Patec - Annual Report 2021 | FinancialReports.eu

TSE ： 2236

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Patec Precision Industry Co., Ltd.

2020 Annual Report

Printed on May 28, 2021

Annual report inquiry website Market Observation Post System: http://mops.twse.com.tw

I. Spokesman: Name: Wee Liang-Kiang Title: General Manager Tel: (65) 6257-8122 E-mail: [email protected] Deputy Spokesman: Name: Sean Hsu Title: CFO Tel: (886) 2-7751-9850 E-mail: [email protected]

II. Contact information of the headquarters, branch offices and subsidiaries:

(I) Headquarters Name: Patec Precision Industry Co., Ltd. Address: 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands Company website: www.patec-intl.com Tel: (65) 6257-8122 (II) Branch offices and subsidiaries: Name: Patec Pte. Ltd. Address: 54 Serangoon North Avenue4 #05-01 Cyberhub North Singapore 555854 Tel: (65) 6257-8122 Name: Patec Pte. Ltd. Taiwan Branch Address: 14F., No. 137, Sec. 2, Nanjing E. Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.) Tel: (886) 2-7751-9850 Name: Press Automation Technology Pte. Ltd. Address: 54 Serangoon North Avenue4 #05-01 Cyberhub North Singapore 555854 Tel: (65) 6257-8122 Name: Wuxi Jingxin Precision Machining Co., Ltd. Address: No. C21-1, Shuofang Industrial Park Area, Phase 5, Xinwu Dist., Wuxi, China. Tel: (86) 510-8531-1462 Name: PT. PatecPresisi Engineering Address: Jl. Angsana Raya BlokL 3-01 Delta Silicon Industrial Park, Lippo Cikarang, Bekasi 17550, Indonesia Tel: (62) 21-8990-8366

(III) Name, job title, contact telephone number, and e-mail address of the litigious and non-litigious agent within the R.O.C.

Name: Jack Liu Title: Associate general manager of Sales Tel: (886) 2-7751-9850 E-mail: [email protected]

III.	Overseas trade places	for listed negotiable securities:
	Name:	Transfer Agency Department of CTBC Bank Co., Ltd.
	Address:	5F., No. 83, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei
		City 100, Taiwan (R.O.C.)
	Official website:	www.chinatrust.com.tw
	Tel:	(886) 2-6636-5566
IV.	Names of CPAs who attested the financial report for the most recent year, and the CPA firm
	names, addresses, web addresses, and telephone numbers.
	Name of CPA:	CPA Chin-Chang Chen and CPA Yi-Fan Lin
	CPA firm:	PricewaterhouseCoopers (PwC) Taiwan
	Address:	27F., No. 333, Sec. 1, Keelung Rd., Xinyi Dist., Taipei City 110,
		Taiwan (R.O.C.)
	Official website:	www.pwc.tw
	Tel:	(02) 2729-6666

V. The name of any exchanges where the Company's securities are traded offshore, and the method by which to access information on said offshore securities: None.

VI. Company website: www.patec-intl.com

VII. List of directors

Title	Name	Nationality	Main experience and education
Director	Goh Mui Teck William	Singapore	Senior Cambridge Examination Mayertro Electronics Pte. Ltd. sales and marketing manager Motorola Electronics Pte. Ltd. sales and marketing manager JIT Holdings Ltd. deputy chairman and group executive director
Director	Wee Liang Kiang (Note 1)	Singapore	PhD in Industrial and Business Management, West Coast University Production Engineer of Fujitec Maxton Intl Pte. Ltd. sales manager Business manager of Komatsu Ltd.,Japan
Director	Wee Hong Jie	Singapore	Bachelor’s degree in Mechanical Engineering and Business Management, Royal Melbourne Institute of Technology Sales Manager of Patec Precision Kft Special Assistant to GM of Patec Precision IndustryCo.,Ltd.
Director	Hidaka Hiroyuki (Note 2)	Japan	Aeronautical Maintenance of Tokyo Aeronautical Engineering College Performance Efficiency of Sanno College Sales Manager of Press Automation Technology Pte. Ltd.
Independent Director	Yen Chun Te	R.O.C.	Bachelor’s degree in Accounting, Tunhai University CFO of Softstar Entertainment Inc.

Title	Name	Nationality	Main experience and education
Independent Director	Tan Jee Yaw	Singapore	Nanyang Technological University Bachelor’s degree in Accounting, Nanyang Technological University Manager of Barclays Audit Manager of PwC Singapore Qualified CPA in Singapore Qualified CFA
Independent Director	Ernest Yogarajah Balasubram aniam	Singapore	National University of Singapore Master’s degree in Law Arfat Selvan Alliance LLC

Note 1: The original director Wee Liang Kiang was dismissed on March 15, 2021. Note 2: The original director Hidaka Hiroyuki was dismissed on April 22, 2021.

One. LETTER TO SHAREHOLDERS ........................................................................................... 4	One. LETTER TO SHAREHOLDERS ........................................................................................... 4
Two. COMPANY PROFILE ............................................................................................................. 4
I.	DATE OF INCORPORATION .................................................................................... 6
II.	A BRIEF HISTORY OF THE COMPANY ................................................................. 6
III.	GROUP STRUCTURE ................................................................................................ 7
IV.	RISK MATTERS ......................................................................................................... 7
Three. CORPORATE GOVERNANCE REPORT ......................................................................... 8
I.	ORGANIZATIONAL SYSTEM .................................................................................. 8
II.	INFORMATION ON THE COMPANY’S DIRECTORS, GENERAL
	MANGER, DEPUTY GENERAL MANAGER AND ASSISTANT
	GENERAL MANAGER OF ALL THE COMPANY’S DIVISIOTN AND
	BRANCH UNITS ...................................................................................................... 10
III.	THE STATE OF THE COMPANY’S IMPLEMENTATION OF
	CORPORATE GOVERNANCE ................................................................................ 21
IV.	INFORMATION ON CPA PROFESSIONAL FEES ................................................. 44
V.	INFORMATION ON REPLACEMENT OF CERTIFIED PUBLIC
	ACCOUNTANT ........................................................................................................ 45
VI.	INFORMATION ON SERVICE OF THE COMPANY’S CHAIRMAN,
	PRESIDENT, AND FINANCIAL OR ACCOUNTING MANAGERS AT
	THE ACCOUNTING FIRM OR ITS AFFILIATES IN THE RECENT
	FISCAL YEAR, THE NAME AND POSITION OF THE PERSON, AND
	THE PERIOD DURING WHICH THE POSITION WAS HELD, SHALL BE
	DISCLOSED .............................................................................................................. 45
VII.	ASSESSMENT ON INDEPENDENCE OF THE CPA ............................................. 45
VIII.	ANY TRANSFER OF EQUITY INTERESTS AND/OR PLEDGE OF OR
	CHANGE IN EQUITY INTERESTS BY A DIRECTOR, SUPERVISOR,
	MANAGERIAL OFFICER OR SHAREHODER WITH A SHARE OF
	MORE THAN 10 PERCENT IN THE MOST RECENT FISCAL YEAR
	AND UP TO THE DATE OF PUBLICATION OF THE ANNUAL REPORT ......... 46
IX.	RELATIONSHIP INFORMATION, IF AMONG THE COMPANY’S 10
	LARGEST SHAREHOLDERS ANY ONE IS A RELATED PARTY OR A
	RELATIVE WITHIN THE SECOND DGREE OF KINSHIP OF ANOTHER ........ 48
X.	THE TOTAL NUMBER OF SHARES AND TOTAL SHAREHOLDING IN
	ANY SINGLE ENTERPRISE BY THE COMPANY, ITS DIRECTORS AND
	SUPERVISORS, MANAGERS AND ANY COMPANIES CONTROLLED
	EITHER DIRECTLY OR INDIRECTLY BY THE COMPANY .............................. 49
Four. CAPITAL RAISING ACTIVITIES ...................................................................................... 50
I.	CAPITAL AND SHARES ......................................................................................... 50
II.	CORPORATE BONDS (INCLUDING OVERSEAS CORPORATE BONDS) ....... 57
III.	PREFERRED SHARES ............................................................................................. 57
IV.	GLOBAL DEPOSITORY RECEIPTS (GDR) ........................................................... 57
V.	EMPLOYEE STOCK WARRANTS ......................................................................... 57
VI.	NEW RESTRICTED EMPLOYEE SHARES ........................................................... 57
VII.	STATUS OF NEW SHARES ISSUANCE IN CONNECTION WITH
	MERGERS AND AQUISITIONS ............................................................................. 57

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VIII. THE STATUS OF IMPLEMENTATION OF CAPITAL ALLOCATION PLANS ....................................................................................................................... 57

Five. OPERATIONAL HIGHLIGHTS .......................................................................................... 58	Five. OPERATIONAL HIGHLIGHTS .......................................................................................... 58
I.	BUSINESS ACTIVITIES .......................................................................................... 58
II.	MARKET AND SALES OVERVIEW ...................................................................... 78
III.	THE NUMBER OF EMPLOYEES AND THEIR INFORMATION FOR
	THE 2 MOST RECENT FISCAL YEARS ................................................................ 90
IV.	DISBURSEMENTS FOR ENVIRONMENTAL PROTECTION ............................. 90
V.	LABOR RELATIONS ............................................................................................... 91
VI.	IMPORTANT CONTRACTS .................................................................................... 93
Six. AN OVERVIEW OF THE COMPANY’S FINANCIAL STATUS ....................................... 94
I.	CONDENSED BALANCE SHEETS FOR THE PAST 5 FISCAL YEARS ............ 94
II.	FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS ............................... 96
III.	SUPERVISORS’ OR AUDIT COMMITTEE’S REPORT FOR THE MOST
	RECENT YEAR’S FINANCIAL STATEMENT ...................................................... 99
IV.	FINANCIAL STATEMENT FOR THE MOST RECENT FISCAL YEAR ............ 100
V.	IF THE COMPANY OR ITS AFFILIATES HAVE EXPERIENCED
	FINANCIAL DIFFICULTIES IN THE MOST RECENT FISCAL YEAR
	AND UP TO THE DATE OF PUBLICATION OF THE ANNUAL REPORT,
	THE REPORT SHALL EXPLAIN HOW SAID DIFFICULTIES WILL
	AFFECT THE COMPANY’S FINANCIAL SITUATION ...................................... 157
Seven. A REVIEW AND ANALYSIS OF THE COMPANY’S FINANCIAL POSITION
AND FINANCIAL PERFORMANCE, AND A LISTING OF RISKS ...................................... 158
I.	FINANCIAL POSITION ......................................................................................... 158
II.	FINANCIAL PERFORMANCE .............................................................................. 159
III.	CASH FLOW ........................................................................................................... 160
IV.	MAJOR CAPITAL EXPENDITURES DURING THE MOS RECENT
	FISCAL YEAR ........................................................................................................ 160
V.	RE-INVESTMENT POLICY FOR THE MOST RECENT FISCAL YEAR,
	THE MAIN REASONS FOR THE PROFITS OR LOSSES,
	IMPROVEMENT PLANS AND INVESTMENT PLANS FOR THE
	COMING YEAR ...................................................................................................... 160
VI.	RISK MATTERS ..................................................................................................... 162
VII.	OTHER IMPORTANT MATTERS ......................................................................... 167
Eight. SPECIAL DISCLOSURE .................................................................................................. 168
I.	INFORMATION RELATED TO THE COMPANY’S AFFILIATES ..................... 168
II.	TRANSACTION ABOUT THE COMPANY’S PRIVATE PLACEMENT OF
	SECURITIES DURING THE MOST RECENT FISCAL YEAR AND UP TO
	THE DATE OF PUBLICATION OF THE ANNUAL REPORT ............................. 171
III.	HOLDING OR DISPOSAL OF SHARES IN THE COMPANY BY THE
	COMPANY’S SUBSIDIARIES DURING THE MOST RECENT FISCAL
	YEAR AND UP TO THE DATE OF PUBLICATION OF THE ANNUAL
	REPORT ................................................................................................................... 171
IV.	OTHER MATTERS THAT REQUIRE ADDITIONAL DESCRIPTION ............... 171
V.	AN EXPLANATION OF ANY MATERIAL DIFFERENCES FROM THE
	RULES OF THE R.O.C. IN RELATION TO THE PROTECTION OF
	SHAREHOLER EQUITY ....................................................................................... 172

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Nine. MATTERS IN ARTICLE 36 PARAGRAPH 3 SUBPARAGRAPH 2 OF THE SECURITIES EXCHANGE ACT THAT HAS SIGNIFICANT IMPACT ON SHAREHOLDERS’ EQUITY OR SHARE PRICE IN THE MOST RECENT FISCAL YEAR AND UP TO THE PUBLICATION OF THE ANNUAL REPORT ............................... 176

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One. Letter to Shareholders

2020 business report Dear Shareholders:

Thank you for the encouragement and the support to the Company in the past year. Thank you for your time to participate in the Company’s 2021 general shareholders meeting during your busy schedule. Here, we would like to present the operating result in 2020; and a summary of the business plan for 2021.

