audit Committee after the election carried out on the General

27 -

Meeting of Shareholders held in 2019 before regulations were set out by the competent authority. Aside from executing duties of supervisors relating to applicable laws and regulations, the Company’s Audit Committee also assists the Board to exercise their duties of with an aim of supervising the appropriateness of the Company’s financial statements, the selection (dismissal), independence and performance of CPAs, the effective implementation of the Company's internal control, the Company's compliance with applicable laws and regulations, and managing and controlling the Company’s existing or potential risks.

The main review matters for the Audit Committee of this year includes

Review quarterly financial statements
Establish or amend internal control system and relevant important procedures
Review the effectiveness of the internal control system
A material monetary loan, endorsement, or provision of a guarantee.
The hiring, discharge, or compensation of an attesting CPA.
Business report and proposal for distribution of profit or covering losses.

3.4.2.1 Audit Committee：

A total of 6 (A) meetings of the audit committee were held in 2020. The independent directors’attendance status is as follows:

Title	Name	Attendance in person(B)	By Proxy	Attendance rate (%) (Ｂ/Ａ)
Independent Director	Lin, Horng Chang	6	0	100%
Independent Director	Chan, Chin- Hung	6	0	100%
Independent Director	Ko, Shun- Hsiung	6	0	100%
Remarks: 1. For Audit Committee meetings that meet any of the following descriptions, state the date and meeting of Board of Directors meeting held, the discussed topics, the Audit Committee's resolution, and how the company has responded to Audit Committee's opinions. (I)The listed items on Article 14-5 of the Securities and Exchange Act: Date/session of board of directors’ meeting Proposal content and subsequent handling Matters specified in §14-5of the Securities and Exchange Act Resolutions not approved by the Audit Committee but with the consent of more than two-thirds of all directors 2020/03/12 (1st session in 2020) (1) Proposal on cash capital increase for investment of Nishoku TechnologyVietnam Co.,Ltd. � None (2) 2019 Internal control system declaration � None (3) Proposal for amendments to the “Management Procedures for the Preparation of Financial Statements” � None Resolution Result of Audit Committee: Approved by the Audit Committee Meeting attended by all Audit Committee members. Company’s Handling for Opinions of Audit Committee: Submitted to the board of directors’ meeting and approved byall attendingindependent directors and directors.

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		(1) Proposal for the offshore company Same Start Ltd.(ANGUILLA)
		with 100% equity indirectly held by the Company lending funds to � None
	2020/04/30	Nishoku TechnologyVietnam Co Ltd
	(2nd session of	Resolution Result of Audit Committee: Approved by the Audit Committee Meeting attended by all Audit
	2020)	Committee members.
		Company’s Handling for Opinions of Audit Committee: Submitted to the board of directors’ meeting and approved
		byall attendingindependent directors and directors.
		(1) Proposal for the loaning of funds to the offshore company Nishoku
		Technology Vietnam Co. Ltd. with 100% equity directly held by the � None
	2020/06/30	Company
	(3rd session of	Resolution Result of Audit Committee: Approved by the Audit Committee Meeting attended by all Audit
	2020)	Committee members.
		Company’s Handling for Opinions of Audit Committee: Submitted to the board of directors’ meeting and approved
		byall attendingindependent directors and directors.
		(1) Consolidated financial statements of Q2, 2020 � None
	2020/07/30 (4th session of	Resolution Result of Audit Committee: Approved by the Audit Committee Meeting attended by all Audit Committee members.
	2020)	Company’s Handling for Opinions of Audit Committee: Submitted to the board of directors’ meeting and approved
		byall attendingindependent directors and directors.
		(1) Proposal for amendments to the “Internal Audit Enforcement Rules”. � None
	2020/10/29 (5th session of 2020)	(2) Proposal for revisions of “R&D Cycle”, “Production Cycle” and “Purchase and Payment Cycle”. � None Resolution Result of Audit Committee: Approved by the Audit Committee Meeting attended by all Audit Committee members.
		Company’s Handling for Opinions of Audit Committee: Submitted to the board of directors’ meeting and approved
		byall attendingindependent directors and directors.
		(1) Proposal for 2021 annual budget and business plans. � None
		(2) Proposal for 2021 annual audit plans. � None
	2020/12/29 (6th session of	(3) 2021 independence evaluation of CPAs appointed by the CPA firm. � None
	2020)	Resolution Result of Audit Committee: Approved by the Audit Committee Meeting attended by all Audit
		Committee members.
		Company’s Handling for Opinions of Audit Committee: Submitted to the board of directors’ meeting and approved
		byall attendingindependent directors and directors.
	(II) Other than those described above, any resolutions not approved by the Audit Committee
	but passed by more than two-thirds of directors: None.
2.For the implementation of independent directors' recusal for conflicts of interests, the
	independent directors' name, topic discussed, reasons for the required recusal and participation
	in the voting process: in 2020, there were no motions that had any conflict of interest between
	the Audit Committee and independent directors.
3. Descriptions of the communications between the independent directors, the internal auditors,and
	the independent auditors:
	1. The Company’s internal Audit Officer discusses audit report results with members of the
	Audit Committee on a regular basis, and makes an internal audit report in the Audit
	Committee meeting each quarter. Where there is a special circumstance, members of the
	Audit Committee will also be reported to immediately. In 2020, there was no occurrence
	of any of the situation stated above.
	2. The Company’s CPAs periodically reports the audit result or review result of financial
	statements on Audit Committee meetings as well as other matters required by other
	applicable laws and regulations. Where there is a special circumstance, members of the
	Audit Committee will also be reported to immediately. In 2020, there was no occurrence
	of any of the situation stated above.
	3. Communication status is as follows:
	(1) Communication status for internal audits
		Communication status over internal audits
		Date of Meeting Communication Matter
		March 12, 2020 Internal audit report of February, 2020.
		April 30, 2020 Internal audit report of March, 2020.

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	June 30, 2020		Internal audit report of May, 2020.
	July 30, 2020		Internal audit report of June, 2020.
	October 29, 2020		Internal audit report of September, 2020.
	December 29, 2020		Internal audit report of November, 2020.
(2) Commutation statuswithCPAs
	Date of		Commutation status with CPAs
	Meeting		Communication Matter
		1.	Explanation given by the CPAs regarding the
		review of the financial report for Q4, 2019.
	March 12, 2020		2. Discussion and communication of CPAs
			focusing questions asked by personnel
			participatingin the meeting.
		1.	Explanation given by the CPAs regarding the
		review of the financial report for Q2, 2020.
	July 30, 2020	2.	Discussion and communication of CPAs
		focusing questions asked by personnel
		participatingin the meeting.

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3.4.3 Corporate Governance Implementation Status and Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

Item			ImplementationStatus	Non- implementation and its reason(s)
	Y	N	Summary
1. If the Company established and disclosed Corporate Governance Principles in accordance with Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies?	V		The Company’s Board passed the “Corporate Governance Best-Practice Principles” in 2014 which has been disclosed on the Company’s corporate website/Investor Relations/Governance/Organizational Operations Regulations. Website: https://www.nishoku.com.tw	None
2. Shareholding Structure & Shareholders’ Rights (1) If the Company established internal procedures to handle shareholder suggestions, proposals, complaints and litigation and execute accordingly? (2) If the Company maintained of a list of major shareholders and a list of ultimate owners of these major shareholders? (3) If risk management mechanism and “firewall” between the Company and its affiliates are in place? (4) If the Company established internal policies that forbid insiders from trading based on non-disclosed information?	V V V V		(1) The Company has established the “Management Measures for Stock Affairs” and has set up spokespersons and representatives. Dedicated personnel is in charge of handling shareholders’ suggestions, concerns, disputes and litigation matters. (2) The Company’s internal personnel (directors, managerial officers and major shareholders holding more than 10% of the shares) provides shareholders’ list by the report of shareholding changes and stock agency, keeping a hold of the actual control list at any time. (3) The Company has established applicable management measures for subsidiaries in accordance with the internal control system and management measures for groups, enterprises and related parties, building an appropriate risk control mechanism and firewall. (4) As a means to prevent insider trading, the Company has established the “Operating Procedures for the Prevention of Insider Trading” and conducts a monthly promotion to internal personnel and the Company’s employees. In addition, the Company’s internal personnel including newly appointed directors and managerial officers are given “Promotional Handbook for Company’s Internal Personnel Trading Equity”compiled by theTWSE forthe compliance of internalpersonnel	None

31 -

Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
			and at the same time strengthening the prevention of insider trading, protecting therights andinterests of investors and the Company.
3. Structure of Board of Directors and its responsibility (1) If the Board consisted of members from diverse background?	V		(1) The Company has established the “Corporate Governance Best-Practice Principles” which has been disclosed on the Company’s corporate website/Investor Relations/Governance/Organizational Operations Regulations. The Company’s website: https://www.nishoku.com.tw. It regulates that the composition of the board of directors shall be determined by taking diversity into consideration. An appropriate policy on diversity based on the Company’s business operations, operating dynamics, and development needs be formulated and include, without being limited to, the following two general standards: (1) Basic requirements and values: Gender, age, nationality, and culture. (2) Professional knowledge and skills: A professional background (e.g. law, accounting, industry, finance, marketing, and technology), professional skills, and industry experience. To achieve the ideal goal of corporate governance, members of the Board of Directors shall possess the following abilities: (1) The ability to make judgments about operations. (2) Accounting and financial analysis ability. (3) Business management ability. (4) Crisis management ability. (5) Knowledge of the industry. (6) An international market perspective. (7) Leadership ability. (8) Decision-making ability. The current board of directors of the company consists of 9 directors, including 6 directors and 3 independent directors. The members have	None

32 -

Item				Implementation Status	Non- implementation and its reason(s)
	Y	N		Summary
(2) If the Company established any other functional committee in addition to	V		rich experience and expertise in finance, business, management and industry. In addition, the company also pays attention to gender equality in the composition of the board of directors. The target ratio of female directors is 25%. The current 9 directors, including 2 female directors, have a ratio of 22.22%. The relevant implementation status is as follows: (2) Not only has the Company established and Remuneration Committee, an Audit Committee was also established aftertheBoard election in 41-50 51-60 61-70 Chen, Piao-Fu M ◎ ◎ ◎ ◎ ◎ Tsai, Chien- Sheng M ◎ ◎ ◎ ◎ ◎ Wu, Ying-Lan F ◎ ◎ ◎ ◎ ◎ Chang, Wen- Hsien M ◎ ◎ ◎ ◎ ◎ Hsieh, Xin-Yi M ◎ ◎ ◎ ◎ Fan, Chia- Wen F ◎ ◎ ◎ ◎ ◎ ◎ Chan, Chin- Hung M ◎ ◎ ◎ ◎ ◎ Ko, Shun- Hsiung M ◎ ◎ ◎ ◎ ◎ Lin, Horng Chang M ◎ ◎ ◎ ◎ ◎ ◎ ITEM Director Name Business management Fact in conformity in capabilities Hotel/Tourism Financial Holding/Banking/Insurance Manufacturing/Investment/Other Professor/Lawyer/Accountant/Professio nal Personnel Business Law Expertise and skills Basic component Age Range Gender Employees of the company Law/Accounting/Legal Affairs Health Management/Medical Biotechnology		None

33 -

Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
Compensation Committee, Audit Committee as required by law? (3) If the Company established methods and procedures to assess the performance of the Board and conduct assessment on annual basis? If the result of the assessment will be reported to the Board and taken into considerations for individual remuneration nomination purpose?	V		general meeting of shareholders held in 2019. Other types of functional committees will be established according to the actual condition. (3) The Company’s Board passed the “Regulations Governing the Board Performance Evaluation” which has been disclosed on the Company’s corporate website/Investor Relations/Governance/Organizational Operations Regulations. Website: https://www.nishoku.com.tw The Company uses questionnaires to carry out self-assessment of its performance and discusses future issues that require special attention. As a means to implement corporate governance while improving the function of the Company's Board, performance goals are set to enhance the Board efficiency. The Company's Board shall conduct an internal performance assessment of the internal Board of Directors at least once per year, and a self-assessment for the year shall be conducted at the end of each year according to assessment procedures and assessment indicators. The internal assessment outcome of the Board shall be reported to the next Board of Directors’ meeting. The 2020 Board of Directors carried out a performance assessment according to the Regulations Governing the Board Performance Evaluation and the assessment outcome has been reported to the Board of Directors meeting held on February 26, 2021,refer to assess the performance results which will also be used as a reference base for the remuneration to each director and nomination for re-appointment of directors. The remuneration to each director is determined on the participating degree and contribution the directors have on the Company’s operation. Related outcome of director performance assessment and standard of peers in the same industry will also be considered. After the review is carried out by the Remuneration Committee, it shall be resolved by the	None

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Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
(4) If the Company assess the independence of CPA periodically?	V		Board of Directors meeting. The remuneration shall not exceed the amount specified in the Company’s Articles of Incorporation. (4) When the Company appoints CPAs each year, the Financial and Accounting Division carries out an independence evaluation of the CPA and an independence statement shall be obtained. According to the “CPA Independence Evaluation Form”, CPAs are evaluated whether they are in compliance with the requirements. The evaluation outcome shall be sent to the Audit Committee for review then to the Board of Directors meeting for discussion as references of appointed CPAs. For the self-evaluation outcome of appointed CPAs for 2021, please refer to the Annual Report (Table 1).	None
4. If the Company had adequate number of corporate governance personnel and appoint a chief corporate governance officer overlooking corporate governance affairs including but not limited to handling matters relating to board meetings and shareholder meetings, assisting directors with legal compliance, preparing agendas and producing minutes for board meetings and shareholder meetings?	V		The Company has set up a concurrent unit to be responsible for affairs relating to corporate governance and the Financial and Accounting Division was assigned to be in charge of such unit. Assistant Vice President Tzu-Hsuan Lin has been appointed to act as the Corporate Governance Officer. The Assistant General Manager holds accountant qualification as well as 14 years of experiences in a public company engaging in management work relating to accounting and finances. (1) Provides information needed for directors to carry out their duties as well as meeting information 7 days prior to the convening of the Board Meeting. (2) Handles matters relating to the Board Meeting and Shareholders meeting while at the same time assisting in the Board of Directors and Shareholders for the compliance of applicable laws and regulations. (3) Compiles meeting minutes for the Board of Directors, Functional Committees and Shareholders meetings which are provided within 10 days of the meeting. (4) Assist the Board of Directors and Supervisors in complying with laws and regulations.	None

35 -

Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
			(5) Arranges further education courses and visits to the Group’s important operation bases for directors. (6) Assists in self performance assessments, guides and improves the Company’s implementation of corporate governance. (7) Please refer to the Annual report for the continuing education status. The Company’s corporate governance promotion of 2020 is as follows: (1) Based on the Company’s industrial characteristics and business needs, directors are assisted in proposing annual further education plans and arranging courses. Further education courses were held on June 30, 2020 and October 29, 2020 for 3 hours per each course. (2) The Company assess and purchases liability insurance for directors and supervisors. In the latest period, the Company purchased liability insurance for all directors with a premium of USD5 million (equivalent to approximately NT$147,425,000). The insurance period started September 1, 2020 and ends September 1, 2021, which has been reported to the Board of Directors meeting held on October 29, 2020 for acknowledgment. (3) In August 2020, the Company was invite to take part in the “SinoPac hold road show”. Information on most recent Investor Conference can be found on the MOPS. (4) Responsible for reviewing material information for important resolutions to be released after the Board of Directors meeting, ensuring the appropriateness and correctness of important information to protect the transaction information of investors. (5) Maintains investor relations and arranges regular exchange with agency investors, allowing investors to gain enough information to evaluate and decide the Company’s reasonable capital market value while at the same time allowing good maintenance of shareholders rights and interests. (6) Completed the preparationof meetingminutesfor Board of Directors

36 -

Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
			meeting and its Functional Committees as well as the Shareholders meeting in 2020. (7) Completed self-performance evaluation of Board of Directors and its FunctionalCommitteesin 2020.
5. If the Company established communication channel with stakeholders (including but not limited to shareholders, employees, customers, suppliers, etc) and disclosed key corporate social responsibility issues frequently enquired by stakeholders on the designated area ofcorporate website?	V		The Company’s website has a “Stakeholder Section” which discloses information on channels for complaints for stakeholders. There is also a mailbox for Audit Committee complaints and suggestions, enabling the sound communication between the Company and stakeholders. (https://www.nishoku.com.tw/zh-TW/Investor/Relationship)	None
6. If the Company engaged professional transfer agent to host annual general shareholders’ meeting?	V		The Company has appointed Stock Agency Department of CTBC Bank as stock agency to handle stock related affairs.	None
7 Information Disclosure (1) If the Company set up a corporate website to disclose information regarding the Company’s finance, business and corporate governance? (2) If the Company adopted any other information disclosure channels (e.g., maintaining an English-language website, appointing designated personnel to handle information collection and disclosure, appointing spokespersons, webcasting investors conference, etc)? (3) If the Company disclosed its annual financial report within two months after yearend and discloseits1st.2nd, 3rd	V V V		(1) The Company’s website also has a “Investor Relations” section, disclosing related financial, businesses, stock affairs and corporate governance information. Relevant regulations and rules as well as their execution status are also explained. (https://www.nishoku.com.tw) (2) Aside from setting up a website that is in both Chinese and English, the Company also has a spokesperson system with assigned spokesperson and acting spokesperson who are responsible for the communication in terms of external relations as well as the collection and disclosure of company information. They also upload information regarding shareholder conferences on the Company’s website. (https://www.nishoku.com.tw/zh- TW/Investor/Catalog?guid=18110215404026) (3) The Company announces and reports its annual financial report within two months after the end of the fiscal year before the prescribed time (withinthreemonths prescribed bylaw).Financial reportforQ1, Q2and	None

37 -

Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
quarter financial reports and monthly revenue ahead of regulated disclosure date?			Q3 and monthly operation status are reported in accordance with regulations. Related information can be found on the MOPS.
8. If the Company had other important information to facilitate better understanding of the Company’s corporate governance practices (including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?	V		(I) Employee Rights: The Company has established the Staff Welfare Committee with welfare fund set aside each month. Representatives are selected by both sides of the labor and the management to be in charge of matters in connection to employee welfare so as to reach the goal of harmonious working environment as well as bringing all employees together. Welfare provided by the Company and the Welfare Committee: (1) Establishes Employee Welfare Committee to handle various benefits to employees. (2) Purchases labor insurance, National Health Insurance and Group Insurance. (3) Holds employee health examinations performance by qualified hospitals, ensuring the health of employees. (4) Sets Employee canteen, providing meals for employees (5) Allowance for employee marriages, childbirths, three major festivals and birthdays (6) Funeral and hospital subsidies (7) Free car and motorbike parking spaces for colleagues. (8) Periodical employee trips (9) Holds education and training inside and outside the plant from time to time (10) Year-end parties and lucky draws (II) Employee Care: (1) The Company formulates various management rules based on the interest of employees while looking after employees’ life, benefits, and offers fair salaries.	None

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Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
			(2) In order to increase employees’ professional ability and enhance work efficiency, further education on employees is encouraged. Methods for further education are various seminars, school training, professional training courses; according to Employee education and training Measures, related fess can be applied and subsided. (3) Employee Safety and Health Measures (A) A first-aid kit is placed on the first floor of the Headquarters to provide instant medical help. (B) The Company has signed an employee health examination contract with a teaching medical center. Not only do we offer health examinations that are customized and different, we also offer comprehensive health report consultancy, helping our employees to pay more attention on their own health. (C) Professional personnel is hired to carry out maternal and child safety education, fire protection and first aid training at the manufacturing area. (D) Sexual harassment and abuse language are strictly prohibited. An employee opinion box has been set up and there are clear compliant procedures to protect the rights of workers. (E) A lactation room has been set up for female employees at the manufacturing area. (III) Investor Relations: The Company has established a spokesperson and acting spokesperson as a communication bridge between the Company and investors. Aside from holding regular shareholder conferences, there is also a dedicated section on the Company’s website for investors. The Company’s current situation is disclosed through such comprehensive and fair platform, hoping that investors understand wholeheartedly the Company’s management outcome and long-term operationdirection.	None None

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Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
			(IV) Supplier Relations: 1. The Company’s procurement personnel evaluates the quality service, delivery time and price of suppliers with the requisition unit, and establish a database for the qualified manufacturers according to the evaluation outcome. 2. Negotiations and contracting are first given to excellent suppliers, ensuring the quality while reducing the Company’s procurement cost. (V) Stakeholder Rights: The Company has set a up a spokesperson and acting spokesperson who are responsible for external communication; there is also a dedicated section on the Company’s website for stakeholders, and dedicated personnel has been assigned to respond regarding important CSR issues concerned by stakeholders. (VI) Further Education for Directors: The Company had 9 directors in 2020 and a total of 54 training hours should be carried out; directors who actually took part in the training were 9 with a total of 54 training hours, completing the further education hours of the year. For the above-stated further education status of directors, please refer to the Annual Report (Table 2). (VII) Execution Status of Risk Management Policy and Risk Measurement Standard: Internal measures and internal control systems have been set up as required by the law to carry out various risk management and evaluation. The internal audit unit assesses the implementation level of the internal control system on a regular and unscheduled basis. (VIII) Status of the Company Purchasing Liability Insurance for Directors: It has been stipulated in the Articles of Incorporation that the Company shallpurchaseliabilityinsurance during the termofoffice	None None None None None

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Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
			of directors, and shall be liable for their compensation in terms of duties they carry out. Please refer to the Annual Report (Table 3). (IX) Further Education and Training Regarding Corporate Governance Participated by Managerial Officers: Please refer to the Annual Report (Table 4). (X) Formulation of Succession Plans of Members of the Board and Key Management Personnel: According to the Company’s development direction and goals, during the succession planning not only does a successor require excellent work ability, but he/she also needs to hold similar values as the Company. He/she must be contain the quality of integrity, taking commitment seriously, innovation and earning the trust of customers. The Company plans different concurrent tasks for unit managers of various groups. By cultivating strategic ability, it is expected that within 5 to 10 years, members of the Board and key management can be selected from within. (1) Succession Plans for Board Members: The Company currently has 9 directors (including 3 independent directors) who all have commerce, finance, accounting or management expertise required by the business of the Company. Among these directors, 4 of them are also the Company’s senior management. In the future, the current structure will continue to be used in respect of the composition of the Company’s Board, and their experience and background. In terms of the succession plan of the Board, the Company has proposed to allow members of the key management group to attend the Board Meeting in order to cultivate their strategic ability while at the same time familiarizing the operation of the Board. In the future, these members may be selected as successors of the Board after evaluation. Independent directors on the other hand must require working experiences with	None

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Item			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
			respect to commerce, law, finance, accounting or other fields required by the business of the Company. As there is no shortage of such professionals in Taiwan, the succession plan for independent directors of the Company may come from the industry. (2) Succession Plan of Key Management: They Company's succession plan of key management is focused on the development of talent of a talent pool to discover employees who have high potential. Comprehensive education and training system and promotion channel have been set up, providing opportunities for continuous improvement and development in order to respond to the succession need for the future key management. The training method of the Company’s key management succession plan is divided into 3 modules: management ability, professional ability and personal development plans. Decision-making ability is also developed through professional ability training so that the person in training is able to integrate what he/she has learned. Training information is registered on the personal training record by the HR Administration Department so as to understand the history of such employee. The Company’s employees above the level of assistant general mangers are qualified as key management and is established from different organizations. Each department has senior and mid-level managers, and the mid-level managers are trained to act as an agent for senior managers accordingly. An employee performance appraisal is carried out every 6 months through daily observation and performance assessment to better understand any improvement and personal expectation of employees. Appraisal outcome is also used as reference bases for succession plans. (XI) Execution Status of Customer Policy:	None

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Item	Implementation Status	Implementation Status	Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
			The Company maintains close contact with customers and informs customers regarding products which may benefit them while ensuring products meet their expectation of the reliability and quality. We also take the initiative to include new perspectives and methods into the Company’s actual management system through communication channels including phone, email and video conference in order to meet customer needs. (XII) Status of Insider Trading Promotion: The Company has established the “Operating Procedures for the Prevention of Insider Trading” which has been disclosed on the Company's website; the Company has regularly promoted the compliance of stock trading laws to its directors, supervisors and managerial officers. Matters relating to insider training is also being regularly promoted to the Company’sinternalcolleagues.	None None
9. Any improvement made in accordance with the result of the most recent corporate governance evaluation conducted by TWSE? Any measures to be taken on the outstanding items? Improvements：(1)The Corporate Governance Officer has been established in 2020. (2)The Company has uploaded the English version of meeting handbook and meeting supplementary information 30 days before the 2020 general shareholders’ meeting. Matters for improvement in priority: (1) Policy for statistically analysis of the greenhouse gas emission, water usage and waste total weight over the last 2 years, and has the company established policies for energy saving, carbon reduction, greenhouse emission reduction, reduction of water usage or other waste management. (2) Perform external evaluation on board of directors’ performance in order to improve the functions of the board ofdirectors.

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(Table 1)

The evaluation of the independency of CPA

Evaluation Unit: Board Affairs Unit

Evaluation Year：2021

Appointed Law Firm and CPAs:KPMG/CPA Cheng-Chien Chen and Sheng-Ho Yu.

Content	Consistent	Remark
1. Not an employee of the Company or any of its affiliated enterprises.	�	After evaluation, no such matters were found in these 2 CPAs
2. Not a director or supervisor of an affiliate of the Company. (However, this restriction does not apply in cases where the person is an independent director of the Company, its parent or subsidiary which the Company directly or indirectlyholds 50% of votingrights).	�	After evaluation, no such matters were found in these 2 CPAs
3. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its topten shareholders.	�	After evaluation, no such matters were found in these 2 CPAs
4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of personnel in(1), (2) and (3).	�	After evaluation, no such matters were found in these 2 CPAs
5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the Company's outstanding shares or a topfive shareholder.	�	After evaluation, no such matters were found in these 2 CPAs
6. Not a director, supervisor, or executive officer of a specific company or institution with financial or business dealings with the Company, or shareholder with 5% or more shares of the Company.	�	After evaluation, no such matters were found in these 2 CPAs
7. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company.	�	After evaluation, no such matters were found in these 2CPAs
8. Not been a person or any conditions defined in Article 30 of the Company Act.	�	After evaluation, no such matters were found in these 2CPAs
9. Not under Article 27 of the Company Act with government, juristic person or the representative thereof successfullyelected.	�	After evaluation, no such matters were found in these 2 CPAs
10. Receipt of Auditor's Independence Declaration	�	Obtained

◆After evaluation, none of the CPAs were found to have matters stated in the independence evaluation stated above.

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directors completed th(Table 2) Board of Dir e ir continuous furthectors Training Reco r education. d：In 2020, there were a total of 9 directors, and 9 The hours of further education for directors have met the regulations prescribed in the “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE/TPEx Listed Companies”.

Title	Name	Date	Date	Institute	Course	Period (hours)
		From	To
Chairman	Chen, Piao- Fu	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
Director	Tsai, Chien- Sheng	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
Director	Chang, Wen- Hsien	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
Director	Wu, Ying- Lan	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
Director	Fan, Chia- Wen	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
Director	Hsieh, Xin- Yi	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
Independent Director	Chan, Chin- Hung	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
Independent Director	Ko, Shun- Hsiung	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3

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		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
Independent Director	Lin, Horng Chang	2020/6/30	2020/6/30	Securities and Futures Institute	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
		2020/10/29	2020/10/29		Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3

(Table 3) Purchasing of Liability Insurance for Directors:

Liability insurance for the entire Board and Supervisors

Director Chang Institute 2020/10/29 2020/10/29 Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint 3 (Table 3) Purchasing of Liability Insurance for Directors:	Director Chang Institute 2020/10/29 2020/10/29 Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint 3 (Table 3) Purchasing of Liability Insurance for Directors:	Director Chang Institute 2020/10/29 2020/10/29 Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint 3 (Table 3) Purchasing of Liability Insurance for Directors:
Liabilityinsurance for the entire Board and Supervisors
Insured Object	Insurance Company	Insurance Period(start to end)
Entire Board	Fubon Financial HoldingCo.	September 1, 2020 to September 1, 2021
(Note) The report of the entire Board insured with liability insurance has been submitted to the Board Meeting held on October 29,2020.

(Table 4) Further Education and Training Regarding Corporate Governance Participated by Managerial Officers:

Sequence	Title	Name	Course	Number of Hours
1	Chief Strategy Officer	Chen, Piao- Fu	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
2	Chief Strategy Officer	Chen, Piao- Fu	Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
3	President	Tsai, Chien- Sheng	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
4	President	Tsai, Chien- Sheng	Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
5	Executive Vicepresident	Chang, Wen- Hsien	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
6	Executive Vicepresident	Chang, Wen- Hsien	Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
7	Vice president	Wu, Ying- Lan	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
8	Vice president	Wu, Ying- Lan	Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
9	Corporate Governance Officer	Lin, Tzu-Hsuan	Strategy and Management of Enterprise Upgrade and Transformation-Choice of M&A and Alliance	3
10	Senior manager	Lin, Tzu-Hsuan	Continuing Education Program for Accounting Managers of Issuers, Securities Firms, and Securities Exchanges	12
11	Corporate Governance Officer	Lin, Tzu-Hsuan	Directors' Responsibilities and Risk Management under the Latest Corporate Governance Blueprint	3
12	Audit Officer	Cheng, Chao-Ming	Discussion on audit practice of enterprise cost and value creation	6

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3.4.4 The Composition of the Remuneration Committee and its Operation Status:

The Company's Remuneration Committee primarily executes the following duties:

(1) To establish and regularly review policies, system, standards and structures for performance evaluation and remuneration for directors and managers.
(2) To regularly assess and set up the salary remuneration for directors and managerial officers.
(3) To review incentive remuneration plan or employee remuneration plans with share-based payment.
(4) Motion for suggested amendment to these Rules.
Information on the Members of the Remuneration Committee

Title (Note 1)	Criteria Name	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience	Met One of the Following Professional Qualification Requirements with at Least Five Years Work Experience		Independence Criteria(Note2)	Independence Criteria(Note2)	Independence Criteria(Note2)	Independence Criteria(Note2)	Independence Criteria(Note2)	Independence Criteria(Note2)				Number of other public companie s in which the individua l is concurre ntly serving as an remunera tion committe e member	Remark s
		An Instructor or Higher Position in a Department of Commerce Law,Financ e,Accountin g,or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College,Col lege or University	A Judge, Public Prosecutor , Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experie nce in the Areas of Comme rce,Law, Finance ,or Account ing, or Otherwi se Necessa ry for the Busines s of the Compan y	1	2	3	4	5	6	7	8	9	10
Independen t Director (Convener)	Ko, Shun- Hsiung		�	�	�	�	�	�	�	�	�	�	�	�	3	None
Independe nt Director	Lin, Horng Chang			�	�	�	�	�	�	�	�	�	�	�	None	None
Other	Wang, Zhi- Chen			�	�	�	�	�	�	�	�	�	�	�	1	None

Note 1: Election of the Audit Committee members was held on June 28, 2019. The term of the convener Chan, ChinHung ended and the new convener is director Ko, Shun-Hsiung.

Note 2: Compensation Committee Members, during the two years before being elected or during the term of office, meet any of the following situations, please tick the appropriate corresponding boxes:

Not an employee of the company or any of its affiliates;
Not a director or supervisor of the company or any of its affiliates.;
Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders;
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding 1 subparagraph, or of any of the above persons in the preceding subparagraphs 2 and 3;
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Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the company, ranks as of its top five shareholders, or has representative director(s) serving on the company’s board based on Article 27 of the Company Law.
Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company;
Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the company’s chairman or CEO (or equivalent);
Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company;
Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, and the service provided is an “audit service” or a “non-audit service which total compensation within the recent two years exceeds NTD500,000”;
Not been a person of any conditions defined in Article 30 of the Company Law.
The operation status of the Remuneration Committee
(1) The Company’s Remuneration Committee is composed of 3 members.
(2) Tenure of the fourth session of Compensation committee is from 18st June, 2019 to 17th June, 2022.

A total of 2 (A) meetings of the Compensation Committee were held in 2020. The status of attendance is as follows:

Title	Name	Attendance in person (B)	By Proxy	Attendance rate (%) (Ｂ/Ａ)
Chairman	Ko, Shun- Hsiung	2	0	100%
Member	Lin, Horng Chang	2	0	100%
Member	Wang, Zhi- Chen	2	0	100%
Other matters that shall be reported: 1. If the Board of Directors does not adopt or amend recommendations proposed by the Remuneration Committee, the date, session, proposal contents and resolutions of the Board of Directors, and the company's actions in response to the opinions of the Audit Committee shall be stated (also, where the remuneration approved by the Board of Directors is superior to that recommended bythe Remuneration Committee,the differences and reasons shall be stated): None. Remuneration Committee Meeting Date Session Proposal Content Remuneration Committee Resolution Result Company’s handling for opinions of Remuneration Committee 2020/01/17 1st session of 2020 (1) Proposal for 2019 board of directors’ performance evaluation result of the Company (2) Proposal for 2019 remunerations of directors and supervisors (3) Proposal for 2019 remuneration of managerial officers and employees (4) Proposal for 2019 year-end bonus of managerial officers All attending members approved the proposal as proposed. Submitted to the board of directors’ meeting and approved by all attending independent directors and directors. 2020/12/29 2nd session of 2020 (1) Proposal for assessment and review the remuneration of managerial officers of the Company. (2) Proposal for 2019 remuneration of directors and supervisors and remunerations of managerial officers and employees. (3)Proposal for appointment of Ms. Ying-Lan Wu to be the Vice President of the Company. (4)Proposal for amendments to “Regulations All attending members approved the proposal as proposed. Submitted to the board of directors’ meeting and approved by all attending independent directors and directors.

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Governing Appointment and Remuneration of Managerial Officers”. (5) Proposal for amendments to “Regulations for Board of Directors Performance Evaluation”.