2020 operating results

Global light vehicle sales volume was 77.66 million in 2020, which decreased 14% from 2019. Since global car sales volume peaked at 95.6 million in 2018, it has shown negative growth for two consecutive years. In addition to the continued shrinking in the global car market in 2020, the global COVID-19 pandemic also restricted people's lives. It reduced the car utilization rate, which has severely impacted the entire car market and has become a huge challenge to company operations.

The Company's main markets are in China and Europe. After going through the trough in the first quarter in 2020, COVID-19 slowed down in the second quarter. Since the Chinese government’s policy of promoting car consumption, the annual decline of the sales volume in the car market improved, with a cumulative sales volume of 25.272 million cars in 2020, declined 1.9%. For the major European countries that produce cars, they faced the difficulties of declining in global car demand and the trend of converting to electric cars. Covid-19 caused shutdowns of factories and the production, rise of product inventories, closure of car sales centers, and sluggish sales of new models, which have led to a serious decline in the number of new car registrations in European countries. The cumulative sales volume was 11.96 million in 2020, declined 24.32%.

The Company’s operating conditions in 2020, in terms of the components for cars and motorcycles, affected by the COVID-19 pandemic, the sales amount were 1.079 billion dollars and 42 million dollars, respectively; while in terms of machinery equipment, the sales amount was affected by the reduction in customer’s demand of production. The sales amount was 36 million dollars. In summary, the Company's overall performance was 1.182 billion dollars, a decrease of 34.19% from 2019 After considering the entire economic environment, the Company continued to optimize the costs and implemented the cost-saving policy and declined orders with low-profit margins, so there was still profit throughout the year.

Unit: NT$’000; %

Analysis	Year	Year	2019	2020	Increase (Decrease)%
P&L	Sales		1,795,565	1,181,611	(34.19%)
	Gross Profit		437,621	293,338	(32.97%)
	Income after tax		52,296	27,288	(47.82%)
Profitability	Return on assets (%)		2.74	1.47	(46.35%)
	Return on equity (%)		3.90	2.08	(46.67%)
	Ratio of register capital (%)	Operating profit	25.21	11.91	(52.76%)
		Income before tax	24.96	11.61	(53.49%)

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	Net profit rate (%)	2.91	2.31	(20.62%)
	Basic EPS (dollar)	0.85	0.69	(18.82)
	Diluted EPS (dollar)	0.85	0.69	(18.82)

2021 business plan

Although COVID-19 has a huge impact on the global economy, and the industry predicted that the demand in the global car consumption market would slow down, the company still planned to develop more applications of stamping workpieces with exclusive stamping equipment in 2021. It optimized the cost by improving the production process and production automation. We also negotiated the prices with customers to maintain the profits that we should have and actively developed new markets. Also, in response to changes in the industrial environment, the company has adjusted its direction and industry policies since 2019. The Company stepped into the medical devices and multi-party automation tool markets and cooperated with local equipment distributors. We hope to open customer markets in a short time and develop a solid basis with the advantages of sales channels.

Thanks again to all shareholders for the support and encouragement. Honesty and integrity, quality first, and sustainable management are the Company's tenet. Looking forward to 2021, the COVID-19 vaccine has gradually become available in the market, and the global economy is expected to recover gradually. The management teams and all colleagues will Continue to work hard, actively implement the above-mentioned operation plan, and continue to invest resources in technological development and improvement, increase products diversity in order to create new business territory and increase the Company’s value, and continue to create good profits for shareholders.

We wish you all prosperity and every success in the future.

Goh Mui Teck CHAIRMAN William Wee Liang CEO Kiang CFO Sean Hsu

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Two. Company Profile

I. Date of incorporation: June 29, 2011

Patec Precision Industry Co., Ltd. (hereinafter referred to as “the Company”, or referred to as “the Group” with all of its subsidiaries) was established on June 29, 2011 in the British Cayman Islands. It was established mainly for the restructuring of the Company’s organizational structure, and readily apply for listing on the Taiwan Stock Exchange. After restructuring, the Company became the holding company, which consolidate all of its subsidiaries, but with no real economic activity.

II. A BRIEF HISTORY OF THE COMPANY

A BRIEF	HISTORY OF THE COMPANY
Date	A brief historyof the Company
1992	● Wee Liang Kiang cooperated with a Japanese colleague Mr. Hidaka and jointlyestablished Press Automation TechnologyPte. Ltd.(Singapore)
1993	● Invested in the R &D and manufacturingof stampingequipment(Japan).
1997	● Established a factory in Singapore to produce press machines and equipment.
2001	● Invested in Wuxi Jingxin Precision Machining Co., Ltd. (China) to develop in China's automotive stamped component market forproduction and sales.
2006	● Established Patec Pte. Ltd. ● Invested in Indonesia’s PT. Patec Presisi Engineering to develop production and sales of locomotive and auto components in Indonesia. ● Ranked 29th in Singapore’s Enterprise 50 Awards.
2007	● Ranked 6th in Singapore’s Enterprise 50 Awards.
2008	● Established Patec Precision Kft (Hungary) to penetrate into Europe's automotive stamped component market. ● Acquired ISO-9001 certification.
2009	● Established Wuxi Patec Precision Machining Co., Ltd., focusing on production and sales of stamping machine equipment in China. ● Acquired ISO/TS-16949 certification.
2011	● Established PT. PDF Presisi Engineering (Indonesia). ● Established Patec Precision Industry Co., Ltd. (Cayman Islands) for the restructuring of the Company’s organizational structure, and readily apply for listingin Taiwan.
2012	● Wuxi Jingxin Precision Machining Co., Ltd. obtained the high-tech enterprise certification(China).
2013	● Established Yancheng JingXin Precision Machining Co., Ltd for processing of automotive components. ● Established the Audit Committee. ● Established the Remuneration Committee.
2014	● Established Patec Precision Industry Co Ltd (Taiwan) as preparation for being listed in Taiwan, which is responsible for maintaining investor relations and the disclosure of real-time information, and gradually penetrate the sales market in Taiwan. ● Increased capital in Indonesia’s PT. API Precision.

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Date	A brief historyof the Company
2015	● Officiallylisted on the Taiwan Stock Exchange.
2016	● Issued the first unsecured corporate bonds in the R.O.C.
2017	● Established Patec Medical Supplies Pte. Ltd. and Singapore Patec Medical Supplies Pte. Ltd. Taiwan Branch for sales of medical devices. ● Obtained the first grade medical equipment permit from the Ministry of Health and Welfare.
2018	● Acquired BionicXP Pte. Ltd. for sales of automated machinery.
2019	● Increased capital in Indonesia’s BionicXP Pte. Ltd..
2020	● Disposed Yancheng JingXin Precision Machining Co., Ltd.. ● BionicXP Pte. Ltd. changed its name to Kabam Pte. Ltd. ● Patec Pte Ltd partners First Armour to develop Jordan’s first automated N95 maskproduction line.

III. GROUP STRUCTURE

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IV. Risk Matters:

Please refer to: "Seven. A Review and Analysis of the Company’s Financial Position and Financial Performance, and a Listing of Risks."

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Three. Corporate Governance Report

I. ORGANIZATIONAL SYSTEM

(I) Organizational System:

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Shareholder’s
Meeting
Audit Committee
Board of Directors
Remuneration Internal Audit
Committee Office
Chairman
General Manager
Financial Administration Sales Manufacturing R & D
Department Department Department Department Department
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(II) Department functions:

Department / Positions	Functions
Board of Directors	Set up policies and operational goals for the Company's business operations.
Remuneration Committee	Establish and regularly review policies, systems, standards and structures for performance appraisal and compensation to directors and managers. Assess and determine the remuneration of directors and managers on a regular basis.
Audit Committee	Supervise the Company’s business, financial status, fair presentation of financial statements,and internal control effectiveness.
Internal Audit Office	Responsible for the Company’s internal auditing.
General Manager	Execute Board resolutions, and has general management responsibilities in the Company.
Administration Department	Responsible for procurement, human resources management, information management, logistics, acceptance and distribution of documents,employee benefits,etc.
Financial Department	Responsible for the company's funding, accounting, budget control, and the analysis and interpretation of the Company’s financial structure, changes inprofit/loss,accountingreports,etc.
Sales Department	Responsible for collecting market information, product sales, customer service,as well asproduct and customer development.

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Department / Positions	Functions
Manufacturing Department	Responsible for matters related to production and manufacturing of the Company’sproducts and equipment.
R & D Department	Responsible for the development, testing, improvement and management ofproduct technologies.

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II. Information on the company's directors, general manager, deputy general manager, assistant general manager, and the supervisors of all the company's divisions and branch units

(I) Information on directors:

Apr 30, 2021; Unit: Share

Title	Nationality or Place of Registration	Name	Gender	Date Elected	Term	Date First Elected	Shareholding When Elected	Shareholding When Elected	Current Shareholding	Current Shareholding	Spouse & Minor Current Shareholding	Spouse & Minor Current Shareholding	Current Shareholding in the name of others	Current Shareholding in the name of others	Experience (Education)	Current Positions at The Company and Other Companies	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
							Shares	Percentage %	Shares	Percentage %	Shares	Percentage %	Shares	Percentage %			Title	Name	Relation
Chairman (Note1)	Singapore	Wee Hong Jie	Male	2019.06.28	3 years	2012.01.18	113,501	0.28%	9,101,591	19.89%	-	-	-	-	Bachelor’s degree in Mechanical Engineering and Business Management, Royal Melbourne Institute of Technology Sales Manager of Patec Precision Kft Special Assistant to GM of Patec Precision Industry Co., Ltd.	Chairman of Patec Precision Industry Co., Ltd. Director of Wuxi JingXin Precision Machining Co., Ltd Director of Patec Precision Kft President Director of PT. Patec Presisi Engineering President Director of PT. PDF Presisi Engineering President Director of PT. API Precision	GM	Wee Liang Kiang	Son
Director (Note1)	Singapore	Goh Mui Teck William	Male	2019.06.28	3 years	2011.07.20	3,418,771	8.32%	2,069,274	4.52%	-	-	-	-	Senior Cambridge Examination Mayertro Electronics Pte. Ltd. Sales and Marketing Manager Motorola Electronics Pte. Ltd. Sales and Marketing Manager JIT Holdings Ltd. Deputy Chairman and Group Executive Director	Director of Patec Pte Ltd Director of Press Automation Technology Pte Ltd Director of Wuxi Jingxin Precision Machining Co.,Ltd.	−	−	−