Where resolutions of the Remuneration Committee include dissenting or qualified opinion which is on record or stated in a written statement, the date, session, proposal contents, opinions from every member, and actions in response to the opinions of the members shall be stated: None.
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3.4.5 Implementation of Corporate Social Responsibility

Items			ImplementationStatus	Non- implementatio n and its reason(s)
	Y	N	Summary
1. If the Company conducted risk assessment on its usiness operation, social environment as and corporate overnance based on the principle of materiality and stablished risk management policy or strategy ccordingly?	V		The Company has established the “Corporate Social Responsibility Best Practice Principles” which has content of practices of CSR, and is divided into “implementation of corporate governance”, “development of a sustainable environment”, “maintenance of social welfare”, and “enhancing the information disclosure of CSR. Under the principle of corporate sustainable development and environmental protection as well as occupational disaster prevention, the commitment of company operation and management must be conducted under the environmental protection method. The Company is also dedicated to pollution prevention and reduction control to thoroughly reach the goal of power resource reduction and its efficient usage. We adhere to the implementation of risk control and safety mechanisms, and reviews and makes amendment according to theiractualoperation inthefuture.	None
2. If the Company established a part time or full time unit to execute corporate social responsibility projects and the Board authorized top management to overlook and provide feedback on status of execution?	V		The Company’s HR Administration Department is responsible for the concurrent unit for CSR promotion; the unit does its utmost to maintain CSR and welfare while facilitating environmental protection in terms of energy conservation, carbon reduction and greening. Progress of physical and material promotion plans are reported to the Board of Directorsmeetings onaregularbasis.	None
3. Environmental Issues (1) If the Company endeavored to utilize resources more efficiently and utilized renewable materials which have a lower impact on the environment? (2) If the Company established proper environmental or energy management system based on the characteristics of the industry where the Company belongs to?	V V		(1)The Company and its subsidiaries have built adequate environmental management systems according to the ISO14001 (Environmental Management System) which have been verified by a fair third-party. The certification has been disclosed on the Company’s website. (2) In order to correspond the Company's business growth, a green headquarters has been built which has been put into use on March 30, 2011. The design of the headquarters was based on the standard oftheLeadershipin Energy andEnvironmental Design(LEED)	None

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Items			Implementation Status	Non- implementatio n and its reason(s)
	Y	N	Summary
(3) If the Company assessed current and potential impact and opportunity of climate change on the Company’s operation and take preventive measures? (4) If the Company monitored the amount of greenhouse emission, water usage and waste handling for the past two years and established corporate strategies on reduction of carbon emission, greenhouse gas emission, water usage and waste management?	V V		prescribed by the US Green Building Council. We have implemented the policy of green building and energy saving and carbon reduction with a goal of lowering the impact on the environment. The Design of the Headquarters: “Water Conservation” landscape watering uses entirely recycled rainwater, tap water-saving device and increases the efficiency of kitchen and bathroom water by 70%. The goal of the process water recovery rate after operation is expected to reach over 90%. Advance night ice storage system has been introduced for “Energy Saving” air conditioning system which can be used in conjunction with a day chiller, saving time and money. (3)The Company has kept an eye on international trends and corresponding directions and has further understood issues concerned by stakeholders namely the government, investors, customers and the society. The Company evaluated possible legal risks, substantial risks and other risks as well as potential opportunities in order to adopt corresponding measures. (4)In addition to the Company, the overseas production locations of Nishoku Group - Kunshan, Shenzhen and Vietnam all uphold the notion of co-existence with the Earth environment, continue to promote energy saving and greenhouse gas emission reduction measures, actively reduce carbon emission and focus on power consumption measures and review internal energy consumption status periodically. The Company has established relevant provisions for polices on the energy saving and carbon reduction, greenhouse gas emission reduction, reduction of water usage or other waste management in the “Corporate Social Responsibility Best Practice Principles”, and also implements such polices thoroughly. The Company’s greenhouse gas emission inspection has been verified by externalunit.Inadditionto the obtaining ofgreen	None None None

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Items			Implementation Status	Non- implementatio n and its reason(s)
	Y	N	Summary
			building certificate for the Group’s headquarter building, the greenhouse gas total emission of the production locations in 2018 and 2019 were 12,413 tons and 10,979 tons respectively, indicating that the greenhouse gas emission of the organization in 2019 was reduced by 11.55% from the previous year. The Company will continue to exert effort in the improvement of environment, and also plans to achieve the management goal of reduction of greenhouse gas emission by 5% annually in the future. The execution measures are as follows: 1. Production end energy-saving measures: Reduction of process energy consumption, increase of equipment efficiency and energy management, etc. 2. Office energy saving measures: (1)Group’s headquarter building obtained the U.S. Green Building Council LEED green building golden class certification in June 2012. (2)Office environment adjusts the air conditioning depending upon the season and the temperature is set at 26 degree Celsius constantly in order to reduce the power load. (3)Office lighting uses energy-saving and high-performance lighting fixtures in order to reduce the heat generated by the light source and to achieve the objective of energy saving. (4)Promote employees to use stairs instead of elevators. 3. Others: (1)Use document electronic signing and approval system to perform electronic signing approval, thereby reducing the paper usage amount, and promote the use of recycled papers. (2)Properly execute the recycle management and resource classification of wastes, such kitchen wastes, metal/aluminum/glass bottles, waste papers and plastic bottles, etc., and appoint

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Items			Implementation Status	Implementation Status	Non- implementatio n and its reason(s)
	Y	N	Summary
			professional personnel to be responsible for the treatment and classification of wastes. Presently, the main production locations have consecutively obtained the greenhouse gas emission inspection reports. According to the inspection result below, the carbon emission in 2019 was reduced by 11.55% from 2018: In 2019, the Company entrusted Greem Industrial (ShenZhen) Co.,Ltd. to complete ISO 14064-1 For the greenhouse gas verification,accordingto the inspection result: In 2018, the Company entrusted CTI International Certification (ShenZhen) Co.,Ltd. to complete ISO 14064-1 For the greenhouse gas verification, according to the inspection result: 2018 Emission(tCO2e) Scope 1 Direct Greenhouse Gas Emission 40.67 Scope 2 Energy Indirect Greenhouse Gas Emission 12,372.67 12,413.34 2019 Emission(tCO2e) Scope 1 Direct Greenhouse Gas Emission 18.08 Scope 2 Energy Indirect Greenhouse Gas Emission 10,961.57 10,979.65
			2018	Emission(tCO2e)
			Scope 1 Direct Greenhouse Gas Emission	40.67
			Scope 2 Energy Indirect Greenhouse Gas Emission	12,372.67
				12,413.34
4. Social Issues (1) If the Company followed relevant laws, and internationally recognized human rights principal, and established appropriate	V		(1) The Company strictly follows laws and regulations prescribed by the government by implementing labor laws and regulations to protect therights ofcolleagues.Inadditionto establishinglabor-		None

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Items			Implementation Status	Non- implementatio n and its reason(s)
	Y	N	Summary
management policies and procedures? (2) If the Company followed relevant laws and regulations and international guidelines on consumer health and safety, customer privacy, marketing and labeling of products and services and established relevant consumer protection policy and grievance channel? (3) If the Company provided safe and healthy working environment to employees and conducted relevant training on safety and health management to employees periodically? (4)Ifthe Company provided careerplanning,	V V V		management meetings and holding regular labor-management meetings, our colleagues can also give their opinions or suggestions through the communication channel within their unit or cross-unit, reaching the goal of sufficient communication and efficient problem-solving. (2) 1. The Company’s Articles of Incorporation clearly states that “In case the company has yearly profit, at least 1% shall be appropriated as employee remuneration”. Moreover, performance of various business groups and personal performance are used as reference base for determination, and after the approval of authorization manager is gained, reasonable reward shall be given to employees. 2. The Company’s holiday system has been formulated in accordance with the Labor Standards Act. 3. For the status of the Company's employee welfare measures and implementation, please refer to “V. Overview of Business Operation”. (3) “Providing a safe and health workplace for employees” is the Company’s fundamental obligation. Aside from establishing a Labor Safety and Health Management Committee to implement necessary workplace environmental inspection, various safety and health facilities for labors and improvement or proposal of suggestions are also provided. Safety lectures with topics of personal injuries or accidental disasters are regularly held to build a safe work place. As a means to raise awareness of colleagues’ fire and fire protection to avoid the cause of accident due to panicking in the occurrence of fire or other disasters, the Company has established a Self-Defense Fire Protection Team, and regular firefighting drills are performed. (4)The Company values theimportance ofemployees’competitiveness	None None

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Items			Implementation Status	Non- implementatio n and its reason(s)
	Y	N	Summary
relevant raining and skill development for employees? (5) If the Company followed relevant laws and regulations and international guidelines on consumer health and safety, customer privacy, marketing and labeling of products and services and established relevant consumer protection policy and grievance channel? (6) If the Company established suppliers management policy requesting suppliers to comply with relevant regulations on EHS and human rights issues and monitored suppliers’ execution status.	V V		and is dedicated to talent development. Annual education and training plans are arranged according to the education and training Measures. Flexible adjustment may be made according to the nature of work to meet expectations of duty and career development. (5) The Company is in the manufacturing industry; products are not directly sold to consumers. Even though there are no compliant procedures in terms of R&D, procurement, manufacturing, production and service to protect consumers’ rights and interests, a section dedicated to stakeholders can be found on the Company's website in accordance with the Business Integrity Rules. There is also a compliant management to prevent product or service from directly or indirectly damaging the rights and interests, health and safety of consumers or other stakeholders. (6) The Company evaluates and inspects the condition of suppliers in accordance with the Company's “Supplier Management Measures”, “Supplier Evaluation Management Procedures”, “Supplier Questionnaire”, and “Inspection Form of Environmental Quality Assurance System for Suppliers”. The Company performs an evaluation on new suppliers to determine whether it can become a qualifiedmanufacturer; in terms of existing suppliers, the Company carries out regular evaluation to ensure they are adequate and provide guidance on supplier compliance with matters namely environmental management, restricted substance control, non- hazardous substances and non-conflict miners. All suppliers signed the contract with the commitment of complying with the Company’s environmental policies including compliance of laws and regulations, reduction of impact, continuous improvement, implementation of education, and communication. If a supplier is involved with unlawful incident, the Companymay terminateits contract. Where a supplier, customeror	None None None

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Items	Implementation Status	Implementation Status	Implementation Status	Non- implementatio n and its reason(s)
	Y	N	Summary
			an entity which the Company does business with is suspected to have violated the Company’s CSR policies which has made a significant impact on the environment and society, the business relationship between 2 parties may be considered to be terminated. In light of the important issue of environmental protection, countries in the EU and other countries have passed acts including the Restriction of Hazardous Substances Directive (RoHS) and Waste Electrical and Waste Electric and Electronic Equipment (WEEE). As a member of the green product supply chain, not only does Nishoku Technology promote products that are lead-free but is also dedicated to fulfilling the needs of customers regarding heavy metal and banned chemical substances. We are currently promoting forbidden substance control and have released statement that all suppliers must meet the standard prescribed by laws and regulations.
5. If the Company’s CSR report prepared based on international recognized standard and if the report verified by the third party?	V		The Company has established the Corporate Social Responsibility Best Practice Principles. There is no major difference between the Company's CSR status and self-established CSR Best Practice Principles.	None
6. If the Company established any guideline of corporate social responsibility in accordance with “Corporate Social Responsibility Best-Practice Principles for Listed Companies”? As a means to fulfill CSR and improve the balance of economy, society, the environment and ecology, and sustainable development, the Company's Board of Directors passed the establishment of the Company's “CSR Best Practice Principles” in November 2015. Inspection of execution status is carried out on a regular basis and improvements are made accordingly. Since the establishment of the Principles, no material variation has been found.
7. Other material information that helps to understand the operation of corporate social responsibility: (I) As a means to fulfill corporate responsibility in protecting the environment, the raw materials currently used by the Company all comply with the RoHS regulations prescribed in July 2006. The dangerous substances stipulated in the RoHS are strictly prohibited in the production, and relevant information is also delivered to all departments, ensuring that all products of the Company comply with the RoHS or meet the needs of our customers.

As a means to fulfill CSR and improve the balance of economy, society, the environment and ecology, and sustainable development, the Company's Board of Directors passed the establishment of the Company's “CSR Best Practice Principles” in November 2015. Inspection of execution status is carried out on a regular basis and improvements are made accordingly. Since the establishment of the Principles, no material variation has been found.

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Items	Items	Implementation Status	Implementation Status	Implementation Status	Implementation Status
		Y	N	Summary
(II) With a certain amount of money, the Company engages in events of social care and disadvantaged groups. Employees of the Company are also encouraged to take part in doing charities and make a difference in order to give back to the society. Number Name of the Recipient Amount 1 Genesis Social Welfare Foundation 55,000 2 Mennonite Social Welfare Foundation 59,599 3 Yilan CountyPrivate Buddhism Puxian Social Welfare CharityFoundation 57,600 4 The Hualien County Christian Missionary Association of Taiwan Province, affiliated to the Hualien Bethesda Home for handicapped 60,000 5 Taiwan Fund for Children and Families 65,000 6 XinzhuangDistrict,Xinbei CityOffice 50,000 7 The Taichung City Private Huiming Blind Child Welfare Association is attached to the Christian HuimingBlind Welfare Association 60,000 8 The Chiayi Diocese of Chiayi County is attached to the Chiayi Diocese of the Catholic Church 60,000 9 Huashan Social Welfare Foundation 70,000 10 New Taipei CityPrivate Leshan Park Social Welfare CharityFoundation 60,000 11 Children Are Us Foundation 4,990 12 Wujie Township Office, Yilan County (Wujie Digital Opportunity Center) 30,000 13 Longqi Elementary School, Longqi District, Tainan City 6,000 14 Dongshan Elementary School, Dongshan District, Tainan City 18,000 15 World Vision Taiwan 42,000 16 Nantou CountyPrivate Xuan-Kuan CaringHome 59,245 17 FuwangElementarySchool 36,000 18 Andrew CharityAssociation 10,000
Number	Name of the Recipient				Amount
1	Genesis Social Welfare Foundation				55,000
2	Mennonite Social Welfare Foundation				59,599
3	Yilan CountyPrivate Buddhism Puxian Social Welfare CharityFoundation				57,600
4	The Hualien County Christian Missionary Association of Taiwan Province, affiliated to the Hualien Bethesda Home for handicapped				60,000
5	Taiwan Fund for Children and Families				65,000
6	XinzhuangDistrict,Xinbei CityOffice				50,000
7	The Taichung City Private Huiming Blind Child Welfare Association is attached to the Christian HuimingBlind Welfare Association				60,000
8	The Chiayi Diocese of Chiayi County is attached to the Chiayi Diocese of the Catholic Church				60,000
9	Huashan Social Welfare Foundation				70,000
10	New Taipei CityPrivate Leshan Park Social Welfare CharityFoundation				60,000
11	Children Are Us Foundation				4,990
12	Wujie Township Office, Yilan County (Wujie Digital Opportunity Center)				30,000
13	Longqi Elementary School, Longqi District, Tainan City				6,000
14	Dongshan Elementary School, Dongshan District, Tainan City				18,000
15	World Vision Taiwan				42,000
16	Nantou CountyPrivate Xuan-Kuan CaringHome				59,245
17	FuwangElementarySchool				36,000
18	Andrew CharityAssociation				10,000

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	Items			Implementation Status
		Y	N	Summary
19	Love Second SpringCultural and Educational Foundation			50,000
	TOTAL			853,934

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3.4.6 Implementation of Ethical Corporate Management Best Practice Principles:

Items			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
1. Ethical Corporate Management Policy (1) If the Company established ethical corporate management policy approved by the Board and specified procedures in its internal policies and external document? If the Board of Directors and the management team committed to enforce such policies rigorously and thoroughly? (2) If the Company established a system to periodically evaluate business activities which are possibly at a higher risk of being involved in an unethical conduct and if relevant prevention policy covering business activities specified in the second paragraph of Article 7 of Ethical Corporate Management Best Practice Principles for TWSE/GTSE Listed Companies established thereof?	V V		(1) The Company's Board has passed the “Ethical Management Best Practice Principles” and has clearly disclosed its ethical corporate management policies and conduct measures in its “Management Rules”, “Conduct Rules”, and “Professional Ethics for Employees and Code of Conduct”. The Board and the Management are committed to the implementation of ethical management and have formulated a recusal system for the Board in the Company’s “Ethical Conduct Rules for Directors and Supervisors” and “Rules and Procedures for Board Meetings” which states that if the participation by the board member or their representative is likely to prejudice the interest of the Company, the concerned person may not participate in discussion of or voting. . (2) The Company regularly analyses the forms of the whistle- blowing system for unethical conducts. An effective accounting system and internal control system are established for business activities with high risks, and the following procedures have been formulated in the “Ethical Management Best Practice Principles”: � No providing or acceptance of bribes. � No providing illegal political contributions. � No improper charitable donations or sponsorship. � No offering or acceptance of unreasonable presents or hospitality, or other improper benefits. � No misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights. � No engaginginunfaircompetitive practices.	None None

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Items			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
(3) If the Company executed any measures to prevent unethical conduct and clearly prescribed the specific ethical management practice including operational procedures, guiding principles, penalties and grievance channels? If the Company reviewed the execution of these measures periodically and revised the measures where necessary.	V		� No damage directly or indirectly caused to the rights or interests, health, or safety of consumers or other stakeholders in the course of research and development, procurement, manufacture, provision, or sale of products and services. (3) The Company has established the “Ethical Management Best Practice Principles”, which has clearly stated its operating procedures, conduct guidelines, penalties for violation and reporting system, such as channels including dedicated contact personnel, contact number and e-reporting mailbox on the Company’s website and internal website. For Company employees involving in ethical conduct, it shall be handled according to the reporting procedures of the “Handling Measures for Reporting Illegal and Unethical and Dishonest Conducts”.	None
2. Implementation of Ethical Corporate Management (1) If the Company checked whether the respective counterparty holds any record of unethical misconduct and if the contract terms required the compliance of ethical corporate management policy? (2) If the Company set up a unit, under the direct supervision of the Board of Directors, to handle the implementation and supervision of ethical corporate management as well as prevention of unethical conduct and reported to the Board of Directors periodically (annually)?	V V		(1) The Company has established the “Supplier Evaluation Management Procedures” and “Supplier Questionnaire” for approving trading objects for which the Company does business activities with. For suppliers/contractors which the Company is already in cooperation with, regular audits and inspections are carried out. Related terms and conditions between the Company and trading objects are also specified in the contact. (2) The Company’s Finance Department is the concurrent unit for the promotion of corporate ethical management, and various operations are facilitated according on applicable management measures, ensuring the implementation of ethical management best practice principles. The execution status is reported to the BoardMeeting atleast once a year.	None None

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Items			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
(3) If the Company established a policy on prevention of conflict of interests, provided appropriate reporting channel and executed rigorously and thoroughly?.	V		Reported to the board of directors on 2020/12/29.Related execution status for the Company's 2020 ethical management policies: (1) Education Training External education and trainings (courses include Practical Ethical Management seminars, Accounting Systems and Internal Control Systems) concerning issues of ethical management were held in 2020. A total of 20 employees took part with a total of 189 hours of courses. (2) Decree advocacy (3) The Company has established the “Ethical Management Best Practice Principles” and when a proposal at a given Board of Directors meeting concerns the personal interest of, or the interest of the juristic person represented by any of the directors, managerial officers, and other stakeholders attending or present at Board Meetings of the Company, the concerned person shall state the important aspects of the relationship of interest at the given Board Meeting. If his or her participation is likely to prejudice the interest of the company, the concerned person may not participate in discussion of or voting on the proposal and shall recuse himself or herself from the discussion or the voting, and may not exercise voting rights as a proxy for another director. As a means to avoid improper leaks of internal material information, the “Operating Procedures for the Prevention of Insider Trading” has also been established for the compliance of the Company’s directors, managerial officers, employees and shareholders holding more than 10% of the Company’s shares as well as spouses, minor children and holding shares using another person’s name stated previously. There is also a stakeholders section on the Company's website,	None

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Items			Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
(4) If the Company established an effective accounting system and internal control system and if internal auditing department formulated auditing plan based on the result of risk evaluation on unethical conduct and audited the compliance of prevention plan or authorized external accounting firm to conduct auditing? (5) If the Company organized training and awareness programs on ethical corporate management to internal and external parties?	V V		providing a channel for making statements. (4) The accounting system and internal control system established by the Company are able to control relevant operation risks. However, with the change of economic environment and the Company's expanding business scales, the Company adheres to its ethical management while at the same time making appropriate reviews and improvements. The internal audit personnel carries out audits on the compliance of the systems stated previously, and shall make an audit report to submit to the Board meeting. CPAs are appointed to execute audits, and when it is necessary, professionals may be appointed for assistance. (5) As required by the “Regulations Governing Establishment of Internal Control Systems by Public Companies” and the “Operating Procedures for the Prevention of Insider Trading” passed by the Board, an Education Promotion Handbook is produced quarterly and courses are carried out by external education institutions for assistant general manger-level and above. Trainings relating to Professional Ethics for Employees and Conduct of Conduct are arranged for the Company's general employees.	None None
3.Implementation of whistleblowing system (1) If the Company established a whistleblowing and reward system? Upon receiving a reported case, is there a dedicated personnel handling the reported case?	V		(1) The Company has established the “Handling Measures for Reporting Illegal and Unethical and Dishonest Conducts”, as well as independent whistle-blowing mailbox for internal and external personnel. A whistle-blower may send the reporting matter directly to such mailbox. The authorization unit appoints suitable dedicated personnel to handle the matter according to the nature of such matter, and the identity and reporting content will be kept confidential. An internal audit may be carried out according to needs.	None

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Items	Implementation Status	Implementation Status	Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
(2) If the Company established standard operational procedures and relevant information confidentiality policy for investigation of reported cases and recommendation of preventive measures? (3) If the Company established any measures for protecting whistleblowers from inappropriate disciplinary actions?	V V		(2) The Company has established applicable standard operating procedures investigation in terms of reporting matters and an investigation is conducted under a confidential document. (3) The Company's “Handling Measures for Reporting Illegal and Unethical and Dishonest Conducts” clearly specifies that the handling personnel shall keep confidential of the identity of the whistle-blower as well as the content, and shall protect such person from suffering any consequences of reporting an incident.	None None
4. Information Disclosure If the Company disclosed ethical corporate management policy and its status of implementation via corporate website or Market Observation Post System?	V		The Company has disclosed information relating to ethical management on its website and annual report for relevant personnel.	None
5. If the Company established any guideline of ethical business conduct in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies” and please state the implementation status of the guideline and any reasons for non-implementation? The Company’s “Ethical Management Best Practice Principles” has been approved by the Board Meeting and has been publicly announced on the Company’s website and MOPS for compliance of employees. The concurrent unit, Finance Department, is responsible for the promotion of corporate ethical management.
6. If any other information that helped to understand the operation of ethical business conduct and its implementation. (ie. Declarations, trainings and conventions held with vender to promote ethical business conduct)? (I) In the daily operation, it is prohibited to involve bribery when various departments are conducting businesses, regardless of directly or through third parties (including through subsidiaries, joint ventures, agents, representatives, consultants, stockbrokers, contractors, suppliers or other media). (II) All forms of bribery are prohibited, such as: receiving contract rebates, or taking advantages from customers, agents, contractors, suppliers and employees. However, it is not limited to benefits received or given with accepted social customs (such as gifts to manufacturers on 3 major festivals) or gifts for when the Company visits customers within an amount under NT$10,000, and is carried out occasionally without any concern of affecting any specific rights and obligations. The “Group Decision-Making Authority Form” shall be filled in and submitted to the authorization managerprior to makinganyexpenditure relatingto entertainment.

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Items	Implementation Status	Implementation Status	Implementation Status	Non- implementation and its reason(s)
	Y	N	Summary
(III) It is prohibited to make direct or indirect donations to specific political parties, party members, candidates, political organizations or persons as a form of bribery. (IV) For making donations to charitable institutions, an application must be sent for approval by the authorization manager, ensuring the transparency of all donation process. (V) No offering or acceptance of unreasonable presents or hospitality, or other improper benefits. Unreasonable gifts, hospitality or other improper benefits are gifts that are not part of normal accepted social customs which should not be carried out occasionally that may affect specific rights and obligations. (VI) For data confidentiality of business secrets or commercially sensitive information obtained, the Company has established the “Insider Trading Prevention Management Operating Procedures” for the compliance of the directors and supervisors. Employees are also required to sign an employee confidentiality agreement. For suppliers, customers or trading object in which the Company has business with involved in unethical conduct,the business relationshipbetween bothparties should be terminated.

3.4.7 The Company has Corporate Governance Rules and Related Measures:
The Company currently has Corporate Governance Rules, CSR Best Practice Principles, Ethical Conduct Rules for Directors, Supervisors and Managerial Officers, Rules and Procedures for Board Meetings, Rules of Procedure for Board of Directors Meetings, Duties of Independent Directors, Professional Ethics for Employees and Code of Conduct, and comprehensive internal control system and internal audit system in order to implement the operation and promotion of corporate government. Related rules and measures can be found on the Company’s internal and external websites.
3.4.8 Other important may be disclosed regarding information to improve the understanding of the Company's corporate governance operation: The Company has a corporate governance section on the website for the disclosure of related information on corporate governance.
- Company website:https://www.nishoku.com.tw/zh-TW/Investor/Company
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3.4.9 The following items related to the implementation of internal control systems shall be disclosed:
(1) Internal Control Statement

Nishoku Technology Inc. Statement of Internal Control System

Date: February 26, 2021

Based on the findings of self-assessment, Nishoku Technology Inc. states the following with regard to its internal control system in 2020:

Nishoku Technology Inc. is fully aware that establishing, operating and maintaining an internal control system are the responsibilities of its Board of Directors and management. The aim of the internal control system is to provide reasonable assurance to effectiveness and efficiency of operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparency and regulatory compliance of financial reporting and compliance with of applicable laws, regulations and bylaws.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can only provide reasonable assurance of accomplishing the aforementioned three objectives. Moreover, the effectiveness of an internal control system may be subject to changes of environmental or circumstances. Nevertheless, the internal control system of Nishoku Technology Inc. contains self-monitoring mechanism and Nishoku Technology Inc. takes corrective actions whenever a deficiency is identified.
Nishoku Technology Inc. evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control System by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify five constituent elements of internal control based on the process of management control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communications, and (5) monitoring activities. Each component further contains several items. Please refer to the Regulations for details.
Nishoku Technology Inc. has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
Based on the findings of the self-assessment mentioned in the preceding paragraph, Nishoku Technology Inc. believes that, as of December 31, 2020, its internal control system (including its supervision and management of subsidiaries), as well as understanding the degree of achievement of its objectives concerning operational effectiveness and efficiency, reliability, timeliness, transparency and regulatory compliance of financial reporting, and compliance with the applicable laws, regulations and bylaws, were effective in design and operation, and reasonably assured the achievement of the above-stated objectives.
This Statement will be integral part of Nishoku Technology Inc.’s Annual Report for the year 2020 and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Law.
This Statement has been passed by the Board of Directors in their meeting held on February 26, 2021 with zero of nine attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Nishoku Technology Inc.

Chen, Piao-Fu Chairman

Tsai, Chien-Sheng President and Chief Executive Officer

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(2) Where a CPA is entrusted to carry out a special audit of the internal control system,
furnish the CPA audit report: None.
3.4.10 The penalties delivered to the Company and the staffs of the Company, or the penalties delivered by the Company to the staffs for violations of internal control system in the most recent years and up to the date of the annual report which caused material impact to shareholder equity or share price and content of penalty shall be disclosed accordingly: None.
3.4.11 Major Resolutions of Shareholders’ Meeting and Board Meetings
3.4.11.1 The 2020 major Resolutions of Shareholders’ Meeting and its Implementation Status:
Motion for 2019 Business Report and Financial Statements.
- Execution status: according to the resolution.
Motion for 2019 earnings distribution.

Execution status: a cash dividend of NT$4 per share was issued. Base date: July 7, 2020. The distribution was completed on July 29, 2020.

3.4.11.2 Major Resolutions of Board Meetings

Date	Major resolutions	Matters listed in §14-3 of the Securities and Exchange Act	Independent director holding any dissent or qualified opinion
2020 First session March 12, 2020	1. Motion for the proposal of the investment in Nishoku TechnologyVietnam Co.,Ltd.	�	None
	2. Motion for the Company’s 2019 parent only and consolidated financial statements	-	None
	3. Motion for the Company’s 2019business report	-	None
	4. Motion for the Company’s 2019 internal control system statement	�	None
	5. Motion for the Company’s 2019 remuneration to directors, supervisors and employees, and year-end bonus for managerial officers	-	None
	6. Motion for amendment to the “Management Procedures for the Preparation of Financial Statements”	�	None
	7. Motion for amendment to the “Rules and Procedures of Meetings of Shareholders”	-	None
	8. Motion for the proposal of the time, location and agendas for the Company’s 2020 General Meeting of Shareholders and that voting method may be conducted electronically	-	None
	9. Proposal of setting a time to accept shareholders’ proposals for 2020 General Meeting of Shareholders	-	None

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Date	Major resolutions	Matters listed in §14-3 of the Securities and Exchange Act	Independent director holding any dissent or qualified opinion
	10. Motion for the proposal of signing a loan limit with the bank	-	None
	Opinion of the independent directors: None.
	How the companyresponded to these opinions: None.
	Resolution: The motion was passed without objections after the Chair consulted with all attendingindependent directors and directors.
	No other motions or extraordinarymotions
2020 2nd session April 30, 2020	1. Motion for the Company’s 2019 earnings distribution	-	None
	2. The Company's 2019 Earnings Distribution Proposal for the Distribution of Shareholders' Dividends in Cash	-	None
	3.Motion for amendment to the “Articles of Incorporation"	-	None
	4. Motion for amendment to the “Rules and Procedures for Board Meetings”	-	None
	5. Motion for the formulation of “Audit Committee Charter”	-	None
	6. Motion for the proposal of the Company’s 100% equity held offshore company Same Start Ltd. (ANGUILLA) lending funds to Nishoku TechnologyVietnam Co Ltd	�	None
	Opinion of the independent directors: None.
	How the companyresponded to these opinions: None.
	Resolution: The motion was passed without objections after the Chair consulted with all attendingindependent directors and directors.
	No other motions or extraordinarymotions
2020 3rd session June 30, 2020	1. Motion for the proposal of the Company’s 100% equity held offshore company Same Start Ltd.(ANGUILLA) lending funds to Nishoku TechnologyVietnam Co Ltd	�	None
	2. The company plans to set up a director of corporate governance	-	None
	3. Motion for amendment to the “Operating Procedures for all Demands for the Board”	-	None
	4. Motion for the proposal of signing a loan limit with Mega Bills	-	None
	5.Motion for theproposal of signinga loan limitwithCitibank	-	None
	6. The company's 100% investment subsidiary Nishoku Boueki Co., Ltd. signed a loan quota proposal	�	None
	Opinion of the independent directors: None.
	How the companyresponded to these opinions: None.
	Resolution: The motion was passed without objections after the Chair consulted with all attendingindependent directors and directors.
	No other motions or extraordinarymotions

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Date	Major resolutions	Matters listed in §14-3 of the Securities and Exchange Act	Independent director holding any dissent or qualified opinion
2020 4th session July 30, 2020	1. Motion for the proposal of signing a loan limit with International Bills Finance Corporation	-	None
	2. Motion for amendment to the “Remuneration Committee Charter”	-	None
	3. Motion for amendment to the “Rules Governing the Scope of Powers of Independent Directors”	-	None
	Opinion of the independent directors: None.
	How the companyresponded to these opinions: None.
	Resolution: The motion was passed without objections after the Chair consulted with all attendingindependent directors and directors.
	No other motions or extraordinarymotions
2020 5th session October 29, 2020	1. Set the base date for the issuance of new shares and capital increase in the third quarter of 2020 for the exchange of common shares for the company’s employee stock option certificates	-	None
	2. Motion for amendment to the formulation of “Audit Committee Charter”	-	None
	3. Motion for amendment to the “Rules and Procedures for Board Meetings”	-	None
	4. Motion for amendment to the "Corporate Governance Code of Practice"	-	None
	5. Motion for amendment to the "Corporate Social Responsibility"	-	None
	6. Motion for amendment to the "Internal Audit Implementation Rules"	-	None
	7. Motion for amendment to the " R&D cycle"、 "Production cycle" and " Purchase andpayment cycle"	�	None
	8. Motion for the proposal of signing a loan limit with First Commercial Bank	-	None
	Opinion of the independent directors: None.
	How the companyresponded to these opinions: None.
	Resolution: The motion was passed without objections after the Chair consulted with all attendingindependent directors and directors.
	No other motions or extraordinarymotions
2020 6th session December 29, 2020	1. Motion for reporting the Company’s 2021 budgets and businessplans	-	None
	2. Motion for reporting the Company’s 2021 audit plans	�	None
	3. Motion for the Company’s 2021 independence evaluation of CPAs appointed bythe CPA firm	�	None
	4. Motions resolved by the Remuneration Committee on the second meeting in 2020、Implementation of Directors' Remuneration and Employees' Dividends in 2019	-	None
	5. Proposed to appoint Ms. Wu Yinglan as the vice president of the company。	-	None

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Date	Major resolutions	Matters listed in §14-3 of the Securities and Exchange Act	Independent director holding any dissent or qualified opinion
	6. Motion for amendment to the "Administrative Measures for the Appointment and Reward of Managers "	-	None
	7. Motion for the amendment to the “Regulations Governingthe Board Performance Evaluation”	-	None
	8.Motion for the continuation of the Company's credit contract with Taipei Fubon Commercial Bank.	-	None
	Opinion of the independent directors: None.
	How the companyresponded to these opinions: None.
	Resolution: The motion was passed without objections after the Chair consulted with all attendingindependent directors and directors.
	No other motions or extraordinarymotions
2021 First session February 26, 2021	1. Motion for the Company’s 2020 parent only and consolidated financial statements	-	None
	2. Motion for the Company’s 2020 remuneration to directors and employees, and year-end bonus for managerial officers	-	None
	3. Set the base date for the issuance of new shares and capital increase in the fourth quarter of 2020 for the exchange of common shares for the company’s employee stock option certificates	-	None
	4. Motion for the Company’s 2020 business report	-	None
	5. Motion for the Company’s 2020 internal control system statement	�	None
	6. Motion for amendment to the “Rules and Procedures of Meetings of Shareholders”	-	None
	7. Motion for amendment to the “Regulations Governing Election of Directors”	-	None
	8. Motion for amendment to the “Ethical Conduct Rules for Directors and Supervisors”	-	None
	9. Abolish the company's Regulations on the scope of powers of supervisors.。	-	None
	10. Motion for the proposal of the time, location and agendas for the Company’s 2021 General Meeting of Shareholders and that votingmethod maybe conducted electronically	-	None
	11. Proposal of setting a time to accept shareholders’ proposals for 2021 General Meetingof Shareholders	-	None
	12. Motion for the proposal of signing a loan limit with CTBC Bank	-	None
	13. Motion for the proposal of signing a loan limit with Mega Bank	-	None
	14. Motion for the proposal of signing a loan limit with First Commercial Bank	-	None
	15. Motion for the proposal of signing a loan limit with Esun Bank	-	None

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Date	Major resolutions	Matters listed in §14-3 of the Securities and Exchange Act	Independent director holding any dissent or qualified opinion
	Opinion of the independent directors: None.
	How the companyresponded to these opinions: None.
	Resolution: The motion was passed without objections after the Chair consulted with all attendingindependent directors and directors.
	No other motions or extraordinarymotions

3.4.12 Major Issues of Record or Written Statement Made by Any Director Dissenting to Important Resolutions Passed by the Board of Directors in 2020 and to the date of the annual report: None.
3.4.13 Resign and discharge by the Company's chairman, president, accounting head, treasurer, internal audit head and research and development head in the latest fiscal year and as of the publication date of the annual report: None.
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3.5 Information Regarding CPA Fees

Range of CPA professional fees

CPA Firm	CPA Firm	CPA	CPA	CPA	AuditingPeriod	AuditingPeriod	Note
KPMG		Cheng-Chien Chen		Sheng-He Yu	2020/1/1~2020/12/31
						unit: NT$thousand
Items of CPAs Amount Bracket		fee	Auditing Fees			Non-Auditing Fees	Total
1	Below 2,000 thousand					755	755
2	2,000 thousand (included) ~ 4,000 thousand(excluded)
3	4,000 thousand (included) ~ 6,000 thousand(excluded)		4,520				4,520
4	6,000 thousand (included) ~ 8,000 thousand(excluded)
5	8,000 thousand (included) ~ 10,000 thousand(excluded)
6	Over 10,000thousand(included)

3.5.1 When non-audit fees paid to the CPA, to the accounting firm of the CPA, and/or to any affiliated enterprise of such accounting firm is one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed:

Information on CPA fees

unit: NT$ thousand

			Non-AuditingFees	Non-AuditingFees	Non-AuditingFees	Non-AuditingFees		Auditing Period
				Industrial and
CPA Firm	CPA	Fees	System						Note
				commericial	HR	Others	Total
			Design
				registration

	Cheng-Chien
	Chen							2020/1/1~	Service fees for
KPMG		4520	0	45	0	710	755
	Sheng-He	,						2020/12/31	transfer pricing

	Yu

3.5.2 Audit fee for the change of accounting firms paid in the year is less than the previous year, the decreased amount, percentage and reason of the audit fee shall be disclosed: None.

3.5.3 Over 10% decrease in audit fee on a year-to-year basis: Not applicable.

3.6 Information on Change of CPA: None

3.7 If the chairman, president, and financial or accounting manager of the Company who had worked for the independent auditor or the related party in the most recent year, the name, title, and the term with the independent auditor or the related party must be disclosed: None.

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3.8 Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Department Heads and Shareholders of 10% Shareholding or More

3.8.1 Information on Net Change in Shareholding：

Unit: Share

				Unit: Share	Unit: Share
Title	Name	2020		2021/1/1-2021/4/18
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Director	Ghi Yang Investment Limited Rep.: Chen,Piao-Fu	0	0	0	0
Director	Heng Sheng Investment Limited Rep.: Tsai, Chien- Sheng	0	0	0	0
Director	Heng Sheng Investment Limited Rep.: Wu,Ying-Lan
Director	Cyuan Guan Investment Limited Rep.: Chang, Wen- Hsien		0	0	0
Director	Jhan Yu Investment Limited Rep.: Hsieh,Xin-Yi	0	2,000,000 (2,000,000)	0
Director	Chang Shun Investment Limited Rep.: Fan,Chia-Wen	0	0	0	0
Independen t Director	Ko, Shun-Hsiung	0	0	0	0
Independent Director	Chan, Chin-Hung	0	0	0	0
Independent Director	Lin, Horng Chang	0	0	0	0
Chief Strategy Officer	Chen, Piao-Fu		0	0	0
President	Tsai, Chien-Sheng	(1,800,000)	0	0	0
Executive Vice President R&D Head	Chang, Wen-Hsien	(3,400,000)	0	0	0
Accounting Officer	Lin, Tzu-Hsuan	(18,000)	0	0	0
Audit Officer	Cheng, Chao-Ming	15,000	0	0	0

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3.8.2 Information of Shares Transferred:

Information on Transfer of Equity

Name	Reason for Transfer	Transaction Date	Trading Counterparts	The Relationship between the Counterparty and the company's Director, Supervisor, Manager, or Shareholder with a Stake of More Than 10 Percent	Shares	Transactio n Price
Chang, Wen- Hsien	Offset an establishment	2020/8/14	Yun Ding Investment Limited	Person in Charge	3,400,000	67.90

3.8.3 Information of Equity Pledged:

Information on Pledge of Equity

Name	Reason for Change in Equity Pledge	Date of Change	Trading Counterparts	The Relationship between the Counterparty and the company's Director, Supervisor, Manager, or Shareholder with a Stake of More Than 10 Percent	Shares	Sharehol ding Ratio	Pledge Ratio	Pledge (Redemption) Amount
Jhan Yu Investmen t Limited	Redeemed	2020/2/12	First Commercial Bank Wu-Ku Branch		2,000,000	4.29%	74.54%
Jhan Yu Investment Limited	Pledged	2020/2/12	First Commercial Bank Wu-Ku Branch		2,000,000	4.29%	74.54%

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3.9 Shareholders who hold the top ten shareholdings, who are related to each other or relatives within the relationship of spouse, second parent, etc.

	Unit: shares;%; As of 2021/04/19	Unit: shares;%; As of 2021/04/19	Unit: shares;%; As of 2021/04/19	Unit: shares;%; As of 2021/04/19	Unit: shares;%; As of 2021/04/19	Unit: shares;%; As of 2021/04/19	Unit: shares;%; As of 2021/04/19	Unit: shares;%; As of 2021/04/19	Unit: shares;%; As of 2021/04/19
Name	Shareholding		Spouse & Minor		Shareholding by Nominee Arrangement		The relationship between any of the Company’s TopTen Share holders		Remarks
	Shares	%	Shares	%	Shares	%	Name	Relation
Ji Teng Investment Limited Rep.: Tsai, Chien-Sheng	4,500,000 2,130	7.19% 0.00%	0 445,197	0% 0.71%	0 4,500,000	0% 7.19%	Heng Sheng Investment Limited	Same as the Chairperson	None
Yun Ding Investment Limited	4,050,000	6.47%	0	0%	0	0%	None	None
Rep.: Chang, Wen-Hsien	117,309	0.19%	9,316	0.01%	4,050,000	6.47%
CTBC Bank is entrusted with the custody of the investment account of Jin Zhi Limited Rep.: Hsieh, Xin-Yi	3,897,856 3,883,968	6.23% 6.21%	0 38,400	0% 0.06%	0 0	0% 0%	None	None
							Jhan Yu Investment Limited	The Chairperson of the company
Jin Hong Investment Limited Rep.: Chen, Piao-Fu	3,600,000 222,682	5.75% 0.36%	0 336,476	0% 0.54%	0 3,600,000	0% 5.75%	Ghi Yang Investment Limited	Same as the Chairperson
Chang Shun Investment Limited Rep.: Chang, Pei-Yang	2,705,932 0	4.33% 0%	0 0	0% 0%	0 0	0% 0%	None	None
Jhan Yu Investment Limited Rep.: Hsieh, Xin-Yi	2,683,082 3,883,968	4.29% 6.21%	0 38,400	0% 0.06%	0 0	0% 0%	Hsieh, Xin- Yi	Representative person
Heng Sheng Investment Limited Rep.: Tsai, Chien-Sheng	2,263,956 2,130	3.62% 0.00%	0 445,197	0% 0.71%	0 4,500,000	0% 7.19%	Ji Teng Investment Limited	Same as the Chairperson
CTBC Bank is entrusted with the custody of the investment account of Rui Bo Lian Limited	2,054,360	3.28%	0	0%	0	0%	None	None
Ghi Yang Investment Limited	1,880,621	3.01%	0	0%	0	0%	Jin Hong Investment Limited	Same as the Chairperson

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Name Rep.: Chen, Piao-Fu	Shareholding	Shareholding	Spouse & Minor	Spouse & Minor	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	The relationship between any of the Company’s TopTen Share holders	The relationship between any of the Company’s TopTen Share holders	Remarks
	Shares 222,682	% 0.36%	Shares 336,476	% 0.54%	Shares 3,600,000	% 5.75%	Name	Relation

3.10 Long-Term Investment Ownershi

Unit: thousand shares; %; As of 2020/12/31

Long-Term Investment （Note1）	Ownership by Pegatron	Ownership by Pegatron	Direct/Indirect Ownership by Directors and Management	Direct/Indirect Ownership by Directors and Management	Total Ownership	Total Ownership
	Shares	%	Shares	%	Shares	%
SUN NICE LTD. (SAMOA)	34,468	100%	0	0%	34,468	100%
NISHOKU BOUEKI CO., LTD.	6,300	100%	0	0%	6,300	100%
SUN NICE LTD.(B.V.I)	0	0%	15,697	100%	15,697	100%
NISHOKU TECHNOLOGY VIETNAM CO.,LTD.	(Note 2)	100%	0	0%	(Note 2)	100%
SAME START LTD. (ANGUILLA)	0	0%	0	100%	0	100%
NISHOKU HONG KONG HOLDING LIMITED	0	0%	62,298	100%	62,298	100%
NISHOKU PLASTIC MOLD (SHENZHEN)CO.,LTD.	0	0%	(Note 2)	100%	(Note 2)	100%
KUNSHAN NISHOKU PLASTIC ELECTRONIC CO.,LTD.	0	0%	(Note 2)	100%	(Note 2)	100%

Note 1: Refers to the Company’s investments accounted for under equity method. Note 2: No shares issued.

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4. Capital and Shares

4.1 Capital and Shares

4.1.1 Type of Stock

As of the publication date of the annual report; unit: thousand shares; NT$ thousand

Year/ Month	Issue Price	Authorized Capital	Authorized Capital	Paid-In Capital	Paid-In Capital	Remarks	Remarks	Remarks
		Shares	Amount	Shares	Amount	Sources of Capital	Capital Increase by Assets Other than Cash	Others
May 1980	1,000	2.5	2,500	2.5	2,500	Founding capital	None	Note 1
Nov 1983	1,000	10	10,000	10	10,000	Cash Capital Increase - NT$7,500 thousand	None	Note 2
Jun 1988	1,000	20	20,000	20	20,000	Cash Capital Increase - NT$10,000 thousand	None	Note 3
Mar 2008	10	22,000	220,000	22,000	220,000	Cash Capital Increase - NT$200,000 thousand	None	Note 4
May 2008	20	100,000	1,000,000	32,000	320,000	Cash Capital Increase - NT$100,000 thousand	None	Note 5
Sep 2008	35	100,000	1,000,000	37,714	377,143	Cash Capital Increase - NT$57,143 thousand	None	Note 6
Dec 2008	40	100,000	1,000,000	54,214	542,143	Cash Capital Increase - NT$165,000 thousand	None	Note 7
Jan 2009	10	100,000	1,000,000	59,214	592,143	Capitalized earnings - NT$50,000 thousand	None	Note 8
May 2009	40	100,000	1,000,000	64,964	649,643	Cash Capital Increase - NT$57,500 thousand	None	Note 9
Jun 2009	45	100,000	1,000,000	70,964	709,643	Cash Capital Increase - NT$60,000 thousand	None	Note 10
Dec 2010	110	100,000	1,000,000	73,964	739,643	Cash Capital Increase - NT$30,000 thousand	None	Note 11
Oct 2011	55	150,000	1,500,000	81,164	811,643	Cash Capital Increase - NT$72,000 thousand	None	Note 12
Feb 2014	10	150,000	1,500,000	80,265	802,653	Cancellation of Treasury Shares - NT$8,990 thousand	None	Note 13
Aug 2016	10	150,000	1,500,000	79,303	793,033	Cancellation of Treasury Shares - NT$9,620 thousand	None	Note 14
Aug 2018	10	150,000	1,500,000	63,442	634,426	Cash Capital Increase - NT$158,607 thousand	None	Note 15
Nov 2018	10	150,000	1,500,000	62,296	622,962	Cancellation of Treasury Shares - NT$11,464 thousand	None	Note 16

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Nov 2020	10	150,000	1,500,000	62,446	624,462	Employee stock option certificate conversion shares 1,500 thousand	None	Note 17
Mar 2021	10	45,000	450,000	62,491	624,912	Employee stock warrants converted to common shares NT$450 thousands	None	Note 18

Note 1：Approved by Taiwan Provincial Government on May 20, 1980. Note 2：1983/11/10 Jin So Son Tzi No.246628

Note 3：1988/06/17 Jin So Son Tzi No.304680

Note 4：2007/07/20 Jin So Son Tzi No.09632459260 and 03/20/2008 Jin So Son Tzi No.09731903470 Note 5：2008/05/16 Jin So Son Tzi No.09732260590

Note 6：2008/09/23 Jin So Son Tzi No.09733121770 Note 7：2008/12/15 Jin So Son Tzi No.09701315730 Note 8：2009/01/14 Jin So Son Tzi No.09801004840 Note 9：2009/05/13 Jin So Son Tzi No.09801094360 Note 10：2009/06/04 Jin So Son Tzi No.09801111260 Note 11：2010/12/13 Jin So Son Tzi No.09901274890 Note 12：2011/10/17 Jin So Son Tzi No.10001239610 Note 13：2014/02/06 Jin So Son Tzi No.10301021820 Note 14：2016/08/10 Jin So Son Tzi No.10501189160 Note 15：2018/08/16 Jin So Son Tzi No.10701102870 Note 16：2018/11/27 Jin So Son Tzi No.10701145000 Note 17：2020/11/19 Jin So Son Tzi No.10901214520 Note 18：2021/03/23 Jin So Son Tzi No.11001047370

	Units: share	Units: share	Units: share	Units: share
Share Type	Authorized Capital			Remarks
	Issued Shares (Note)	Un-issued Shares	Total Shares
Common Share	62,561,229	87,438,771	150,000,000	None

Note: The Company's stocks are publicly-traded. 70,000 Shares refer to employee stock option conversion but alternation registration has not been performed

4.1.2 Information for Shelf Registration: None

4.2 Composition of Shareholders

As of 2021/04/19; Units: share ; %

Shareholder Structure Amount	Government Agencies	Financial Institutions	Other Juridical Person	Foreign Institutions & Natural Persons	Domestic Natural Persons	Treasure shares	Total
Number of Individuals	0	1	34	51	3,167	0	3,253
Number of Shares Held	0	1,800,000	26,539,625	9,867,014	24,354,590	0	62,561,229
ShareholdingRatio	0.00%	2.88%	42.42%	15.77%	38.93%	0.00%	100.00%

Note: refers to the number of shares repurchased by the Company.

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4.3 Distribution of Shareholdings

4.3.1 Common Share As of 2021/04/19; Units: number of people ;share ; %

4.3.1 Common Share		As of 2021/04/19;Units: num	ber ofpeople;share;%
Class of Shareholding (Unit :Share)	Number of Shareholders	Shareholding (Shares)	Percentage
1 ~ 999	733	210,930	0.34%
1,000 ~ 5,000	2,050	3,826,244	6.12%
5,001 ~ 10,000	200	1,496,238	2.39%
10,001 ~ 15,000	54	679,759	1.09%
15,001 ~ 20,000	61	1,103,094	1.76%
20,001 ~ 30,000	34	847,810	1.36%
30,001 ~ 50,000	34	1,393,978	2.23%
50,001 ~ 100,000	24	1,705,293	2.73%
100,001 ~ 200,000	23	3,005,534	4.80%
200,001 ~ 400,000	14	3,759,616	6.01%
400,001 ~ 600,000	8	4,071,773	6.50%
600,001 ~ 800,000	4	2,969,583	4.75%
800,001 ~ 1,000,000	1	956,294	1.53%
over 1,000,001	13	36,535,083	58.39%
Total	3,253	62,561,229	100.00%

4.3.2 Shareholding Distribution Status of Preferred Shares: None.

4.4 Register of Major Shareholders

As of 2021/04/19;Units: share;% Shareholding Shareholder's Name Shares Percentage Ji TengInvestment Limited 4,500,000 7.19% Yun DingInvestment Limited 4,050,000 6.47% CTBC Bank is entrusted with the custody of the investment account of Gold Telent Limited 3,897,856 6.23% Hsieh,Xin-Yi 3,883,968 6.21% Jin HongInvestment Limited 3,600,000 5.75% ChangShun Investment Limited 2,705,932 4.33% Jhan Yu Investment Limited 2,683,082 4.29% HengShengInvestment Limited 2,263,956 3.62% CTBC Bank is entrusted with the custody of the investment account of Rambo Land Limited 2,054,360 3.28% Ghi YangInvestment Limited 1,880,621 3.01%	As of 2021/04/19;Units: share;% Shareholding Shareholder's Name Shares Percentage Ji TengInvestment Limited 4,500,000 7.19% Yun DingInvestment Limited 4,050,000 6.47% CTBC Bank is entrusted with the custody of the investment account of Gold Telent Limited 3,897,856 6.23% Hsieh,Xin-Yi 3,883,968 6.21% Jin HongInvestment Limited 3,600,000 5.75% ChangShun Investment Limited 2,705,932 4.33% Jhan Yu Investment Limited 2,683,082 4.29% HengShengInvestment Limited 2,263,956 3.62% CTBC Bank is entrusted with the custody of the investment account of Rambo Land Limited 2,054,360 3.28% Ghi YangInvestment Limited 1,880,621 3.01%	As of 2021/04/19;Units: share;% Shareholding Shareholder's Name Shares Percentage Ji TengInvestment Limited 4,500,000 7.19% Yun DingInvestment Limited 4,050,000 6.47% CTBC Bank is entrusted with the custody of the investment account of Gold Telent Limited 3,897,856 6.23% Hsieh,Xin-Yi 3,883,968 6.21% Jin HongInvestment Limited 3,600,000 5.75% ChangShun Investment Limited 2,705,932 4.33% Jhan Yu Investment Limited 2,683,082 4.29% HengShengInvestment Limited 2,263,956 3.62% CTBC Bank is entrusted with the custody of the investment account of Rambo Land Limited 2,054,360 3.28% Ghi YangInvestment Limited 1,880,621 3.01%
Shareholding Shareholder's Name	Shares	Percentage
Ji TengInvestment Limited	4,500,000	7.19%
Yun DingInvestment Limited	4,050,000	6.47%
CTBC Bank is entrusted with the custody of the investment account of Gold Telent Limited	3,897,856	6.23%
Hsieh,Xin-Yi	3,883,968	6.21%
Jin HongInvestment Limited	3,600,000	5.75%
ChangShun Investment Limited	2,705,932	4.33%
Jhan Yu Investment Limited	2,683,082	4.29%
HengShengInvestment Limited	2,263,956	3.62%
CTBC Bank is entrusted with the custody of the investment account of Rambo Land Limited	2,054,360	3.28%
Ghi YangInvestment Limited	1,880,621	3.01%

Note: refers to top 10 shareholders of the Company

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4.5 Market Price, Net Worth, Earnings and Dividends Per Common Share

Unit: NT$, except for weighted average shares and return on investment ratios

Item	Year	Year	Year	2019	2020	2021/01/01- 2021/04/30
Market Price per Share	Highest Market Price			73.80	123	171.50
	Lowest Market Price			43.00	41	100.50
	Average Market Price			53.60	79.27	140.04
Net Worth per Share	Before Distribution			63.30	71.38	74.45
	After Distribution			59.30	(Note 2)	NA
Earnings per Share	Weighted Average Shares			62,296 thousand shares	62,296 thousand shares	62,460 thousand shares
	Earnings per Share		Before Dividends	5.42	11.57	3.49
			After Dividends	5.42	(Note 2)	NA
Dividends per Share	Cash Dividends			4.00	10.00	NA
	Stock Dividen d	Dividends from Retained Earnings		0	0	NA
		Dividends from CapitalSurplus		0	0	NA
	Accumulated Undistributed Dividends			0	0	NA
Return on Investment (Note1)	Price / Earnings Ratio			9.89	6.85	NA
	Price / Dividend Ratio			13.40	7.93	NA
	Cash Dividend Yield Rate			7.46%	12.62%	NA

Note 1: (1) Price/Earnings Ratio = Average Closing Price for the Year / Earnings per Share. (2) Price/Dividend Ratio = Average Closing Price for the Year / Cash Dividends per Share

(3) Cash Dividend Yield = Cash Dividends per Share / Average Closing Price for the Year Note 2: cash dividends for 2020 earnings distribution are calculated as NT$10 per share.

Note 3: Net worth per share and earnings per share are filled in according to the consolidated financial report of Q1 2021 reviewed by the CPAs.

4.6 Dividend Policy and Execution Status

4.6.1 Dividend Policy Stipulated in the Company’s Articles of Incorporation

In case the Company has yearly profit, at least 1% shall be appropriated as staff reward and less than 5% as rewards for directors and supervisors. In case the company has accumulative losses (including adjusted unappropriated earnings), reserve shall be made as compensation. The employee remuneration mentioned in the preceding paragraph may be determined by shares or cash and its receiving parties must include its serving employees in accordance with the requirements established by the Board of Directors; the board and supervisor remuneration mentioned in the preceding paragraph may be determined only by cash. The preceding 2 items shall be resolved by the Board before execution. And the shareholders

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meeting shall be reported to.

The policy of cash dividends of the company is formed to match present and future development plan. In consideration of investing environment, demand of fund, competition at home and abroad, and interest of shareholders, every year at least 10% of distributable surplus for stock or cash dividends shall be appropriated as rewards for shareholders. However, when the annual distributable earnings have been all appropriated for stock and cash dividends for shareholders at less than NT$0.5 per share, the distributable surplus may be fully retained without any distribution. The distribution of surplus can be cash or stock dividends. Among the dividends, cash shall be at least 30% of total.

4.6.2 Dividend distribution resolved by this Board Meeting

Item	NT$ per share	Source
Cash dividend	10	Undistributed earnings

4.6.3 Explanation shall be given if there were expected materials changes in the dividend policy:

There were no expected materials changes in the Company’s dividend policy, so there is not impact.

4.7 Impact to Business Performance and EPS resulting from Stock Dividend Distribution:

Not Applicable.

4.8 Compensation to Employees and Remuneration to Directors:

4.8.1 Compensation to employees and remuneration to directors stipulated in the Company’s Articles of Incorporation :

In case the company has yearly profit, at least 1% shall be appropriated as staff reward and no more than 5% as rewards for directors and supervisors. However, the company’s accumulated losses shall first have been covered.

The preceding staff reward shall be paid by stock shares or cash dividends. The objects of payment shall consist of employees of controlling and affiliated company meeting certain criteria determined by the Board. The preceding rewards for directors and supervisors shall only be paid by cash dividends.

The preceding 2 items shall be resolved by the Board before execution. And the shareholders meeting shall be reported.

4.8.2 Accounting treatment applied to the difference between actual and estimated compensation to employees and remuneration to directors:

Where there are still changes on the resolution day of Shareholders meeting, they shall be recognized as accounting estimate changes and will be accounted on the annual shareholders resolution day.

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4.8.3 Approving status of remuneration distribution by the Board of Directors:
1. Remuneration to employees and remuneration to directors, supervisors are distributed in cash or stocks. Any discrepancy between the annual recognized distributed amount and figure, the difference, reason and response should be disclosed:
  - The Company’s 2020 remuneration to employees was NT$30,000,000, and remuneration to directors and supervisors was NT$11,705,000; both were all distributed in the form of cash. There is no discrepancy of the amount of remuneration to employees, directors and supervisors mentioned above.
2. Amount of stock distributed as employee remuneration and as a percentage to net income of parent company only or individual financial statements and aggregate remuneration to employees:
  - Not applicable because the Company did not distribute any employee remuneration in stocks.
4.8.4 If there's any discrepancy between actual distribution (including the number of shares distributed, amount and stock price) and the recognized remuneration for employees, directors and supervisors for the previous year, please specify the discrepancy, cause, and how it is treated:

The Company's motion for 2019 earnings distribution was resolved and passed by the General Meeting of Shareholders held on June 16, 2020. Remuneration paid in cash to employees was NT$22,100 thousand and remuneration paid in cash to directors was NT$7,925 thousand. There is no discrepancy between the actual distribution and the recognized remuneration.

Unit: NTD

						Unit: NTD
Distributions	Actual distributions resolved by the General MeetingofShareholders		Proposed distributions resolved by the Board Meeting		Discrep	Reason for discrepancy
	No. of Shares	Amount	No. of Shares	Amount
Employee remuneration in cash	0	22,100,000	0	22,100,000	None	None
Remuneration to directors	0	7,925,000	0	7,925,000	None	None

4.9 Buyback of Common Stock: None

4.10 Issuance of Corporate Bond: None

4.11 Preferred Shares (with stock option) : None

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4.12 Issuance of Global Depository Receipts : None

4.13 Employee Stocks Option ：

4.13.1 Employee stock options that have not yet expired shall be disclosed as of the publication

date of the annual report and there is no impact to the shareholders’ equity.

Employee Stock Options (ESO)

2021/4/30

	2021/4/30	2021/4/30
The types of employee subscription warrants	First ESO
Effective date	July17,2017
Issuance date	July28,2017
No. of units issued	600 units,each unit is 1,000 shares of ESO
No. of subscribable shares as a percentage of total issued shares(%)	0.96%
Subscription period	After 2 years, employees granted with ESO may exercise their stock options rights.
Performance of contract	Issuance of new stocks
Period and ratio (%) in which subscription is restricted	ESO Grant Period (accumulative) After 2 years After 3 years After 4years	Stock Option Exercisable Ratio 50% 75% 100%
Number of shares obtained through exercise of subscription rights	265,000
NT$ amount of shares subscribed	17,622,500
No. of shares that have not been subscribed	335,000 shares
Subscription price per share of the unsubscribed shares	NT$66.50(Note)
No. of unsubscribed shares as a percentage of total issued shares(%)	0.5355%
Effect on the shareholders	The stock options are executed in an installment of 4 years after 2 years of the issue date and the shareholders’ equity is diluted year by year which poses a limited dilutingeffect.

Note: due to the distribution of cash dividends and the cash reduction, the execution price for ESO was adjusted according to the ESO issuance measures.

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4.13.2 As of the publication of the annual report, the names of managerial officers granted with employee stock options and the names of top ten employees by the number of shares subscribed under the employee stock options granted, the status of grant and share subscription:

2021/4/30; Unit: Thousand shares: NTD

Title		Name	Subscriba ble shares through obtained employee share warrants	No. of subscribable shares as a percentage (%) of total issued shares		Subs	cribed			Unsubs	cribed
					No. of shares	Subscription price	Amount of shares subscribed	No. of shares as a percentag e (%) of the total issued shares	No. of shares	Subscription price	Amount of shares subscribed	No. of shares as a percentag e (%) of the total issued shares
Managerial Officer	CFO Accou nting Officer	Lin, Tzu- Husan	60	0.10%	15	66.5	997,500	0.03%	45	66.50	0	0.07%
	Audit Officer	Cheng, Chao- Ming
Employee	Assistant General Manage r	Hsu, Guo-Fu (Note)	380	0.61%	250	66.5	16,625,0 00	0.40%	130	66.50	0	0.21%
	Assistant General Manage r	Lin, Ding-Yu (Note)
	Assistant General Manage r	Huang, Wan-Jun (Note)
	Senior Manage r	Su, Xian- Zhang
	Manager	Chen, Wei- Zhong
	Assistant General Manage r	Li, Ming-Li
	Manager	Li, Gao- Mei (Note)
	Manager	Chen, Yao-Lin
	Assistant General	Li, Bei- Ping

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==> picture [517 x 62] intentionally omitted <==

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

Manage
r
Guo,
Manager Ling-
Hua
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==> picture [109 x 11] intentionally omitted <==

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Note: left the Company.
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4.14 Issuance of Employee Restricted Stocks : None

4.15 Status of New Shares Issuance in connection with Mergers and Acquisitions: None

4.16 Financing Plan and Implementation Rebecca: None

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5. Overview of Business Operation

5.1 Business Activities

5.1.1 Business Scope

5.1.1.1 Operating Scope

(1) CQ01010 Die Manufacturing.
(2) F106030 Wholesale of Die.
(3) F206030 Retail Sale of Die.
(4) C805990 Other Plastic Products Manufacturing.
(5) F401010 International Trade.
(6) ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

5.1.1.2 Breakdown of Sales by Major Products

Unit: NTD thousand

						Unit: NTD thousand	Unit: NTD thousand
Product Category	Year	2019		2020		Firstquarter of 2021
		Operating Revenue Amount	Proportion (%)	Operating Revenue Amount	Proportion (%)	Operating Revenue Amount	Proportion (%)
Plastic Components	3C Products	2,428,328	61.37%	2,809,676	58.43%	693,608	49.39%
	Other	1,191,609	30.11%	1,623,403	33.76%	599,502	42.69%
	Subtotal	3,619,937	91.48%	4,433,079	92.19%	1,293,110	92.08%
Die		335,732	8.48%	372,894	7.76%	111,064	7.91%
Other		1,475	0.04%	2,288	0.05%	117	0.01%
Total		3,957,144	100.00%	4,808,261	100.00%	1,404,291	100.00%

5.1.1.3 Product Lines

Our primary products include the design and development of precision plastic dies, and single and double injection components. The main application for plastic injection components include phone cases, MP3 cases, earphones and their parts, components for notebooks, household appliances parts, computer peripherals components, wearable bracelets, and existing light housings, dashboards, fan outlets, and grips in automotive fields.

5.1.1.4 Product Development

Our Company is a professional plant for designing and manufacturing dies as well as single and double injection plastic components injection with its primary products covering manufacturing different types of plastic components and assembly. With the accumulation of years of expertise and experience on injection, not only do we offer our customers professionalism in terms of plastics, techniques and skills to solve difficult

85 -

issues encountered by the industry, we also offer our customers extended surface treatment processes including electroplating, printing, painting and ultrasonic fusion technology and assembly. Different hardening and spraying process technology of inserted injection and soft plastics are being used and our development of all process technologies have matured and are continuing to improve.

5.1.2 Industry Overview

5.1.2.1 Progress and Development of the Industry

(1) Die Industry

The die industry is categorized as a special industry with intensive technology and capital and at the same time high-added values. It is also a crucial basic tool in terms of mass production of various end products; it therefore is also known as the “Mother of Industry.” The development of the die industry not only improves the precision degree of industrial products, it also drives the overall progress of the entire manufacturing industry, accelerating the upgrading of industries. Consequently, the die industry is regarded as a paramount basic industry for flourishing manufacturing sectors. There are many types of die products with a wide range of applications, 75% of the rough-processed industrial product parts and 50% of finished parts are mostly shaped by dies and most plastic products are also molded by dies. As the basic industry of the national economy, dies are involved in industries such as machinery, automobiles, light industry, electronics, chemical industry, metallurgy, and building materials. Products from high-tech industries to people’s livelihood industries all use dies as basic tools for mass production. At the moment, of all downstream application industries, 3C related industries have the highest proportion in terms of applications, followed by the transportation tool industry. The total of both industries account for 70% of the overall applications. With regard to die types, the stamping and plastic molding are the main supplies for 3C related industries followed by the supplies for shell production of automobiles, motorbikes and die-casting mold; the downstream industries are mainly automobiles, motorbikes and forging dies for automobiles, motorbikes and bicycle industries. The Company is a manufacturer of plastic dies.

In 2020, the total output value of Taiwan’s dies amounted to T$47 billion, less 3.69% compared to 2019.

(2) Plastic Component Application Industry

Plastic injection products have a relatively wide range of applications which include: consumer electronics, medical equipment, automotive industry, information industry, etc. At the moment, industrial plastic products in the domestic market used in information process equipment account for approximately 1/4 of the overall applications; household electrical appliances, motors and other electrical appliances and audiovisual small household appliances each account for

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approximately 13% - 14%. However, the development of the plastic injection industry is closely related to manufacturers’ needs of plastic shells or plastic injection components. With the drive of 3C electronics industry needs, Taiwan’s production and sale of plastic products have been steadily growing year by year. The Company’s products are mainly information products such as parts for notebooks as well as automotive parts.

5.1.2.2 Correlation of the Upstream, Midstream, and Downstream of the Industry

Aside from the design and development of precision molds, we also engage in products with plastic injection components. Plastic injection components of upstream raw materials are high temperature resistant plastic raw materials including PP (polypropylene), ABS ((propylene-butadiene-styrene copolymer), PMMA (polymethyl methacrylate), PC (polycarbonate) and PU (Polyurethane). The raw material suppliers are mainly well-known domestic and foreign manufacturers and given by the long-term well-maintained supply relationship the Company has built with its suppliers over the years, the situation of material shortages is unlikely to happen. In addition, the application of the Company’s plastic components products is wide including information, communications, consumer electronics, household appliance industry, medical equipment and automotive components industry, etc. The connection between upstream and downstream industries is shown as follows:

Upstream Midstream Downstream

(Designing, Processing and

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

(Raw materials) (Application Market)
Manufacturing )
1. Mold design and Computer industry
development Auto parts industry
Plastic materials
2. Plastic injection Consumer products
3. Surface treatment industry
4. Assembling Communication industry
Medical industry
Home appliance industry
----- End of picture text -----

5.1.2.3. Development Trends of Products and Competition Situation

(I) Trends of Product Development

A. Die Industry

In the face of the micro era, the life cycle of all types of products are getting shorter and shorter, especially in the 3C electronics industry. The die industry will therefore encounter the challenge of tight delivery and profit reduction. In

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order to response to such trend, sectors must use process automation to replace manual processing while at the same time using systems including CAD/CAM/ CAE(computer-aided drawing/ computer-aided processing/ computer-aided engineering) to reduce trial molds to further reach the precision required by the development of molds. In addition, due to the fact that molds are being produced by orders, it is therefore unlikely to be mass-produced on an economic scale; the sales for mold production is mostly regional, hence the reason for the establishment of overseas subsidiaries or joint ventures by mold manufacturers as a means to deploy business globally. As a result, the original die industry that only dominates regionally may transfer into a global industry. With the mold industry moving towards internationally, only by early deployment globally may domestic manufacturers seize the first business opportunity.

Molds are products that are customized which cannot be mass-produced and they require close cooperation and coordination with customers in order to perform design adjustments. Consequently, the industry focused mainly on sales of domestic customers or for their own use then it would move onto the neighboring countries which limited sales. Nevertheless, as a means to reduce inventory, decrease production costs and quickly respond to market demands, many downstream information manufacturers of mold industry have adopted the production and sales strategy of global operation. In order to meet customer requirements in the market, mold manufacturers have also established overseas subsidiaries or joint ventures to accompany their customers to conduct a global deployment so as to face and respond to the challenges encountered in various locations.

B. Plastic Component Application Industry

Along with the continuous improvement of digital technology and manufacturing technology, communications, information and consumer electronics products have gradually been integrated into a 3C industry. While at the same time products are developing into a trend which allows them to be lighter, thinner, shorter, smaller, and the exterior design is appealing to the eye. With the constant introduction of new products, it has prompted rapid replacement of products. Hence, it is no doubt that the future development of industry will focus on automated production equipment, rapid production, highquality products and diversification. Judging from the inevitable development trend of high-tech productions moving towards lighter, shorter and smaller of the global electronics, information and communication, requirements for precision components have also somewhat increased. The manufacturing technology and surface treatment application of precision components have become the goal for all manufacturers to proactively research and develop.

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(II) Competition Situation of Products

The Company is a production manufacturer for design and development of professional precision dies and precision plastic injection components. The Company's main competitors include Coxon Group, TaiHan Precision Technology Co., Ltd., Ways Technical Corp., Ltd. and Megaforce Company with main competitions such as die development and various plastic injection components. Many mold manufacturers and plastic injection plants perform lower-level production with simple machinery and equipment. Nevertheless, the Company’s advantages can be summarized as follows:

A. High degree of vertical integration - it can effectively connect the supply chain to provide products needed by customers at one time in order to increase the market share while making a stop for the entering of new manufacturers, adding more virtual barriers for competitors to enter the market.
B. Effectively grasping the key technology capabilities of new products by participating in projects and joint development discussion with end customers at the beginning stage of a product development; providing customers diversified services so as to effectively shorten the production cycle and reduce production costs.
C. Adopting automated production and double injection machines which have been regarded as a leading advantage in the industry. When faced with price competition, regardless of cost or quality, the Company poses the benefit of economic scale which is unlikely to be replaced by new manufacturers in the short and medium period of time.

5.1.3 Research and Development

5.1.3.1 Research and Development Expense in Recent Year

Unit: NTD thousand

Year Item	2019	2020	First quarter of 2021
R&D expenses	112,711	87,074	25,106
Net operatingincome	3,957,144	4,808,261	1,404,291
R&D expenses to net revenue ratio	2.85%	1.81%	1.79%

5.1.3.2 Research and Development Accomplishments in the Recent Year
(1) As a means to increase added values to plastic components, the Company keeps on investing in surface treatment technologies, which include heat transfer printing, printing, coating, engraving, heat stacking and NCVM and has successfully developed insert molding process inserted injection.
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(2) Patents acquired by the Company in the past 5 years:

Year	Specific R&D Result	Country- Patent Approval Number
2014	Electronic watch body structure and production method of its watch bands.	Taiwan - I423000
2017	Fixture structure in integrated silicon steel sheet	Taiwan - M543164
2017	Fixture structure in integrated silicon steel sheet	Mainland - ZL 2017 2 0139556.8
2017	Fixture structure in integrated silicon steel sheet	The U.S. - Approved, pending patent approval number.
2019	Fixture structure in integrated silicon steel sheet	The U.S. - 10317185 - Acquired on June 11,2019.

5.1.4 Long Term and Short Term Business Development Plans
5.1.4.1 Short-term plans
- (1) Deepen the layout of diversified products and proactively extend popular products in terms of automotive and information products.
- (2) Accelerate the expansion of the Vietnamese market development and production scale to achieve synergy in the production economy.
- (3) Seek strategic partners in connection to business and technology improvement, deepening and widening corporate core competitiveness.
- (4) Accelerate the development of automation and replacement of electronics to improve efficiency and streamline manpower.
- (5) Build standard and modeled designs and carryout process improvement, increasing production efficiency.
- (6) Continue to invest in R&D funds, and recruit and cultivate professional R&D personnel as a means to develop key technologies and new products, constructing a strong R&D team.
- (7) Deepen cultivation of compound process and develop automotive exterior decorative parts and manufacturing process.
5.1.4.2 Long-term plans
- (1) Proactively develop new market applications, expand product width, and maintain the market competitiveness.
- (2) Become strategic alliance with industry’s key technology manufacturers to carry out technical cooperation so as to accelerate new applications between the combination of plastic material development and other products.
- (3) Strengthen the technical position of key components for new products in the market, increasing the market share and competitiveness.
- (4) Emphasize product profitability; products with low margins will not be produced; insist on making products that are different.
- (5) Operation model is high-end technologies and know-how oriented in terms of R&D and marketing.
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(6) Establish a plant that contains consistent, automatic and comprehensive manufacturing processes; ensure stable quality via strict and inclusive process management.
(7) Continue to expand global product lines and sales regions to reduce the operational risk of excessively concentrated product development.

5.2 Market and Sales Overview

5.2.1 Market Analysis

5.2.1.1 Sales (Service) Regions

		Unit: NTD thousand;%	Unit: NTD thousand;%	Unit: NTD thousand;%	Unit: NTD thousand;%	Unit: NTD thousand;%	Unit: NTD thousand;%
Item	Year	2019		2020		Firstquarter of 2021
		Sales Amount	To revenue ratio	Sales Amount	To revenue ratio	Sales Amount	To revenue ratio
Export Sales	North America	1,797,250	45.42%	1,608,676	33.46%	349,729	24.90%
	Europe	1,303,473	32.94%	2,668,964	55.51%	956,003	68.08%
	Asia	811,357	20.50%	502,679	10.45%	90,380	6.44%
	Subtotal	3,912,080	98.86%	4,780,319	99.42%	1,396,112	99.42%
Domestic Sales		45,064	1.14%	27,942	0.58%	8,179	0.58%
Total		3,957,144	100.00%	4,808,261	100.00%	1,404,291	100.00%

5.2.1.2 Market Share

The Company has been focusing on the production of mold design and development and plastic components which is highly recognized in the industry. The Company has diversified products to meet market requirements. Our products are being widely used on components for notebooks, computer-related components, phone cases, MP3 cases, earphones and their parts, household appliances parts, wearable bracelets, existing light housings, dashboards, fan outlets, and grips in automotive fields. The Company’s total turnover of 2020 amounted to NT$4,808,261 thousand, of which the main income from plastic injection components amounted to approximately NT$4,435,367 thousand; operating amount for molds accounted for approximately NT$372,894 thousand. The final products of plastic injection components are considerably different, hence there is no complete and objective analysis for market shares provided for reference.

5.2.1.3 Market Demand, Supply, and Growth

Given that the Company’s main products are plastic components for IT products and accessories for the interior of automotive as the main product lines, the situation of the supply and demand is affected according to changes of end product sales and product life cycles.

The Display Research Division under TrendForce indicated that due to the positive impact of the home economic effect associated with the COVID-19 pandemic, the global notebook output volume in 2020 exceeded 200 million units for the first time in the history, and the annual growth rate also reached the record high of 22.5%. However, in

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comparison with the production resumption of OEM manufacturers in Q2 of last year, the notebook demand is increasing. In addition, as the global pandemic shows no signs of mitigation, all countries have continuously to implement border restriction and city lockout, consequently, it is hard to determine the market trend for the second half of 2021. Presently, the notebook output volume is estimated to reach 217 million units with an annual growth of 8.6%. It shall be noted that due to the remote education, the demand for Chromebook continues to increase, and its contribution to the notebook computer becomes significant. In 2020, Chromebook accounted for 14.8% of the total notebook output volume worldwide, and the ratio of its output over the total notebook output volume is expected to increase to 18.5% in 2021.