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Title	Nationality or Place of Registration	Name	Gender	Date Elected	Term	Date First Elected	Shareholding When Elected	Shareholding When Elected	Current Shareholding	Current Shareholding	Spouse & Minor Current Shareholding	Spouse & Minor Current Shareholding	Current Shareholding in the name of others	Current Shareholding in the name of others	Experience (Education)	Current Positions at The Company and Other Companies	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
							Shares	Percentage %	Shares	Percentage %	Shares	Percentage %	Shares	Percentage %			Title	Name	Relation
Director	Singapore	Wee Liang Kiang (Note 2)	Male	2019.06.28	3 years	2011.07.20	5,781,192	14.07%	223,385	0.49%	93,553	0.20%	-	-	West Coast University PhD in Industrial and Business Management, West Coast University Production Engineer of Fujitec Maxton Intl Pte. Ltd. sales manager Sales Manager of Komatsu	General Manager of Patec Precision Industry Co., Ltd. Director of Patec Pte Ltd Director of Press Automation Technology Pte Ltd Director of Wuxi Jingxin Precision Machining Co., Ltd. Director of Wuxi Patec Precision Machining Co., Ltd Director of Patec Precision Kft Director of Patec Investments Pte. Ltd. PT. Patec Presisi Engineering President Commissioner PT. PDF Presisi Engineering President Commissioner PT. API Precision President Commissioner	Chairman	Wee Hong Jie	Son
Director	Japan	Hidaka Hiroyuki (Note 3)	Male	2019.06.28	3 years	2019.06.28	2,125,571	5.25%	1,049,274	2.29%	-	-	-	-	Aeronautical Maintenance of Tokyo Aeronautical Engineering College Performance Efficiency of Sanno College Sales Manager of Press Automation Technology Pte. Ltd.	None	−	−	−
Independent Director	R.O.C.	Yen Chun Te	Male	2019.06.28	3 years	2013.11.29	−	−	−	−	−	−	−	−	Bachelor’s degree in Accounting, Tunhai University CFO of Softstar Entertainment Inc.	Group CFO of Winking Entertainment Co., Ltd. Patec Precision Industry Co., Ltd. independent Director Otsuka Information Technology Corp. Independent Director	−	−	−

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Title	Nationality or Place of Registration	Name	Gender	Date Elected	Term	Date First Elected	Shareholding When Elected	Shareholding When Elected	Current Shareholding	Current Shareholding	Spouse & Minor Current Shareholding	Spouse & Minor Current Shareholding	Current Shareholding in the name of others	Current Shareholding in the name of others	Experience (Education)	Current Positions at The Company and Other Companies	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
							Shares	Percentage %	Shares	Percentage %	Shares	Percentage %	Shares	Percentage %			Title	Name	Relation
Independent Director	Singapore	Tan Jee Yaw	Male	2019.06.28	3 years	2013.11.29	−	−	−	−	−	−	−	−	Nanyang Technological University Bachelor’s degree in Accounting, Nanyang Technological University Manager of Barclays Audit Manager of PwC Singapore Qualified CPA in Singapore CFA	Deputy general manager of BNP Paribas (Singapore) Patec Precision Industry Co., Ltd. independent Director	−	−	−
Independent Director	Singapore	Ernest Yogarajah Balasubramaniam	Male	2019.06.28	3 years	2012.01.18	−	−	−	−	−	−	−	−	Master’s degree in Law, National University of Singapore Arfat Selvan Alliance LLC	Certified attorney of UniLegal LLC Patec Precision Industry Co., Ltd. independent Director Independent director of VIBROPOWER Corporation Limited(Singapore)	−	−	−

Note 1: The company's board of directors elected Wee Hong Jie as the chairman of the board on April 22, 2021. Note 2: The original director Wee Liang Kiang was dismissed on March 15, 2021. Note 3: The original director Hidaka Hiroyuki was dismissed on April 22, 2021.

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(II) Major shareholders of institutional shareholders : Not applicable.
(III) Major shareholders of the Company’s major institutional shareholders: Not applicable.
(IV) Professional qualifications and independence analysis of directors (for directors that comply with the following criteria, please tick the appropriate corresponding boxes)

Criteria Name	At Least Five Years Work Experience and Meet One of the Following Professional Qualification Requirements	At Least Five Years Work Experience and Meet One of the Following Professional Qualification Requirements	At Least Five Years Work Experience and Meet One of the Following Professional Qualification Requirements	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Independence Attribute (Note)	Number of Holding Concurrent Independent Director Position in Other Public Companies
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, 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 Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Wee HongJie	−	−	V	−	−	−	−	V	V	V	−	V	−	V	V	0
Goh Mui Teck William	−	−	V	V	−	−	V	−	V	V	V	V	V	V	V	0
Yen Chun Te	−	−	V	V	V	V	V	V	V	V	V	V	V	V	V	1
Ernest Yogarajah Balasubramaniam	−	V	V	V	V	V	V	V	V	V	V	V	V	V	V	1
Tan Jee Yaw	−	V	V	V	V	V	V	V	V	V	V	V	V	V	V	0

Note: The Directors and Supervisors comply with the following conditions from two years before being elected and appointed, and during his term of office, please tick the appropriate corresponding boxes.
(1) Not an employee of this Company or its affiliates.
(2) Not a Director or Supervisor of the Company or its affiliates. (However, this does not apply, in cases where the person is an Independent Director of the company or its parent company, subsidiary are set up according to this Act or local country ordinances).
(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 outstanding shares of the Company or ranking in the top ten in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act.
(6) Not a director, supervisor, or employee of the company which majority director seats or voting shares and those of any other company are controlled by the same person.
(7) Not a director (or governor), supervisor, or employee of the company or institution which the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses.
(8) 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.
(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

− 13 −

(10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11) Not been a person of any conditions defined in Article 30 of the Company Law.
(12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

− 14 −

(V) Information of general manager, deputy general manager, assistant general manager and managers of the Company’s divisions and branch units:

		branch	units:
													April 30, 2021; Unit: Share
Title	Nationality	Name	Gender	Inauguration date	Shareholding		Spouses & Minor Shareholding		Current Shareholding in the name of others		Experience (Education)	Current Positions at Other Companies	Managers who are spouses or within two degrees of kinship			Managers holding employee share subscription warrants
					Shares	Percentage %	Shares	Percentage %	Shares	Percentage %			Title	Name	Relation
Group General Manager	Singapore	Wee Liang Kiang	Male	2013.11.29	223,385	0.49%	93,553	0.20%	-	-	West Coast University PhD in Industrial and Business Management, West Coast University Production Engineer of Fujitec Maxton Intl Pte. Ltd. sales manager Sales Manager of Komatsu	Director of Patec Precision Industry Co., Ltd. Director of Patec Pte Ltd Director of Press Automation Technology Pte Ltd Director of Wuxi Jingxin Precision Machining Co., Ltd. Director of Wuxi Patec Precision Machining Co., Ltd Director of Patec Precision Kft Director of Patec Investments Pte. Ltd. PT. Patec Presisi Engineering President Commissioner PT. PDF Presisi Engineering President Commissioner PT. API Precision President Commissioner	None	None	None	−
General Manager (Wuxi Jingxin)	China	Zhang Ping	Male	2002.02.01	51,685	0.12%	-	-	-	-	Bachelor’s degree in Mechanical Engineering, Tsinghua University, Beijing Manager of Kaihua Moulds	General Manager of Wuxi Patec Precision Machining Co., Ltd General manager of Yancheng JingXin Precision Machining Co., Ltd Director of Wuxi Jingxin Precision Machining Co.,Ltd. Director of Patec Precision Kft Supervisor of Wuxi Patec Precision MachiningCo., Ltd	None	None	None

− 15 −

Title	Nationality	Name	Gender	Inauguration date	Shareholding	Shareholding	Spouses & Minor Shareholding	Spouses & Minor Shareholding	Current Shareholding in the name of others	Current Shareholding in the name of others	Experience (Education)	Current Positions at Other Companies	Managers who are spouses or within two degrees of kinship	Managers who are spouses or within two degrees of kinship	Managers who are spouses or within two degrees of kinship
					Shares	Percentage %	Shares	Percentage %	Shares	Percentage %			Title	Name	Relation
General Manager (PT. Patec,	Indonesia	Adrian Nicolas	Male	2019.04.30	-	-	-	-	-	-	PhD in American Institute of Management Studies Master’s degree in Corporate Management, Kennedy Western University Master’s degree in Chemical Engineering, Bandung Institute of Technology General manager and director of Philips Lightings Regional manager and executive director of Adient Automotive, Indonesia CEO of Staedtler Indonesia	None	None	None	None
Group CFO	R.O.C.	Sean Hsu	Male	2013.11.29	504,882	1.10%	-	-	-	-	Bachelor’s degree in Accounting, Soochow University Deputy audit manager of PwC Taiwan Deputy manager of Chailease Finance Co., Ltd.	PT. Patec Presisi Engineering Commissioner	None	None	None
Auditing Manager	R.O.C.	Pei-Ling Li	Female	2014.02.28	42,564	0.09%	-	-	-	-	Bachelor’s degree in Accounting, Soochow University Auditor of Reanda M Y Wu & Co. Auditor of PwC Taiwan	None	None	None	None

− 16 −

(VI) Remuneration to directors, supervisors, general manager and deputy general manager in the most recent fiscal year 1. Remuneration paid to directors (independent directors):

Units: NT$ thousands

Title	Name	Remunerations of Directors	Remunerations of Directors	Remunerations of Directors	Remunerations of Directors	Remunerations of Directors	Remunerations of Directors	Remunerations of Directors	Remunerations of Directors	Ratio of Total Remuneration (A+B+C+D) to Net Income (%)	Ratio of Total Remuneration (A+B+C+D) to Net Income (%)	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Ratio of total compensation (A+B+C+D+E+F+ G) to net income (%)	Ratio of total compensation (A+B+C+D+E+F+ G) to net income (%)	Compensation paid to directors from an invested company other than the company’s subsidiary or parent Company
		Base Compensation (A)		Severance Pay (B)		Directors Compensation (C)		Allowances (D)				Salary, Bonuses and Allowances(E)		Severance Pay (F)		Employee Compensation (G)
		The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement	The Company		All companies in the consolidated financial statement		The Company	All companies in the consolidated financial statement
																Cash	Stock	Cash	Stock
Chairman (Note 1)	Wee Hong Jie	−	−	−	−	100	100	68	68	0.62	0.62	−	5,950	−	370	−	−	−	−	0.62	23.78	−
Director (Note 1)	Goh Mui Teck William	−	−	−	−	100	100	51	51	0.55	0.55	−	−	−	−	−	−	−	−	0.55	0.55	−
Director	Wee Liang Kiang (Note 2)	−	−	−	−	100	100	68	68	0.62	0.62	−	9,684	−	115	−	−	−	−	0.62	36.53	−
Director	Hidaka Hiroyuki (Note 3)	−	−	−	−	100	100	68	68	0.62	0.62	−	−	−	−	−	−	−	−	0.62	0.62	−
Independent Director	Yen Chun Te	−	−	−	−	100	100	68	68	0.62	0.62	−	−	−	−	−	−	−	−	0.62	0.62	−
Independent Director	Ernest Yogarajah Balasubramaniam	−	−	−	−	100	100	68	68	0.62	0.62	−	−	−	−	−	−	−	−	0.62	0.62	−
Independent Director	Tan Jee Yaw	−	−	−	−	100	100	68	68	0.62	0.62	−	−	−	−	−	−	−	−	0.62	0.62	−
1.Please state the payment policy, system, standard, and structure of the independent directors’ remuneration, and state the relevance with the amount of remuneration based on factors such as responsibility, risk, and time devoted: According to Article 99 of the Company's Articles of Association, if there is any surplus at the end of the fiscal year, no more than 3% of the net profit before tax shall be allocated as the remuneration for all directors of the Company. Reasonable remuneration shall be given after referring to the industry level, the Company's operating results, and the director’s contribution to the Company's performance, and shall be reviewed by the Remuneration Committee and the Board of Directors. 2.Except the sheet disclosed above,the remuneration to all the directors served for all the companies within the consolidated financial statement(such as a consultant not an employees)in the most recent fiscalyear: None.