In 2020, a lot of enterprises worldwide announced the implementation of remote office, and the model of remote office has become the new common working style nowadays. In addition, some of the enterprises will continue to implement home office working model to September of this year. To increase the video conference quality and to satisfy the working and personal entertainment needs of users, notebook computer brand manufacturers are focusing on the AI, lens, audio effect and background noise technologies based on the fundamental of commercial notebooks in order to achieve improve of video conference quality. In addition, HP, Dell and Lenovo also focus on the business opportunities of the application fields and have launched new medium and high end hybrid commercial notebook models. It is expected that the first half of 2021 will be the peak time for the demands of such type of products, and the overall notebook computer output volume for the first half of the year will be driven to increase significantly.

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Looking towards 2021

For the new living style associated with the pandemic, in addition to hybrid type of commercial notebooks, Chromebook is also a market that the brand manufacturers are eager to increase the market share. Despite that the output volume of Chromebook in 2020 reached 29.6 million units with an annual growth reaching 74%, nonetheless, a lot of the education markets have not been satisfied completely. In addition, countries in Central and Southern America and Asia-Pacific regions are also catching up the trend, such that the overall demand is expected to reach the peak. Presently, TrendForce estimates that the output volume of Chromebook in 2021 is estimated to reach more than 40 million units with an annual growth of approximately 40%. In addition, under the active planning of Google, the whole-year output volume may also be adjusted higher than the estimation.

In terms of the operating system, presently, for the present main notebook computer operating system of Windows, due to the rising of the Chromebook in 2020, the market share of Windows was lower than 80% for the first time in 2020. In addition, Windows also indicates a continuous declining trend, and its market share may not rebound in a short period of time. TrendForce predicts that in the future, the market share of Windows will maintain at approximately 70-75%, the market share of operating system of Chrome will be between 15-20%, and MacOS will be below 10%.

In terms of the processors of notebook computers, the processors of AMD) Zen+ architecture officially launched in 2019 has a market share of approximately 11.4%. Since 2020, with the start of expansion of market development, its market share reached 20.1%, and its Ryzen3000 series has also been widely accepted in the medium and low end of notebook computer markets. Accordingly, the brand manufacturers have also started to use AMD processors on Chromebook, such that its market share indicates significant growth.

Apple officially launched Apple Silicon M1 of ARM architecture in November 2020, and its market share in the first year was only 0.8%. The main reason for its use of the ARM architecture is to optimize the performance of Macbook. In addition, with the launch of Apple Silicon M1, Apple has also completed the integration of hardware, software and terminal service. It is expected that after the Q2, 2021, 14” and 16” Macbook Pro will both use Apple’s own processors, and the market share will increase significantly to approximately 7%. In addition, with the 2% market share of AMD, meaning that Intel will need to adopt corresponding plans and solutions in terms of its processor product strategy in order to overcome such severe competition and market pressure.

Furthermore, in 2020, the automobile market was affected by the COVID-19 pandemic, and the sales volume was expected to decline to 78 million cars, with an annual decline of 13.8%. Looking into the year of 2021, the impact of the pandemic still exists, and the global market enters the post-pandemic era with the new living style and

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economic activities. If the measures of city lockouts and home restrictive orders, etc. will be ceased, the automobile market is expected to recover gently, and the overall expected output volume will reach 83.5 million cars, with an annual growth of 7%.

The uncertainty associated with COVD-19 pandemic is high, and a large scale of recovery of the automobile market may not be achieved easily; nevertheless, the new energy automobile market sales is picking up and it is expected to reach a two-digit growth rate in 2021. For autonomous cars, the self-driving function under the international regulations will also be made available, serving as active dynamics to the slow market.

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5.2.1.4 Competitive Advantages

The analysis of various competitive niche points is as follows:

(1) Consistent Production Process with High-Integration

Effectively grasping the key technology capabilities of new products by participating in projects and joint development discussion with end customers at the beginning stage of a product development; providing customers diversified services so as to effectively shorten the production cycle and reduce production costs.

(2) Production Scales and Best Equipment in the Industry

The high-speed precision mold processing equipment made in Switzerland and the development of design software have been introduced to greatly improve process precision and efficiency which satisfies the needs of customers in terms of product quality improvement and development time shortening. Industry-leading in the number of double injection equipment. Operating procedures including R&D design, mold making or production are carried out in the plant of the Company to improve production efficiency and reduce the production costs while at the same time satisfying the vast demand of customers. The Company has mold manufacturing plants and plastic molding

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plants in China, Taiwan and Hanoi, Vietnam. The Company also has crucial technical resources for plastic molding and R&D capabilities for molds which enable the completion of mold development and plastic injection production in the shortest time possible. In addition, since 2015, automation of the production process has been implemented gradually. Through product combination adjustment and acceleration of process automation, in addition to the significant reduction of manpower, the gross profit is also increased relatively.

(3) R&D technology leading others of the same industry; the Company is able to effectively manufacture products that are lighter and slimmer. With the already succeeded double injection combination of silicone and plastic, the Company is proactively developing new markets hoping to bring the double injection technology into products in the new field while being recognized by internationally known manufactures.
(4) Leading Others of the Same Industry with the Deployment in China and Vietnam markets

The Company’s production bases are located in Taiwan, China and Vietnam. These 3 locations have substantial production scales and rapid capacity scheduling flexibility. Nearby customers are quickly served with the geographic advantage, offering highquality and high-efficient supplying services. This robust production resource has also become the Company’s vital competitive advantage for receiving OEM orders from large internationally known manufacturers.

5.2.1.5 Advantages, Disadvantages and its Responsive Strategies Advantages

(1) Favorable Factors

A. Outstanding Technology Development and Manufacturing Process Innovation Capability

Since the establishment, the Company has been investing in double injection composite molding technology, therefore, the Company has the crucial technology to double injection plastic molding and precision mold design and development, and has successfully entered the supply chain systems such as Japanese, American and domestic well-known manufacturers. It is evident that the Company's R&D technology and product quality have reached international standards. Furthermore, the Company is persistent with investment of process improvement. The semi automated machine is used for process production with the leading process technology developed by our R&D team. The production time and work procedures are greatly reduced, improving production yield while reducing production costs.

B. Wide Range of Product End-Use Applications - A Promising Future is to be Expected
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Plastic injection molding products can be applied to many daily necessities, including communications, information, electronics industry, home multimedia, medical, automotive, household appliances and office equipment. With a wide range of applications, not only management costs can be reduced, potential business opportunities can also be discovered to distribute management risks of market development for single products. In light of the consistent product growth in the application market, the demand of plastic injection molded products also continues to increase. Mold manufacturing and plastic injection molding sectors still have substantial growing room.

C. Consistent Manufacturing Process - Reaching Effective Production Scales with High Efficiency

The Company has adopted the “consistent” production method which means that all operations can be done within the plant from having joint discussions with end customers in the early stage of R&D to the precision of surface treatment technology, coating and assembly, reaching the goal of time control and the maintenance of quality. As a means to serve customers close-by to obtain more OEM business and reduce production costs, the Company has established production bases in China and Hanoi, Vietnam, so as to provide customers the most comprehensive and timely services.

(2) Unfavorable Factors and Corresponding Measures
A. The life-cycle of products shortens

Corresponding Measures:

Due to the quick replacement of consumer electronic products and new products forever being launched, the product life-cycle is becoming shorter and shorter. For the past few years, the Company has been proactively developing businesses in terms of fields such as information products and automotive products, gradually achieving synergies of product economic scale.

B. Lowering of Product Price

Corresponding Measures:

(A) Research and develop the possibility of new technology and the use of new manufacturing processes. Continue to invest in the R&D of new products as a means
to improve product quality while at the same time providing products that are integrated and have high added values, allowing them to increase competitiveness.
(B) Expand production capabilities and increase yield to reach production economic scale that lowers the production costs of units.
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C. Constant New Competitors

Corresponding Measures:

(A) Build strategic partnership with customers to maintain long-term yet stable cooperation.
(B) Self-develop technologies and apply for product patent rights to hold a competitive advantage.
(C) Keep a close eye on development trends in the market; develop customized products to meet customers’ needs, further improving their satisfaction.

D. Rise of Labor Cost

Corresponding Measures:

(A) Aside from the continuous introduction of automated production equipment with high-precision, reasonable working hours will also be facilitated to reduce the dependence on labor and at the same time reducing production costs.
(B) Improve personnel’s skills through adequate training.

5.2.2 Application of Major Products

1. Important Purposes of Primary Products

Products	Product Purpose
Die	Including plastic parts such as: phone cases, MP3 cases, earphones and their parts, notebook components, household appliances parts, computer peripherals components, existing light housings, dashboards, central control panels,fan outlets andgrips in automotive fields.
Plastic Components

2. Manufacturing Process of Primary Products

The semi automated manufacturing process technology developed by the Company only requires one manufacturing process to complete production. The Company has more production efficiency compared with the production technology with others of the same industry.

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Die
Raw Injection Spraying
Printing Assembling
material Molding
Sputtering
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Shipments
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5.2.3 Supply of Major Material

The Company’s primary raw materials are billet steel and plastic particles such as PC (polycarbonate), ABS (acrylonitrile, butadiene and styrene), TPU (thermoplastic polyurethane). The raw material suppliers are mostly domestic and overseas well-known manufacturers that provide stable and quality supply. Meanwhile, not only the Company keeps a close eye on the market situation in order to stabilize the purchase price for key raw materials but also creates long-term strategic cooperation with manufacturers.

5.2.4 The names of the suppliers who have accounted for more than 10% of the total purchase (sales) amount in any of the previous 2 years, and the amount and proportion of the purchase (sales) amount, and explain the reasons for such increase or decrease:

The names of the suppliers who have accounted for more than 10% of the total purchase amount in any of the previous 2 years, and the amount and proportion of the purchase amount, and explain the reasons for such increase or decrease:

	2019	2019	2019	2019	2020	2020	2020	2020	Q1, 2021	Q1, 2021	Q1, 2021	Q1, 2021

Item			Ratio to net		Name	Amount	Ratio to net annual purchase(%)	Relation to the issuer	Name	Amount	Ratio to net purchase as of the first quarter of the currentyear(%)	Relation to the issuer
				Relation to
	Name	Amount	annual
			purchase(%)	the issuer

1					Company A	222,526	13	None	Company A	77,843	14	None


2					Others	1,471,820	87		Others	466,850	86
	Others	1,440,148	100	None

	Net		100		Net purchase amount	1,694,346	100		Net purchase amount	544,693	100
	purchase	1,440,148
	amount

The names of the suppliers who have accounted for more than 10% of the total sales amount in any of the previous 2 years, and the amount and proportion of the sales amount, and explain the reasons for such increase or decrease:

Unit: NTD thousand

									Unit: NTD thousand	Unit: NTD thousand	Unit: NTD thousand	Unit: NTD thousand
	2020				2020				First quarter of 2021
Item	Name	Amount	Ratio to net annual sales (%)	Relation to the issuer	Name	Amount	Ratio to net annual sales (%)	Relation to the issuer	Name	Amount	Ratio to net sales as of the first quarter of the currentyear(%)	Relation to the issuer
1	Customer B	1,077,350	27.23	None	Customer B	1,920,512	39.94	None	Customer B	683,083	48.64	None
2	Other	2,879,794	72.77	-	Other	2,887,749	60.06	-	Other	721,208	51.36	-
	Net sales	3,957,144	100.00	-	Net sales	4,808,261	100.00	-	Net sales	1,404,291	100.00	-

There have been no significant changes to customers accounting for 10% or more of the

net sales amount in the past 2 years. Aside from strengthening the existing customer base, the Company will proactively expand and develop all types of different applications in the future by using its outstanding double injection mold technology and molding R&D capabilities to further continue developing new customer groups to increase the market share.

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5.2.5 Production/Sales Quantities and Value over the Past Two Years

Unit: set; thousand pieces; NT$ thousand

	Unit: set;	Unit: set;	Unit: set;	thousandpieces;NT$thousand	thousandpieces;NT$thousand	thousandpieces;NT$thousand
Year Production Volume/Value PrimaryProducts	2019			2020
	Production Capacity	Production Volume	Production Value	Production Capacity	Production Volume	Production Value
Die	(Note 1)	546	270,380	(Note 1)	469	296,746
Plastic Components	(Note 1)	335,664	3,113,067	(Note 1)	379,749	3,300,697
Total	(Note 1)	(Note 2)	3,383,447	(Note 1)	(Note 2)	3,597,443

Note 1: The Company’s mold-opening equipment is put into use according to the situation of orders and there are many different types of equipment. Products of plastic components are mostly nonstandard products with various types, so the complex of each manufacturing process is different. Product capacity therefore was unable to be counted.

Note 2: Due to different unit measurements used, the total is not applicable.

5.2.6 Sales Quantities and Value of the Last Two Years

Unit: set;thousandpieces;NT$ thousand	Unit: set;thousandpieces;NT$ thousand	Unit: set;thousandpieces;NT$ thousand	Unit: set;thousandpieces;NT$ thousand	Unit: set;thousandpieces;NT$ thousand	Unit: set;thousandpieces;NT$ thousand	Unit: set;thousandpieces;NT$ thousand	Unit: set;thousandpieces;NT$ thousand	Unit: set;thousandpieces;NT$ thousand
Year Sales Quantity and Value PrimaryProducts	2019				2020
	Domestic Sales		Export Sales		Domestic Sales		Export Sales
	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
Die	11	4,380	608	331,352	5	1,735	531	371,159
Plastic Components	5,020	40,587	334,807	3,579,350	2,857	25,319	369,361	4,407,760
Other (Note 1)	23	97		1,378	93	888	10	1,400
Total	(Note 1)	45,064	(Note 1)	3,912,080	(Note 1)	27,942	(Note 1)	4,780,319

Note 1: Due to different unit measurements used, the total is not applicable.

5.3 Status of Employees

2021/4/30 Unit: Persons

	Year	2019 December 31, 2019	2020	During 2021 until the printing date of the annual report on April 30, 2021
			December 31, 2020

Number of Employees	Number of Managerial Officers	52	66	77
	General Staff	1,119	746	957
	Direct Employees	1,747	2,178	2,064
	Total	2,918	2,990	3,098
	Average age	36.29	38.10	36
Average Years of Service		5.34	6.28	5.69
Academic qualification (%)	Ph.D.	0.00%	0.00%	0.00%
	Master's Degree	1.62%	1.77%	1.93%
	Bachelor's Degree	22.27%	18.13%	19.68%
	High School	25.82%	35.52%	44.14%
	Less than High School	50.29%	44.76%	34.25%

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5.4 Expenditure on Environmental Protection

As of the printing date of the annual report, the losses caused from environmental pollution (including compensation and an environmental audit outcome that resulted in a violation of the environmental laws and regulations - the date of penalty, penalty reference, the violation of provision, the content of the violation, penalty content). The current and future possible estimated amount and countermeasures shall also be disclosed. If it cannot be reasonably estimated, facts of the reason shall be given: None.

5.5 Employee Relations

5.5.1 Employee’s Welfare and Benefit

5.5.1.1 Employee welfare and benefit

Aside from following the Labor Standards Act and other applicable acts and regulations, the Company has established the Staff Welfare Committee with a welfare fund set aside each month. Representatives are selected by both sides of the labor and the management to be in charge of matters in connection to employee welfare so as to reach the goal of a harmonious working environment as well as bringing all employees together. Welfare provided by the Company and the Welfare Committee:

(1) The purchase of labor insurance, National Health Insurance and Group Insurance.
(2) Periodic health examinations.
(3) Employee canteen, providing meals for employees
(4) Allowance for employee marriages, childbirths, three major festivals and birthdays.
(5) Funeral and hospital subsidies
(6) Free car and motorbike parking spaces for colleagues.
(7) Periodical employee trips
(8) Year-end parties and lucky draws

5.5.1.2 Training program

“People are the Company’s valuable assets” - In order to improve employees’ knowledge and skills, we have planned a training and development system as well as the Educational Training Promotion Committee to ensure training needs and annual training plans. By continuous innovation and improvement, educational training is able to meet the organizational needs. At Nishoku, we improve employees’ professional skills and core competitiveness through providing them comprehensive training and further education channels and while cultivating professionals and corporate management talents.

2020 employees’ further education training system and its actual execution

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Unit: NTD

			Unit: NTD
Item	Total number of people	Total hours	Total expenses
1. New recruit training	7	21	0
2. Professional job skills training	253	524	129,950
Total	260	545	129,950

5.5.1.3 Retirement system

The Company has established the Employee Retirement Management Measures in accordance with provisions stipulated in the Labor Standards Act and Labor Pension Act. The Measures regulate the retirement terms for employees and pension distribution standard as a means to implement the retirement system and at the same time looking after our employees after they retire. In accordance with the regulations stipulated in the “Labor Retirement Reserve Fund and Management Measures” published by Ministry of the Interior, a certain ratio of retirement reserve fund is allocated on a monthly basis from employees’ salaries and wages to be deposited into Bank of Taiwan for safekeeping; or according to the provisions of the labor retirement pension system, no less than 6% of the monthly salaries and wages of employees shall be allocated to be deposited into employees’ labor pension account; recently, group annuity insurance and retirement award fund have been planned to achieve the goal of providing our employees with a retirement long-term plan that is more diverse and comprehensive.

5.5.1.4 Employee rights

The Company keeps a harmonious labor-management relationship. Employees may communicate with the Company through labor-management meetings regarding issues of the various system and working environment so as to maintain healthy interaction between the labor and management. In addition, the Company’s Staff Welfare Committee is responsible for matters in relation to the welfare of employees and organizes various events from time to time so as to reach the goal of a harmonious working environment as well as bringing all employees together.

5.5.1.5 Employees Code of Conduct: To regulate employees conduct and ethics

The Company’s “Regulations of Professional Ethics and Conducts” have been promulgated as a means to regulate professional conduct and ethics of all employees; it has been disclosed on the Company’s website/Investor Relations/Governance/Organizational Operations Regulations. The Company’s website: http://www.nishoku.com.tw/Investor/Investor/Company.

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5.5.2 Any current or potential loss resulting from labor disputes and prevention actions for the past year and as of the date of this annual report.
As of now, the Company has never had a single incident relating to labor-management disputes. Labor and management maintain a harmonious relationship. There has not been any dispute between the labor and management or losses due to a dispute.
Possible current and future measures:
- (1) Thoroughly comply with labor acts and regulations and strengthen welfare facilities.
- (2) Establish a labor-management communication channel and complaint channel that are open and straightforward.
- (3) Establish an operating management system for all employees.
Amount of possible current and future losses:

The Company adheres to its management policy of being harmonious and honest. If there are no other changes from the outside world, the labor-management relationship should be normal and harmonious. There is no occurrence of money loss.

5.5.3 Work environment and personal safety protection

As a means to protect the safety of employees, we insure labor and health insurance for all our employees. We also provide group insurance and business travel insurance and carry out periodical employee health examinations in accordance with acts and regulations. Company associates also enjoy health examinations specifically for associates to ensure the health of all employees.

We also have public accident liability insurance covered on working places such as the Company and the plant. Public safety equipment checks of buildings and fire equipment are reported to the competent authority in accordance with acts and regulations. The Company also selects employees who have obtained fire management personnel qualification certificate to maintain the safety of fire equipment in the workplace.

In order to prevent occupational accidents and protect the safety and health of employees, the Company has established the “Labor Safety And Health Code” required by the Occupational Safety and Health Act and applicable acts and regulations. Safety and health management personnel and first-aid personnel for Labors have also been set up in accordance with laws. A safety and health educational training is organized on an annual basis.

Given the importance of protection measures for workplace and personal safety, the Company carries out related educational training on an unscheduled basis. The “Safety and Health Education for Labors” educational training is performed on employees containing

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courses such as: general safety and health educational training, how to enhance awareness of safety, fire safety and hygiene, occupational health promotion and how to prevent sexual harassment in the workplace. Learning evaluation is also carried out in the process of educational training to ensure the correctness of the learning direction of employees while at the same time confirming the implementation of the working environment and personal safety.

5.6 Important Contracts

Sales contract, technical cooperation contracts, engineering contracts, long term loans contracts and other significant contracts that are active or ending within a year which are sufficient to affect the interests of shareholders as of the end of the printing date of the annual report: None.

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6. Financial Information

6.1 Five-Year Financial Summary

6.1.1 Condensed Balance Sheet

6.1.1.1 Condensed Consolidated Balance Sheet

		Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Item		Five-Year Financial Summary (Note1)					Financial Data for the Current Fiscal Year up to March 31,2021
		2016	2017	2018	2019	2020
Current assets		5,950,497	6,153,279	5,509,564	5,907,592	5,744,344	5,931,560
Property, plant and equipment		1,417,562	1,495,836	1,649,355	1,531,841	1,444,529	1,415,832
Intangible assets		0	0	0	0	0	0
Other assets		144,970	227,955	203,418	341,488	219,109	1,423,008
Total assets		7,513,029	7,877,070	7,362,337	7,780,921	8,617,493	8,770,400
Current liabilities	Before Distribution	1,450,015	1,628,203	1,815,798	1,972,949	2,276,408	2,157,752
	After Distribution	2,084,440	2,104,021	2,002,687	2,222,134	(註2)	(註2)
Non-current liabilities		1,279,648	1,805,569	1,618,969	1,864,512	1,883,839	1,960,105
Total liabilities	Before Distribution	2,729,663	3,433,772	3,434,767	3,837,461	4,160,247	4,117,857
	After Distribution	3,364,088	3,909,590	3,621,656	4,086,646	(註2)	(註2)
Equity		4,783,366	4,443,298	3,927,570	3,943,460	4,457,246	4,652,543
Share capital		793,033	793,033	622,962	622,962	624,462	624,912
Capital surplus		1,363,943	1,207,154	955,989	959,124	968,882	971,608
Retained earnings	Before Distribution	793,033	2,624,819	2,548,458	2,699,191	3,171,368	3,389,247
	After Distribution	1,363,943	2,386,910	2,361,569	2,450,006	(註2)	(註2)
Other equity interest		(38,354)	(181,708)	(199,839)	(337,817)	(310,459)	(337,879)
Treasury stock		0	0	0	0	0	0
Non-controlling interests		0	0	0	0	0	0
Total Equity	Before Distribution	4,783,366	4,443,298	3,927,570	3,943,460	4,457,246	4,652,543
	After Distribution	4,148,941	3,967,480	3,740,681	3,694,275	(註2)	(註2)

Note 1: All financial information of the financial statement has been certified or reviewed by the CPAs. Note 2: 2020 earnings distribution has not yet been passed by the General Meeting of Shareholders, it is therefore not stated.

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6.1.1.2 Condensed Individual Balance Sheet

Unit: NTD thousand

Year Item	Year Item	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Financial Data for the Current Fiscal Year up to March 31, 2021 (Note 3)
		2016	2017	2018		2020
					2019

Current assets		295,716	994,306	338,831	902,723	1,112,673	NA
Property, plant and equipment		343,782	335,972	322,537	307,741	299,596
Intangible assets		0	0	0	0	0
Other assets		5,893,325	5,593,215	5,775,073	5,467,698	6,012,812
Total assets		6,532,823	6,923,493	6,436,441	6,678,162	7,425,081
Current liabilities	Before Distribution	470,496	674,718	840,574	823,726	1,115,870
	After Distribution	1,104,921	1,150,536	1,027,463	1,072,911	(Note 2)
Non-current liabilities		1,278,961	1,805,477	1,668,297	1,910,976	1,851,965
Total liabilities	Before Distribution	1,749,457	2,480,195	2,508,871	2,734,702	2,967,835
	After Distribution	2,383,882	2,956,013	2,695,760	2,983,887	(Note 2)
Equity		4,783,366	4,443,298	3,927,570	3,943,460	4,457,246
Share capital		793,033	793,033	622,962	622,962	624,462
Capital surplus		1,363,943	1,207,154	955,989	959,124	968,882
Retained earnings	Before Distribution	2,664,744	2,624,819	2,548,458	2,699,191	3,171,368
	After Distribution	2,188,925	2,386,910	2,361,569	2,450,006	(Note 2)
Other equity interest		(38,354)	(181,708)	(199,839)	(337,817)	(310,459)
Treasury stock		0	0	0	0	0
Non-controlling interests		0	0	0	0	0
Total Equity	Before Distribution	4,783,366	4,443,298	3,927,570	3,943,460	4,457,246
	After Distribution	4,148,941	3,967,480	3,740,681	3,694,275	(Note 2)

Note 3: Consolidated financial report of Q1 2021 was prepared using the IFRSs, it is therefore not applicable.

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6.1.1.3 Condensed Consolidated Statement of Comprehensive Income

Unit: NTD thousand

Year Item	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Five-Year Financial Summary (Note1)	Financial Data for the Current Fiscal Year up to March 31, 2021
	2016	2017	2018	2019	2020
Operating revenues	4,136,945	4,019,508	4,218,842	3,957,144	4,808,261	1,404,291
Gross profit	1,077,301	994,040	797,817	878,713	1,539,880	431,098
Results from operatingactivities	617,897	596,916	318,255	379,003	1,069,052	309,575
Non-operating income and expenses	147,359	(98,358)	141,736	45,548	(194,495)	34,236
Profit before tax	765,256	498,558	459,991	424,551	874,557	343,811
Profit (loss) from continuingoperations	602,076	435,894	241,752	337,622	721,362	217,879
Profit (loss) from discontinued operations	0	0	0	0	0	0
Profit	602,076	435,894	241,752	337,622	721,362	217,879
Other comprehensive income(after tax)	(309,993)	(143,354)	(18,131)	(137,978)	27,358	(27,420)
Comprehensive income	292,083	292,540	223,621	199,644	748,720	190,459
Profit (loss), attributable to owners ofparent	602,076	435,894	241,752	337,622	721,362	217,879
Profit (loss), attributable to non-controllinginterests	0	0	0	0	0	0
Comprehensive income, attributable to owners of parent	292,083	292,540	223,621	199,644	748,720	190,459
Comprehensive income, attributable to non- controllinginterests	0	0	0	0	0	0
Basic earnings per share	7.59	5.50	3.35	5.42	11.57	3.49

Note 1: All financial information of the financial statement has been certified or reviewed by the CPAs.

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6.1.1.4 Condensed Individual Statement of Comprehensive Income

Unit: NTD thousand

Year Item	Five-Year Financial Summary (Note)	Five-Year Financial Summary (Note)	Five-Year Financial Summary (Note)	Five-Year Financial Summary (Note)	Five-Year Financial Summary (Note)	Financial Data for the Current Fiscal Year up to March 31, 2021(Note 2)
	2016	2017	2018	2019	2020
Operating revenues	444,529	414,126	374,609	309,312	869,200	Not applicable
Gross profit	135,089	111,804	104,085	77,171	235,329
Results from operatingactivities	(8,984)	(78)	(13,838)	(39,945)	94,557
Non-operating income and expenses	719,627	449,796	423,741	454,652	689,983
Profit before tax	710,643	449,718	409,903	414,707	784,540
Profit (loss) from continuingoperations	602,076	435,894	241,752	337,622	721,362
Profit (loss) from discontinued operations	0	0	0	0	0
Profit	602,076	435,894	241,752	337,622	721,362
Other comprehensive income(after tax)	(309,993)	(143,354)	(18,131)	(137,978)	27,358
Comprehensive income	292,083	292,540	223,621	199,644	748,720
Profit (loss), attributable to owners ofparent	0	0	0	0	0
Profit (loss), attributable to non-controllinginterests	0	0	0	0	0
Comprehensive income, attributable to owners of parent	0	0	0	0	0
Comprehensive income, attributable to non- controllinginterests	0	0	0	0	0
Basic earnings per share	7.59	5.50	3.35	5.42	11.57

Note 1: All financial information of the financial statement has been certified by the CPAs.

Note 2: Consolidated financial report of Q1 2021 was prepared using the IFRSs, it is therefore not applicable. 6.1.3 Auditing by CPA from 2015 to 2019

Year	CPA Firm	CPA's Name	AuditingOpinion
2016	KPMG	Cheng-Chien Chen、 Huang,Yong-Hua	Unqualified
2017	KPMG	Cheng-Chien Chen、 Huang,Yong-Hua	Unqualified
2018	KPMG	Cheng-Chien Chen、 Huang,Yong-Hua	Unqualified
2019	KPMG	Cheng-Chien Chen、 Sheng-He Yu	Unqualified
2020	KPMG	Cheng-Chien Chen, Chu,Yao-Jun	Unqualified

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6.2 Five-Year Financial Analysis

6.2.1 Consolidated Financial Analysis

Item	Year	Five-Year Financial Analysis (Note1)	Five-Year Financial Analysis (Note1)	Five-Year Financial Analysis (Note1)	Five-Year Financial Analysis (Note1)	Five-Year Financial Analysis (Note1)	Financial Data for the Current Fiscal Year up to March 31, 2021
		2016	2017	2018	2019	2020
Capital structure (%)	Debt ratio	36.33	43.59	46.65	49.32	48.28	46.95
	Ratio of long-term capital to property, plant and equipment	427.71	417.75	336.29	379.15	438.97	467.05
Solvency	Current ratio(%)	410.37	377.92	303.42	299.43	252.34	274.90
	Quick ratio(%)	380.95	345.46	274.34	274.28	227.87	248.82
	Times interest earned	51.62	29.64	19.10	16.98	42.75	68.71
Operating ability	Accounts receivable turnover(Times)	2.81	2.88	3.13	2.88	2.99	3.30
	Average collectionperiod	129.89	126.74	116.61	126.74	122.07	110.61
	Inventoryturnover(Times)	7.37	6.84	6.98	6.32	6.54	7.38
	Accounts payable turnover (Times)	5.71	5.47	5.86	5.11	4.65	4.94
	Average days in sales	49.52	53.36	52.29	57.75	55.81	49.45
	Property, plant, and equipment turnover(Times)	2.73	2.76	2.68	2.49	3.23	3.92
	Total assets turnover (Times)	0.55	0.52	0.55	0.52	0.59	0.64
Profitabili ty	Return on total assets(%)	8.20	5.85	3.44	4.74	9.00	10.21
	Return on stockholders' equity (%)	12.55	9.45	5.78	8.58	17.17	19.13
	Pretax profit to paid-in capital(%)	96.50	62.87	73.84	68.15	140.05	55.02
	Netprofit margin(%)	14.55	10.84	5.73	8.53	15.00	15.52
	Basic earningsper share($)	7.59	5.50	3.35	5.42	11.57	3.49
Cash flow	Cash flow ratio(%)	75.69	18.21	54.52	28.23	23.57	23.55
	Cash flow adequacy ratio (%)	143.27	88.68	88.38	108.42	111.96	106.97
	Cash reinvestment ratio(%)	8.35	(3.49)	5.53	3.89	2.86	4.94
Leverage	Operatingleverage	1.42	1.39	1.80	1.82	1.26	1.20
	Financial leverage	1.03	1.03	1.09	1.08	1.02	1.02

Note 1: The financial information of each year has been reviewed and certified by the CPAs; financial information of Q1 2021 has been reviewed by the CPAs.

Please explain the reasons for the changes in the financial ratios over the last two years: (significant current variations reaching 20% or more)

variations reaching20% or more)
項目	變動比率	變動原因
Times interest earned	152%	Mainly due to the significant increase in the revenue and profit of investees in 2020
Property, plant, and equipment turnover(Times)	30%
Return on total assets(%)	90%
Return on stockholders' equity (%)	100%
Pretaxprofit topaid-in capital(%)	106%
Netprofit margin(%)	76%

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Basic earningsper share($)	114%
Operatingleverage	-31%
Cash reinvestment ratio (%)	-27%	Mainly due to the acquisition of financial assets at amortised cost in 2020, which caused a large increase in other non-current assets

6.2.2 Individual Financial Analysis

Item	Year	Five-Year Financial Analysis (Note1)	Five-Year Financial Analysis (Note1)	Five-Year Financial Analysis (Note1)	Five-Year Financial Analysis (Note1)	Five-Year Financial Analysis (Note1)	Financial Data for the Current Fiscal Year up to March 31, 2020(Note 2)
		2016	2017	2018	2019	2020
Capital structure (%)	Debt ratio	26.78	35.82	38.98	40.95	39.97	Not applicable
	Ratio of long-term capital to property, plant and equipment	1,763.42	1,859.91	1,734.95	1,902.39	2,105.91
Solvency	Current ratio(%)	62.85	147.37	40.31	109.59	99.71
	Quick ratio(%)	60.85	145.72	38.74	107.90	95.28
	Times interest earned (Times)	61.51	33.01	22.13	25.25	48.12
Operating ability	Accounts receivable turnover(Times)	4.22	4.26	2.95	3.32	4.30
	Average collectionperiod	86.42	85.60	123.91	109.94	84.94
	Inventoryturnover(Times)	35.78	43.24	34.93	27.36	25.30
	Accounts payable turnover (Times)	24.66	17.95	18.15	18.17	6.33
	Average days in sales	10.20	8.44	10.45	13.34	14.43
	Property, plant, and equipment turnover(Times)	1.26	1.22	1.14	0.98	2.86
	Total assets turnover (Times)	0.07	0.06	0.06	0.05	0.12
Profitabili ty	Return on total assets(%)	9.34	6.65	3.85	5.36	10.42
	Return on stockholders' equity (%)	12.55	9.45	5.78	8.58	17.17
	Pretax profit to paid-in capital(%)	89.61	56.71	65.80	66.57	125.63
	Netprofit margin(%)	135.44	105.26	64.53	109.15	82.99
	Basic earningsper share($)	7.59	5.50	3.35	5.42	11.57
Cash flow	Cash flow ratio(%)	38.37	75.64	25.31	3.26	(21.39)
	Cash flow adequacy ratio (%)	47.45	55.80	52.90	50.50	36.87
	Cash reinvestment ratio(%)	(2.24)	(1.98)	(4.67)	(2.73)	(9.46)
Leverage	Operatingleverage	(0.97)	(199.99)	(0.11)	0.56	1.60
	Financial leverage	0.43	0.01	0.42	0.70	1.21

Note 1: The financial information of each year has been reviewed and certified by the CPAs Note 2: Consolidated financial report of Q1 2021 was prepared using the IFRSs, it is therefore not applicable.

Please explain the reasons for the changes in the financial ratios over the last two years: (significant current variations reaching 20% or more)

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Item	Variation ratio	Variation reason
Times interest earned	91%	Mainly due to the significant increase in the revenue and profit of investees in 2020, such that the net income of theparent companyincreased
Accounts receivable turnover (Times)	29%	Mainly due to the significant increase of revenue in 2020, such that the accounts receivable turnover increased and average collection days decreased
Average collectionperiod	-23%
Accounts payable turnover (Times)	-65%	Mainly due to the significant increase of the revenue in 2020, and the raw materials required for purchase also greatly increased correspondingly
Property, plant, and equipment turnover(Times)	192%	Mainly due to the significant increase of the revenue of theCompanyin 2020
Total assets turnover(Times)	161%	Mainly due to the significant increase in the revenue and profit of investees in 2020, such that the net income of the parent company increased
Return on total assets(%)	94%
Return on stockholders' equity (%)	100%
Pretax profit to paid-in capital (%)	89%
Netprofit margin(%)	-24%
Basic earningsper share($)	114%
Cash flow ratio(%)	-756%	Mainly due to the relatively greater amount of inward remittance of profits from overseas subsidiaries 2020 such that greater amount of tax payment was made.
Cash flow adequacyratio(%)	-27%
Cash reinvestment ratio (%)	247%
Operatingleverage	183%	Mainly due to the significant increase of the profit of the Company in 2020
Financial leverage	73%

6.2.3 The formula of financial analysis (IFRS)

Capital Structure

(1) Debt ratio = Total liability / Total assets

(2) Ratio of long-term capital to property, plant and equipment = (Net shareholders’ equity + Longterm liability) / Net property, plant and equipment

Solvency

(1) Current ratio: Current assets / current liability

(2) Quick ratio = (Current assets – Inventory – Prepaid expense) / current liability

(3) Times interest earned = Net income before tax and interest expense / Interest expense of the year

Operating ability

(1) Account receivable turnover (including accounts receivable and notes receivable derived from business operations) = Net sales / Average accounts receivable (including accounts receivable and notes receivable derived from business operation)

(2) Days sales in accounts receivable = 365 / Account receivable turnover

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

(4)Account payable turnover (including accounts payable and notes payable derived from business operation) =Cost of goods sold / Average accounts payable (including accounts payable and notes payable derived from business operation)

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

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(6) Fixed assets turnover = Net sales / Net fixed assets

(7) Total assets turnover = Net sales / Total assets

Profitability

(1) Return on assets = (Net income (loss) + interest expense x (1-tax rate)) / Average total assets

(2) Return on shareholders’ equity = Net income (loss) / Net average shareholders’ equity

(3) Profit ratio = Net income (loss) / Net sales

(4) Basic earnings per share = (Net income – preferred stock dividend) / Weighted average stock shares issued

Cash flow

(1) Cash flow ratio = Bet cash flow from operating activity / Current liability

(2) Cash flow adequacy ratio = Net cash flow from operating activity in the past 5 years / (Capital expenditure +

Inventory interest + Cash dividend) in the past 5 years

(3) Cash reinvestment ratio = (Net cash flow from operating activity – Cash dividend) / (Fixed assets + Long term investment + Other assets + Working capital)

Balance

(1) Degree of operating leverage = (Net operating income – Variable operating cost and expense) / Net operating income

(2) Degree of financial leverage = Net operating income / (Net operating income – interest expense)

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6.3 Audit Committee’s Report in the Most Recent Year

Audit Committee’s Review Report

Date: April 28,2021

The Board of Directors has prepared the Company’s 2020 Business Report, Financial Statements, and proposal for allocation of earnings. The CPA firm of KPMG was retained to audit the Company’s Individual and Consolidated Financial Statements and has issued an unqualified opinion by CPAs Cheng-Chien Chen and Sheng-He Yu. The aforementioned Business Report, Financial Statements, and proposal for allocation of earnings have been reviewed and determined to be correct and accurate by the Audit Committee members of the Company. According to relevant requirements of the Securities and Article 14-4 Exchange Act and the Article 219 of Company Act., we hereby submit this report.