− 17 −

Range of Remunerations

	Range of Remunerations	Range of Remunerations	Range of Remunerations	Range of Remunerations
Range of remuneration paid to the Company’s directors	Names of Directors
	Total of(A+B+C+D)		Total of(A+B+C+D+E+F+G)
	The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement
Under NT$ 1,000,000	Goh Mui Teck William, Wee Liang Kiang, Wee Hong Jie, James H. Wang, Yen Chun Te, Tan Jee Yaw, Ernest Yogarajah Balasubramaniam	−	Goh Mui Teck William, Wee Liang Kiang, Wee Hong Jie, James H. Wang, Yen Chun Te, Tan Jee Yaw, Ernest Yogarajah Balasubramaniam	−
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)	−	−	−	Wee Liang Kiang, Wee HongJie
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	7	0	7	2

※ The remuneration disclosed in this table is different from the income concept of the Income Tax Act. Therefore, the purpose of this form is for information disclosure, and is not used for tax purposes.

Remunerations of Supervisors: Not applicable, as the Company has only established the audit committee.
Remunerations of General manager and deputy general manager

												Units: NT$ thousands	Units: NT$ thousands	Units: NT$ thousands
Title	Name	Salary (A)		Severance Pay (B)		Bonus and Allowances (C)		Employee Compensation (D)				Ratio of total compensation (A+B+C+D) to net income(%)		Compensation on paid to directors from an invested company other than the company’s subsidiary or parent company
		The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement		The Company	All companies in the consolidated financial statement		The Company	All companies in the consolidated financial statement
								Cash	Stock	Cash	Stock
Group General Manager	Wee Liang Kiang	−	16,914	−	741	−	2,157	−	−	−	−	−	51.07	−
General Manager (Wuxi Jingxin)	Chang Ping

− 18 −

General Manager (PT. Patec)	General Manager (PT. Patec)	Adrian Nicolas
CFO		Sean Hsu
			Range of Remunerations
	Range of remuneration paid to general managers and deputy general managers		Names of General Managers and DeputyGeneral		Managers
			The Company	All companies in the consolidated financial statement
	Under NT$ 1,000,000		−	−
	NT$1,000,000 (included) ~ NT$2,000,000(excluded)		−	Adrian Nicolas
	NT$2,000,000 (included) ~ NT$3,500,000(excluded)		−	Sean Hsu, Chang Ping
	NT$3,500,000 (included) ~ NT$5,000,000(excluded)		−	−
	NT$5,000,000 (included) ~ NT$10,000,000(excluded)		−	Wee Liang Kiang
	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		0	4

4. The remuneration of the company's top five remuneration executives

												Units: NT$ thousands	Units: NT$ thousands	Units: NT$ thousands
Title	Name	Salary (A)		Severance Pay (B)		Bonus and Allowances (C)		Employee Compensation (D)				Ratio of total compensation (A+B+C+D) to net income(%)		Compensation on paid to directors from an invested company other than the company’s subsidiary or parent company
		The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement	The Company	All companies in the consolidated financial statement		The Company	All companies in the consolidated financial statement		The Company	All companies in the consolidated financial statement
								Cash	Stock	Cash	Stock
Group General Manager	Wee Liang Kiang	−	7,958	−	115	−	1,726	−	−	−	−	−	36.53	−
President Director (Indonesia subsidiaries)	Asan Tatang	−	4,598	−	384	−	438	−	−	−	−	−	19.86	−
Special Assistant to GroupGM	Wee Hong Jie	−	4,018	−	370	−	1,932	−	−	−	−	−	23.78	−
HR Manager (Patec SG)	Giang Ho San George	−	2,457	−	260	−	-	−	−	−	−	−	9.96	−
Financial Manager (Patec SG)	Ong Jian Ming, Gary	−	2,127	−	115	−	-	−	−	−	−	−	8.22	−

− 19 −

※ The remuneration disclosed in this table is different from the income concept of the Income Tax Act. Therefore, the purpose of this form is for information disclosure, and is not used for tax purposes.
1. Compensation distributed to managers, their name and distribution status: The Company did not distribute compensation to managers in the current fiscal year.
(VII) Analysis of the proportion of the total remuneration of directors, supervisors, general managers and deputy general managers of the Company paid by the Company and all companies in the consolidated financial statement to net profit after tax in individual financial statements of the recent two years. Explanation of remuneration policies, standards and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure.
1. Analysis of the proportion of the total remuneration of directors, supervisors, general managers and deputy general managers of the Company paid by the Company and all companies in the consolidated financial statement to net profit after tax in consolidated financial statements:

					Units: NT$ thousands	Units: NT$ thousands	Units: NT$ thousands	Units: NT$ thousands
Title	2019				2020
	Total Remuneration		Total Remuneration		Total Remuneration		Total Remuneration
	The Company	All invested companies	The Company	All invested companies	The Company	All invested companies	The Company	All invested companies
Director	1,134	18,497	2.91%	47.66%	1,159	17,278	4.25%	63.32%
General Manager and deputy general manager	−	19,812	−	51.07%	−	14,767	−	54.12%

Explanation of remuneration policies, standards and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure:

The Company has established a Remuneration Committee, which is composed of the entire number of independent directors as members of the committee. The Remuneration Committee is responsible for establishing and regularly reviewing policies, systems, standards and structures for the performance appraisal and compensation to directors and managers. In addition, the committee regularly assess and refer to remuneration levels of its peers to determine the remuneration of directors and managers.

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III. THE STATE OF THE COMPANY’S IMPLEMENTATION OF CORPORATE GOVERNANCE

(I) The state of operations of the board of directors: Number of meetings; attendance rate of each director; an evaluation of targets for strengthening of the functions of the board during the current and immediately preceding fiscal years, and measures taken toward achievement thereof; and any other matters that require reporting, please refer to the attached table:
The board of directors has held 4 meetings (A) in the most recent fiscal year (2020); the attendance of directors is shown below:

Title	Name	In-person Attendance (B)	By proxy	In-person Attendance Rate (%) (B/A)	Remarks
Chairman	Goh Mui Teck William	3	0	75	Re-elected on June 28, 2019 The company's board of directors elected Wee Hong Jie as the chairman of the board on April 22,2021
Director	Wee Liang Kiang	4	0	100	Re-elected on June 28,2019
Director	Wee Hong Jie	4	0	100	Re-elected on June 28, 2019 The company's board of directors elected Wee Hong Jie as the chairman of the board on April 22,2021.
Director	Hidaka Hiroyuki	4	0	100	Newly-elected on June 28, 2019
Independent Director	Yen Chun Te	3	1	75	Re-elected on June 28,2019
Independent Director	Tan Jee Yaw	4	0	100	Re-elected on June 28,2019
Independent Director	Ernest Yogarajah Balasubramaniam	4	0	100	Re-elected on June 28,2019
Other matters to be recorded: 1. For matters specified in Article 14.3 of the Taiwan Securities and Exchange Act and an independent director has opinions expressing objections or reservations at the meeting that were included in records or stated in writing, the meeting date, period, content, qualified opinion and resolution made by any independent directors, and the handling of opinions by the Company should be specified. (1) Matters specified in Article 14.3 of the Taiwan Securities and Exchange Act Period Content Resolutions Qualified opinions from any independent director and the handling of opinions bythe Company Mar 27, 2020 3rd meeting of the 5th term board of directors 1. Allocation of earnings for capital increase and issuance of new shares 2. Appointment of the accounting firm PwC Taiwan to conduct audit Proposals 1~2 were approved by all attendees with no objection Approved by resolution of all independent directors

− 21 −

May 11, 2020 4th meeting of the 5th term board of directors	1. Amend the “Management of Board Meetings Operations”, “Ethical Corporate Management Best Practice Principles”, “Procedures for Ethical Management and Guidelines for Conduct”, “Audit Committee Charter” and “Remuneration Committee Charter” 2. Amend the “Rules of Procedure for Shareholders Meetings” and “Endorsements Management”	Proposals 1~2 were approved by all attendees with no objection	Approved by resolution of all independent directors
Aug 11,2020 5th meeting of the 5th term board of directors	Endorsements/Guarantees to the Company’s subsidiary in Singapore	Proposal was approved by all attendees with no objection	Approved by resolution of all independent directors
Nov 13,2020 6th meeting of the 5th term board of directors	Endorsements/Guarantees to the Company’s subsidiary in Indonesia	Proposal was approved by all attendees with no objection	Approved by resolution of all independent directors
Mar 30,2021 7th meeting of the 5th term board of directors	1. Appointment of the accounting firm PwC Taiwan to conduct audit 2. Amend the “Rules of Procedure for Shareholders Meetings”and “Endorsements Management” 3. Review of the Tender Offer from YIDA INVESTMENTS PTE. LTD. to the Common Shares of the Company	Proposals 1~2 were approved by all attendees with no objection Proposals 3 all the Board members in attendance confirm the identity and financial condition of the Offeror to be reasonable, the conditions of the Tender Offer to be fair, and the sources of the Tender Offer funds to be reasonable	Approved by resolution of all independent directors

For the avoidance of conflicts of interest among directors, the director’s name, meeting content, and reason for avoiding conflict of interest and participation in the voting process must be properly recorded: None.
The Company has established a self-evaluation system for the Board of Directors, and has conducted the Questionnaire of Self-Evaluation of Performance of the Board to evaluate and review the performance of the Board on a regular basis, so that the board directors can be self-motivated to enhance the sound operation of the Board.
The implementation status of the Board' s performance evaluation:

Evaluation cycles	Evaluation periods	Scope of evaluation	Method of evaluation	Content of evaluation
Conducts once a year	2020.01.01~ 2020.12.31	Including the Board of Directors, individual Board members, the Audit Committee and the Remuneration Committee	Internal evaluation of the board and self-evaluation by the board members	The performance evaluation of the Board of Directors includes: (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; (4) Election and continuing education of the directors; and (5) Internal control.