Sincerely,

The 2021 Annual Meeting of Shareholders

Nishoku Technology Inc.

Chairman of Audit Committee:

Chan, Chin-Hung

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Stock Code:3679

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors ’ Report For the Years Ended December 31, 2020 and 2019

Address: No.36, Ln.11 ,Huacheng Rd., Xinzhuang Dist., New Taipei City, Taiwan Telephone: 886-2-29983578

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Representation Letter

The entities that are required to be included in the combined financial statements of NISHOKU TECHNOLOGY INC. as of and for the year ended December 31, 2020 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, NISHOKU TECHNOLOGY INC. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: NISHOKU TECHNOLOGY INC. Chairman: B. F. Chen Date: February 26, 2021

Independent Auditors ’ Report

To the Board of Directors of Nishoku Technology Inc.:

Opinion

We have audited the consolidated financial statements of Nishoku Technology Inc. and its subsidiaries (“the Group ”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, 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 at December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee ( “ IFRIC ” ) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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 of the current period. 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. Key audit matters for the Group’s financial statements are stated as follows:

Impairment of accounts receivable

Please refer to Note 4(g) “Financial instruments”Note 5(a) “Significant accounting assumptions and judgments, and major sources of estimation uncertainty” of the consolidated financial statements.

Description of key audit matter:

The Group engages in business primarily with clients which are involved in the manufacture of mold and electronic parts with credit term, which make the Group vulnerable to credit risk. The default of the client may lead to impairment loss of the receivables. The assessment of impairment loss involves subjective judgments of the management, which is the major source of estimation uncertainty. Therefore, this whole matter needed to be taken into serious consideration.

How the matter was addressed in our audit:

Our principal audit procedures included: assessing whether the Group’s impairment of accounts receivable has been set aside in accordance with the Group’s policy, including inquiring from the management if they had identified the debtors who have financial difficulties ; selecting a moderate number of samples from the account aging statements to ensure the accuracy of the statements, and understanding the reason on overdue accounts; assessing the uncollectable accounts receivable for the approriateness of impairment assessment of accounts receivable; assessing the appropriateness and adequacy for doubtful accounts made by the management based on the subsequent collection of accounts receivable.

2. Impairment of inventory

Please refer to Note 4(h) “Inventory”, Note 5(b) “Significant accounting assumptions and judgments, and major sources of estimation uncertainty” of the consolidated financial statements.

Description of key audit matter:

Evaluation of inventory is one of the key judgmental areas for our audit, the Group is primarily involved in the design, manufacture, and sale of mold and electronic parts. As different series or models of electronic products are rapidly being replaced by new ones, it may impact the inventory of the older ones to be slow-moving, or worse yet, stagnant; thus, may result the cost of inventory to be higher than the net realized value. The assessment of impairment loss requires subjective judgments of the management, which is the major source of estimation uncertainty. Therefore, this whole matter needed to be taken into serious consideration.

How the matter was addressed in our audit:

Our principal audit procedures included: understanding the inventories valuation policies of the Group; inspecting whether those policies are applied; examine the accuracy of the aging of inventories by sampling and analyse the changes of the aging of inventories by comparison; retroactively inspecting the reasonability for allowance provided on inventory valuation in the past and compare it to the current year to ensure that the measurements and assumptions are reasonable; sampling the inventories sold in the subsequent period to assess whether the allowance for inventories are reasonable.

Other Matter

The Nishoku Technology Inc. has additionally prepared its parent-company-only financial statements as of and for the years ended December 31, 2020 and 2019, 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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, 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.

Auditor ’ s 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 auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the 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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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.
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.
Obtain sufficient appropriate audit evidence regarding the financial information of the 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.

117

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

The engagement partners on the audit resulting in this independent auditors’ report are Cheng-Chien Chen and Sheng-Ho Yu.

KPMG

Taipei, Taiwan (Republic of China) February 26, 2021

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and cash flows in accordance with the 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 accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and consolidated financial statements, the Chinese version shall prevail.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1170 Notes and accounts receivables, net (note 6(c)) 130X Inventories (note 6(d)) 1470 Other current assets 1476 Other current financial assets (note 8) Non-current assets: 1511 Non-current financial assets at fair value through profit or loss (note 6(b)) 1535 Non-current financial assets at amortised cost (note 6(e)) 1600 Property, plant and equipment (note 6(f)) 1755 Right-of-use assets (note 6(g)) 1840 Deferred income tax assets (note 6(m)) 1915 Prepayments for equipment 1985 Long-term prepaid rents 1990 Other non-current assets	December 31, 2020 Amount % $ 2,626,650 30 665,743 8 1,817,252 21 523,074 6 54,105 1 57,520 1	December 31, 2019 Amount % 3,539,799 46 449,429 6 1,395,940 18 475,628 6 35,229 - 11,567 -
	5,744,344 67	5,907,592 76
	126,439 1 1,124,961 13 1,444,529 17 69,737 1 21,792 - 8,503 - 66,518 1 10,670 -	- - - - 1,531,841 20 134,970 2 96,553 1 15,555 - 70,173 1 24,237 -
	2,873,149 33	1,873,329 24

December 31, 2020	December 31, 2020	December 31, 2020
Amount	%	Amount
2,276,408 26 1,972,949 25
1,200,000 14 1,000,000 13 652,948 8 788,926 10 30,891 - 75,586 1
1,883,839 22 1,864,512 24
4,160,247 48 3,837,461 49
624,462 7 622,962 8
2,993 - - -
968,882 11 959,124 12
538,129 7 504,367 6 337,817 4 199,839 3 2,295,422 27 1,994,985 26
3,171,368 38 2,699,191 35
(310,459) (4) (337,817) (4)
4,457,246 52 3,943,460 51

$ 8,617,493 100 7,780,921 100

Total assets

$ 8,617,493 100 7,780,921 100

Total liabilities and equity

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except Earnings Per Share)

2020	% 102 2	2019	% 102 2
Amount $ 4,883,877 75,616		Amount 4,026,762 69,618
4,808,261 3,268,381	100 68	3,957,144 3,078,431	100 78
1,539,880	32	878,713	22
56,007 327,149 87,074 598	1 7 2 -	77,584 310,153 112,711 (738)	2 8 3 -
470,828	10	499,710	13
1,069,052	22	379,003	9
81,677 (255,224) (20,948)	2 (5) -	104,711 (32,593) (26,570)	3 (1) (1)
(194,495)	(3)	45,548	1
874,557 153,195	19 3	424,551 86,929	10 2
721,362	16	337,622	8
34,198 (6,840)	1 -	(172,472) 34,494	(4) 1
27,358	1	(137,978)	(3)
$ 748,720	17	199,644	5
$ 721,362	16	337,622	8
$ 748,720	17	199,644	5
$	11.57		5.42
$	11.51		5.39

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

Share capital	Share capital	Capital surplus	Retained earnings	Retained earnings
Ordinary shares	Advance receipts for share capital		Legal reserve	Special reserve
$ 622,962 -		955,989 480,192 181,708 1,886,558 (199,839) 3,927,570 3,927,570
- - - -		- - - 337,622 - 337,622 337,622 - - - - (137,978) (137,978) (137,978)
- -		- - - 337,622 (137,978) 199,644 199,644
- - - - - - - -		- 24,175 - (24,175) - - - - - 18,131 (18,131) - - - - - - (186,889) - (186,889) (186,889) 3,135 - - - - 3,135 3,135
622,962 - - - - -		959,124 504,367 199,839 1,994,985 (337,817) 3,943,460 3,943,460 - - - 721,362 - 721,362 721,362 - - - - 27,358 27,358 27,358
- -		- - - 721,362 27,358 748,720 748,720
- - - 33,762 - (33,762) - - - - - - - 137,978 (137,978) - - - - - - - - (249,185) - (249,185) (249,185) - - 1,283 - - - - 1,283 1,283 1,500 2,993 8,475 - - - - 12,968 12,968
$ 624,462 2,993 968,882 538,129 337,817 2,295,422 (310,459) 4,457,246 4,457,246

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation and amortization expense Expected credit loss (gain) Interest expense Interest income Stock option compensation cost Net gain on financial assets at fair value through profit or loss Loss on disposal (reversal of) of property, plant and equipment Recognition losses (reversal of provision) on inventory valuation and obsolescence Others Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Financial assets at fair value through profit and loss Notes and accounts receivables Inventories Other current assets and financial assets Changes in operating liabilities: Notes and accounts payables Other current liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at amortised cost Acquisition of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Increase in other financial assets Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Increase (decrease) in short-term notes and bills payable Proceeds from long-term borrowings Increase in guarantee deposits received and others Payments of lease liabilities Cash dividends paid Exercise of employee share options Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 $ 874,557 277,032 598 20,948 (63,921) 1,283 (3,584) (3,653) 2,648 1,336	2019 424,551 311,196 (738) 26,570 (87,477) 3,135 (1,464) 1,570 (4,189) -
	232,687	248,603
	(215,535) (421,910) (50,094) (8,381)	(184,075) (46,528) 27,081 5,663
	(695,920)	(197,859)
	196,050 70,622	3,075 32,252
	266,672	35,327
	(196,561)	86,071
	677,996 65,891 (20,922) (186,451)	510,622 85,466 (25,329) (13,893)
	536,514	556,866
	(1,181,921) (123,633) (103,953) 9,138 10,391 (2,274)	- - (160,627) 5,781 (1,011) (4,626)
	(1,392,252)	(160,483)
	164,130 (150,000) 200,000 146 (57,064) (249,185) 12,968	19,070 50,000 100,000 414 (56,497) (186,889) -
	(79,005)	(73,902)
	21,594 (913,149) 3,539,799	(125,725) 196,756 3,343,043
	$ 2,626,650	3,539,799

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

NISHOKU TECHNOLOGY INC. (the “Company”) was incorporated in year 1980, as a company limited by shares and registered under the Ministry of Economic Affairs, ROC. The Company conducted an IPO on the Taiwan Stock Exchange (TWSE) on October 5, 2011. The Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) primarily are involved in the manufacture and sale of plastic injection mold, tooling manufacturing and general import and export Trade, please refer to note 14.

(2) Approval date and procedures of the consolidated financial statements:

These consolidated financial statements were authorized for issue by the board of directors on February 26, 2021.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2020:

Amendments to IFRS 3 “Definition of a Business”
Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”
Amendments to IAS 1 and IAS 8 “Definition of Material”
Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its consolidated financial statements:

Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform － ” Phase 2

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
“ － ”
● Amendments to IAS 16 Property, Plant and Equipmentt Proceeds before Intended Use
“ － ”
● Amendments to IAS 37 Onerous Contracts Cost of Fulfilling a Contract
Annual Improvements to IFRS Standards 2018-2020
Amendments to IFRS 3 “Reference to the Conceptual Framework”

(4) Summary of significant accounting policies:

The significant accounting policies presented in the consolidated financial statements are summarized below. Except for those specifically indicated, the following accounting policies are applied consistently throughout the periods presented in the consolidated financial statements.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter, referred to as “the Regulations”) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, R.O.C..

(b) Basis of preparation

(i) Basis of measurement

Except for the financial instruments at fair value through profit or loss are measured at fair value, the consolidated financial statements have been prepared on a historical cost basis.

(ii) Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan dollars, which is the Company’ s functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(c) Basis of consolidation
(i) Principle of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances. Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent.

(ii) List of subsidiaries in the consolidated financial statements

Name of investor	Name of subsidiary	Principal Activities	Percentage of shareholding (%)	Percentage of shareholding (%)
			December 31, 2020	December 31, 2019
The Company 〃〃 SUN NICE (SAMOA) 〃〃 NISHOKU (HK) 〃	NISHOKU BOUEKI CO., LTD. (NISHOKU BOUEKI) NISHOKU TECHNOLOGY VIETNAM CO., LTD. (NISHOKU VIETNAM) SUN NICE LIMITED (SAMOA) (SUN NICE (SAMOA)) SAME START LIMITED (Anguilla) (SAME START Anguilla) NISHOKU HONG KONG HOLDING LIMITED (NISHOKU HK) SUN NICE LIMITED (BVI) (SUN NICE (BVI)) NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. (NISHOKU (SHENZHEN)) KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD. (NISHOKU KUNSHAN PLASTIC)	Trading Company Manufacture and Sale of tooling and plastic products Holding Company Trading Company Holding Company Holding Company Manufacture and Sale of mold and plastic products Manufacture and Sale of mold and plastic products	100% 100% 100% 100% 100% 100% 100% 71.49%	100% 100% 100% 100% 100% 100% 100% 71.49%

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Name of investor	Name of subsidiary	Principal Activities	Percentage of shareholding (%)	Percentage of shareholding (%)
			December 31, 2020	December 31, 2019
SUN NICE (BVI)	KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD. (NISHOKU KUNSHAN)	Manufacture and Sale of mold and plastic products	28.51%	28.51%

(d) Foreign currencies

(i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes of only part of its investment in an associate or a joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future. Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

An entity shall classify a liability as current when:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(f) Cash and cash equivalents

Cash comprises cash on hand and demand deposits.Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(g) Financial instruments

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL：

‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

2) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

3)
Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivables, other receivables, guarantee deposit paid and other financial assets).

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

‧ debt securities that are determined to have low credit risk at the reporting date；and
‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’ s historical experience and informed credit assessment as well as forward-looking information.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instruments

1) Classification of debt or equity

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

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital suplus is not sufficient to be written down).

4) Other financial liabilities

Financial liabilities are classified as measured at amortized cost, which comprise loans and borrowings, and trade and other payables. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

5) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligation are discharged or cancelled, or expired. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(iii) Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average method and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(i) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives, for the current and comparative years, of significant items of property, plant and equipment are as follows:

1) Buildings: 20~50 years
2) Accessory equipment of buildings: 5~10 years
3) Machinery and equipment: 3~8 years
4) Office and other equipment: 2~8 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

(j) Lease
(i) Identifying a lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

－ – the contract involves the use of an identified asset this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
－ the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
－
the customer has the right to direct the use of the asset throughout the period of use only if either:
(1) the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or
(2) the relevant decisions about how and for what purpose the asset is used are predetermined and:

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

－ the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
－ the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

(ii) As a leasee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

－
fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－
amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－
there is a change in future lease payments arising from the change in an index or rate; or
－
there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or
－
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－
there is a change of its assessment on whether it will exercise a extension or termination option; or
－
there is any lease modifications

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(k) Research and development

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

(l) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.Impairment losses are recognized in profit or loss. They are allocated to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(m) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods to a customer. The Group recognizes revenue when it satisfies a perfarmance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

(i) Sale of goods

The Group manufactures and sells plastic goods and molds. The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

(ii) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods to the customer and payment by the customer exceeds one year. As a consequence, the group does not adjust any of the transaction prices for the time value of money.

(n) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(o) Share-based payment

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as employee expenses, with a corresponding increase in equity, over the vesting period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Grant date of a share-based payment award is the date which the board of directors authorized the price and number of a new award.

(p) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax asset are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(q) Earnings per share

The Group discloses the basic and diluted earnings per share attributable to ordinary shareholders of the Company. The calculation of basic earnings per share is the profit attributable to the ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is the profit attributable to ordinary shareholders of the Company dividend by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Dilutive potential ordinary shares comprise convertible bonds, employee stock options, and employee bonuses not yet resolved by the shareholders.

(r) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated financial statements in conformity with the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

There are no critical judgment made in applying the accounting policies that have significant effects on amounts recognized in consolidated financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment with the following year is as follows:

(a) The loss allowance of accounts receivable

The Group has estimated the loss allowance of trade receivable that is based on the risk of a default occurring and the rate of expected credit loss. The Group has considered historical experience, current economic conditions and forward-looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs. The recognition of impairment loss, please refer to note 6(c).

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be changes in the net realizable value of inventories.

The Group’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss.

The Group’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back-testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. The Group strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

(a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
(b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
(c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date. Please refer to note 6(u) for assumptions used in measuring fair value.

(6) Explanation of significant accounts:

(a) Cash and cash Equivalents

Cash and demand deposits Time deposits Bond acquired under repurchase agreement Cash and cash equivalents in the consolidated statement of cash flows	December 31, 2020 $ 1,827,075 429,335 370,240	December 31, 2019 1,528,284 1,321,955 689,560
	$ 2,626,650	3,539,799

Please refer to note 6(u) for the interest rate risk, and sensitivity analysis of the financial assets and liabilities of the Group.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

Financial assets at fair value through profit or loss Fund investments-current Fixed income financial instruments Overseas corporate bonds Total Fund investments-non-current Please refer to note 6(e) for fund investments-non-current.	December 31, 2020 $ 46,663 612,833 6,247	December 31, 2019 12,666 430,513 6,250
	$ 665,743	449,429
	$ 126,439	-

As of December 31, 2020 and 2019, the Group did not provide any financial assets as collateral for its loans.

Notes receivable Accounts receivable Less：loss allowance	December 31, 2020 $ 6,083 1,811,698 (529)	December 31, 2019 19,343 1,395,696 (19,099)
	$ 1,817,252	1,395,940

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information. The loss allowance provision were determined as follows:

December 31, 2020	December 31, 2020	Loss allowance provision - 2 25 502
Gross carrying amount $ 1,804,736 6,423 37 502	Weighted-aver age loss rate
	-% 0%~1% 0%~30% 100%
$ 1,811,698		529

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

December 31, 2019	December 31, 2019	Loss allowance provision - 247 - 18,852
Gross carrying amount $ 1,339,320 37,523 1 18,852	Weighted-aver age loss rate
	-% 0%~1% 0%~30% 100%
$ 1,395,696		19,099

The movement in the allowance for notes and accounts receivables were as follows:

Balance at January 1 Impairment losses recognized Reversal of impairment loss Amounts written off Balance at December 31	2020 $ 19,099 598 - (19,168)	2019 23,892 - (738) (4,055)
	$ 529	19,099

(d) Inventories Raw materials Work in process Finished goods	2020 $ 194,769 203,355 124,950	2019 144,663 219,691 111,274
	$ 523,074	475,628

For the years ended December 31, 2020 and 2019, raw material, consumables, and changes in the finished goods and work in progress recognized as cost of sale amounted to $3,268,381 thousand and $3,078,431 thousand, respectively. For the years ended December 31, 2020 and 2019, the Group recognized the losses (reversal gains) on inventory valuation and obsolescence as cost of goods sold amounting to $2,648 thousand and $(4,189) thousand, respectively.

As of December 31, 2020 and 2019, the Group did not provide any inventories as collateral for its loans.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Non-current financial assets at amortized cost

Restricted bank deposit	December 31, 2020 $ 1,124,961	December 31, 2019 -

In May and July, 2020, the Group applied to IRS for the application of “The Management, Utilization, and Taxation of Repatriated Offshore Funds Act” (hereinafter referred to as the “Act”), and the remittance was approved within one month. According to the Act, the funds need to be deposited in a special-purpose account for five years, and 5% of the funds can be used without restriction, 25% can be used on financial investment, and 70%, at least, can be used for substantive investment; Otherwise, the funds can only be redeemed within 3 consecutive years on average after the five years maturity. Please refer to note 6(b) for financial assets.

(f) Property, plant and equipment

The cost, depreciation and impairment loss of the property, plant and equipment of the Group for the years ended December 31, 2020 and 2019, were as follows:

Land	Office and other equipment	Construction in progress and testing equipment 101,928 48,645 (125,867) - 31,350	Total 3,695,683 118,866 (1,384) (127,478) 33,743
	476,633 21,811 1,066 (25,442) 5,374
$ 179,672 1,048,926 1,955,334	479,442	56,056	3,719,430
$ 179,672 927,427 2,099,866 - 9,153 42,411 - 10,528 41,135 - (1,270) (97,000) - (25,076) (69,724)	478,594 31,307 14,669 (30,071) (17,866)	73,046 97,882 (63,094) - (5,906)	3,758,605 180,753 3,238 (128,341) (118,572)
$ 179,672 920,762 2,016,688	476,633	101,928	3,695,683
$ - 391,905 1,413,474 - 47,072 121,300 - - (98,534) - 14,417 (873)	358,463 45,357 (23,459) 5,779	- - - -	2,163,842 213,729 (121,993) 19,323
$ - 453,394 1,435,367	386,140	-	2,274,901
$ - 354,265 1,406,257 - 50,124 147,244 - - 2,182 - (1,270) (92,760) - (11,214) (49,449)	348,728 48,646 1,550 (26,960) (13,501)	- - - - -	2,109,250 246,014 3,732 (120,990) (74,164)
$ - 391,905 1,413,474	358,463	-	2,163,842

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Carrying amounts: Balance on December 31, 2020 Balance on December 31, 2019	Land	Building	Machinery and equipment	Office and other equipment	Construction in progress and testing equipment 56,056	Total
	$ 179,672 595,532 519,967			93,302		1,444,529
	$ 179,672 528,857 603,214			118,170	101,928	1,531,841

As of December 31, 2020 and 2019, the property, plant and equipment of the Group had not been pledged as collateral.

(g) Right-of-use assets

The Group leases many assets including land and buildings, vehicles and machinery equipment. Information about leases for which the Group as a lessee was presented below:

Buildings and structures $ 149,480 2,366 (59,079) 1,242	Machinery and equipment	Transporta tion equipment 8,399 - - -	Total 188,978 6,991 (90,008) 1,175
	31,099 4,625 (30,929) (67)
$ 94,009	4,728	8,399	107,136
$ 40,364 110,406 (1,290)	32,124 - (1,025)	8,399 - -	80,887 110,406 (2,315)
$ 149,480	31,099	8,399	188,978
$ 35,024 37,260 (42,231) 476	15,549 15,464 (30,929) (84)	3,435 3,435 - -	54,008 56,159 (73,160) 392
$ 30,529	-	6,870	37,399
$ - 36,390 (1,366)	- 16,155 (606)	- 3,435 -	- 55,980 (1,972)
$ 35,024	15,549	3,435	54,008
$ 63,480	4,728	1,529	69,737
$ 114,456	15,550	4,964	134,970

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(h) Short-term borrowings

The Short-term borrowings were summarizes as follows:

Secured loans Credit loans, no pledge Total Interest rate range	December 31, 2020 $ 45,000 943,920	December 31, 2020 $ 45,000 943,920	December 31, 2019 - 805,720
	$ 988,920		824,790
		0.4%~0.83%	0.90%~2.80%

For the collateral for short-term borrowings, please refer to note 8.

(i) Short-term notes and bills payable

The short-term notes and bills payable were summarized as follows:

December 31, 2019 Guarantee or acceptance institution Range of interest rates (%) Amount Mega Bills 0.732% $ 150,000 (6) $ 149,994	December 31, 2019 Guarantee or acceptance institution Range of interest rates (%) Amount Mega Bills 0.732% $ 150,000 (6) $ 149,994	December 31, 2019 Guarantee or acceptance institution Range of interest rates (%) Amount Mega Bills 0.732% $ 150,000 (6) $ 149,994
Guarantee or acceptance institution	Range of interest rates (%)
Mega Bills	0.732%
		$ 149,994

(j) Long-term borrowings

The detail were as follows:

	December 31, 2020	December 31, 2020	Amount $ 1,200,000
Currency	Interest rate range	Maturity year
NTD	0.95%~0.98% 2022 December 31, 2019
			Amount $ 1,000,000
Currency	Interest rate range	Maturity year
NTD	1.00%~1.19%	2021

Please refer to note 6(u) for the exchange rate risk, the interest rate risk, and the sensitivity analysis of the financial assets and liabilities of the Group.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(k) Lease liabilities

Current Non-current financial assets For the maturity analysis, please refer to note 6(u).	December 31, 2020 $ 39,224	December 31, 2019 59,531
	$ 30,891	75,586

The amounts recognized in profit or loss was as follows:

Interest expenses on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	For the years ended December 31, 2020 For the years ended December 31, 2019 $ 1,178 669 $ - 289 $ 857 548	For the years ended December 31, 2020 For the years ended December 31, 2019 $ 1,178 669 $ - 289 $ 857 548	For the years ended December 31, 2020 For the years ended December 31, 2019 $ 1,178 669 $ - 289 $ 857 548
		1,178
		-	289
		$ 857	548

The amounts recognized in the statement of cash flows for the Group was as follows:

Total cash outflow for leases	For the years ended December 31, 2020 $ 59,098	For the years ended December 31, 2019
		56,497

(l) Employee benefits

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The consolidated entities set up overseas have defined contribution plans. These plans are funded in accordance with the regulations of their respective countries, and recognized as the contribution in the current period.

The pension costs incurred from the contributions to the Labor Insurance amounted to $27,436 thousand and $48,445 thousand for the years ended December 31, 2020 and 2019, respectively.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(m) Income tax
(i) The components of income tax in the years 2020 and 2019 were as follows:

Current tax expense Deferred tax expense (benefit)	2020 $ 221,397 (68,202)	2019 11,909 75,020
	$ 153,195	86,929

(ii) The amounts of income tax expense (profit) recognized in other comprehensive income or loss for 2020 and 2019 was as follows:

Foreign currency translation differences for foreign operations	2020 $ 6,840	2019 (34,494)

(iii) Reconciliation of income tax and profit before tax for 2020 and 2019 was as follows:

Profit excluding income tax Income tax using the Company’s domestic tax rate Effect of tax rates in foreign jurisdiction Tax incentive-Repatriated offshore funds Change in unrealized deferred tax assets Undistributed earnings additional tax Prior year’s income tax adjustment and other	2020 $ 874,557	2019 424,551
	278,160 (30,040) (177,211) 75,540 - 6,746	94,761 4,653 - - 628 (13,113)
	$ 153,195	86,929

(iv) Deferred tax assets and liabilities
1) Unrecognized deferred tax assets

The deductible temporary difference for which no deferred income tax assets have been recognized were as follows:

Unrealized investment losses Depreciation period difference Loss on inventory valuation The carryforward of unused tax losses Other	December 31, 2020 $ 75,540 43,734 37,013 17,461 13,692 $ 187,440	December 31, 2019 - 45,265 35,727 24,750 19,991
		125,733

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

As of December 31, 2020, the unused prior-year tax loss carry-forward of the consolidated entities set up overseas amounted to $232,816 thousand, and the deductible taxes calculated by the local tax authorities amounted to $17,461 thousand.

2) Recognized deferred tax liabilities

Changes in the amount of deferred tax liabilities for 2020 and 2019 were as follows:

Deferred tax liabilities Balance on January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income or loss Balance on December 31, 2020 Balance on January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income or loss Balance on December 31, 2019	Investment income recognized under the equity method	Foreign currency translation differences for foreign operations	Others
	$ 765,537 (46,992) - 718,545 104,720 - 8 104,728 - (35,185) - (35,185)
	$ 870,257 (82,177) 8 788,088

3) Recognized deferred tax assets

Changes in the amounts of deferred tax assets for 2020 and 2019 was as follows:

Deferred tax assets Balance on January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income or loss Balance on December 31, 2020 Balance on January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income or loss Balance on December 31, 2019	Investment income recognized under the equity method	Loss on inventory valuation	Foreign currency translation differences for foreign operations	Unused tax losses carry forwards	Others	Total
	$ (75,540) (447) (320) (15,452) (4,794) (96,553) 75,540 (113) - 10,764 (9,970) 76,221 - - (1,460) - - (1,460) $ - (560) (1,780) (4,688) (14,764) (21,792)
	$ (60,532) (471) (1,011) (3,224) (2,298) (67,536) (15,008) 24 - (12,228) (2,496) (29,708) - - 691 - - 691
	$ (75,540) (447) (320) (15,452) (4,794) (96,553)

(v) The Company and NISHOKU BOUEKI income tax returns have been examined by the tax authority through the years up to 2018, only 2017 income tax returns of The Company has been under review respectively.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Capital and other equity

On December 31, 2020 and 2019, the total share capital of the Company were both $1,500,000 thousand, and the denomination per share was $ 10, both with a total of 150,000 thousand shares (all including employee stock option, and the amount of shares that can be subscribed is $20,000 thousands). As of that date, both 62,446 thousand shares and 62,296 thousand shares whose legal registration procedure for the authorized capital stock is completed. All issued shares were paid up upon issuance.

The issued and registered shares of common stock in 2020 and 2019 were as follows (expressed in thousands of shares)

Balance on January 1 Exercise of employee stock option Balance on December 31	Ordinary shares 2020 2019 62,296 62,296 150 -	Ordinary shares 2020 2019 62,296 62,296 150 -
	2020
	62,296 150
	62,446	62,296

(i) Issuance of capital stock

The Company issued 195 thousand shares, with par value of $10 per share for the exercise of employee stock options in 2020. Therein 150 thousand shares were completed the legal registration procedures. As of December 31, 2020 there were still 45 thousand shares whose legal registration procedure are unfinished.

(ii) Capital surplus

The balances of capital surplus as of December 31, 2020 and 2019, were as follows:

Share capital Employee share options	December 31, 2020 $ 958,419 10,463	December 31, 2019 949,944 9,180
	$ 968,882	959,124

According to the ROC Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring paid-in capital in excess of par value should not exceed 10% of the total common stock outstanding.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Retained earnings

The Group’s article of incorporation stipulate that, when allocating the profit for each fiscal year, the Company shall first offset its losses in previous years. Of the remaining profit, 10% is ’ to be appropriated as legal reserve, until the accumulated legal reserve equals the Company s paid-in capital. Aside from the aforesaid legal reserve, the Company shall appropriate or reverse another sum as special earnings reserve in accordance with relevant laws or regulations or requested by the authorities in charge. The remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

According to the amendment of the of Article 240 and Article 241 of the ROC Company Act, the Company authorized the distributable dividends and bonuses in whole or in part may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

Before the distribution of dividends, the Company shall first take into consideration its operating environment, industry developments, and the long-term interests of stockholders, as well as its programs to maintain operating efficiency and meet its capital expenditure budget and financial goals in determining the stock or cash dividends to be paid. The dividend to be distributed shall be no less than 10% of the current-year retained earnings available for distribution only if the current-year retained earnings available for distribution does not reach $0.5 per share, the Company may decide not to distribute dividend. The dividend to be distributed may be in the form of cash and stock, and cash dividend in the distribution should not be less than 30%.

1) Legal reserve

According to the amendment of the ROC Company Act, the Company must retain 10% of its after-tax annual earnings as legal reserve until such retention equals the amount of total capital. When a company incurs no loss, it may, pursuant to a resolution by a shareholders ’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be set aside as special earnings reserve during earnings distribution. Similarly, a portion of undistributed prior-period earnings shall be set aside as special earnings reserve (and can not be distributed) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. As of December 31, 2020, the total amount of special reserve amounted to $337,817 thousand.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

3) Earnings distribution

Earnings distribution for 2019 and 2018 were decided via the general meeting of shareholders held on June 16, 2020, and June 18, 2019, respectively. The relevant dividend distributions to shareholders were as follows:

Dividend to shareholders Cash	2019	2019	2018 Payout per share Amount 3.0 186,889
	Payout per share	Amount 249,185	Payout per share
	$ 4.0		3.0

(o) Share-based payment

(i) The Company issued 600 units of employee stock options, at 1,000 shares per unit, to its employees and its subsidiaries’ who met certain requirements on July 28, 2017. The duration of the employee stock options is five year. 50%, 75%, and 100% of the stock options are exercisable 2 years, 3 years, and 4 years, respectively, after the grant date. Those qualified employees are entitled to purchase the shares at the closing price of ordinary shares of the Company on the same day. After the grant of the stock options, any changes in the ordinary shares of the Company, the exercise price of the share options will be adjusted according to the prescribed formula.

(ii) Details of the employee stock options are as follows:

2020	2020	2019 Weighted average exercise price Number of options 75.40 560 - - - (120) - - 70.80 (note) 440 220 18.15
Weighted average exercise price	Number of options 440 - (10) (195)	Weighted average exercise price
$ 70.80 (note) - - 66.50 66.50 (note)		75.40 - - - 70.80 (note)
	235
	135
	$ 18.15

(Note) The Company adjusted the exercise price of stock options according to its requirements for issuance stock options.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The details of the stock options of the Group were as follows:

December 31, 2020 Weighted average of remaining contractual period (years) 1.57	December 31, 2019
	2.57

(iii) The Company used the Black-Scholes pricing model in measuring the fair value of the share-based payment at the grant date. The measurement inputs were as follows:

Exercise price (NT dollars) Share price at grant date (NT dollars) Expected dividend (%) Expected volatility (%) Risk-free interest rate (%) Expected life (years)	2017 employee stock option
	81.80 81.80 - % 26.78%~27.89% 0.67%~0.73% 5

(iv) For the years ended December 31, 2020 and 2019, the expenses attributable to share based payment amounted to $1,283 thousand and $3,135 thousand, respectively.

(p) Earnings per share

(i) Basic earnings per share

The calculation of basic earnings per share for the years ended December 31, 2020 and 2019, was based on the profit attributable to ordinary shareholders of the Company and the weighted-average number of ordinary shares outstanding, calculated as follows:

Profit attributable to ordinary shareholders of the Company Weighted-average number of ordinary shares (thousand shares) Basic earnings per share	2020 $ 721,362	2019
		337,622
	62,321	62,296
	$ 11.57	5.42

(ii) Diluted earnings per share

The calculation of diluted earnings per share for the years ended December 31, 2020 and 2019, were based on the profit attributable to the ordinary shareholders of the Company and the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:

Profit attributable to ordinary shareholders of the Company (diluted)	2020 $ 721,362	2019 337,622

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Weighted-average number of ordinary shares (diluted) (thousand shares)

	2020 62,321 327	2019 62,296 373 62,669 5.39 2019 1,797,250 856,421 1,303,473

	62,648
$	11.51
	2020 $ 1,608,676 530,621 2,668,964
	$ 4,808,261	3,957,144
	$ 4,433,079 372,894 2,288	3,619,937 335,732 1,475
	$ 4,808,261	3,957,144
	December 31, 2019 31,622	January 1, 2019 35,824

For details of accounts receivable, please refer to note 6 (c).

The major change in the balance of contract liabilities is the advance consideration received from customers for the contracts, in which revenue is recognized when products are delivered to customers. The amount of revenue recognized for the years ended December 31, 2020 and 2019, which was included in the contract liability balance at the beginning of the period, was $31,622 thousand and $35,824 thousand, respectively.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(r) Employee, board of directors' compensation

In accordance with the Articles of incorporation the Company should contribute no less than 1% of the profit as employee compensation and not exceed 5% as directors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved ’ to offset the deficit. The recipients of shares and cash may include the employees of the Company s affiliated companies who meet certain conditions.

For the years ended December 31, 2020 and 2019, the Company estimated its employee remuneration amounting to $30,000 thousand and $22,100 thousand, and directors’ remuneration amounting to $11,705 thousand and $7,925 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors of each period, multiplied by the percentage of remuneration to employees, directors as specified in the Company’s articles. These remunerations were recognized as operating costs or operating expense. If the actual amount of the annual distribution and the estimated amount of differences, according to the changes in accounting estimates, and the difference recognized as the next year annual profit (loss). Such as the resolution of the board of directors to take the stock of employee compensation, the numbers of shares to be distributed would be calculated based on the closing price of the Company’s ordinary shares one day before the date of the meeting of Board of Directors, please refer to Market Observation Post System for further information.

The amounts, as stated in the consolidated financial statements, are identical to those of the actual distributions for 2020 and 2019. There is no difference in the actual distribution situation.

(s) Other revenue

The other revenue for the years ended December 31, 2020 and 2019 were as follows:

Interest income Others Total other income	2020 $ 63,921 17,756	2019 87,477 17,234
	$ 81,677	104,711

(t) Other gains and losses

The other gains and losses for the years ended December 31, 2020 and 2019 were as follows:

Foreign exchange losses, net Gains on financial assets at fair value through profit or loss Gains (losses) on disposals of property, plant and equipment Others	2020 $ (261,003) 3,584 3,653 (1,458)	2019 (23,332) 1,464 (1,570) (9,155)
	$ (255,224)	(32,593)

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(u) Financial Instruments

(i) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, which arises from the Group’s accounts receivable and investments.

1) Accounts receivable and others receivables

For credit risk exposure of note and accounts receivable, please refer to note 6(c).