− 22 −

(II) Operations of the Audit Committee:

The Audit Committee has held 4 meetings (A) in the most recent fiscal year (2020); the attendance of members of the committee is shown below:

Title	Name	In-person Attendance (B)	By proxy	In-person Attendance Rate (%) (B/A)	Remarks
Independent Director	Yen Chun Te	3	1	75	-
Independent Director	Tan Jee Yaw	4	0	100	-
Independent Director	Ernest Yogarajah Balasubramaniam	4	0	100	-
Other matters to be recorded: 1. For matters specified in Article 14.5 of the Taiwan Securities and Exchange Act, and any matter that has not been approved upon the consent of two-thirds or more of all directors, the period, content, and results of the Audit Committee’s resolutions shall be disclosed. (1) Matters specified in Article 14.5 of the Taiwan Securities and Exchange Act Period Content Resolutions Qualified opinions from any independent director and the handling of opinions bythe Company Mar 27, 2020 3rd meeting of the 5th term board of directors 1. Allocation of earnings for capital increase and issuance of new shares 2. Appointment of the accounting firm PwC Taiwan to conduct audit Proposals 1~2 were approved by all attendees with no objection Approved by resolution of all independent directors May 11, 2020 4th meeting of the 5th term board of directors 1. Amend the “Management of Board Meetings Operations”, “Ethical Corporate Management Best Practice Principles”, “Procedures for Ethical Management and Guidelines for Conduct”, “Audit Committee Charter”and “Remuneration Committee Charter” 2. Amend the “Rules of Procedure for Shareholders Meetings”and “Endorsements Management” Proposals 1~2 were approved by all attendees with no objection Approved by resolution of all independent directors Aug 11, 2020 5th meeting of the 3rd term board of directors Endorsements/Guarantees to the Company’s subsidiary in Singapore Proposal was approved by all attendees with no objection Approved by resolution of all independent directors Nov 13, 2020 6th meeting of the 3rd term board of directors Endorsements/Guarantees to the Company’s subsidiary in Indonesia Proposal was approved by all attendees with no objection Approved by resolution of all independent directors

− 23 −

Mar 30, 2021 7th meeting of the 3rd term board of directors	1. The Company’s 2020 business report and consolidated financial statements 2. The Company’s Internal Control Statement 3. Appointment of the accounting firm PwC Taiwan to conduct audit 4. Amend the “Rules of Procedure for Shareholders Meetings” and “Endorsements Management” 5. Review of the Tender Offer from YIDA INVESTMENTS PTE. LTD. to the Common Shares of the Company	Proposals 1~4 were approved by all attendees with no objection Proposals 5 all the Audit Committee members in attendance confirm the identity and financial condition of the Offeror to be reasonable, the conditions of the Tender Offer to be fair, and the sources of the Tender Offer funds to be reasonable	Approved by resolution of all independent directors

(2) Except for the matters stated above, the resolutions rejected by the Audit Committee and two thirds or more directors gave their approval: None.
For the avoidance of conflicts of interest among directors, the independent director’s name, meeting content, and reason for avoiding conflict of interest and participation in the voting process must be properly recorded: None.
Communication between independent directors and internal auditors and CPAs (including audit materials, methods, and results pertaining to corporate finances and/or operations, etc.):
(1) The Company has held at least one Audit Committee Meeting every quarter, where the head of internal audit is responsible for audit reports. In addition, an audit report is sent by the end of each month for review of independent directors, in order to fully achieve a two-way communication between independent directors and audit supervisors.
(2) The CPA will send a written communication to the management unit before issuing an audit report, including details of important audit findings and defects of internal control systems, roles and responsibilities of accountants, relevant audit plans, risk assessment and key audit matters, and CPA independence, in order to fully achieve a two-way communication between independent directors and audit supervisors.

− 24 −

(III) The state of the Company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such departure:

Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Description
I. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?	V		The Company has established and disclosed the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”. In addition, the Company has implemented related regulations based on the spirit of corporate governance, and in the future, it will promote corporate governance by revising the relevant management regulations, as well as improving information transparency and board functions.	No significant difference.
II. Shareholding structure & shareholders’ rights (I) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement these based on the procedure? (II) Does the company possess a list of its major shareholders as well as the ultimate owners of those shares? (III) Does the company establish and execute a risk management and firewall system within its conglomerate structure? (IV) Does the company establish internal rules against insider trading with undisclosed information?	V V V V		(I) The Company’s spokesman is designated to be responsible for dealing with matters such as shareholders’ suggestions and disputes, and to coordinate the relevant departments for its implementation. (II) The shareholder service agency provides up-to-date information on a regular basis for the Company’s list of major shareholders as well as the ultimate owners of those shares. (III) The assets and financial management are independent between the Company and its affiliates, hence the Company establishes and executes a risk management and firewall system in accordance with its own internal regulation system. (IV) The Company has set up the “Regulations Governing the Prevention of Insider Trading” as internal rules against insiders trading.	No significant difference. No significant difference. No significant difference. No significant difference.
III. Composition and Responsibilities of the Board of Directors (I) Does the Board develop and implement a diversified policy for the composition of its members?	V		(I) The Board has developed a diversified policy for the composition of its members, and designated 3 independent directors, Chun-Te Yen, Jee Yaw Chen, and Ernest Yogarajah Balasubramaniam. Among them, Chun-Te Yen and Jee Yaw Chen have professional backgrounds related to finance and accounting, whereas Ernest Yogarajah Balasubramaniam has a legal background.	No significant difference.

− 25 −

Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Description
(II) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (III) Has the Company established performance evaluation measures and methods for the Board of Directors? Does it conduct performance evaluation on a regular basis annually, and report the results of this performance evaluation to the Board of Directors and apply them as a reference for salary and remuneration, nomination, and renewal of individual directors?	V V		(II) The company has not established other functional committees, and will plan on establishing other functional committee in the future when necessary. (III) The board of directors of the company passed the "Self-Evaluation of the Board of Directors and Managers" on March 27, 2020, the Company's board of directors shall conduct an internal board performance evaluation every year according to the evaluation procedures at the end of each year. The company completed the evaluation of the board of directors and individual directors in February 2021, and reported the evaluation results and the 2021 will continue to strengthen the direction in March 2021. The measurement items for the performance evaluation of the company's board of directors include the following five 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 (4) Election and continuing education of the directors (5) Internal control The measurement items for the performance evaluation of the company's functional committees include the following six aspects: (1) Alignment of the goals and missions of the 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 (6) Internal control The measurement items for the performance evaluation of the company's board of directors include the following five aspects: (1) Participation in the operation of the company (2) Awareness of the duties of the functional committee (3) Improvement of quality of decisions made by the functional committee	No significant difference. No significant difference.

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Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Description
(IV) Does the company regularly evaluate the independence of CPAs?	V		(4) Makeup of the functional committee and election of its members (5) Internal control This evaluation was conducted using internal questionnaires. Based on the three parts of board operation, director participation and functional committee operation, the directors’ evaluation of the board’s operation, directors’ self-participation evaluation and functional committee operation evaluation were adopted. The evaluation results ranged from 90.47 points to 96.84 points. According to the results of the 2020 board of directors’ performance appraisal, the overall operation of the board of directors is still good. (IV) The Company annually evaluates the independence of CPAs. There is no relationship between the Company and the CPA other thanthe accounting services agreement.	No significant difference.
4. Does the listed or OTC company have an appropriate number of competent corporate governance personnel, and has it designated a corporate governance director to be responsible for corporate governance-related matters (including but not limited to providing information required by directors and supervisors to carry out business, assisting directors and supervisors with legal compliance, managing matters related to the Board of Directors’ and shareholders' meetings in accordance with the law, taking minutes of the Board of Directors’ and shareholders' meetings, etc)?	V		At present, the Company's Finance Department is also in charge of corporate governance, and the Chief Financial Officer is appointed to be in charge of the supervision. In the future, appropriate personnel will be allocated according to the laws, regulations, and the Company's needs.	No significant difference.
V. Has the company established communication channels and dedicated a section for stakeholders (including but not limited to the shareholders, employees, clients, and suppliers) on its website to respond to important issues of corporate social responsibility concerns?	V		The Company has established a dedicated section for stakeholders in the company website, in order to enable stakeholders to communicate with the Company by phone, writing, fax, or email.	No significant difference.
VI. Does the company appoint a professional shareholder service agency to dealwithshareholderaffairs?	V		The Transfer Agency Department of Chinatrust Commercial Bank is designatedfor handlingrelevantmatters ofthe shareholders' meeting.	No significant difference.
VII. Disclosure of information (I)Does the companyhave a corporate website to disclose both	V		(I)The Companyhas disclosed both financial standings and the status	No significant difference.

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Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Description
financial standings and the status of corporate governance? (II) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? (III) Does the company announce and file its annual financial report within two months after the end of the fiscal year, and announce and file its first, second, and third quarter financial reports and the operation of each month ahead of the required time limit?	V	V	of corporate governance in the MOPs and the Company website in accordance with the relevant laws. (II) The Company has set up a Chinese and English website, and appointed a spokesman and deputy spokesman to answer queries related to the Company, while the finance department is designated to handle information collection and disclosure. (III) At present, the Company has a large number of operating sites in various regions, and the time for preparation of the annual financial report data and independent auditor’s audit is long. Therefore, the Company is currently unable to announce and file the reports within two months after the end of the fiscal year. The financial reports for the first, second, and third quarters and the operation of each month will be announced and filed before the specified time limit.	No significant difference. The Company is currently operating in many locations and the time required for the preparation of the annual financial report and the audit required by the accountants is longer than expected; therefore, it is not possible to announce and file the annual financial report within two months after the end of the fiscal year. The financial reports for the first, second and third quarters, as well as the monthly operating results, will be announced and filed in advance before the required deadline.
VIII. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., 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 and its affiliates established relevant employee benefit systems in accordance with the relevant laws and regulations of foreign governments and the R.O.C., in order to ensure employee benefits. (II) Investor relations: The Company has appointed a spokesman and deputy spokesman to answer queries from investors and other stakeholders about the Company's operating status or related interests, and disclosed relevant and reliable corporate information on the MOPS in accordance with the relevant laws and regulations. (III)Supplier relations: The Companymaintainsgood relationships	No significant difference.

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Items	Implementation Status	Implementation Status	Implementation Status
	Yes	No	Description
			with its suppliers, discusses recent market prices and relative information on a regular basis, and adheres to the concept of integrity when conducting supplier management. The Company will uphold the spirit of mutual trust and mutual benefit, and hope to support each other and create a win-win situation. (IV) Rights of stakeholders: The Company has been maintaining good communication with its correspondent banks, clients and suppliers, as well as respecting and ensuring the legitimate rights and interests of stakeholders. (V) Directors’ training records: All of the Company‘s directors and independent directors have completed training hours in accordance with the relevant laws, and have already acquired directors liability insurance. (VI) Risk management policies and risk evaluation measures: The Company focuses on its core business operations, and implements various policies in accordance with the relevant laws andregulationsinordertoreduce and avoid any possiblerisks.
IX. According to the latest results of the Corporate Governance Evaluation System by the Corporate Governance Center of TWSE, explain the amendments or propose priority matters and measurements to unimproved items. In the corporate governance assessment of 2020, the following are the priority items pending improvement: 1. Indicator Item No. 3.2 The company disclose material information in English and Chinese at the same time: The Company will disclose material information in English and Chinese at the same time beginning in 2021. 2. Indicator Item No. 3.16 The company disclose on its website the list of substantial shareholders: The Company will update the substantial shareholder list on the Company’s website.

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(IV) If the company has a compensation committee in place, the composition, duties, and operation of the compensation committee shall be disclosed:
Information on members of the Compensation Committee

Identity (Note 1)	Criteria Name	At Least Five Years Work Experience and Meet One of the Following Professional Qualification Requirements	At Least Five Years Work Experience and Meet One of the Following Professional Qualification Requirements	At Least Five Years Work Experience and Meet One of the Following Professional Qualification Requirements	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Independence Attribute (Note 2)	Concurrent compensation committee position in other publicly listed companies	Remarks (Note 3) End of the document
		An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, 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 Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10
Independent Director	Yen Chun Te	−	−	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	1	-
Independent Director	Tan Jee Yaw	−	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0	-
Independent Director	Ernest Yogarajah Balasubramaniam	−	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0	-

Note 1: Fill in the Identity with directors, independent directors or others.
Note 2: All members comply with the following conditions from two years before being elected and appointed, and during his term of office, please fill “ ✓ ” in the appropriate corresponding boxes.
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company, or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of the company, or that ranks in the top 5 in shareholding, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act.
(6) Not a director, supervisor, or employee of the company which majority director seats or voting shares and those of any other company are controlled by the same person.
(7) Not a director (or governor), supervisor, or employee of the company or institution which the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses.
(8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares, of a specified company or institution that has a financial or business relationship with the company.
(9) Not a professional individual who, or an owner, partner, director, supervisor, or managerial officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided that this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not have any of the circumstances set forth in Article 30 of the Company Act.