The Group has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, when available, and in some cases bank references. These criterias are reviewed periodically.

2) Investment

The credit risk exposure in bank deposits, fixed-income investment, and other financial instruments is measured and monitored by the Group’s finance department. As the Group deals with banks and other external parties with good credit standing and with financial institutions, corporate organizations, and government agencies which are graded above investment level, the management believes their counterparts do not have significant default risk, therefore, the credit risk is insignificant.

3) Credit risk exposure

As of December 31, 2020 and 2019, the Group’s maximum exposure to credit risk was mainly from the carrying amount of financial assets recognized in the consolidated statements of financial position and amounted to $6,418,565 thousand and $5,396,735 thousand, respectively. The Group had deposited these bank deposits in different financial institutions, and the Group believes that there is no significant credit risk from the above mentioned financial institutions.

4) Concentration of credit risk

The credit risk exposure of the Group comes from the credit of individual customers, and the industry of the customer also have effect on credit risk. For the years ended December 31, 2020 and 2019, sales to the individual customers whose revenue constituting over 10% of net revenue are 40% and 27% of total revenues respectively. As of December 31, 2020 and 2019, 43% and 23%, respectively, of accounts receivable were those customers.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

Carrying amount $ 988,920 1,200,000 800,428 70,115 55,202	Contractual cash flows	within 1 year	1-2 years	2-5 years
	989,735 1,220,867 800,428 70,115 55,202	989,735 11,492 800,428 39,224 55,202	- 1,209,375 - 30,891 -	- - - - -
$ 3,114,665	3,136,347	1,896,081	1,240,266	-
$ 824,790 149,994 1,000,000 604,378 135,117 45,748	830,154 150,000 1,018,915 604,378 135,117 45,748	830,154 150,000 10,730 604,378 59,531 45,748	- - 1,008,185 - 75,586 -	- - - - - -
$ 2,760,027	2,784,312	1,700,541	1,083,771	-

The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(iii) Market risk

1) Exchange rate risk

The Group's significant exposure to foreign currency risk on financial assets and liabilities was as follows:

Financial assets Monetary Items USD CNY Financial liabilities Monetary Items USD	December 31, 2020	December 31, 2020	December 31, 2019 Foreign currency Exchange rate NTD 81,104 29.980 2,431,483 16,029 4.305 69,005 1,394 29.980 41,795
	Foreign currency Exchange rate $ 153,339 28.480 199 4.377 8,170 28.480	NTD
		4,367,099 870 232,674

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivables, accounts payable and other payables that are denominated in foreign currency.

A weakening (strengthening) of 1% of the NTD against the USD and CNY at December 31, 2020 and 2019, would have increased or decreased the net profit before tax by $41,353 thousand and $24,587 thousand, respectively. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for both periods.

Since the Group has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For years 2020 and 2019, foreign exchange gain (including realized and unrealized portions) amounted to $261,003 thousand and $23,332 thousand, respectively.

2) Interest rate analysis

The details of financial instruments exposed to interest rate risk were as follows:

Fixed-rate instruments: Financial assets Financial liabilities Variable-rate instruments: Financial assets Financial liabilities	Carrying	amount December 31, 2019 2,011,515 (704,964)
	December 31, 2020 $ 799,575 (1,288,920)
	$ (489,345)	1,306,551
	$ 1,826,437 (900,000)	1,527,780 (1,269,820)
	$ 926,437	257,960

The sensitivity analysis is based on the exposure to the interest rate risk of nonderivative financial instruments on the reporting date. Regarding liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases 1 basis points when reporting to management internally, which also represents the Group management's assessment of the reasonably possible interest rate change.

If the interest rate had increased / decreased by 1 basis points, the Group’s net income would have decreased / increased by $2,316 thousand and $645 thousand ffor the years ended December 31, 2020 and 2019, with all other variable factors remaining constant. This is mainly due to the Group’s borrowing at variable rates and bank deposits in variable-rate bills.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Fair value of financial instruments
1) Fair value of financial instruments

The fair value of financial assets at fair value through profit or loss is measured on a recurring basis. The carrying amount and fair value of the Group’s financial assets, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	Total 665,743
		Fair	Value
	Level 1	Level 2		Level 3 612,833
	46,663	6,247 -
				-	126,439
$ 2,626,650 1,817,252 560 15,099 56,960 1,124,961
$ 5,641,482
$ 2,188,920 800,428 70,115 55,202
$ 3,114,665

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	December 31, 2019	December 31, 2019	December 31, 2019
		Fair Value		Total 449,429
	Level 1 12,666	Level 2 6,250	Level 3 430,513
$ 3,539,799 1,395,940 11,567 25,490
$ 4,972,796
$ 1,824,790 149,994 604,378 135,117 45,748
$ 2,760,027

2) Valuation techniques for financial instruments measured at fair value
a) Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm ’ s-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

b) Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques generally accepted by market participants. Fair value of forward currency is usually determined by the forward currency exchange rate.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Reconciliation of Level 3 fair values

The following table shows a reconciliation of the beginning balances to the ending balances for the fair value measurements in Level 3 of the fair value hierarchy:

Balance in the beginning of the period Recognized In profit or loss Purchased Disposal Balance in the ending of the period	At fair value through profit or loss 2020 2019 $ 430,513 245,966 32,133 33,049 1,969,820 1,549,846 (1,819,633) (1,398,348)	At fair value through profit or loss 2020 2019 $ 430,513 245,966 32,133 33,049 1,969,820 1,549,846 (1,819,633) (1,398,348)
	2020 $ 430,513 32,133 1,969,820 (1,819,633)
	$ 612,833	430,513

The aforementioned total gains and losses were recognized in “other income”. There were no transfers from all Level in 2020 and 2019.

4) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Group’s financial instruments that use Level 3 inputs to measure fair value are “ – financial assets measured at fair value through profit or loss fixed income financial instrument” and derivative financial assets. The financial assets’ fair value are using the prior transaction price before adjustments or third-party pricing information. The unobservable inputs are not set up as the Group measures fair value, so the quantified information of significant unobservable inputs are not disclosed.

(v) Financial risk management
(i) Structure of risk management

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect any changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The board of directors monitors the management to ensure compliance with the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The board of directors is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the board of directors.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) The Group have exporesures to the following risks from its financial instruments:
1) Credit risk
2) Liquidity risk
3) Market risk

’ For more disclosures about the quantitative effects of these risks exposures and the Group s objectives, policies and processes for measuring and managing the above mentioned risks, please refer to note 6(u).

(w) Capital management

The Group manages capital to safeguard the capacity to continue to operate and to safeguard the certainly and stability of its financial resources. The management uses the asset-liability ratio to manage capital. As of December 31, 2020 and 2019, the Group’s equity to asset ratios were 52% and 51%, respectively. There were no changes in the Group’s approach to capital management as of December 31, 2020.

(x) Investing and financing activities not affecting current cash flow

The Group’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2020 and 2019, were as follows:

(i) For acquisition of right-of-use assets, please refer to note 6(g).
(ii) Reconciliation of liabilities arising from financing activities were as follows:

Short-term borrowings Short-term notes and bills payable Long-term borrowings Lease liabilities Total liabilities from financing activities Short-term borrowings Short-term notes and bills payable Long-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2020 Cash flows Foreign exchange movement and others December 31, 2020 $ 824,790 164,130 - 988,920 149,994 (150,000) 6 - 1,000,000 200,000 - 1,200,000 135,117 (57,064) (7,938) 70,115
	$ 2,109,901 157,066 (7,932) 2,259,035
	January 1, 2019 Cash flows Foreign exchange movement and others December 31, 2019 $ 805,720 19,070 - 824,790 99,985 50,000 9 149,994 900,000 100,000 - 1,000,000 80,887 (56,497) 110,727 135,117
	$ 1,886,592 112,573 110,736 2,109,901

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(7) Related-party transactions:

(a) Transaction of key management personnel
(iii) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits Post-employment benefits Termination benefits Other long-term benefits Share-based payments	2020 $ 51,351 216 - - -	2019 41,258 216 - - -
	$ 51,567	41,474

(8) Pledged assets

The carrying values of pledged assets were as follows:

Pledged assets	Object	December 31, 2020 $ 25 - 56,960	December 31, 2019 25 4,703 -
Demand deposits (classified under other current financial assets) 〃〃	Guarantee for carbon emission Guarantee for Litigation Short-term borrowings
		$ 56,985	4,728

(9) Significant Commitments and Contingencies:

(a) Unrecognized contractual commitments
(i) The Group’s unrecognized contractual commitments to the purchase of plant and equipment are as follows:

Acquisition of property, plant and equipment	December 31, 2020 $ 42,920	December 31, 2019 75,657

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) For the necessary to bank loan and operating capital, the Company and its subsidiaries provide guarantee and endorsement for other parties were as follows:

Outstanding guarantee notes Purchasing guarantee Actual usage amount	December 31, 2020 $ 1,398,688 -	December 31, 2019 1,628,960 14,990
	$ 1,398,688	1,643,950
	$ 153,920	329,780

(10) Losses Due to Major Disasters:None

(11) Subsequent Events:None

(12) Other:

(a) A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

By function By item	2020	2020	2020	2019	2019	2019
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefit expenses Salary Labor and health insurance Pension Others Depreciation Amortization	798,071 20,278 21,418 21,015 217,348 3,435	228,698 8,956 6,018 34,129 52,540 3,709	1,026,769 29,234 27,436 55,144 269,888 7,144	746,550 21,268 37,796 20,161 245,058 4,942	213,799 9,182 10,649 27,239 56,936 4,260	960,349 30,450 48,445 47,400 301,994 9,202

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

(i) Loans to other parties:

==> picture [473 x 100] intentionally omitted <==

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

Highest
balance Collateral
of financing Actual Financing
to other usage limit for Maximum
parties during Ending amount Reason for Allowance each financing
Name of Name of Account Related the period balance during the Nature of Transaction short-term for bad borrowing limit for the
No. lender borrower name party (Note 3) (Note 3) period Interest rate financing amounts financing debt Item Value company lender
0 The NISHOKU Other Yes 296,300 284,800 227,840 0.95% Necessary to - Operating - - 445,725 1,782,8
Company VIETNAM accounts loan other capital (Note 1) (Not
receivable parties
1 SAME 〃〃 Yes 242,000 - - 1.03%~1.4% Necessary to - 〃 - - - -
START loan other (Note 4) (Note 4)
(Anguilla) parties
----- End of picture text -----

Note 1: The individual amount and the total amount for lending to a company shall not exceed 10% and 40% of the lending company’s net worth in the latest financial statement, respectively. The Company for lending to the Company directly or indirectly holds 100% of their shares, with the loan amount not limited and the total amounts not exceeding the lending company’s net worth in the last financial statement.

Note 2: Related transaction have been elimated during the preparation of the consolidated financial statements.

Note 3: Amount actually draw in foreign currencies were translated based on the exchange rate at the reporting date.

Note 4: SAME START LIMITED (Anguilla) had canceled the financing amount on the meeting of Board of directors at November, 2020.

(ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise (note 1)	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date (Note 3)	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company (Note 2)
0 〃〃 1	The Company 〃〃 KUNSHAN NISHOKU PLASTIC	SAME START (Anguilla) NISHOKU VIETNAM NISHOKU BOUEKI SAME START (Anguilla)	3 2 2 1	1,337,174 1,337,174 1,337,174 940,123	514,250 1,144,044 159,260 15,125	113,920 1,127,808 156,960 -	- 113,920 40,000 -	- - - -	2.56% 25.30% 3.52% - %	4,457,246 4,457,246 4,457,246 3,133,743	Y 〃〃 N	N 〃〃〃	N 〃〃〃

Note 1: The amount and the total amount of the guarantee to a company shall not exceed 30% and 100%, respectively, of the Company net worth in the latest financial statements. The total amount of the guarantee that the Company and its subsidiaries to a company shall not exceed 100%, of the Company’s net worth in the latest financial statement. The Company directly or indirectly holds 100% of their shares, the guarantee amounts not limited by the Company’s net worth in the latest financial statement.

Note 2: The relationship of guarantor and endorsements to related parties were as follows:
1) Business relationship between the Company
2) The Company directly or indirectly holds over 50% of subsidiaries’ shares;
3) The parent company and its subsidiaries holds over 50% of investees’ shares
4) A subsidiary jointed owned over 50% by the Company and the Company's directly-owned subsidiary.

Note 3: Amount actually draw in foreign currencies were translated based on the exchange rate at the reporting date.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

Name of holder	Nature and name of securities	Relationship with the securitiesissuer	Account name	Highest balance during theyear	Highest balance during theyear	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Percentage of ownership (%)	Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company 〃〃 SAME START (Anguilla) 〃 NISHOKU BOUEKI NISHOKU SHENZHEN KUNSHAN NISHOKU PLASTIC The Company 〃〃〃〃	JPMorgan Funds - Global Corporate Bond Fund - JPM Global Corporate Bond Allianz Income and Growth - Class AT Acc BlackRock Global Fund - Global Allocation Fund Bond of oversea PineBridge preferred securities income fund Allianz Income and Growth - Class AT Acc Fixed income financial instruments Fixed income financial instruments Allianz Global Investors Income and Growth Fund PineBridge Global ESG Quantitative Bond Fund PineBridge Global Multi - Strategy High Yield Bond Fund FSITC US Top 100 Bond Fund Nomura Global Financial Bond Fund Accumulate	None 〃〃〃〃〃〃〃〃〃〃〃〃	Financial assets at fair value through profit or loss - current 〃〃〃〃〃〃〃 Financial assets at fair value through profit or loss - non current 〃〃〃〃	- - - - - - - - - - - - -	- % - % - % - % - % - % - % - % - % - % - % - % - %	- - - - - - - - - - - - -	8,578 11,412 8,634 6,247 12,343 5,696 393,964 218,869 38,573 23,257 38,461 13,075 13,073	- % - % - % - % - % - % - % - % - % - % - % - % - %	8,578 11,412 8,634 6,247 12,343 5,696 393,964 218,869 38,573 23,257 38,461 13,075 13,073

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

Name of company	Category and name of security	Account name	Name of counter-part y	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
KUNSHAN NISHOKU PLASTIC 〃	Fixed income financial instrument l 〃	Financial assets at fair value through profit or oss-current 〃	Agricltura Bank o China Wells Fargo Asse Managemen (Shanghai)	l f None t t 〃	- -	86,103 215,256	- -	350,190 437,738	- -	438,470 447,601	436,293 434,125	2,177 13,476	- -	- 218,869

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Name of company	Category and name of security	Account name	Name of counter-part y	Relationship with the company	Beginning Balance	Beginning Balance	Pur	chases		S	ales		Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
NISHOKU SHENZHEN 〃	Fixed income financial instrument 〃	Financial assets at fair value through profit or loss-current 〃	Wells Fargo Asset Management (Shanghai) Bank of China	〃〃	- -	129,154 -	- -	787,928 393,964	- -	537,799 395,763	523,118 393,964	14,681 1,799	- -	393,964 -

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None
(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock:

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
SAME START (Anguilla) KUNSHAN NISHOKU PLASTIC SAME START (Anguilla) The Company The Company KUNSHAN NISHOKU PLASTIC KUNSHAN NISHOKU PLASTIC SAME START (Anguilla)	KUNSHAN NISHOKU PLASTIC SAME START (Anguilla) The Company SAME START (Anguilla) KUNSHAN NISHOKU PLASTIC The Company SAME START (Anguilla) KUNSHAN NISHOKU PLASTIC	Associate 〃〃〃〃〃〃〃	Sale Purchase Sale Purchase Sale Purchase Sale Purchase	(373,393) 373,393 (136,013) 136,013 (603,930) 603,930 (177,124) 177,124	(60)% 21% (22)% 23% (69)% 34% (4)% 40%	Net days 〃〃〃〃〃〃	Note 1 〃〃〃〃〃〃	Note 1 〃〃〃〃〃〃	- - 17,686 (17,686) 301,922 (301,922) 23,553 (23,553)	-% -% 49% (9)% 89% (35)% 2% (73)%	Note 2 〃〃〃〃〃〃〃

Note 1: The subsidiaries did not purchase or sale same product from third parties, so the purchase (sale) price can not be compared. In addition, the receipt terms of related parties were not significant different to third parties.

Note 2: Transactions within the Group were eliminated in the consolidated financial statements.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
The Company	KUNSHAN NISHOKU PLASTIC	Associate	301,922	4.00	-		93,395	-

Note 1: Until February 5, 2021. Note 2: Transactions within the Group were eliminated in the consolidated financial statements

(ix) Trading in derivative instruments: None.

(x) Business relationships and significant intercompany transactions:

The following is the information for the years ended December 31, 2020, business relationships and significant intercompany transactions with the amounts exceeding NT$10 million:

				(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No. (Note 1)	Name of company	Name of counter-party	Nature of relationship (Note 2)	Intercompany transactions,
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 〃〃〃〃 1 2 〃〃〃〃〃	The Company 〃〃〃〃 NISHO BOUEKI START (Anguilla) 〃〃〃〃〃	SAME STAR (Anguilla) 〃 KUNSHAN NIS 〃 NISH VIETNAM K SAME STAR (Anguilla) NISH SHENZHEN KUNSHAN NIS 〃〃 NISH VIETNAM 〃	1 1 H 3 3 3 3 3 H 3 3 3 3 3	Purchase Account Payable Sales Account receivable Other receivables Sales Purchase Purchase Account Payable Sales Sales Account receivable	136,013 17,686 603,930 301,922 227,840 94,282 17,786 177,124 23,553 373,393 94,681 17,872	Note 3 〃〃〃 Loans Note 3 〃〃〃〃〃〃	3% -% 13% 4% 3% 2% -% 4% -% 8% 2% -%

Note 1: “0” represents the parent company, and the others represent the subsidiaries.

Note 2: “1” represents the transactions from parent company to subsidiary.

“2” represents the transactions from subsidiary to parent company.
“3” represents the transactions between subsidiaries.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Note 3: The trading price and product that purchase or sale from related parties that did not purchase or sale from third parties, so can not be compared. The payments terms were 90 days for related parties.

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main businesses andproducts	Original investment amount	Original investment amount	Highest balance during the year	Highest balance during the year	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Percentage of ownership	Shares (thousands)	Percentage of ownership	Carrying value
Company 〃〃 SUN NICE 〃〃	SUN NICE (SAMOA) NISHOKU BOUEKI NISHOKU VIETNAM SAME START (Anquilla) NISHOKU HK SUNNICE (BVI)	SAMOA Taiwan Vietnam Aquilla HK BVI	Holding Purchase and sales of plastic raws and parts Manufacture and sale of tooling and plastic products Purchase and sale of mold and plastic products Holding 〃	1,096,194 1,000 508 (USD 16,500 thousand) - 1,800,3 (USD 57,915 thousand) 585 (USD 17,948 thousand)	1,096,194 1,000 , 26 (USD 8,50 thousand) - 6 1,800, (USD 57,915 thousand) , 58 (USD 17,948 thousand)	34,468 6,300 7 - - 62,298 5 15,697	100% 100% 100% - % 100% 100%	34,468 6,300 - - 62,298 15,697	100.00% 100.00% 100.00% 100.00% 100.00% 100.00%	4,510,300 114,781 113,468 223,799 3,431,369 895,933	751,704 7,464 2,581 245,005 351,353 155,154	753,882 10,741 2,890 245,005 351,353 155,154

Note 1: Transactions within the Group were eliminated in the consolidated financial statements

(c) Information on investment in Mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2019	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2020	Net income (losses) of the investee	Percentage of ownership	Investment income (losses) (Note 1)	Book value (Note 1)	Accumu-lated remittance of earnings in currentperiod
					Outflow	Inflow
NISHOKU SHENZHEN KUNSHAN NISHOKU PLASTIC	Manufacture and sale of mold and plastic products Manufacture and sale of mold and plastic products	USD23,288 thousand USD53,310 thousand	Indirect investment through third area 〃	(USD thousand) (USD thousand)	- -	- -	(USD2 thousand) 1 (USD5 thousand)	(37,988) 544,500	100.00% 100.00%	(37,988) 544,500	1,163,612 3,133,743	475,841 473,544

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Limitation on investment in Mainland China:

Limitation on investment in	Mainland China:
Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
2,378,140	2,378,140	(Note 2)

Note 1: The above investment income (loss) in mainland China were based on financial statements audited by the Company’s auditors.

Note 2: The Company has received the certificate issue by the Industrial Development Bureau, Ministry of Economic Affairs, allowing it to start operating of its headquarters.

Note 3: Above investment amount within the Group were eliminated in the consolidated financial statements.

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on ” significant transactions .

(d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Ji Teng Investment Limited	4,500,000	7.20%
Yun Ding Investment Limited	4,050,000	6.48%
CTBC Bank Trusted Custody investment account _Gold Talent Co., Ltd.	3,897,856	6.23%
Jin Hong Investment Limited	3,600,000	5.76%

Note 1: This table is based on the last business day at the end of each quarter, and calculates that the total number of ordinary shares and special shares registration of non-physical securities (including treasury shares) that have been reached more than 5%. As for the share capital recorded in the company's financial report and the number of shares registration of non-physical securities may be have variance due to different calculation basis.
Note 2: The information that shareholders deliver shares to trust is disclosed by the individual trustee who set up the trust account. As for shareholders who handle the declaration of insider equity holdings of more than 10% of their shares in accordance with the Securities Exchange Act, their shareholdings include the shares held by them plus their delivery to the trust and have the right to make decisions on trust property, etc. For information on insider equity declaration, please refer to Market Observation Post.

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

(a) General information

The Group’s identifies its operating segments based on decision of the chief operating decision marker (CODM). The Group’s operating segments are in United States, Asia and Europe, etc. Those operating segments are be reportable segments. The Revenue from manufacture and supply electronic parts to clients. Since the strategy of each segment is different, its is necessary to separate them for management.

(b) Information about reportable segments and their measurement and reconciliations

The Group uses the internal management report that the chief operating decision maker reviews as the basis to determine resource allocation and make a performance evaluation. The internal management report includes profit before taxation, but not including any extraordinary activity and foreign exchange gain or losses because taxation, extraordinary activity, and foreign exchange gain or losses are managed on a group basis, and hence they are not able to be allocated to each reportable segment. In addition, not all reportable segments include depreciation and amortization of significant non-cash items. The reportable amount is similar to that in the report used by the chief operating decision maker.

The operating segment accounting policies are similar to those described in note 4 “significant ” accounting policies .

The Group treated inteersegment sales and transfers as third-party transactions. They are measuredat market price. The Group’s product revenues from geographical clients are as follows:

United States		2020		Total 4,808,261
	Asia 530,621	Europe 2,668,964	Elimination -
$ 1,608,676
$ 518,245	44,212	506,595	-	1,069,052
United States		2019		Total 3,957,144
	Asia 856,421	Europe 1,303,473	Elimination -
$ 1,797,250
$ 292,054	21,040	65,909	-	379,003

(Continued)

NISHOKU TECHNOLOGY INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Revenue from external customers of the Group was as follows:

Product and Services Plastic injection Mold Others Total	2020 $ 4,433,079 372,894 2,288	2019 3,619,937 335,732 1,475
	$ 4,808,261	3,957,144

(d) Major customers

Sales to individual clients constituting over 10% of total revenue in 2020 and 2019 are summarized as follows:

Customer Company A Customer Company A	2020 Amount Percentage of net sales $ 1,920,512 40
	Amount $ 1,920,512
	2019 Amount Percentage of net sales $ 1,077,350 27
	Amount $ 1,077,350

169

Stock Code:3679

NISHOKU TECHNOLOGY INC.

Financial Statements

With Independent Auditors ’ Report For the Years Ended December 31, 2020 and 2019

Address: No.36, Ln.11, Huacheng Rd., Xinzhuang Dist., New Taipei City, Taiwan Telephone: 886-2-29983578

The independent auditors’ report and the accompanying only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and only financial statements, the Chinese version shall prevail.

Independent Auditors ’ Report

To the Board of Directors of Nishoku Technology Inc.:

Opinion

We have audited the financial statements of Nishoku Technology Inc. (“the Company”), which comprise the balance sheets as of December 31, 2020 and 2019, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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 financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters for the Company’s financial statements are stated as follows:

Investments accounted for using equity method

Please refer to Note 4(h) “Investments in subsidiaries” and Note 5 “Significant accounting assumptions and judgments, and major sources of estimation uncertainty” of the financial statements.

Description of key audit matter

The Company’s investments accounted for using equity method are all subsidiaries of the Company. Based on the scope and nature of their businesses which may influence the outcome of their operations, the impairment assessment of accounts receivable, and net realizable value of inventories in certain subsidiaries required the Managements to make subjective judgments, which is the major source of estimation uncertainty. Therefore, the impairment assessment of accounts receivable, and valuation of inventories of the investments accounted for using equity method are the key audit matters for our audit.

How the matter was addressed in our audit :

Our principal audit procedures on the impairment assessment of accounts receivable of the investments accounted for using equity method included assessing whether the impairment of accounts receivable has been set aside in accordance with the Company’s policy, including inquiring from the Management if they had identified the debtors who have financial difficulties ; selecting a moderate number of samples from the account aging statements to ensure the accuracy of the statements, and understanding the reason on overdue accounts; assessing the uncollectable accounts receivable for the approriateness of impairment assessment of accounts receivable; assessing the appropriateness and adequacy for doubtful accounts made by the management based on the subsequent collection of accounts receivable. With respect to the evaluation of inventories, our principal audit procedures included: to understand whether the accounting policy for inventory evaluation is consistency with the Company; examine the accuracy of the aging of inventories by sampling and analyse the changes of the aging of inventories by comparison; retroactively inspecting the reasonability for allowance provided on inventory valuation in the past and compare it to the current year to ensure that the measurements and assumptions are reasonable; sampling the inventories sold in the subsequent period to assess whether the allowance for inventories are reasonable.

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

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

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

’ Those charged with governance(including the Audit Committee) are responsible for overseeing the Company s financial reporting process.

Auditors ’ Responsibilities for the Audit of the Financial Statements

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

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

The engagement partners on the audit resulting in this independent auditors’ report are Cheng-Chien Chen and Sheng-Ho Yu.

KPMG

Taipei, Taiwan (Republic of China) February 26, 2021

Notes to Readers

The accompanying only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the 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 only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and only financial statements, the Chinese version shall prevail.

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2020 Amount % $ 455,105 6 28,624 - 338,261 5 37,504 1 17,922 - 235,257 3	December 31, 2020	December 31, 2020	December 31, 2020
	Amount	%	Amount
1,112,673 15	1,115,870 15 823,726 12
126,439 2 1,124,961 15 4,738,549 64 299,596 4 1,529 - 16,903 - 4431 -	1,200,000 16 1,000,000 15 651,965 9 788,088 12 - - 1,548 - - - 121,340 2
	1,851,965 25 1,910,976 29
	2,967,835 40 2,734,702 41
, 6,312,408 85	624,462 8 622,962 9

	2,993 - - -
	968,882 13 959,124 14
	538,129 7 504,367 8 337,817 5 199,839 3 2,295,422 31 1,994,985 30
	3,171,368 43 2,699,191 41
	(310,459) (4) (337,817) (5)
	4,457,246 60 3,943,460 59

$ 7,425,081 100 6,678,162 100

Total liabilities and equity

$ 7,425,081 100 6,678,162 100

Total assets

See accompanying notes to financial statements.

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except Earnings Per Share)

2020	% 100 -	2019	% 100 -
Amount $ 869,936 736		Amount 309,608 296
869,200 590,028	100 68	309,312 232,141	100 75
43,843	5	-	-
235,329	27	77,171	25
7,147 123,665 9,559 401	1 14 1 -	6,496 99,630 11,169 (179)	2 32 4 -
140,772	16	117,116	38
94,557	11	(39,945)	(13)
14,427 (75,308) (16,649) 767,513	2 (9) (2) 88	15,470 (25,482) (17,100) 481,764	5 (8) (6) 156
689,983	79	454,652	147
784,540 63,178	90 7	414,707 77,085	134 25
721,362	83	337,622	109
34,198 (6,840)	4 1	(172,472) 34,494	(56) 11
27,358	3	(137,978)	(45)
$ 748,720	86	199,644	64
$	11.57		5.42
$	11.51		5.39

See accompanying notes to financial statements.

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Share capital	Share capital	Capital surplus	Retained earnings	Retained earnings	Retained earnings	Other equity interest	Total equity 3,927,570
						Exchange differences on translation of foreign financial statements
Ordinary shares	Advance receipts for share capital		Legal reserve	Special reserve	Unappropriated retained earnings
$ 622,962	-	955,989	480,192	181,708 1,886,558		(199,839)
- -	- -	- -	- -	- 337,622 - -		- (137,978)	337,622 (137,978)
-	-	-	-	- 337,622		(137,978)	199,644
- - - -	- - - -	- - - 3,135	24,175 - - -	- (24,175) 18,131 (18,131) - (186,889) - -		- - - -	- - (186,889) 3,135
622,962 - -	- - -	959,124 - -	504,367 - -	199,839 1,994,985 - 721,362 - -		(337,817) - 27,358	3,943,460 721,362 27,358
-	-	-	-	- 721,362		27,358	748,720
- - - - 1,500	- - - - 2,993	- - - 1,283 8,475	33,762 - - - -	- (33,762) 137,978 (137,978) - (249,185) - - - -		- - - - -	- - (249,185) 1,283 12,968
$ 624,462	2,993	968,882	538,129	337,817 2,295,422		(310,459)	4,457,246

See accompanying notes to financial statements.

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation and amortization expense Expected credit loss (gain) Interest expense Net gain arising from derecognition of financial assets measured at amortised cost Interest income Stock option compensation cost Share of profit of subsidiaries accounted for using equity method Loss on disposal of property, plant and equipment Unrealized profit (loss) from sales Recognition losses on (reversal of) inventory valuation and obsolescence Others Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Financial assets at fair value through profit or loss Notes and accounts receivables (including related parties) Inventories Other current assets and other financial assets Changes in operating liabilities: Notes and accounts payables (including related parties) Other current liabilities Total changes in operating assets and liabilities Total adjustments Cash outflow generated from operations Interest received Interest paid Income taxes paid Net cash flows used in operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at amortised cost Acquisition of Non-Current financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Cash dividends from investments accounted for using equity method Proceeds from capital reduction of subsidiaries accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in other receivables due from related parties Increase in other non-current assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase (decrease) in short-term borrowings Increase (decrease) in short-term notes and bills payable Proceeds from long-term borrowings Payment of lease liabilities Cash dividends paid Exercise of employee share options Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 $ 784,540 12,534 401 16,649 (2,940) (11,113) 1,283 (767,513) - 43,843 564 -	2019 414,707 17,414 (179) 17,100 - (11,025) 3,135 (481,764) 11 - (121) (3,374)
	(706,292)	(458,803)
	(28,490) (272,398) (28,933) (15,971)	- 53,980 (1,182) 1,665
	(345,792)	54,463
	116,330 36,376	(27,558) 11,389
	152,706	(16,169)
	(193,086)	38,294
	(899,378)	(420,509)
	(114,838) 12,974 (16,602) (120,166)	(5,802) 9,133 (17,009) (5,944)
	(238,632)	(19,622)
	(1,124,961) (123,633) (241,120) 1,505,266 - (188) - (227,840) (722)	- - - 46,478 678,296 (169) 2,320 - (413)
	(213,198)	726,512
	280,000 (150,000) 200,000 (3,487) (249,185) 12,968	(50,000) 50,000 100,000 (3,487) (186,889) -
	90,296	(90,376)
	(361,534) 816,639	616,514 200,125
	$ 455,105	816,639

See accompanying notes to financial statements.

(English Translation of Financial Statements Originally Issued in Chinese) NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

NISHOKU TECHNOLOGY INC. (the “Company”) was incorporated in year 1980, as a company limited by shares and registered under the Ministry of Economic Affairs, ROC. The Company conducted an IPO on the Taiwan Stock Exchange (TWSE) on October 5, 2011. The Company primarily is involved in the manufacture and sale of plastic injection mold, tooling manufacturing and general import and export Trade.

(2) Approval date and procedures of the financial statements:

These financial statements were authorized for issue by the board of directors on February 26, 2021.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2020:

Amendments to IFRS 3 “Definition of a Business”
Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”
Amendments to IAS 1 and IAS 8 “Definition of Material”
Amendments to IFRS 16 “COVID-19-Related Rent Concessions”
(b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its consolidated financial statements:

Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform － ” Phase 2

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

The Company does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
“ － ”
● Amendments to IAS 16 Property, Plant and Equipmentt Proceeds before Intended Use
“ － ”
● Amendments to IAS 37 Onerous Contracts Cost of Fulfilling a Contract
Annual Improvements to IFRS Standards 2018-2020
Amendments to IFRS 3 “Reference to the Conceptual Framework”

(4) Summary of significant accounting policies:

The accompanying financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language financial statements, the Chinese version shall prevail.

The significant accounting policies presented in the financial statements are summarized below. Except for those specifically indicated, the following accounting policies are applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter, referred to as “ the Regulations”).

(b) Basis of preparation
(i) Basis of measurement

Except for the financial instruments at fair value through profit or loss are measured at fair value, the financial statements have been prepared on a historical cost basis.

(ii) Functional and presentation currency

The functional currency is determined based on the primary economic environment in which the Company operates. The financial statements are presented in New Taiwan dollars, which is the Company’s functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(c) Foreign currencies

(i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions. At the and of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of transaction.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the Company’s presentation currency at the average rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Company disposes of only part of its investment in an associate or a joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

(d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits, which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes, should be recognized as cash equivalents.

(f) Financial instruments

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL：

‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

2) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

3) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL)on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivables, other receivables, guarantee deposit paid and other financial assets).

The Company measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL：

‧ debt securities that are determined to have low credit risk at the reporting date；and
‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company ’ s historical experience and informed credit assessment as well as forward-looking information.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

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

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

2) Equity instrument

3) Treasury shares

4) Other financial liabilities

Financial liabilities are classified as measured at amortized cost, which comprise loans and borrowings, and trade and other payables. Interest expense and foreign exchange gains and losses are recognized in profit or loss, and is included in financial costs under non-operating income or expenses. Any gain or loss on derecognition is also recognized in profit or loss.

5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligation are discharged or cancelled, or expired. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(iii) Derivative financial instruments

The Company holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(g) Inventories

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Investment in subsidiaries

Investments in subsidiaries are accounted for using the equity method. There is no difference between net income and comprehensive income in the Company’s financial statements and net income and comprehensive income attributable to stockholders of the parent. The equity in the Company’s financial statements and the equity attributable to stockholders of the parent in the Company’s consolidated financial statements are also the same.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(i) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

(iii) Depreciation

Land is not depreciated.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1) Buildings: 50 years
2) Accessory equipment of buildings: 8~10 years
3) Machinery and equipment: 3~8 years
4) Office and other equipment: 3~8 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

(j) Lease
(i) Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

－ – the contract involves the use of an identified asset this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
－ the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
－
the customer has the right to direct the use of the asset throughout the period of use only if either:
(1) the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or
(2) the relevant decisions about how and for what purpose the asset is used are predetermined and:
－ the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
－ the customer designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(ii) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

－
fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－
amounts expected to be payable under a residual value guarantee; and
－
payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－
there is a change in future lease payments arising from the change in an index or rate; or
－
there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－ there is a change of its assessment on whether it will exercise a extension or termination option; or
－
there is any lease modifications

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(k) Research and development

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

(l) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(m) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods to a customer. The Company recognizes revenue when it satisfies a perfarmance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

(i) Sale of goods

The Company manufactures and sells plastic goods and molds. The Company recognizes revenue when control of the products has transferred, a point in time when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered, since this is the point in time when the Company has a right to receive an amount of consideration unconditionally.

(ii) Financing components

The Company does not expect to have any contracts which the period between the transfer of the promised goods to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(n) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(o) Share-based payment

Grant date of a share-based payment award is the date which the board of directors authorized the price and number of a new award.

(p) Income taxes

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(q) Earnings per share

The Company discloses the basic and diluted earnings per share attributable to ordinary shareholders of the Company. The calculation of basic earnings per share is the profit attributable to the ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is the profit attributable to ordinary shareholders of the Company dividend by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

(r) Operating segments

Please refer to Company’s consolidated financial statements for the years ended December 31, 2020 and 2019, for further details.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the financial statements in conformity with the Regulations requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

There are no critical judgment made in applying the accounting policies that have significant effects on amounts recognized in financial statements.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment with the following year is as follows:

(a) The loss allowance of accounts receivable of subsidiaries accounted for using equity method

(b) Valuation of inventories of subsidiaries accounted for using equity method

The Company’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss.

The Company’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back-testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

(a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
(b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
(c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date. Please refer to note 6(v) for assumptions used in measuring fair value.

(6) Explanation of significant accounts:

(a) Cash and cash Equivalents

Cash and demand deposits Time deposits Bond acquired under repurchase agreement Cash and cash equivalents in the statement of cash flows	December 31, 2020 $ 198,785 - 256,320	December 31, 2019 94,589 107,440 614,610
	$ 455,105	816,639

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

Please refer to note 6(v) for the interest rate risk and sensitivity analysis of the financial assets and liabilities of the Company.