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Note 3: If the members are directors, please indicate whether they meet the requirements of Article 6 paragraph 5 of the “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter”.
Operation status of the Remuneration Committee:
- (1) There are 3 members in the Company’s Remuneration Committee.
- (2) Current Term: From August 13, 2019 to June 27, 2022, the Compensation Committee held 2 meetings (A) in the most recent fiscal year (2020). Qualifications and attendance of the Committee are shown as follows:

Title	Name	In-person Attendance (B)	By proxy	In-person Attendance Rate (%) (B/A) (Note)	Remarks
Convenor	Yen Chun Te			100	−
Member	Tan Jee Yaw	2	0	100	−
Member	Ernest Yogarajah Balasubramaniam	2	0	100	−
Other matters to be recorded: 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (e.g., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None. 2. Resolutions of the remuneration committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.

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(V) Performance of social responsibility and deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons ：

Listed Companies and reasons`：`
Items	Implementation Status			Deviations from the “Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” andReasons
	Yes	No	Description
I. Does the company conduct risk assessment on environmental, social, and corporate governance issues related to the company's operation in accordance with the principle of materiality, and formulate relevant risk management policies orstrategies?	V		The Company has formulated the “Corporate Social Responsibility Best Practice Principles” and requires its directors and employees to follow the relevant norms.	No significant difference.
II. Has the company set up a full-time (part-time) unit to promote corporate social responsibility, which is authorized by the Board of Directors to be under the charge of the senior management andreport to theBoard of Directors?	V		The Company has not yet set up a full-time corporate social responsibility promotion unit, but will promote corporate social responsibility from top to bottom throughthe operationoftheBoard of Directors.	No significant difference.
III. Environmental issues (I) Has the company established an appropriate environmental management system according to its industrial characteristics? (II) Is the company committed to improving the utilization efficiency of resources and using recycled materials with low impact on the environment? (III) Does the company assess the potential risks and opportunities of climate change for it now and in the future, and take measures to deal with climate-related issues? (IV) Did the company prepare statistics of greenhouse gas emissions, water consumption, and total weight of waste in the past two years, and formulate policies for energy conservation and carbon reduction, greenhouse gas reduction, water use reduction, or other waste management?	V V V V		(I) The Company has relevant specifications for quality management, safety and health, environmental protection, etc, which conform to the auditing standards of the relevant management units. (II) To value resources, the Company continues to promote energy conservation via waste recycling, reduction of paper use, and the use of environmentally-friendly tableware. (III) In response to the development trend of climate change and greenhouse gas reduction, the Company advocates turning off the lights when not used and saving water, so as to reduce carbon, power, and water. (IV) According to the Company's regulations, no air-conditioner shall be turned on until the temperature reaches 28 ℃, and the Company advocates turning off the lights when not used and saving water, and implements classified recycling of wastes, so as to achieve energy saving.	No significant difference. No significant difference. No significant difference. No significant difference.
IV. Social Issues (I)Does the companyformulate appropriate management	V		(I)The Companysafeguards the legitimate rights and	No significant difference.

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Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” andReasons
	Yes	No	Description
policies and procedures according to the relevant regulations and the International Bill of Human Rights? (II) Has the company established and implemented reasonable employee welfare measures (including compensation, vacation, and other benefits), and properly reflected the operating performance or results in employee compensation? (III) Does the company provide a healthy and safe working environment, and organize training on health and safety for its employees on a regular basis? (IV) Has the company established an effective career development training program for its employees? (V) Does the company comply with the relevant laws, regulations, and international standards for the health and safety of customers, customer privacy, marketing and labeling of products and services, and has it formulated relevant policies and complaint procedures to protect the rights and interests of consumers? (VI) Does the company have a supplier management policy that requires suppliers to follow the relevant specifications and their implementation in environmental protection, occupational safety and health, or labor human rights issues?	V V V V V		interests of employees in accordance with the labor-related laws and regulations. In addition, the relevant employee rights are stipulated in the employee handbook and executed accordingly. (II) The Company has established and implemented reasonable employee welfare measures in the Personnel Management Regulations, and properly reflected the results of business performance in employee remuneration. (III) The Company provides a safe working environment in accordance with labor-related laws and regulations. In addition, employee health checks are conducted on an intermittent basis to ensure health and safety for its employees. (IV) The Company has established an effective career development training program for its employees. (V) The Company has formulated relevant after-sales service measures in accordance with the relevant laws and regulations of each operation area to protect the rights and interests of consumers. (VI) The Company has developed supplier management procedures. At present, it has not found any suppliers’ violation of the relevant laws and regulations of the local environmental protection, occupational safety and health, and labor human rights. In the future, relevant specifications will be developedfor management purposes.	No significant difference. No significant difference. No significant difference. No significant difference. No significant difference.
V. Does the company prepare a corporate social responsibility report and other reports that disclose the company's non-financial information in accordance with international		V	The Company has set up a dedicated section for investors and social responsibility on the Company's website to disclose information related to theperformance of social	There is no demand at present, and it will be prepared according to the Company’s scale and needs in the

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Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” andReasons
	Yes	No	Description
reporting standards or guidelines? Are confirmation or guarantee opinions obtained from third-party verification units for the reports above?			responsibility. At present, no corporate social responsibility report has been prepared. It will be prepared according to the Company’s scale and needs in thefuture.	future.
VI. If the company has established its own corporate social responsibility best practice principles based on the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies”, please describe the difference between its operation and the regulations. The Company has set up “the Corporate Social Responsibility Best Practice Principles”, but has not yet appointed dedicated units to be in charge of its implementation. However, corporate social responsibility will be implemented from top to bottom through the operation of the Board of Directors. There has been no major difference with the Rules.
VII. Other important information which is helpful to understand the operation of corporate social responsibility: The Company will adhere to the spirit of corporate social responsibility, actively engage in the aforementioned social responsibility practices, encourage employees to consider situations with others' conditions in mind,helpwith disaster relief,and commit to servingsociety.

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(VI) Performance of ethical corporate management best practice principles and deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons:

Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and reasons
	Yes	No	Description
I. Establishment of an ethical corporate management policy and program (I) Has the company established an ethical corporate management policy approved by the Board of Directors, and clearly stated the ethical corporate management policy and practice in its regulations and external documents, as well as the commitment of the Board of Directors and senior management to actively implement the operation policy? (II) Has the company established an evaluation mechanism for the risk of unethical behavior, regularly analyzed and evaluated the business activities with high unethical behavior risk within the business scope, and formulated a plan for preventing unethical behavior based on it? Does the mechanism at least cover preventive measures for the behaviors in paragraph 2, Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”? (III) Has the company specified the operating procedures, behavioral guidelines, and disciplinary and grievance systems for violations in the plan for prevention of unethical behavior and implemented them, and regularly reviewed and revised the plan?	V V V		(I) The Company has established the “Ethical Corporate Management Best Practice Principles”, and actively advocated the spirit of ethical corporate management in the Board of Directors and management meetings. (II) The Company has formulated its "Ethical Corporate Management Best Practice Principles" and "Ethical Corporate Management Behavior Guidelines" to put forward preventive measures for unethical behavior. (III) The Company has formulated its "Ethical Corporate Management Behavior Guidelines", and regularly reviews and amends it by reference to the latest revised "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies".	No significant difference. No significant difference. No significant difference.
II. Fulfill Ethical Operations (I) Does the company assess the integrity records of its counterparties and specify the integrity terms in the contracts it enters into with them?	V		(I) The Company's regulations stipulate that ethical records of business partners shall be first assessed before conducting the transaction, in order to avoid transactions with partners that have unethical behavioral records. If business transactions or business partners are found out to have unethical behavior, it shall be listed as a dishonored company, and the Company shall immediately stop business transactions withthe	No significant difference.

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Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and reasons
	Yes	No	Description
(II) Has the company set up a dedicated unit under the Board of Directors to promote ethical operations, and regularly (at least once a year) reported its integrity operation policy, plan to prevent unethical behavior, and supervision of the implementation to the Board of Directors? (III) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? (IV) Has the company established an effective accounting system and internal control system for the implementation of ethical operation, and authorized the internal audit unit to, according to the assessment results of the risk of unethical behavior, draw up the relevant audit plans, and audit the compliance with the plan accordingly to prevent unethical behavior? Or an accountant is commissioned to carry out the audit? (V) Does the company regularly hold internal and external educational training on operational integrity?	V V V	V	business partner. (II) The Company is planning on setting up a dedicated ethical corporate management unit. (III) If the employee finds a conflict of interest when conducting the Company's business, the situation shall be reported directly to the immediate manager, and appropriate guidance shall be provided by the immediate manager. (IV) The audit unit has drawn up an audit plan according to the results of risk assessment and carried out an internal audit, issued an audit report after the audit, and regularly reported the implementation status to the Audit Committee. (V) The Company has established the “Ethical Corporate Management Best Practice Principles”, and actively advocated the spirit of ethical corporate management in the Board of Directors andmanagementmeetings.	The setup is being planned. No significant difference. No significant difference. No significant difference.
III. Operation of the integrity channel (I) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up? (II) Has the company established the standard operating procedures for investigation of reported matters, follow-up measures to be taken after investigation, and relevant confidentiality mechanisms? (III) Does the company provide proper whistleblower protection?	V V V		When the Company discovers or receives accusations of an employee's unethical behavior, it shall immediately ascertain the relevant facts. If it is confirmed to violate the relevant laws or ethical corporate management policies and regulations, the Company shall immediately request the offender to stop their relevant behaviors, take appropriate remedies, and claim for damages through legal proceedings when necessary,inorderto safeguard the	No significant difference. No significant difference. No significant difference.

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Items	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and reasons
	Yes	No	Description
			reputation and interests of the Company.
IV. Enhanced information disclosure (I) Does the company disclose the content and the promotion effects of its ethical corporate management best practice principles on its website andMOPS?	V		The Company has disclosed the “Ethical Corporate Management Best Practice Principles” on the Investors Centre ofthe Company website andMOPS.	No significant difference.
V. If the company has its own ethical corporate management best practice principles in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”, please describe the variation between its operation and the regulations: The Company has formulated its "Ethical Corporate Management Best Practice Principles" and requests its business team to follow the "Ethical Corporate ManagementBehaviorGuidelines" inordertoimplement and promote the ethicalcorporatemanagement best practice principles.Thereisno significant variance.
VI. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (matters such as review and revision of regulations): The Company has reviewed and revised its "Ethical Corporate Management Best Practice Principles" in 2020 in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM ListedCompanies”,and submitted it to the shareholders' meeting.

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(VII) If the Company has adopted corporate governance best-practice principles or related bylaws, disclose how these are to be searched: Please refer to the Company website (http://www.patec-intl.com) → Investor Centre → Corporate Governance.
(VIII) Other significant information that will provide a better understanding of the state of the company's implementation of corporate governance may also be disclosed: None.

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(IX) Internal Control System Execution Status:
Statement of Internal Control System:

Statement of Internal Control System

Date: March 30, 2021

Based on the findings of a self-assessment, the Company states the following with regard to its internal control system during the year 2020:

I. The Company’s board of directors and management are responsible for establishing, implementing, and maintaining an adequate internal control system, and have already established it. Its purpose is to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), the reliability, timeliness, transparency of the report, and to be in compliance with applicable rulings, laws and regulations.
II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its three stated objectives above. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies.
III. The Company 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 Systems by Public Companies (hereinafter referred to as the Regulations). The criteria adopted by the Regulations identify five key components of managerial internal control: 1. control environment, 2. risk assessment, 3. control activities, 4. information and communication, and 5. monitoring activities. Each key component is comprised of several items. Please refer to the Regulations for provisions of the aforementioned items.

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IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.
V. Based on the findings of such evaluation, the Company believes that, on December 31, 2020, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.
VI. This Statement is an integral part of the Company’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.
VII. This statement was passed by the board of directors in their meeting held on March 30, 2021, with none of the 6 attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Patec Precision Industry Co., Ltd. Chairman: Goh Mui Teck William General Manager: Wee Liang Kiang

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If the CPA was engaged to conduct a Special Audit of the Internal Control System, its Audit Report shall be provided: None.
(X) For the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, disclose any sanctions imposed in accordance with the law upon the company or its internal personnel, any sanctions imposed by the company upon its internal personnel for violations of internal control system provisions, principal deficiencies, and the state of any efforts to make improvements.: None.
(XI) Material resolutions of a shareholders meeting or a board of directors meeting during the most recent fiscal year and up to the date of publication of the annual report:

Date	MeetingName	Important Resolutions	Implementation Status
2020.06.22	Shareholders’ Meeting	1. Adoption of the Fiscal 2019 Business Report and Consolidated Financial Statement. 2. Adoption of the Proposal for Distribution of 2019 Earnings. 3. Discussion of the proposal to amend the Memorandum and Articles of Association of the Company. 4. Proposal for a new share issue through capitalization of earnings. 5. Amend the`“`Rules of Procedure for Shareholders Meetings”. 6. Amend the “Endorsements Management”.	1. Item1&3&5~6 were adopted by resolution. 2. Item2&4 were adopted by resolution, and the capital increase and dividend payment completed in 2020.12.29.
2020.03.27	Board of Directors’ Meeting	1. Business Report and Consolidated Financial Statements for the year 2019. 2. Proposed the Fiscal 2019 earnings distribution. 3. Proposal for a new share issue through capitalization of earnings. 4. Issuance of Company’s 2019 Internal Control Declaration is submitted for resolution. 5. Proposed Company’s 2020 PwC CPA service is submitted for resolution. 6. Adoption of the Nineth Amended and Restated Memorandum and Articles of Association of the Company. 7. Proposed Convening and Holding of the General Shareholders’ Meeting of the Company of the Year 2020. 8. Proposed the Fiscal 2019 compensation of directors and employee bonus sharing (includingmanagers).	Item1~8 were adopted by resolution.

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Date	MeetingName	Important Resolutions	Implementation Status
2020.05.11	Board of Directors’ Meeting	1. Amend the “Management of Board Meetings Operations”, “Ethical Corporate Management Best Practice Principles”, “Procedures for Ethical Management and Guidelines for Conduct”, “Audit Committee Charter” and “Remuneration Committee Charter”. 2. Amend the “Rules of Procedure for Shareholders Meetings” and “Endorsements Management”. 3. Proposed Convening and Holding of the General Shareholders’ Meeting of the Company of the Year 2020.(Add new resolution)	Item1~3 were adopted by resolution.
2020.08.11	Board of Directors’ Meeting	1. Discuss an endorsement and guarantee for the Singapore subsidiary. 2. Propose to carry out the relevant matters of distribution of dividends.	Item 1~2 were adopted by resolution.
2020.11.13	Board of Directors’ Meeting	1. Proposed the earnings distribution in the first half of 2020. 2. Discuss an endorsement and guarantee for the Indonesia subsidiary. 3. Patec Group Budget of 2021. 4. The Company’s 2021 audit plans is submitted for resolution. 5. Proposal for registering a change of share status to write-off 636,000 shares of Company’s treasury stock and setting the record date for the reduction ofpaid-upcapital.	1. Item1~4 were adopted by resolution. 2. Item5 was adopted by resolution, and the write-off shares was completed in 2020.11.25.

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Date	MeetingName	Important Resolutions	Implementation Status
2021.03.30	Board of Directors’ Meeting	1. Business Report and Consolidated Financial Statements for the year 2020. 2. Proposed the Fiscal 2020 earnings distribution. 3. Issuance of Company’s 2020 Internal Control Declaration is submitted for resolution. 4. Proposed Company’s 2021 PwC CPA service is submitted for resolution. 5. Amend the “Rules of Procedure for Shareholders Meetings” and “Endorsements Management”. 6. Adoption of the Nineth Amended and Restated Memorandum and Articles of Association of the Company. 7. Proposed the period for accepting the nomination of director candidates, the quota of directors to be elected, the place designated for accepting the roster of director candidates nominated. 8. Accept any shareholder holding 1% or more may propose to the company a proposal for discussion at a regular shareholders’ meeting. 9. Proposal of release the prohibition on Directors from participation in competitive business. 10. Proposed Convening and Holding of the General Shareholders’ Meeting of the Company of the Year 2021. 11. Proposed the Fiscal 2020 compensation of directors and employee bonus sharing (including managers). 12. Review of the Tender Offer from YIDA INVESTMENTS PTE. LTD. to the Common Shares of the Company	Item1~12 were adopted by resolution.
2021.04.22	Board of Directors’ Meeting	Election of the Chairman of the company.	Proposal was adopted by resolution.
2021.05.12	Board of Directors’ Meeting	To review and discuss the director (independent director) nominees list, proposed by the board of directors for election at the 2021 Annual General Shareholders’ Meeting.	Proposal was adopted by resolution.

(XII) Important resolutions made by the board of directors’ meeting during the current fiscal year and up to the date of printing of the annual report: None.

(XIII) A summary of resignations and dismissals, during the most recent fiscal year and up to the date of publication of the annual report, of the company's chairman, general manager, accounting manager, financial manager, chief internal auditor, and research and development manager: The Company re-elected the Chairman of the Board of

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Directors on April 22, 2021 to be Mr. Wee Hong Jie based on the mid-term and long-term business strategy.

IV. INFORMATION ON CPA PROFESSIONAL FEES

Information on replacement of certified public accountant in 2020: None.

INFORMATION ON CPA PROFESSIONAL FEES

Accounting firm	Name of account ant	Name of account ant	Period Covered by CPA’s Audit	Remarks
PwC Taiwan	Chin-ChangChen	Yi-Fan Lin	Jan 1,2020-Dec 31,2021	None

Currency: NT$

				Currency: NT$
Items Range		Audit fee	Non-Audit fee	Total
1	Under 2,000,000		✓
2	2,000,000(included)~4,000,000	✓		✓
3	4,000,000(included)~6,000,000
4	6,000,000(included)~8,000,000
5	8,000,000(included)~10,000,000
6	Above 10,000,000(included)

(I) When non-audit fees paid to the CPA, to the accounting firm of the CPA, and to any affiliated enterprise of such accounting firm are equivalent to one quarter or more of the audit fees paid to them, the amounts of both audit and non-audit fees and the details of the non-audit services shall be disclosed: Not applicable.
(II) When the securities firm changes its accounting firm and the audit fees paid for the financial year in which the change took place are lower than those paid for the financial year immediately preceding the change, the amount of the audit fees before and after the change and the reason shall be disclosed: Not applicable.
(III) When the audit fees paid for the current financial year are lower than those paid for the immediately preceding financial year by 10 percent or more, the amount and percentage of and reason for the reduction in audit fees shall be disclosed: Not applicable.

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V. Information on replacement of certified public accountant: None.

VI. Where the securities firm's chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its auditing CPAs or at an affiliated enterprise of such accounting firm, the name and position of the person, and the period during which the position was held, shall be disclosed: None.

VII. Evaluation of CPA’s independence:

Based on the following matters, the independence of the CPA and accounting firm is

evaluated annually by the Audit Committee, and assessment results are reported to the Board of Directors.

of Directors.
Independence	Yes	No	Remarks
Is the CPA not a director or independent director of the Company or its affiliates?	V
Is the CPA not a shareholder of the Companyor its affiliates?	V
Has the CPA not been paid wages by the Company or any of its affiliates?	V
Has the Company been appointing the auditor for less than 7 consecutiveyears?	V
Has the CPA ensure that the accounting firm has already abide by regulations related to independence.	V
Have CPAs of the joint CPA firm not been designated as a director, manager or a position that has a significant impact on the audit case within oneyear after the CPA is relieved from office?	V
Whether during the financial reporting period, the non-audit service fees and details of services provided by joint accounting firm of the CPA not violate the CPA's independence.	V

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VIII. ANY TRANSFER OF EQUITY INTERESTS AND/OR PLEDGE OF OR CHANGE IN EQUITY INTERESTS BY A DIRECTOR, SUPERVISOR, MANAGERIAL OFFICER OR SHAREHODER WITH A SHARE OF MORE THAN 10 PERCENT IN THE MOST RECENT FISCAL YEAR AND UP TO THE DATE OF PUBLICATION OF THE ANNUAL REPORT

(I) Changes of directors, supervisors, managers or major shareholders in the company

Unit: Share

				Unit: Share	Unit: Share
Title	Name	2020		Current year to Apr 30, 2021
		Shareholding Increase / Decrease	Pledged Shares Increase/ Decrease	Shareholding Increase / Decrease	Pledged Shares Increase/ Decrease
Chairman and held over 10% shares major shareholder (Note 1)	Wee Hong Jie	2,626	-	9,025,000	9,025,000
Director (Note 1)	Goh Mui Teck William	132,570	-	(1,797,271)	-
Director and GM `（`and held over 10% shares major shareholder`）` (Note 2)	Wee Liang Kiang	224,177	-	(6,315,000)	-
Director (Note 3)	Hidaka Hiroyuki	82,423	-	(1,354,694)	-
Independent Director	Yen Chun Te	-	-	-	-
Independent Director	Tan Jee Yaw	-	-	-	-
Independent Director	Ernest Yogarajah Balasubramaniam	-	-	-	-
China GM	ChangPing	1,835	-	-	-
Indonesia GM	Adrian Nicolas	-	-	-	-
Sales Vice President	Jack Liu	-	-	-
CFO	Sean Hsu	17,310	-	-	-
Internal Audit Manager	Jennifer Lee	1,459	-	-	-

Note 1: The company's board of directors elected Wee Hong Jie as the chairman of the board on April 22, 2021.

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Note 2: The original director Wee Liang Kiang was dismissed on March 15, 2021.

Note 3: The original director Hidaka Hiroyuki was dismissed on April 22, 2021.

(II) Information on equity transfer by directors, supervisors, managers or major shareholders for counterparties that are related parties:

Name	Reasons for equity transfer	Transaction Date	Counterparties	The relationship between the counterparty and the company, directors, supervisors, managers, and shareholders whose held over 10% shares	Shares	Trading Price
Wee Hong Jie	Donated	2021.03.15	Wee Liang Kiang	Wee Hong Jie and GM Wee Liang Kiang are father and son	6,315,000	-
Wee Hong Jie	Donated	2021.03.15	Wong Jee Buay	Wee Hong Jie and GM’s spouse Wong Jee Buay are mother and son	2,710,000	-
Goh Mui Teck William	Participate in Public Tender Offer	2021.04.21	YIDA INVESTMENTS PTE. LTD.	YIDA is an investment company 100% owned by Chairman Wee Hong Jie	1,797,271	19.35
Hidaka Hiroyuki	Participate in Public Tender Offer	2021.04.21	YIDA INVESTMENTS PTE. LTD.	YIDA is an investment company 100% owned by Chairman Wee Hong Jie	1,354,694	19.35

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(III) Information on equity pledge by directors, supervisors, managers or major shareholders for counterparties that are related parties: None.