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

Financial assets at fair value through profit or loss Fund investments-current Fund investments-non-current Please refer to Note 6(e) for fund investments-non-current.	December 31, 2020 $ 28,624	December 31, 2019 -
	$ 126,439	-

As of December 31, 2020 and 2019, the Company did not provide any financial assets as collateral for its loans.

Notes receivable Accounts receivable Less：Loss allowance	December 31, 2020 $ - 338,740 (479)	December 31, 2019 74 66,268 (78)
	$ 338,261	66,264

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information. The loss allowance provisions were determined as follows:

December 31, 2020	December 31, 2020	Loss allowance provision - - 479
Gross carrying amount $ 338,099 162 479	Weighted-aver age loss rate
	-% 0%~1% 100%
$ 338,740		479

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

December 31, 2019	December 31, 2019	Loss allowance provision - 78
Gross carrying amount $ 63,062 3,206	Weighted-aver age loss rate
	-% 0%~1%
$ 66,268		78

The movement in the allowance for notes and accounts receivables were as follows:

Blance at January 1 Impairment losses recognized (reversed) Amounts written off Balance at December 31	2020 $ 78 401 -	2019 2,931 (179) (2,674)
	$ 479	78

(d) Inventories

Raw materials Work in process Finished goods Merchandise	December 31, 2020 $ 1,683 755 2,683 32,383	December 31, 2019 2,583 984 5,568 -
	$ 37,504	9,135

For the years ended 2020, raw material, consumables, and changes in the finished goods and work in progress recognized as cost of sale amounted to $590,028 thousand and $232,141 thousand, respectively. For the years ended 2020, the Company recognized the losses (reversal gains) on inventory valuation and obsolescence as cost of goods sold amounting to $564 thousand and $(121) thousand, respectively.

As of December 31, 2020 and 2019, the Company did not provide any inventories as collateral for its loans.

(e) Non-current financial assets at amortized cos

Restricted bank deposit	December 31, 2020 $ 1,124,961	December 31, 2019 -

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

In May and July, 2020, the Company applied to IRS for the application of “The Management, Utilization, and Taxation of Repatriated Offshore Funds Act” (hereinafter referred to as the “Act”), and the remittance was approved within one month. According to the Act, the funds need to be deposited in a special-purpose account for five years, and 5% of the funds can be used without restriction, 25% can be used on financial investment, and 70%, at least, can be used for substantive investment; Otherwise, the funds can only be redeemed within 3 consecutive years on average after the five years maturity. Please refer to Note 6(b) for financial investments.

(f) Investments accounted for using equity method and credit balance of investments accounted for using equity method

A summary of the Company’s financial information for investments accounted for using the equity method at the reporting date is as follows:

Subsidiaries Subsidiaries-credit balance of investments accounted for using equity method	December 31, 2020 $ 4,738,549	December 31, 2020 $ 4,738,549	December 31, 2019 5,366,167
		$ (121,340)

(i) Please refer to the Company’s consolidated financial statements for the year ended December 31, 2020, for details of subsidiaries.
(ii) As of December 31, 2020 and 2019, the Company did not provide any investments accounted for using the equity method as collateral for its loans.
(g) Property, plant and equipment

The cost, depreciation and impairment loss of the property, plant and equipment of the Company for the years ended December 31, 2020 and 2019, were as follows:

Land	Office and other equipment	Total 417,437 188 (810)
$ 179,672 218,832 15,250 - - 188 - - -	3,683 - (810)
$ 179,672 218,832 15,438	2,873	416,815
$ 179,672 218,832 17,954 - - 86 - - (2,790)	3,600 83 -	420,058 169 (2,790)
$ 179,672 218,832 15,250	3,683	417,437

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

Land	Building	Office and other equipment	Total 109,696 8,333 (810)
$ - - -	94,855 11,939 6,885 940 - -	2,902 508 (810)
$ -	101,740 12,879	2,600	117,219
$ - - -	83,787 11,384 11,068 1,279 - (724)	2,350 552 -	97,521 12,899 (724)
$ -	94,855 11,939	2,902	109,696
$ 179,672 117,092 2,559		273	299,596
$ 179,672 123,977 3,311		781	307,741

As of December 31, 2020 and 2019, the property, plant and equipment of the Company had not been pledged as collateral.

(h) Right-of-use assets

The Company leases vehicles. Information about leases for which the Company as a lessee was presented below:

Cost: Balance at December 31, 2020 (equal to balance at January 1, 2020) Balance at December 31, 2019 (equal to balance at January 1, 2019) Accumulated depreciation and impairment losses: Balance at January 1, 2020 Depreciation for the year Balance at December 31, 2020 Balance at January 1, 2019 Depreciation for the year Balance at December 31, 2019 Carrying amount: Balance at December 31, 2020 Balance at December 31, 2019	Vehicles $ 8,399
	$ 8,399
	$ 3,435 3,435
	$ 6,870
	$ - 3,435
	$ 3,435
	$ 1,529
	$ 4,964

(i) Short-term borrowings

The Short-term borrowings were summarizes as follows:

Credit loans, no pledge Interest rate range	December 31, 2020 $ 790,000	December 31, 2020 $ 790,000	December 31, 2019 510,000
		0.78%~0.83%	0.90%~0.96%

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(j) Short-term notes and bills payable

The short-term notes and bills payable were summarized as follows:

December 31, 2019 Guarantee or acceptance institution Range of interest rates (%) Amount Mega Bills 0.732% $ 150,000 (6) $ 149,994	December 31, 2019 Guarantee or acceptance institution Range of interest rates (%) Amount Mega Bills 0.732% $ 150,000 (6) $ 149,994	December 31, 2019 Guarantee or acceptance institution Range of interest rates (%) Amount Mega Bills 0.732% $ 150,000 (6) $ 149,994
Guarantee or acceptance institution	Range of interest rates (%)
Mega Bills	0.732%
		$ 149,994

The detail were as follows:

	December 31, 2020	December 31, 2020	Amount $ 1,200,000
Currency	Interest rate range	Maturity year
NTD	0.95%~0.98% 2022 December 31, 2019
			Amount $ 1,000,000
Currency	Interest rate range	Maturity year
NTD	1.0%~1.19%	2021

Please refer to note 6(v) for the exchange rate risk, the interest rate risk, and the sensitivity analysis of the financial assets and liabilities of the Company.

(l) Lease liabilities

Current Non-current financial assets For the maturity analysis, please refer to note 6(v). The amounts recognized in profit or loss was as follows: Interest expenses on lease liabilities The amounts recognized in the statement of cash flows for the Total cash outflow for leases	December 31, 2020	December 31, 2019 3,446 1,548 2019 82
	$ 1,548
	$ -
	$ 3,487

(Continued)

Notes to the Financial Statements

NISHOKU TECHNOLOGY INC.

(m) Employee benefits

The pension costs incurred from the contributions to the Labor Insurance amounted to $2,337 thousand and $2,303 thousand for the years ended December 31, 2020 and 2019, respectively.

(n) Income taxes

(i) The components of income tax in the years 2020 and 2019 were as follows:

Current tax expense Deferred tax expense (benefit)	2020 $ 130,951 (67,773)	2019 2,161 74,924
	$ 63,178	77,085

(ii) The amounts of income tax profit recognized in other comprehensive income or loss for 2020 and 2019 was as follows:

Foreign currency translation differences for foreign operations	2020 $ 6,840	2019 (34,494)

(iii) Reconciliation of income tax and profit before tax for 2020 and 2019 was as follows:

Profit excluding income tax Income tax using the Company’s domestic tax rate Tax incentive- Repatriated offshore funds Change in unrealized deferred tax assets Undistributed earnings additional tax Prior year’s income tax adjustment and others	2020 $ 784,540	2019 414,707
	156,908 (177,211) 75,540 - 7,941	82,941 - - 628 (6,484)
	$ 63,178	77,085

(iv) Deferred tax assets and liabilities
1) Unrecognized deferred tax assets

The unrealized deferred tax assets were as follows:

Unrealized investment losses	December 31, 2020 $ 75,540	December 31, 2019 -

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

2) Recognized deferred tax liabilities

There were no unrecognized deferred tax assets and liabilities of the Company, and the changes in the amounts of deferred tax liabilities for the years ended 2020, were as of follows:

Deferred tax liabilities Balance at January 1, 2020 Recognized in profit or loss Foreign currency translation differences for foreign operations Balance at December 31, 2020 Balance at January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income or loss Balance at December 31, 2019	Investment income recognized under the equity method	Foreign currency translation differences for foreign operations	Others

3) Recognized deferred tax assets

Changes in the amounts of deferred tax assets for 2020 and 2019 were as follows:

Deferred tax assets Balance at January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income or loss Balance at December 31, 2020 Balance at January 1, 2019 Recognized in profit or loss Recognized in other comprehensive income or loss Balance at December 31, 2019	Investment income recognized under the equity method	Loss on inventory valuation	Foreign currency translation differences for foreign operations	Unused tax losses carry forwards	Others	Total
	$ (75,540) (447) (320) (12,540) (3,246) (92,093) 75,540 (113) - 12,540 (11,317) 76,650 - - (1,460) - - (1,460)
	$ - (560) (1,780) - (14,563) (16,903)
	$ (60,532) (471) (1,011) - (966) (62,980) (15,008) 24 - (12,540) (2,280) (29,804) - - 691 - - 691
	$ (75,540) (447) (320) (12,540) (3,246) (92,093)

(v) The Company income tax returns have been examined by the tax authority through the years up to 2018, only 2017 income tax returns of The Company has been under review respectively.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(o) Capital and other interests

The issued and registered shares of common stock in 2020 and 2019 were as follows (expressed in thousands of shares)

Balance on January 1 Exercise of employee stock option Balance on December 31	Ordinary shares 2020 2019 62,296 62,296 150 -	Ordinary shares 2020 2019 62,296 62,296 150 -
	2020
	62,296 150
	62,446	62,296

(i) Issuance of common stock

(ii) Capital surplus

The balances of capital surplus as of 2020, were as follows:

Share capital Employee share options	December 31, 2020 $ 958,419 10,463	December 31, 2019 949,944 9,180
	$ 968,882	959,124

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(iii) Retained earnings

The Company’s article of incorporation stipulate that, when allocating the profit for each fiscal year, the Company shall first offset its losses in previous years. Of the remaining profit, 10% is to be appropriated as legal reserve, until the accumulated legal reserve equals the Company’s paid-in capital. Aside from the aforesaid legal reserve, the Company shall appropriate or reverse another sum as special earnings reserve in accordance with relevant laws or regulations or requested by the authorities in charge. The remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

1) Legal reserve

2) Special reserve

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be set aside as special earnings reserve during earnings distribution. The amount to be set aside should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of undistributed prior-period earnings shall be set aside as special earnings reserve (and can not be distributed) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. As of December 31, 2020, special earnings reserve amounted to $337,817 thousand.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

3) Earnings distribution

Dividend to shareholders Cash	2019	2019	2018 Payout per share Amount 3.0 186,889
	Payout per share	Amount 249,185	Payout per share
	$ 4.0		3.0

(p) Share-based payment

(i) The Company issued 600 units of employee stock options, at 1,000 shares per unit, to its employees and its subsidiaries’ who met certain requirements on July 28, 2017. The duration of the employee stock options is five year. 50%, 75%, and 100% of the stock options are exercisable 2 years, 3 years, and 4 years, respectively, after the grant date. Those qualified employees are entitled to purchase the shares at the closing price of ordinary shares of the Company on the same day. After the grant of the stock options, any changes in the ordinary shares of the Company, the exercise price of the share options will be adjusted according to the prescribed formula.

(ii) Details of the employee stock options were as follows:

2020	2020	2019 Weighted average exercise price Number of options 75.40 560 - - - (120) - - 70.80 (note) 440 220 18.15
Weighted average exercise price	Number of options 440 - (10) (195)	Weighted average exercise price
$ 70.80 (note) - - 66.50 66.50 (note)		75.40 - - - 70.80 (note)
	235
	135
	$ 18.15

(Note) The Company adjusted the exercise price of stock options according to its requirements for issuance stock options.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

The details of the stock options of the Company were as follows:

Weighted average of remaining contractual period (years)	December 31, 2020	December 31, 2019
	1.57	2.57

(iii) The Company used the Black-Scholes pricing model in measuring the fair value of the share-based payment at the grant date. The measurement inputs were as follows:

Exercise price (NT dollars) Share price at grant date (NT dollars) Expected dividend (%) Expected volatility (%) Risk-free interest rate (%) Expected life (years)	2017 employee stock option
	81.80 81.80 - % 26.78%~27.89% 0.67%~0.73% 5

(iv) For the years ended December 31, 2020 and 2019, the expenses attributable to share based payment amounted to $1,283 thousand and $3,135 thousand, respectively.

(q) Earnings per share

(i) Basic earnings per share

Profit attributable to ordinary shareholders of the Company Weighted-average number of ordinary shares (thousand shares) Basic earnings per share (NT dollars)	2020 $ 721,362	2019
		337,622
	62,321	62,296
	$ 11.57	5.42

(ii) Diluted earnings per share

Profit attributable to ordinary shareholders of the Company (diluted)	2020 $ 721,362	2019 337,622

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

Weighted-average number of ordinary shares (diluted) (thousand shares)

Weighted-average number of ordinary shares (basic) Effect of employee stock bonus Weighted-average number of ordinary shares (diluted) Diluted earnings per share (r) Revenue from contracts with customers (i) Details of revenue Primary geographical markets North America Asia Europe Major products Plastic injection Mold Others (ii) Contract balances December 31, 2020 Contract liabilities $ 8,843			2020 62,321 327		2019 62,296 373 62,669 5.39 2019 187,678 66,100 55,534

			62,648
			11.51
			2020 $ 186,114 653,511 29,575
			$ 869,200		309,312
			$ 718,768 140,870 9,562		162,935 144,931 1,446
			$ 869,200		309,312
			December 31, 2019 5,445		January 1, 2019 5,395

For details of accounts receivable, please refer to note 6 (c).

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(s) Employee, board of directors' compensation

For the years ended December 31, 2020 and 2019, the Company estimated its employee remuneration amounting to $30,000 thousand and $22,100 thousand, and directors’ remuneration amounting to $11,705 thousand and $7,925 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors of each period, multiplied by the percentage of remuneration to employees, directors as specified in the Company’s articles. These remunerations were recognized as operating costs or operating expenses during 2020 and 2019. If the Board of Directors decide to distribute compensation for employees by shares, the numbers of shares to be distributed would be calculated based on the closing price of the Company’s ordinary shares one day before the date of the meeting of Board of Directors. The related information please refer to Market Observation Post. The amounts, as stated in the financial statements, are identical to those of the actual distributions for 2020 and 2019.

(t) Other revenue

Interest income Others	2020 $ 11,113 3,314	2019 11,025 4,445
	$ 14,427	15,470

(u) Other gains and losses

The other gains and losses for the years ended December 31, 2020 and 2019 were as follows:

Foreign exchange losses, net Gains on financial assets at fair value through profit or loss Losses on disposal of property, plant and equipment, net	2020 $ (78,248) 2,940 -	2019 (25,471) - (11)
	$ (75,308)	(25,482)

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(v) Financial Instruments

(i) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, which arises from the Company’ s accounts receivable and investments.

1) Accounts receivable and others receivables

For credit risk exposure of note and accounts receivables, please refer to note 6(c).

The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, when available, and in some cases bank references. These criterias are reviewed periodically.

2) Investment

The credit risk exposure in bank deposits, fixed-income investment, and other financial instruments is measured and monitored by the Company’s finance department. As the Company deals with banks and other external parties with good credit standing and with financial institutions, corporate organizations, and government agencies which are graded above investment level, the management believes their counterparts do not have significant default risk, therefore, the credit risk is insignificant.

3) Credit risk exposure

As of December 31, 2020 and 2019, the Company’s maximum exposure to credit risk was mainly from the carrying amount of financial assets recognized in the statements of financial position and amounted to $2,308,647 thousand and $887,630 thousand, respectively. The Company had deposited these bank deposits in different financial institutions, and the Company believes that there is no significant credit risk from the above mentioned financial institutions.

4) Concentration of credit risk

The credit risk exposure of the Company comes from the credit of individual customers, and the industry of the customer also have effect on credit risk. For the years ended December 31, 2020 and 2019, sales to the individual customers whose revenue constituting over 10% of net revenue are 84% and 48% of total revenues respectively. As of December 31, 2020 and 2019, 89% and 46%, of accounts receivable were for those customers, respectively,.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

Carrying amount $ 790,000 1,200,000 194,484 1,548 11,605	Contractual cash flows	within 1 year	1-2 years	2-5 years
	790,638 1,220,867 194,484 1,548 11,605	790,638 11,492 194,484 1,548 11,605	- 1,209,375 - - -	- - - - -
$ 2,197,637	2,219,142	1,009,767	1,209,375	-
$ 510,000 149,994 1,000,000 78,154 4,994 9,627	510,347 150,000 1,018,915 78,154 4,994 9,627	510,347 150,000 10,730 78,154 3,446 9,627	- - 1,008,185 - 1,548 -	- - - - - -
$ 1,752,769	1,772,037	762,304	1,009,733	-

The Company does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(iii) Market risk

1) Exchange rate risk

The Company’s significant exposure to foreign currency risk on financial assets and liabilities was as follows:

Financial assets Monetary Items USD CNY Financial liabilities Monetary Items USD	December 31, 2020	December 31, 2020	December 31, 2019 Foreign currency Exchange rate NTD 27,234 29.980 816,470 51 4.305 218 2,314 29.980 69,380
	Foreign currency Exchange rate $ 65,578 28.480 51 4.377 6,258 28.480	NTD
		1,867,649 222 178,233

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

The Company’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, accounts payable and other payables that are denominated in foreign currency.

A weakening (strengthening) of 1% of the NTD against the USD and CNY at December 31, 2020 and 2019, would have increased or decreased the net profit before tax by $16,896 thousand and $7,473 thousand, respectively. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for both periods.

Since the Company has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For years 2020 and 2019, foreign exchange gain (including realized and unrealized portions) amounted to $78,248 thousand and $25,471 thousand, respectively.

2) Interest rate analysis

The details of financial instruments exposed to interest rate risk were as follows:

Fixed-rate instruments: Financial assets Financial liabilities Variable-rate instruments: Financial assets Financial liabilities	Carrying	amount December 31, 2019 722,050 (659,994)
	December 31, 2020 $ 256,320 (1,090,000)
	$ (833,680)	62,056
	$ 198,685 (900,000)	94,489 (1,000,000)
	$ (701,315)	(905,511)

The sensitivity analysis is based on the exposure to the interest rate risk of nonderivative financial instruments on the reporting date. Regarding liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases 1 basis points when reporting to management internally, which also represents the Company management ’ s assessment of the reasonably possible interest rate change.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

If the interest rate had increased / decreased by 1 basis points, the Company’s net income would have decreased / increased by $1,753 thousand and $2,264 thousand for the years ended December 31, 2020 and 2019, with all other variable factors remaining constant. This is mainly due to the Company’s borrowing at variable rates and bank deposits in variable-rate bills.

(iv) Fair value of financial instruments
1) Fair value of financial instruments

The fair value of financial assets at fair value through profit or loss is measured on a recurring basis. The carrying amount and fair value of the Company’s financial assets, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

	December 31, 2020	December 31, 2020	December 31, 2020
Carrying amounts $ 28,624		Fair Value		Total 28,624
	Level 1 28,624	Level 2 -	Level 3 -
$ 126,439	126,439	-	-	126,439
$ 455,105 338,261 235,257 3,830 1,124,961
$ 2,157,414
$ 1,990,000 194,484 1,548 11,605
$ 2,197,637

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

	December 31, 2019	December 31, 2019	December 31, 2019
Carrying amounts $ 816,639 66,264 4,727 3,830		Fair Value
	Level 1	Level 2	Level 3	Total

$ 891,460
$ 1,510,000 149,994 78,154 4,994 9,627
$ 1,752,769

2) Valuation techniques for financial instruments measured at fair value
a) Non-derivative financial instruments

b) Derivative financial instruments

3) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Company’s financial instruments that use Level 3 inputs to measure fair value are derivative financial assets. The financial assets’ fair value are using third-party pricing information. The unobservable inputs are not set up as the Company measures fair value, therefore, the quantified information of significant unobservable inputs are not disclosed.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(w) Financial risk management
(i) Structure of risk management

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect any changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

’ The board of directors monitors the management to ensure compliance with the Company s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The board of directors is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the board of directors.

(ii) The Company have exposed to the following risks from its financial instruments:
1) Credit risk
2) Liquidity risk
3) Market risk

For more disclosures about the quantitative effects of these risks exposures and the Company’ s objectives, policies and processes for measuring and managing the above mentioned risks, please refer to note 6(v).

(x) Capital management

The Company manages capital to safeguard the capacity to continue to operate and to safeguard the certainly and stability of its financial resources. The management uses the asset-liability ratio to manage capital. As of December 31, 2020 and 2019, the Company’s Equity to Asset ratios were 60% and 59%, respectively. There were no changes in the Company’s approach to capital management as of December 31, 2020.

(y) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2020 and 2019, were as follows:

(i) For acquisition of right-of-use assets, please refer to note 6(h).

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(ii) Reconciliation of liabilities arising from financing activities were as follows:

Short-term borrowings Short-term notes and bills payable Long-term borrowings Lease liabilities Total liabilities from financing activities Short-term borrowings Short-term notes and bills payable Long-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2020 Cash flows Foreign exchange movement and others December 31, 2020 $ 510,000 280,000 - 790,000 149,994 (150,000) 6 - 1,000,000 200,000 - 1,200,000 4,994 (3,487) 41 1,548
	$ 1,664,988 326,513 47 1,991,548
	January 1, 2019 Cash flows Foreign exchange movement and others December 31, 2019 $ 560,000 (50,000) - 510,000 99,985 50,000 9 149,994 900,000 100,000 - 1,000,000 8,399 (3,487) 82 4,994
	$ 1,568,384 96,513 91 1,664,988

(7) Related-party transactions:

(a) Names and relationship with related parties

The following are entities that have had transaction with related party during the periods covered in the financial statements.

Name of related party NISHOKU BOUEKI CO., LTD. NISHOKU TECHNOLOGY VIETNAM CO.,LTD. SUN NICE LIMITED (SAMOA) SAME START LIMITED (Anguilla) NISHOKU HONG KONG HOLDING LTD. SUN NICE LIMITED (BVI) NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD.	Relationship with the Company
	The Company’s subsidiaries The Company’s subsidiaries The Company’s subsidiaries The Company’s subsidiaries The Company’s subsidiaries The Company’s subsidiaries The Company’s subsidiaries The Company’s subsidiaries

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(b) Significant transactions with related parties
(i) The amounts of sales by the Company to related parties and the outstanding balance were as follows:

Subsidiary company KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD. Other	Sales 2020 2019 $ 603,930 - 7,855 12	Sales 2020 2019 $ 603,930 - 7,855 12	Accounts receivable-related parties December 31, 2020 December 31, 2019 301,922 - 7,763 12	Accounts receivable-related parties December 31, 2020 December 31, 2019 301,922 - 7,763 12
	2020 $ 603,930 7,855		December 31, 2020 301,922 7,763
	$ 611,785	12	309,685	12

The credit terms were 90 days for related parties. The general credit terms were 30 to 150 days for non-related parties. The product sale to related parties was different from other clients, therefore, the sales prices cannot be compared to other clients.

(ii) The amounts of purchase by the Company to related parties and the outstanding balance were as follows:

Subsidiary company SAME START LIMITED (Anguilla) Other	Purchases 2020 2019 $ 136,013 169,220 65 300	Purchases 2020 2019 $ 136,013 169,220 65 300	Accounts payable- related parties December 31, 2020 December 31, 2019 17,686 68,588 - -	Accounts payable- related parties December 31, 2020 December 31, 2019 17,686 68,588 - -
	2020 $ 136,013 65		December 31, 2020 17,686 -
	$ 136,078	169,520	17,686	68,588

The payment terms were 90 days for related parties. The general credit terms for vendors other than related parties are 60 to 120 days. The Company do not purchase the same product from other vendors, therefore, the purchase prices cannot be compared to other vendors.

(iii) Guarantees and endorsements

The amounts of guarantees notes issued as collateral for bank loans were as follows:

Guarantees notes issued Actual usage amount	December 3 2020 December 31 2019 $ 1,398,688 1,628,960	December 3 2020 December 31 2019 $ 1,398,688 1,628,960
	$ 153,920	314,790

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

(iv) Loans to Related Parties

The loans to related parties were as follows:

Relationship Subsidiary company: NISHOKU TECHNOLOGY VIETNAM CO.,LTD.	December 3 2020 December 31 2019 $ 227,840 -

The loans to related parties are unsecured. There are no expected credit loss required after the management’s assessment.

(v) Other

1) The Company paid for operating expenses on behalf of Same Start (Anguilla) amounted to $37,675 thousand and $33,517 thousand for the years ended December 31, 2020 and 2019, respectively; besides that, there are some receivables not recovery (under other current financial assets) as follows:

SAME START (Anguilla)	December 3 2020 December 31 2019 $ 221 2,835

2) The Company sold machinery and controlled items to NISHOKU VIETNAM and KUNSHAN NISHOKU PLASTIC during 2020 and 2019, and the unrealized gains incurred from these transactions are recorded as the deduction of the investments accounted for using equity method, and gains from disposal are recognized by years according to the period of expected use. The realized gains recognized during 2020 and 2019 were $2,486 thousand and $3,374 thousand, respectively.

(c) Transaction of key management personnel

(i) Key management personnel compensation

Key management personnel compensation comprise:

Short-term employee benefits Post-employment benefits Termination benefits Other long-term benefits Share-based payments	2020 $ 43,511 216 - - -	2019 33,859 216 - - - 34,075
	$ 43,727

(Continued)

Notes to the Financial Statements

NISHOKU TECHNOLOGY INC.

(8) Pledged assets:None

(9) Significant Commitments and Contingencies:

Please refer note 7 for guarantees to subsidiaries.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

follows:
By function By item	2020			2019
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefit expenses Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	14,385 1,574 769 - 1,139 5,294 25	89,581 3,473 1,568 12,265 1,895 6,474 741	103,966 5,047 2,337 12,265 3,034 11,768 766	13,317 1,555 775 - 942 8,281 78	66,638 3,197 1,528 7,735 1,615 8,053 1,002	79,955 4,752 2,303 7,735 2,557 16,334 1,080

The number of the Company’s employees and the additional information of employee benefits were as follows:

The number of employees The number of directors who are not adjuncted Average of employee benefit expenses Average of employee salary expenses Adjustment of employee salary expenses Remuneration of supervisor	2020 76	2019
		73
	6	5
	$ 1,634	1,317
	$ 1,485	1,176
	26.28% $ -	(6.59)%
		-

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

The Company compensation policies are as follows:

(a) Director of the Board:

The compensation paid to the directors includes remuneration and meeting travel allowances, which is not fixed monthly remuneration.

The compensation is in accordance with Article 20 of the Company’s Articles of Incorporation, the Company shall allocate at a maximum of 5% of the profit as remuneration to directors for the year, and the Company shall base on its determination of an individual director’s remuneration on the evaluation results of his or her performance.

(b) Managerial officer:

In addition to referring to the employee remuneration policy, the remuneration is determined by the Company's overall operating performance, the individual performance, contribution to the Company's operations, special achievements and peer salary levels.

Aforementioned directors’ and managers’ compensation is evaluated by the remuneration committee, and is submitted to the Board of Directors for resolution.

The salary for each employee is based on the Company’ s salary management regulations, which include the fixed salary, allowances, and the variable pay, as well as performance bonuses and special dividends. The rewards are given according to the seniority, rank, and work performance, etc..

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

==> picture [465 x 85] intentionally omitted <==

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

Highest
balance Actual Collateral
of financing usage Financing Maximum
to other Ending amount Reason for Allowance limit for each financing
Name of Name of Account Related parties during balance during the Interes Nature of Transaction short-term for bad borrowing limit for the
No. lender borrower name party the period (Note 2) period t rate financing amounts financing debt Item Value company lender
0 The NISHOKU Other Yes 296,300 284,800 227,840 0.95% Necessary to - Operating - - - 445,725 1,782,8
Company VIETNAM accounts loan other capital (Note 1) (Not
receivable parties
1 SAME 〃〃 Yes 242,000 - - 1.03%~Necessary to - 〃 - - -
START 1.4%loan other (Note 3) (Note 3)
(Anguilla) parties
----- End of picture text -----

Note 2: Amount actually draw in foreign currencies were translated based on the exchange rate at the reporting date.

Note 3: SAME START LIMITED (Anguilla) had canceled the financing amount by the meeting of Board of Directors at November, 2020.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Consolidated Financial Statements

(ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise (note 1)	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date (Note 3)	Actual usage amount during theperiod	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company (Note 2)
0 〃〃 1	The Company 〃〃 KUNSHAN NISHOKU PLASTIC	SAME START (Anguilla) NISHOKU VIETNAM NISHOKU BOUEKI SAME START (Anguilla)	3 2 2 1	1,337,174 1,337,174 1,337,174 940,123	514,250 1,144,044 159,260 15,125	113,920 1,127,808 156,960 -	- 113,920 40,000 -	- - - -	2.56% 25.30% 3.52% - %	4,457,246 4,457,246 4,457,246 3,133,743	Y 〃〃 N	N 〃〃〃	N 〃〃〃

Note 2: The relationship of guarantor and endorsements to related parties were as follows:

1) Business relationship between the Company
2) The Company directly or indirectly holds over 50% of subsidiaries’ shares;
3) The parent company and its subsidiaries holds over 50% of investees’ shares
4) A subsidiary jointed owned over 50% by the Company and the Company’s directly-owned subsidiary.

Note 3: Amount actually draw in foreign currencies were translated based on the exchange rate at the reporting date.

(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

Name of holder	Nature and name of securities	Relationship with the securitiesissuer	Account name	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company 〃〃 SAME START (Anguilla) 〃 NISHOKU BOUEKI NISHOKU SHENZHEN KUNSHAN NISHOKU PLASTIC The Company 〃〃〃〃	JPMorgan Funds - Global Corporate Bond Fund - JPM Global Corporate Bond Allianz Income and Growth - Class AT Acc BlackRock Global Fund - Global Allocation Fund Bond of oversea PineBridge preferred securities income fund Allianz Income and Growth - Class AT Acc Fixed income financial instruments Fixed income financial instruments Allianz Global Investors Income and Growth Fund PineBridge Global ESG Quantitative Bond Fund PineBridge Global Multi - Strategy High Yield Bond Fund FSITC US Top 100 Bond Fund Nomura Global Financial Bond Fund Accumulate	None 〃〃〃〃〃〃〃〃〃〃〃〃	Financial assets at fair value through profit or loss - current 〃〃〃〃〃〃〃 Financial assets at fair value through profit or loss - non current 〃〃〃〃	- - - - - - - - - - - - -	8,578 11,412 8,634 6,247 12,343 5,696 393,964 218,869 38,573 23,257 38,461 13,075 13,073	- % - % - % - % - % - % - % - % - % - % - % - % - %	8,578 11,412 8,634 6,247 12,343 5,696 393,964 218,869 38,573 23,257 38,461 13,075 13,073

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Consolidated Financial Statements

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
KUNSHAN NISHOKU PLASTIC 〃 NISHOKU SHENZHEN 〃	Fixed income financial instruments 〃 Fixed income financial instruments 〃	Financial assets at fair value through profit or loss-current 〃 Financial assets at fair value through profit or loss-current 〃	Agricltural Bank of China Wells Fargo Asset Management (Shanghai) Wells Fargo Asset Management (Shanghai) Bank of China	None 〃〃〃	- - - -	86,103 215,256 129,154 -	- - - -	350,190 437,738 787,928 393,964	- - - -	438,470 447,601 537,799 395,763	436,293 434,125 523,118 393,964	2,177 13,476 14,681 1,799	- - - -	- 218,869 393,964 -

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None

(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
SAME START (Anguilla) KUNSHAN NISHOKU PLASTIC SAME START (Anguilla) The Company The Company KUNSHAN NISHOKU PLASTIC KUNSHAN NISHOKU PLASTIC SAME START (Anguilla)	KUNSHAN NISHOKU PLASTIC SAME START (Anguilla) The Company SAME START (Anguilla) KUNSHAN NISHOKU PLASTIC The Company SAME START (Anguilla) KUNSHAN NISHOKU PLASTIC	Associate 〃〃〃〃〃〃〃	Sale Purchase Sale Purchase Sale Purchase Sale Purchase	(373,393) 373,393 (136,013) 136,013 (603,930) 603,930 (177,124) 177,124	(60)% 21% (22)% 23% (69)% 34% (4)% 40%	Net Days 〃〃〃〃〃〃〃	Note 1 〃〃〃〃〃〃〃	Note 1 〃〃〃〃〃〃〃	- - 17,686 (17,686) 301,922 (301,922) 23,553 (23,553)	-% -% 49% (9)% 89% (35)% 2% (73)%	Note2 〃〃〃〃〃〃〃

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Consolidated Financial Statements

Note 1: Payment term given to related parties and third parties were 60 days and 60 to 120 days, respectively. In addition, the Company did not buy same product from third part, so the purchase price cannot be compared.
Note 2: The subsidiaries did not purchase or sale same product from third parties, so the purchase (sale) price cannot be compared. In addition, the receipt terms of related parties were not significant different to third parties.
(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
The Company	KUNSHAN NISHOKU PLASTIC	Associate	301,922	4.00	-		93,395	-

Note 1: Until February 5, 2021.

(ix) Trading in derivative instruments:Please refer to notes 6(v).

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2020 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Percentage of ownership	Carrying value
The Company 〃〃 SUN NI (SAMOA) 〃〃	SUN NICE (SAMOA) NISHOKU BOUEKI NISHOKU VIETNAM C SAME START (Anguilla) NISHOKU HK SUN NICE (BVI)	SAMOA Taiwan Vietnam Anguilla HK BVI	Holding Purchase and sales of plastic raws and parts Manufacture and sale of tooling and plastic products Purchase and sale of mold and plastic products Holding 〃	1,096,194 1,000 508 (USD 16,500 thousand) - 1,800,3 (USD 57,915 thousand) 585 (USD 17,948 thousand)	1,096,194 1,000 , 26 (USD 8,50 thousand) - 6 1,800, (USD 57,915 thousand) , 58 (USD 17,948 thousand)	34,468 6,300 7 - - 62,298 5 15,697	100.00% 100.00% 100.00% 100.00% 100.00% 100.00%	4,510,300 114,781 113,468 223,799 3,431,369 895,933	751,704 7,464 2,581 245,005 351,353 155,154	753,882 10,741 2,890 245,005 351,353 155,154

(c) Information on investment in mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2019	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2020	Net income (losses) of the investee	Percentage of ownership	Investment income (losses) (Note 1)	Book value (Note 1)	Accumu-lated remittance of earnings in current period
					Outflow	Inflow
NISHOKU SHENZHEN KUNSHAN NISHOKU PLASTIC	Manufacture and sale of mold and plastic products Manufacture and sale of mold and plastic products	USD23,288 thousands USD53,310 thousands	Indirect investment through third area 〃	(USD thousand) (USD thousand)	- -	- -	(USD thousand) 1 (USD thousand)	2 (37,988) 5 544,500	100.00% 100.00%	(37,988) 544,500	1,163,612 3,133,743	475,841 473,544

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Consolidated Financial Statements

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
2,378,140	2,378,140	(Note 2)

Note 1: The above investment income (loss) in mainland China were based on financial statements audited by the Company’s auditors.

Note 2: The Company has received the certificate issue by the Industrial Development Bureau, Ministry of Economic Affairs when investing abroad, allowing it to start operating of its headquarters. As a result, there is no limitation on investment to Mainland China for the Company.

(iii) Significant transactions:

(d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Ji Teng Investment Limited	4,500,000	7.20%
Yun Ding Investment Limited	4,050,000	6.48%
CTBC Bank Trusted Custody investment account _Gold Talent Co., Ltd.	3,897,856	6.23%
Jin Hong Investment Limited	3,600,000	5.76%

Note 1: This table is based on the last business day at the end of each quarter, and calculates that the total number of ordinary shares and special shares registration of non-physical securities (including treasury shares) that have been reached more than 5%. As for the share capital recorded in the company’s financial report and the number of shares registration of non-physical securities may be have variance due to different calculation basis.
Note 2: The information that shareholders deliver shares to trust is disclosed by the individual trustee who set up the trust account. As for shareholders who handle the declaration of insider equity holdings of more than 10% of their shares in accordance with the Securities Exchange Act, their shareholdings include the shares held by them plus their delivery to the trust and have the right to make decisions on trust property, etc. For information on insider equity declaration, please refer to Market Observation Post.

(14) Segment information:

Please refer to the Company’s consolidated financial statements for the years ended December 31, 2020 and 2019, for details.

220

6.6 Financial Difficulties Encountered By the Company and the Related Party in the Most Recent Year and Up to the Date of the Annual Report: None.

221 -

7. Review of Financial Position, Management Performance and Risk Management

7.1 Financial Status

7.1.1 Analysis of Financial Status – Consolidated

.1.1 Analysis of Financial Status – Consolidated	.1.1 Analysis of Financial Status – Consolidated	.1.1 Analysis of Financial Status – Consolidated
			Unit: NT$thousands;%
Year Item	2020	2019	Difference
			Amount	％
Current Assets	5,744,344	5,907,592	(163,248)	-2.76%
Property, plant and equipment	1,444,529	1,531,841	(87,312)	-5.70%
Non-current assets	1,428,620	341,488	1,087,132	318.35%
Total Assets	8,617,493	7,780,921	836,572	10.75%
Current Liabilities	2,276,408	1,972,949	303,459	15.38%
Long-term liabilities	1,200,000	1,000,000	200,000	20.00%
Other liabilities	683,839	864,512	(180,673)	-20.90%
Total Liabilities	4,160,247	3,837,461	322,786	8.41%
Capital stock	624,462	622,962	1,500	0.24%
Capital Surplus	968,882	959,124	9,758	1.02%
Retained earnings	3,171,368	2,699,191	472,177	17.49%
Total Stockholders' Equity	4,457,246	3,943,460	513,786	13.03%
The reasons of the material change (significant current variations amounting to 20% and the amount of changes reached NTD 10 million) of assets, liabilities and equity above in the later period and within 2 years and the responses of the Company. Please specify the future countermeasures if the effects are significant: (1) Increase of other non-current assets: It was mainly due to that after the inward remittance of dividend distribution of the investees, such amount was classified under the financial assets at amortized cost- non-current according to the account principles. (2) Increase of long-term liabilities: It was mainly to the increase of the long-term borrowings from the bank. (3) Decrease of other liabilities: It was mainly due to the decrease of the deferred income tax liabilities. Future countermeasures: None.

7.1.2 Analysis of Financial Status - Individual

Unit: NTD thousand; %

.1.2 Analysis of Financial Status	- Individual		Unit: NTD thousand;%	Unit: NTD thousand;%
Year Item	2020	2019	Difference
			Amount	％
Current Assets	1,112,673	902,723	209,950	23.26%
Refers to investments accounted for under equitymethod.	4,738,549	5,366,167	(627,618)	-11.70%
Property, plant and equipment	299,596	307,741	(8,145)	-2.65%
Non-current assets	1,274,263	101,531	1,172,732	1155.05%
Total Assets	7,425,081	6,678,162	746,919	11.18%
Current Liabilities	1,115,870	823,726	292,144	35.47%
Long-term liabilities	1,200,000	1,000,000	200,000	20.00%
Other liabilities	651,965	910,976	(259,011)	-28.43%
Total Liabilities	2,967,835	2,734,702	233,133	8.52%
Capital stock	624,462	622,962	1,500	0.24%
Capital Surplus	968,882	959,124	9,758	1.02%
Retained earnings	3,171,368	2,699,191	472,177	17.49%
Total Stockholders' Equity	4,457,246	3,943,460	513,786	13.03%

222 -

The reasons of the material change (significant current variations amounting to 20% and the amount of changes reached NTD 10 million) of assets, liabilities and equity above in the later period and within 2 years and the responses of the Company. Please specify the future countermeasures if the effects are significant:

(1) Increase of current assets:It was mainly due to the increase of the revenue
(2) Increase of other assets: It was mainly due to that after the inward remittance of dividend distribution of the investees, such amount was classified under the financial assets at amortized cost- non-current according to the account principles.
(3) Increase of current liabilities: It was mainly to the increase of the short-term borrowings from the bank.
(4) Increase of long-term liabilities: It was mainly to the increase of the long-term borrowings from the bank.

Decrease of other liabilities: It was mainly due to the decrease of the deferred income tax liabilities Future countermeasures: None.

7.2 Operating Results

7.2.1Analysis of Operating Results - Consolidated

Unit: NTD thousand; %

			Unit: NTD thousand;%	Unit: NTD thousand;%
Year Item	2020	2019	Difference
			Amount	％
Net Sales	4,808,261	3,957,144	851,117	21.51%
Cost of Sales	3,268,381	3,078,431	189,950	6.17%
Gross Profit	1,539,880	878,713	661,167	75.24%
Operating Expense	470,828	499,710	(28,882)	-5.78%
Results from operating activities	1,069,052	379,003	690,049	182.07%
Non-operating Income andExpenses	(194,495)	45,548	(240,043)	-527.01%
Profit Before Tax	874,557	424,551	450,006	106.00%
Income Tax Expense	153,195	86,929	66,266	76.23%
Profit for the year	721,362	337,622	383,740	113.66%
The main reasons and expected sales volume of the significant changes (significant current variations amounting to 20% and the amount of changes reached NTD 10 million) in operating income, operating net profit and net profit before tax in the last two years that may affect the company's future financial business and plan for the response: (1) Increase of operating revenue, increase of profit, increase of operating income, increase of net income before tax, increase of income tax expense and increase of net income of the year: It was mainly due to the significant increase of the both 2020 consolidated revenue and profit. (2)Decease of non-operating Income and expenses: It was mainly due to the relatively great appreciation of NTD in 2020,andgreater exchange loss resulted from the exchange valuation。

7.2.2Analysis of Operating Results - Individual

			Unit: NTD thousand;%	Unit: NTD thousand;%
Year Item	2020	2019	Difference
			Amount	％
Net Sales	869,200	309,312	559,888	181.01%
Cost of Sales	590,028	232,141	357,887	154.17%
Gross Profit	235,329	77,171	158,158	204.94%
Operating Expense	140,772	117,116	23,656	20.20%

223 -

Results from operating activities	94,557	(39,945)	134,502	-336.72%
Non-operating Income andExpenses	689,983	454,652	235,331	51.76%
Profit Before Tax	784,540	414,707	369,833	89.18%
Income Tax Expense	63,178	77,085	(13,907)	-18.04%
Profit for the year	721,362	337,622	383,740	113.66%
The main reasons and expected sales volume of the significant changes (significant current variations amounting to 20% and the amount of changes reached NTD 10 million) in operating income, operating net profit and net profit before tax in the last two years that may affect the company's future financial business and plan for the response: (1) Increase of operating revenue, increase of operating cost, increase of gross profit, increase of operating expense, increase of operating income, increase of net income before tax and increase of net income of the year: It was mainly due to the significant increase of the both 2020 consolidated revenue and profit. (2)Increase of non-operating Income and expenses: It was mainly due to the recognition of profit of investees.

7.2.3The possible impact and response plans regarding the expected sales volume and their basis:

The Company's sales in 2020 was based on the condition of overall supply and demand of the industry, and used the production capacity planning and past operating performance as basis which shall not pose any effect on the Company’s future financial business.

7.3 Analysis of Cash Flow

7.3.1 Analysis of cash flows in the most recent year:
Consolidated Financial Statements

Unit: NTD thousand

Beginning Cash Balance	Net Cash Flow From Operating Activities Throughout The Year	Annual Cash Outflows	Cash Surplus (Deficit)	Remedial Measures forCash Deficit	Remedial Measures forCash Deficit
				Investment Plan	Financial Plan
3,539,799	536,514	1,449,663	2,626,650	NA	NA
1. Analysis of changes in cash flows (1) Operating activities: Net cash inflows of NT$536,514 thousand, mainly due to operating profits. (2) Investment activities: Net cash inflows of NT$1,392,252 thousand, mainly due to the purchase of machinery and equipment and expenditure of plant refurbishment. (3) Financing activities: Net cash outflows of NT$79,005 thousand, mainly due to the distribution of cash dividends. (4) Effect of exchange rate changes and cash equivalents: NT$21,594 thousand 2. Expected remedies for cash deficits and liquidity analysis: No occurrence of cash deficits and liquidity.

2. Non-Consolidated Financial Statements

				Unit: NTD thousand	Unit: NTD thousand
Beginning Cash Balance	Net Cash Flow From Operating	Annual Cash Outflows	Cash Surplus (Deficit)	Remedial Measures for Cash Deficit
				Investment	Financial

224 -

	Activities Throughout The Year			Plan	Plan
816,639	238,632	122,902	455,105	NA	NA
1. Analysis of changes in cash flows (1) Operating activities: Net cash outflows of NT$238,632 thousand, mainly due to operating profits and recovery of payment. (2) Investment activities: Net cash outflows of NT$213,198 thousand, mainly due to the capital reduction of the subsidiary and return of shares. (3) Financing activities: Net cash inflows of NT$90,296 thousand, mainly due to the distribution of cash dividends. 2. Expected remedies for cash deficits and liquidity analysis: No occurrence of cash deficits and liquidity.

7.3.2 Remedy for Cash Deficit and Liquidity Analysis: Not applicable.

7.3.3 Cash Flow Analysis for the Coming Year:

1. Consolidated Financial Statements

Unit: NT$ thousand

				Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Beginning Cash Balance	Net Cash Flow From Operating Activities Throughout The Year	Annual Cash Outflows	Cash Surplus (Deficit)	Remedial Measures forCash Deficit
				Investment Plan	Financial Plan
2,626,650	617,552	989,672	2,254,530	NA		NA
1. Analysis of changes in cash flows (1) Operating business: Mainly due to the estimated stable coming year that generates cash inflows. (2) Investment activities: Mainly due to the construction of the Phase 3 of the Vietnam Plant and purchase of machinery and equipment. (3) Financing activities: It was mainly due to the estimation of investment and financial instruments. 2. Expected remedies for cash deficits and liquidity analysis: No occurrence of cash deficits and liquidity.

2. Non-Consolidated Financial Statements

Unit: NTD thousand

Beginning Cash Balance	Net Cash Flow From Operating Activities Throughout The Year	Annual Cash Outflows	Cash Surplus (Deficit)	Remedial Measures for Cash Deficit	Remedial Measures for Cash Deficit
				Investment Plan	Financial Plan
455,105	1,293,291	653,223	1,095,173	NA	NA
1. Analysis of changes in cash flows (1) Operating activities: Mainly due to the return of earnings from offshore subsidiary in the coming year. (2) Investment activities: Mainly due to the estimated investment of financial products. (3) Financing activities: Mainly due to the estimated distribution of cash dividends. 2. Expected remedies for cash deficits and liquidity analysis: No occurrence of cash deficits and liquidity.

225 -

7.4 Major Capital Expenditure Items:

The Company does not have material capital expenditure plans, it is therefore not applicable.

7.5 Investment Policy in the Last year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year

7.5.1 Investment policy

The Company’s decision-making authority makes investments in consideration of operational needs or company’s future growth. Professional information is first provided by related units and after the Finance Unit compiles information and makes suggestions to the Authorization Manager, a motion of investment suggestion is produced. The investee company’s history and future prospects, market situation and management shall be evaluated to be used as the basis for decision-making authority to proceed with the investment.

7.5.2 Investment policies, main reasons for investment gains or losses, improvement plans in the most recent year

the most recent year	the most recent year	the most recent year	the most recent year
Unit: NTD thousand
Name of Subsidiary	Recognized in 2020 Amount of gains or losses (Note 1)	Main reason for gains or losses	Improvement plan
SUN NICE Ltd. (SAMOA)	753,882	Due to the profit of the investee company.	None
NISHOKU BOUEKI CO., LTD.	10,741	Fair operation condition with stable profit.	None
Nishoku TechnologyVietnam Co.,Ltd.	2,890	Fair operation condition with stable profit.	None
SAME START Ltd. (Anguilla)	245,005	Fair operation condition with stable profit.	None
NISHOKU HONG KONG HOLDING LIMITED	351,353	The investment of the China subsidiary runs fair operation with stableprofit.	None
SUN NICE Ltd.(B.V.I)	155,154	The investment of the	None

226 -

Name of Subsidiary	Recognized in 2020 Amount of gains or losses (Note 1)	Main reason for gains or losses	Improvement plan
		China subsidiary runs fair operation with stableprofit.
NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD.	(37,988)	Revenue not yet achieved the scale of economics	Continue to increase sales of new products to original customers, expand new customer sources and improve the manufacturing process within the plant.
KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD.	544,500	Fair operation condition with stable profit.	None

Note 1: The amounts stated in the 2020 financial report were certified by the CPAs.

7.5.3Investment plan for the coming year: The Company does not have new investment plans for the coming year.

7.6 Analysis of Risk Management

7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation of Corporate Finance, and Future Response Measures
Impact of interest rate changes

		Unit: NTD thousand	Unit: NTD thousand
Item		2020 Consolidated
	Amount	As a percentage of operatingincome	As a percentage of pre-tax netprofit
Interest expenses	20,948	0.44%	2.40%

A. The balance of the Group's consolidated long-term and short-term borrowings was NT$2,188,920 thousand and interest expenses was NT$20,948 thousand at the end of 2020. The above table shows that the ratio of interest expenses to the Company's profit and loss is relatively small. The Company also regularly evaluates bank borrowing rates and maintains good relations with banks in order to obtain a more favorable interest rate and at the same time reducing interest expenses.
B. If the interest rate had increased / decreased by 1 basis points, the Group’ s net
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income would have decreased / increased by $2,316 thousand and $645 thousand for the year ended December 31, 2020 and 2019, with all other variable factors remaining constant. This is mainly due to the Group’ s borrowing at variable rates 。 and bank deposits in variable-rate bills.

2. Impact of exchange rate changes

A. For years 2020, foreign exchange gain (including realized and unrealized portions) ，，
amounted to $(261,003) thousand, respectively. 5.43% of net operating income 。
The overall exchange rate factor has a certain degree of risk burden of profitability exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivables, 。
accounts payable and other payables that are denominated in foreign currency
B. A weakening (strengthening) of 1% of the NTD against the USD and CNY at December 31, 2020 and 2019, would have increased or decreased the net profit before tax by $41,353 thousand and $24,587 thousand, respectively. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for both periods.
C. Future countermeasures: In order to respond to external complex changes, the Company uses its basic strategy and aims to offset assets and liabilities to reduce its exposure to net positions of exchange rate fluctuations. Hedging operation: The main principle is to flatten the above net positions.

3. Impact on inflation

According to the increase and decrease rate of -0.23% and -7.80% of Consumer Price Index (BPI) and Wholesale Price Index (WPI) in 2020 released by the Directorate General of Budget, Accounting and Statistics, the inflation situation does not impose material impact on the Company’s profit or loss. The Company keeps a close eye on the fluctuation of market prices, and makes adjustments of sales prices, raw materials and inventory amount accordingly. The Company currently does not have any immediate material impact due to inflation.

7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-Risk, High-Leverage Investment, Loaning or Endorsement Guarantees and Derivatives Transactions
Engagement of high-risk and highly-leveraged investments

The Company and its subsidiaries focus on the management of the industry and do not make any investment in high-leveraged industry.

Engagement of lending fund to others or endorsement guarantees, and derivatives
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transactions:

The Company’s lending fund to others or endorsement guarantees, and derivatives transactions are handled according to policies and countermeasures in the Company’s “Operating Procedures for Lending Funds to Others”, “Operating Procedures for Endorsements/Guarantees”, and “Acquisition or Disposal of Assets”. Related operations are executed in the consideration of risk situation and applicable regulations.

(1) The status Of Endorsement And Guarantee of the company and its subsidiaries in 2020 is stated as follows:

2020/12/31 Unit: NT$ thousand

Company Name Of Endorser	Endorsees	Endorsees	Balance Of Endorsements -End	Accumulative Endorsement as a Percentage of current net worth (%)
	Company Name	Relation
Nishoku Technology Inc.	SAME START LIMITED(Anguilla)	Subsidiary, 100% owned by Nishoku Technology Inc. through reinvestment via SUN NICE (SAMOA)	113,920	2.56%
Nishoku Technology Inc.	NISHOKU TECHNOLOGY VIETNAM Co., Ltd.	Subsidiary, 100% owned by Nishoku Technology Inc.	1,127,808	25.30%
Nishoku Technology Inc.	NISHOKU BOUEKI CO., LTD.	Subsidiary, 100% owned by Nishoku Technology Inc.	156,960	3.52%
	Total (the Company)		1,398,688	-

The object of endorsement/guarantee of the Company and its subsidiaries are all subsidiaries to be directly or indirectly 100% owned by the Company. The purposes of endorsements and guarantees for subsidiaries are the derivative liabilities of guarantee resulting from group sharing of credit line of bank; the purpose of subsidiaries making endorsements and guarantees for affiliates is to be liable for the responsibility derived from guarantee purchases

(2) Lending funds to others in the end of 2020:

				2020/12/31	unit: NT$ thousand Fund lending and its nature
Creditor	Borrower	Whether the borrower is a	Balance of lending funds to others in the	Actually amount provided	Fund lending and its nature

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		related party	end of the period
Same Start (Anguilla)	Nishoku Technology Vietnam	Yes	284,800	227,840	The necessity for short-term financing

The object who the Company loans funds to are all subsidiaries which the Company directly or indirectly holds 100% shares of, and there is no limit as to the amount of when providing a loan. However, the loaning of fund may not exceed the net worth of the Company’s most recent financial statements.

(3) Derivatives in the end of 2020:

The Company did not engage in derivatives in the end of 2020.

7.6.3 Future Research & Development Projects and Corresponding Budget

The Company’s 2021 R&D plans include application products such as the development of IMF and OMD. The proportion of R&D expenses the Company and its subsidiaries expect to invest in is approximately 2 to 3% of the Company's operating income. With the growth of the future turnover, the annual R&D expenses may be gradually increased. By supporting our future R&D plans, we hope to improve the Company’s competitiveness in the market.

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales

Under the issue of China and US trade war and fierce product competition, the overall industrial competition is even more challenging. Aside from continuing to facilitate automation and process optimization of various operations, we will also accelerate the expansion of market development and production economic scales in Vietnam. We will make every effort to understand customer needs and try our utmost to develop strategically positioned star products while focusing on external competitions in order to make response measures according to the market change. We will strive to grasp the change of relevant laws and regulations in order to make preparation and adapt applicable countermeasures to reduce operational risks of future industry and the overall environment.

7.6.5 Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance and Sales

The Company and its subsidiaries also pay attention and collect and analysis the application market and technological development changes of various plastic products to reduce the impact brought with the change of technology. At the same time, we will also

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improve the R&D of high value-added and high-profit products, allowing the Company’s products to be more diverse, stable and ensure the source of profit. With our outstanding manufacturing process technology, we will continue to expand our strategic alliance in terms of design, mass production, logistic support, distribution, and after-sales service to our existing customers to strengthen the relationship of co-existence and prosperity. As of now, technological changes and industrial changes have not yet posed any impact on the Company's financial business.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures

In recent years, the Company strives to strengthen corporate governance in order to respond to any possible corporate crisis. We also disclose various material information immediately in accordance with laws and regulations while continuing to invest in the environment and corporate responsibility, building a positive corporate image. In order to achieve the goal of environment and social responsibility, we integrate corporate social responsibility with our management strategy, including company policy, internal operation management, various business execution and education and training planning.

Environmental protection: Implement the Company’s core value through the establishment of the ISO14001 system - "team, service, innovation, quality, and efficiency" to enhance the internal culture of the corporate, increase the quality of the workplace while being dedicated to the design and R&D of green products. Not only to meet the trend of environmental protection in the international market, we also treat the green concept as the basic obligation and duty as a corporate citizen.
Community involvement: In order to put together the power of the society, and the aim of caring for the lives of vulnerable groups, the Company proactively promotes welfare events in forms of money or donations, including facilitating environmental protection, caring for vulnerable groups, charitable events and development plans of communities.
Social welfare: The Company adheres to its principle of “taking from the society and using in the society” and is devoted to the promotion of a variety of welfare activities. For 13 consecutive years, the Company has donated a total of 280 used-computers to digital centers in rural areas and social
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welfare organizations. We try our best to fulfill corporate society responsibility and continues to improve the Company’s environment and culture by promoting corporate sustainable development as a means to further inspire other people in the society to facilitate social care and take importance of their living quality. Aside from the efforts in terms of talent cultivation and technology R&D, the Company uploads the spirit of being a corporate citizen to maintain the social culture while making a contribution with respect to the education of the next generation.

Human rights protection: Employees are the Company’s most valuable assets, aside
- from the basic company rules; we also value our employees’ opinions. We hope to provide the space that employees can make the most of. The Company’s employees may express their views with respect to their personal rights, welfare, management and workplace environment through department managers, senior managers and Management Department at any time. The Management Department conducts a survey of the employee canteen each year, allowing opinions of employees regarding the canteen environment. The survey is also used as an important reference basis to the continuous improvement of the workplace.
Safety and health: In order to show the determination of protecting the environment and maintaining employees’ safety and health, the Company has formulated the “Company Environmental Safety and Health Policy”. The Company integrates the implementation of environmental management, green products, occupational safety and health management to achieve the goal of corporate sustainable development.
7.6.7 Expected Benefits and Risks Relating to and Response to Merger and Acquisition Plans

As of the publication date of the annual report, the Company and its subsidiaries do not have any M&A plan. If evaluation and execution of relevant plans are in consideration, they shall be handled according to applicable laws and regulations, and applicable management measures established by the Company.

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7.6.8 Expected Benefits and Risks Relating to and Response to Factory Expansion Plans

As of now, the Company does not have expected plans of plant expansion, it is therefore not applicable.

7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration
Risks associated with concentration of purchases, and countermeasures:

The Company has established production base in China through investment and purchases products after the production is completed in China, so there is a concentration of purchases, a result of labor division between 2 countries in the industry. Other than the purchase of finished products, most of the raw materials purchased by the Company are designated by customers. The Company maintains 2 or more qualified suppliers for each raw material, ensuring uninterrupted supply while at the same time posing an advantage of negotiating the price, reaching the goal of reducing costs. In summary, the Company should not have any risk with respect to purchase concentration or interruption of materials.

Risks associated with concentration of sales, and countermeasures:

The Company will proactively expand and develop all types of different applications in the future by using its outstanding double injection die technology and die R&D capabilities to further continue developing different customer groups. The risk of concentration of sales is therefore very low.

7.6.10 Effects of Risks Relating to and Response to Large Share Transfer or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholding of over 10%

In the most recent year and as of the publication date of the annual report, there are no events of large shares transfer or changes by directors, supervisors, and shareholders with 10% shareholdings or more to cause the operating risk.

7.6.11 Effects of Risks Relating to and Response to Changes in Control over the Company

In the most recent year and as of the publication date of the annual report, the structure of directors and supervisors remains stable; there are no events for the change of management.

7.6.12For all litigious and non-litigious events, please expressly enumerate the involved facts, target amounts, starting dates of the litigation, major parties involved and the progress as of the printing date of this Annual Report for the cases where the Company, the Company’s directors and supervisors, general manager, substantial responsible persons, key shareholders holding over 10% of the total outstanding shares and the auxiliary firms
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in the major litigious, non-litigious or administrative events the outcome of which might have a significant impact upon the shareholders’ equity or stock prices:

For litigations and non-litigations with conclusive judgment or proceedings litigations, non-litigations, or administrative disputes with outcomes that might have major influence on the interest of shareholder or price of securities, the disputed facts, subject-matter amount, initial date of litigation, main litigants, and the status on current proceedings in the past 2 years and as of the publication date of the public report: None.
The directors, supervisors, managerial officers and substantial principals of the company, the major shareholders and affiliated companies with a shareholding ratio of more than 10% have been determined or are included in the lawsuit; non litigation or administrative litigation results may have a significant effect on the company's shareholders' equity or securities price in the past 2 years and as of the publication date of the public report: None.
The directors, supervisors, managerial officers of the company, the major shareholders with a shareholding ratio of more than 10%, any occurrence of events stipulated in Article 157 of the Securities and Exchange Act in the past 2 years and as of the publication date of the public report: None.
7.6.13 The impact of information system impairment to our operation and financial status and our response to the impact:
The information system structure establishes a high-availability host backup and data backup mechanism according to its risk levels, ensuring uninterrupted service. The backup media is also sent to an off-site storage.
In order for the data system to recover its operation as soon as possible in the event of a damage to reduce possible loss and risks, the Company carries out computer room simulation tests and emergency response drills to the normal operation and data security of the data system which can reduce the risk of interruption over unwarranted natural disasters and system interruption caused by human negligence, ensuring the system recovery time meets the expectation. Data security mechanism has been established to strengthen the protection of data security, confirming the confidentiality of company data while protecting personal information.
7.6.14 Other important risks：None.

7.7 Other Major Risks: None

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8. Other Special Notes

8.1 Summary of Affiliated Companies

8.1.1 Consolidated Business Report of Affiliated Companies
8.1.1.1 Affiliated Companies Chart

==> picture [482 x 391] intentionally omitted <==

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

NISHOKU
TECHNOLOGY INC.
100% 100% 100%
NISHOKU
NISHOKU BOUEKI SUN NICE LTD.
TECHNOLOGY
CO., LTD. (SAMOA)
VIETNAM CO., LTD.
100% 100% 100%
NISHOKU HONG
SAME START SUN NICE
KONG HOLDING
LTD.(ANGUILLA) LTD.(B.V.I)
LIMITED
100% 71.49% 28.51%
KUNSHAN NISHOKU
NISHOKU PLASTIC
PLASTIC ELECTRONIC
MOLD (SHENZHEN)
CO., LTD.
CO., LTD.
----- End of picture text -----

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8.1.1.2 Basic Information on Affiliates

2020/12/31 Unit: NT$ thousand

Name of subsidiary	Relation to the Company	Principal Activities	Location	Amount of paid-in capital	Percentage of shareholding
SUN NICE LTD. (SAMOA)	The Company’s subsidiary	Holdng Company	Samoa	1,096,194	100%
NISHOKU BOUEKI CO., LTD.	The Company’s subsidiary	Trading Company	Taiwan	63,000	100%
NISHOKU TECHNOLOGY VIETNAM CO.,LTD.	The Company’s subsidiary	Produces dies and plasticproducts	Vietnam	508,434	100%
SAME START LTD.(ANGUILLA)	Subsidiary invested by the Company through SUN NICE(SAMOA)	Trading Company	Anguilla	30	100%
NISHOKU HONG KONG HOLDING LIMITED	Subsidiary invested by the Company through SUN NICE(SAMOA)	Holdng Company	HongKong	1,800,361	100%
SUN NICE LTD.(B.V.I)	Subsidiary invested by the Company through SUN NICE(SAMOA)	Holdng Company	British Virgin Islands	585,292	100%
NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD.	Subsidiary invested by SUN NICE (SAMOA) NISHOKU HONG KONG HOLDING LIMITED	Manufacturing and sales of plastic products and dies	Shenzhen, China	703,870	100%
KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD.	Subsidiary invested by SUN NICE (SAMOA) NISHOKU HONG KONG HOLDING LIMITED	Manufacturing and sales of plastic products and dies	Kunshan, China	1,674,270	100%

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8.1.1.3 Shareholders presumed to have control and subordinate relationship with the same information: None.

8.1.1.4 Industries in which the affiliates operate

(1) CQ01010 Die Manufacturing.
(2) F106030 Wholesale of Die.
(3) F206030 Retail Sale of Die.
(4) C805990 Other Plastic Products Manufacturing.
(5) F401010 International Trade.

(6) ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval

8.1.1.5 Information on Directors, Supervisors, and President of Affiliates

2020/12/31 unit: thousand shares, %

Company Name	Title	Name or Representative	Shares Held	Shares Held
			Shares	%
NISHOKU BOUEKI CO., LTD.	Director	Nishoku Technology Inc. Rep.: Wu,Ying-Lan	6,300	100.00%
	Director	Nishoku Technology Inc. Rep.: Chen,Piao-Fu	6,300	100.00%
	Director	Nishoku Technology Inc. Rep.: Tsai,Chien-Sheng	6,300	100.00%
	Supervisor	Nishoku Technology Inc. Rep.: Chang,Wen-Hsien	6,300	100.00%
SUN NICE LTD.(SAMOA)	Director	Nishoku Technology Inc. Rep.:Chen,Piao-Fu	34,468	100.00%
	Director	Nishoku Technology Inc. Rep.: Tsai, Chien-Sheng	34,468	100.00%
	Director	Nishoku Technology Inc. Rep.:Chang,Wen-Hsien	34,468	100.00%
NISHOKU TECHNOLOGY VIETNAMCO. LTD.	Director	Nishoku Technology Inc. Rep.:Chen,Piao-Fu	0	100.00%
	Director	Nishoku Technology Inc. Rep.: Tsai,Chien-Sheng	0	100.00%
	Director	Nishoku Technology Inc. Rep.: Chang,Wen-Hsien	0	100.00%
SAME START LTD. (ANGUILLA)	Director	SUN NICE LTD. (SAMOA) Rep.:Chen,Piao-Fu	0	100.00%
	Director	SUN NICE LTD. (SAMOA) Rep.: Tsai, Chien-Sheng	0	100.00%
	Director	SUN NICE LTD. (SAMOA) Rep.:Chang,Wen-Hsien	0	100.00%
NISHOKU HONG KONG HOLDING LIMITED	Director	SUN NICE LTD. (SAMOA) Rep.: Chen, Piao-Fu	62,298	100.00%
	Director	SUN NICE LTD. (SAMOA) Rep.: Tsai, Chien-Sheng	62,298	100.00%
	Director	SUN NICE LTD. (SAMOA) Rep.: Chang, Wen-Hsien	62,298	100.00%
SUN NICE LTD.(B.V.I)	Director	SUN NICE LTD. (SAMOA) Rep.: Tsai, Chien-Sheng	15,697	100.00%

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Company Name	Title	Name or Representative	Shares Held	Shares Held
			Shares	%
NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD.	Director	NISHOKU HONG KONG HOLDING LIMITED Rep.: Chen,Piao-Fu	0	100.00%
	Director	NISHOKU HONG KONG HOLDING LIMITED Rep.: Tsai,Chien-Sheng	0	100.00%
	Director	NISHOKU HONG KONG HOLDING LIMITED Rep.:Chang,Wen-Hsien	0	100.00%
	Director	NISHOKU HONG KONG HOLDING LIMITED Rep.: Wu,Ying-Lan	0	100.00%
	Director	NISHOKU HONG KONG HOLDING LIMITED Rep.:Zheng, Qing-Wen	0	100.00%
KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD.	Director	NISHOKU HONG KONG HOLDING LIMITED Rep.:Chen,Piao-Fu	0	100.00%
	Director	NISHOKU HONG KONG HOLDING LIMITED Rep.: Tsai,Chien-Sheng	0	100.00%
	Director	NISHOKU HONG KONG HOLDING LIMITED Rep.: Chang,Wen-Hsien	0	100.00%
	Supervisor	NISHOKU HONG KONG HOLDING LIMITED Rep.:Zheng, Qing-Wen	0	100.00%

8.1.1.6 Operational Overview of Affiliates

2020/12/31 Unit: NT$ thousand; (net earnings per shares $)

Company Name	Capital	Total Assest	Total Liabilitties	Net Value	Revenues	OPerting Incomes	Net Incomes	EPS
NISHOKU BOUEKI CO., LTD.	63,000	208,850	92,669	116,181	100,195	18,198	7,464	(Note 1)
SUN NICE LTD.(SAMOA)	1,096,194	4,554,404	1	4,554,403	0	(251)	751,704	(Note 1)
NISHOKU TECHNOLOGY VIETNAM CO. LTD.	508,434	512,417	397,359	115,058	418,170	8,057	2,581	(Note 1)
SAME START LTD. (ANGUILLA)	29	322,150	98,352	223,798	622,453	219,290	245,005	(Note 1)
NISHOKU HONG KONG HOLDING LIMITED	1,800,361	3,431,369	0	3,431,369	213	59	351,353	(Note 1)
SUN NICE LTD. (B.V.I)	585,292	895,933	0	895,933	0	(86)	155,154	(Note 1)
NISHOKU PLASTIC MOLD (SHENZHEN)CO.,LTD.	703,870	1,347,030	183,418	1,163,612	330,199	(44,554)	(37,988)	(Note 1)
KUNSHAN NISHOKU PLASTIC ELECTRONIC CO.,LTD.	932,807	4,227,417	1,093,674	3,133,743	3,971,715	731,788	544,500	(Note 1)

Note 1: Refers to unlisted and limited companies, profit (loss) per share is therefore not calculated.

Note 2: The foreign exchange rate is based on the exchange rate on December 31, 2020. The exchange rate for balance sheet: USD28.48; income statement rate: 29.5491.

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8.1.2 Consolidated Financial Statements of Affiliated Enterprises

Representation Letter

Company name: NISHOKU TECHNOLOGY INC.

Chairman: Chen, Piao-Fu

Date: February 26, 2021

239 -

8.1.3 Affiliation Reports：NA

8.2 Private Placement Securities in the Most Recent year: None

8.3 The Shares of the Company Held or Disposed of by the Subsidiaries in the Most Recent
year: None

8.4 Any Other Special Notes to be specify: None

8.5 Any Events in 2020 and as of the Date of this Annual Report that had Significant Impacts on Shareholders’ Right or Security Prices as Stated in Item 2 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan: None
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Nishoku Technology Inc.

Chairman: Chen, Pi ao-Fu

241 -

AI assistant

Nishoku — Annual Report 2020

52364_rns_2021-08-17_a5740518-b31a-45ec-8f5a-bd75e0bd5a75.pdf

Nishoku Technology Inc.

2020 Annual Report

三、COMMON SHARE TRANSFER AGENT AND REGISTRAR

四、AUDITORS

TABLE OF CONTENTS

1. Letter to Shareholders

Dear Shareholders,

1. The 2020 Business result:

(1) Performance Of Business Plan

(2) Status of Budget Execution

(4) Status of R&D

2. 2021 Business Prospects

3. Future Developing Strategies of Company

4. Impacts of the external competitive environment, regulatory environment, and the overall business environment

2. Company Profile

2.1 Date of Incorporation: June 27th, 1980

2.2 Company Milestones

3. Corporate Governance

3.1 Organization Structure

3.1.1 Organization Chart (As of 2020/12/31)

3.1.2 Department Functions

3.2 Board of Directors and Management Team 3.2.1 Introduction of Board of Directors

3.2.1.2 Director、Supervisor Major Shareholders of the Major Shareholders that are Juridical Persons：

3.2.1.2.1 Major Shareholders of the Institutional Shareholders

3.2.1.3Major Shareholders of the Major Shareholders that are Juridical Persons

3.2.1.4 Professional Qualifications and Independence Analysis of the Board Directors

3.2.2 Introduction of the Management Team

3.3 Remuneration and Compensation Paid to Directors, the President, and Vice President

3.3.1 Remuneration Paid to Director As of 2020/12/31，Unit：NTD thousand；%

Range of Remunerations for Directors

3.3.2. Remuneration Paid to Supervisor：The company has set up an audit committee to Replace the supervisors so it is not applicable 3.3.3 Compensation Paid to President and Vice President

3.3.3.1 Compensation Paid to President and Vice President

Remuneration Brackets Table

3.3.3.2Employee Profit Sharing Granted to Management Team

(2) President and Vice President

3.4 Implementation of Corporate Governance

3.4.1 Board of Directors

3.4.2.1 Audit Committee：

3.4.3 Corporate Governance Implementation Status and Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

(Table 1)

The evaluation of the independency of CPA

Evaluation Unit: Board Affairs Unit

Evaluation Year：2021

Appointed Law Firm and CPAs:KPMG/CPA Cheng-Chien Chen and Sheng-Ho Yu.

3.4.4 The Composition of the Remuneration Committee and its Operation Status:

3.4.5 Implementation of Corporate Social Responsibility

3.4.11.2 Major Resolutions of Board Meetings

3.5 Information Regarding CPA Fees

Range of CPA professional fees

Information on CPA fees

3.6 Information on Change of CPA: None

3.8 Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Department Heads and Shareholders of 10% Shareholding or More

3.8.1 Information on Net Change in Shareholding：

3.8.2 Information of Shares Transferred:

Information on Transfer of Equity

3.8.3 Information of Equity Pledged:

Information on Pledge of Equity

3.9 Shareholders who hold the top ten shareholdings, who are related to each other or relatives within the relationship of spouse, second parent, etc.

3.10 Long-Term Investment Ownershi

4. Capital and Shares

4.1 Capital and Shares

4.1.1 Type of Stock

4.1.2 Information for Shelf Registration: None

4.2 Composition of Shareholders

4.3 Distribution of Shareholdings

4.3.2 Shareholding Distribution Status of Preferred Shares: None.

4.4 Register of Major Shareholders

4.5 Market Price, Net Worth, Earnings and Dividends Per Common Share

4.6 Dividend Policy and Execution Status

4.6.1 Dividend Policy Stipulated in the Company’s Articles of Incorporation

4.6.2 Dividend distribution resolved by this Board Meeting

4.7 Impact to Business Performance and EPS resulting from Stock Dividend Distribution:

4.8 Compensation to Employees and Remuneration to Directors:

4.9 Buyback of Common Stock: None

4.10 Issuance of Corporate Bond: None

4.11 Preferred Shares (with stock option) : None

4.12 Issuance of Global Depository Receipts : None

Nishoku Annual Report 2020