IX. Relationship information, if among the company's 10 largest shareholders any one is a related party or a relative within the second degree of kinship of another:

							April 30, 2021; Unit: Share	April 30, 2021; Unit: Share	April 30, 2021; Unit: Share
Name	Shareholding		Spouses & Minor Shareholding		Current Shareholding in the name of others		Relationships among the top ten shareholders, anyone who is a related party, spouse, or second-degree kinship of another: Name and relation		Remarks
	Shares	Percentage %	Shares	Percentage %	Shares	Percentage %	Name	Relation
The SKBC hosting YIDA INVESTMENT S PTE. LTD. trust account	18,801,904	41.09%	−	−	−	−	Wee Hong Jie	The trust account is 100% held by Chairman Wee Hong Jie using YIDA INVESTMENTS PTE. LTD.	−
Representative`：` Wee HongJie
The SKBC hosting WEE HONG JIE investment account	9,101,591	19.89%	−	−	−	−	Wee Hong Jie	The investment account is 100% held by Chairman Wee Hong Jie	−
Representative`：` Wee Hong Jie
Cathay Bank Trust Phillip Securities (Hong Kong) Company Investment Account	2,550,503	5.57%	−	−	−	−	−	−	−
Lin Zhi Long	2,232,841	4.88%	−	−	−	−	−	−	−
Goh Mui Teck William	2,069,274	4.52%	−	−	−	−	−	−	−
Hidaka Hiroyuki	1,049,274	2.29%	−	−	−	−	−	−	−
Tong-An Investment Co., Ltd.	720,662	1.57%	−	−	−	−	−	−	−
Representative: Mao-Hsiung, Huang
Sean Hsu	504,882	1.10%	−	−	−	−	−	−	−

~48~

Name	Shareholding	Shareholding	Spouses & Minor Shareholding	Spouses & Minor Shareholding	Current Shareholding in the name of others	Current Shareholding in the name of others	Relationships among the top ten shareholders, anyone who is a related party, spouse, or second-degree kinship of another: Name and relation	Relationships among the top ten shareholders, anyone who is a related party, spouse, or second-degree kinship of another: Name and relation	Remarks
	Shares	Percentage %	Shares	Percentage %	Shares	Percentage %	Name	Relation
Jie-yuan Weng	353,711	0.77%	−	−	−	−	−	−	−
Dafa Fund Account	305,385	0.67%	−	−	−	−	−	−	−

X. The total number of shares and total equity stake held in any single enterprise by the company, its directors and supervisors, managers, and any companies controlled either directly or indirectly by the company:

March 31, 2021; Unit: Share

Reinvested entities	Investment by the Company	Investment by the Company	Investments by directors, supervisors, managers and directly or indirectly controlled enterprises	Investments by directors, supervisors, managers and directly or indirectly controlled enterprises	Total investment	Total investment
	Shares	Percentage shareholding (%)	Shares	Percentage shareholding (%)	Shares	Percentage shareholding (%)
Pate Pte. Ltd.	31,287	100.00	-	-	31,287	100.00
Press Automation TechnologyPte. Ltd.	6,247	100.00	-	-	6,247	100.00
Patec Medical Supplies Pte. Ltd.	600	57.97	-	-	600	57.97
Kabam Pte. Ltd.	255	85.00	-	-	255	85.00
Wuxi Jingxin Precision Machining Co., Ltd.	Note	100.00	-	-	Note	100.00
Wuxi Patec Precision MachiningCo.,Ltd.	Note	100.00	-	-	Note	100.00
Patec Precision Kft	Note	100.00	-	-	Note	100.00
Pt Patec Presisi Engineering	4,340	70.00	279	4.50	4,619	74.50
Pt PDF Presisi Engineering	1,210	62.28	-	-	1,210	62.28
Pt API Precision	1,483	62.14	63	3.74	1,546	65.88

Note: The Company is a limited company with no shares issued, and hence have no par value and number of shares.

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Four. Capital Raising Activities

I. CAPITAL AND SHARES

(I) Source of capital stock

The formation of capital

April 30, 2021; Unit: Share / NT$

						April 30, 2021; Unit: Share	April 30, 2021; Unit: Share	/ NT$
Year / month	Par Value	Authorized	capital stock	Paid-in capital		Remarks
		Shares	Amount	Shares	Amount	Source of capital	Share payments offset by assets other than cash	Others
2011.06	10	1	10	1	10	Capital of the Company’s establishment	None	-
2011.07	10	2	20	2	20	Capital increase bycash	None	Note 1
2011.11	10	100,000,000	1,000,000,000	28,081,162	280,811,620	Conversion of equity	None	Note 2
2011.12	40	100,000,000	1,000,000,000	28,567,039	285,670,390	Capital increase bycash	None	Note 3
2014.04	40	100,000,000	1,000,000,000	30,067,039	300,670,390	Capital increase bycash	None	Note 4
2015.06	39	100,000,000	1,000,000,000	33,867,039	338,670,390	Capital increase bycash	None	Note 5
2016.07	25.67	100,000,000	1,000,000,000	33,906,039	339,060,390	Conversion of employee share subscription warrants	None	Note 6
2016.08	25.67	100,000,000	1,000,000,000	34,040,039	340,400,390	Conversion of employee share subscription warrants	None	Note 6
2016.09	25.67	100,000,000	1,000,000,000	34,126,039	341,260,390	Conversion of employee share subscription warrants	None	Note 6
2016.12	10	100,000,000	1,000,000,000	37,512,743	375,127,430	Capital increase byearnings	None	Note 7
2017.03	22.99	100,000,000	1,000,000,000	37,562,743	375,627,430	Conversion of employee share subscription warrants	None	Note 8
2017.04	22.99	100,000,000	1,000,000,000	37,658,743	376,587,430	Conversion of employee share subscription warrants	None	Note 9
2017.06	59.3	100,000,000	1,000,000,000	37,812,196	378,121,960	Conversion of corporate bonds	None	Note 9

~50~

Year / month	Par Value	Authorized	capital stock	Paid-in capital	Paid-in capital	Remarks	Remarks
		Shares	Amount	Shares	Amount	Source of capital	Share payments offset by assets other than cash	Others
2017.07	22.99	100,000,000	1,000,000,000	37,919,196	379,191,960	Conversion of employee share subscription warrants	None	Note 10
2017.08	22.99	100,000,000	1,000,000,000	38,239,196	382,391,960	Conversion of employee share subscription warrants	None	Note 10
2017.09	21.03	100,000,000	1,000,000,000	38,244,196	382,441,960	Conversion of employee share subscription warrants	None	Note 10
2017.11	21.03	100,000,000	1,000,000,000	38,272,196	382,721,960	Conversion of employee share subscription warrants	None	Note 11
2017.12	21.03	100,000,000	1,000,000,000	38,307,196	383,071,960	Conversion of employee share subscription warrants	None	Note 11
2018.02	21.03	100,000,000	1,000,000,000	38,729,196	387,291,960	Conversion of employee share subscription warrants	None	Note 12
2018.03		100,000,000	1,000,000,000	38,229,196	382,291,960	Cancellation of treasuryshares	None	Note 12
2018.09	10	100,000,000	1,000,000,000	41,096,386	410,963,860	Capital increase byearnings	None	Note 13
2019.09	10	100,000,000	1,000,000,000	44,826,766	448,267,660	Capital increase byearnings	None	Note 14
2020.11		100,000,000	1,000,000,000	44,190,766	441,907,660	Cancellation of treasuryshares	None	Note 15
2020.12	10	100,000,000	1,000,000,000	45,759,703	457,597,030	Capital increase byearnings	None	Note 16

Note 1: Capital increase by cash by resolution of the board of directors on July 20, 2011.

Note 2: Increase of approved capital by resolution of the shareholders' meeting on November 18, 2011.

Note 3: Capital increase by cash by resolution of the board of directors on December 16, 2011. Note 4: Capital increase by cash by resolution of the board of directors on April 17, 2014. Note 5: Capital increase by cash by resolution of the board of directors on March 27, 2015. Note 6: Approved by Taiwan Stock Exchange Corporation on Oct 27, 2016. Note 7: Approved by Taiwan Stock Exchange Corporation on Dec 21, 2016. Note 8: Approved by Taiwan Stock Exchange Corporation on Apr 11, 2017. Note 9: Approved by Taiwan Stock Exchange Corporation on Aug 18, 2017. Note 10: Approved by Taiwan Stock Exchange Corporation on Oct 5, 2017.

~51~

Note 11: Approved by Taiwan Stock Exchange Corporation on Jan 10, 2018. Note 12: Approved by Taiwan Stock Exchange Corporation on Apr 12, 2018. Note 13: Approved by Taiwan Stock Exchange Corporation on Oct 1, 2018. Note 14: Approved by Taiwan Stock Exchange Corporation on Oct 1, 2019. Note 15: Approved by Taiwan Stock Exchange Corporation on Nov 19, 2020. Note 16: Approved by Taiwan Stock Exchange Corporation on Dec 16, 2020.

2. Type of Stock

2.	Type of Stock
				April 30, 2021; Unit: Share
Type of Stock		Authorized	capital stock		Remarks
	Issued shares	Treasuryshares	Un-issued shares	Total
Registered common stock	45,759,703	−	54,240,297	100,000,000	−

3. General information about the reporting system: None.

(II) Shareholder structure:

April 30, 2021

Shareholder Structure/ Quantity	Government Institutions	Financial Institutions	Other Juridical Persons	Natural Persons	Foreign Institutions and Foreign Persons	Treasury Stock	Total
Number of Shareholders	0	1	14	1,305	27	0	1,347
Shareholding	0	18,801,904	1,691,385	9,583,579	15,682,835	0	45,759,703
Percentage shareholding (%)	0%	41.09%	3.70%	20.94%	34.27%	0%	100.00%

Note: According to Article 3 of the "Regulations Governing Permission for People from the Mainland Area to Invest in Taiwan", for any individual, juristic person, organization, or other institution of China or any company it invests in any third area, the total combined shareholding shall be 0.23%.

(III) Diffusion of ownership:

Diffusion of common stock ownership

			April 30,2021
Class of Shareholding	Number of Shareholders	Shareholding (share)	Percentage (%)
1 ~ 999	504	96,347	0.21%
1,000 ~ 5,000	586	1,187,942	2.60%
	`~52~`

Class of Shareholding	Number of Shareholders	Shareholding (share)	Percentage (%)
5,001 ~ 10,000	105	749,150	1.64%
10,001 ~ 15,000	50	596,289	1.30%
15,001 ~ 20,000	19	324,035	0.71%
20,001 ~ 30,000	25	596,660	1.30%
30,001 ~ 40,000	15	535,800	1.17%
40,001 ~ 50,000	3	125,763	0.27%
50,001 ~ 100,000	15	1,111,505	2.43%
100,001 ~ 200,000	10	1,473,609	3.22%
200,001 ~ 400,000	7	1,931,672	4.22%
400,001 ~ 600,000	1	504,882	1.10%
600,001 ~ 800,000	1	720,662	1.57%
800,001 ~ 1,000,000	0	0	0.00%
Over 1,000,001 Classified under specific circumstances	6	35,805,387	78.26%
Total	1,455	45,759,703	100.00%

2. Preferred Share: None.

(IV) Major Shareholders: List all shareholders with a stake of 5 percent or greater, or the names of the top ten shareholders, specifying the number of shares and stake held by each shareholder on the list:

Unit: Share

			Unit: Share
Name of Major Shareholders	Nationality or Place of Registration	Shareholding (share)	Percentage (%)
The SKBC hosting YIDA INVESTMENTS PTE. LTD. trust account	R.O.C. (Taiwan)	18,801,904	41.09%
The SKBC hosting WEE HONG JIE investment account	R.O.C. (Taiwan)	9,101,591	19.89%
Cathay Bank Trust Phillip Securities (Hong Kong)CompanyInvestment Account	R.O.C. (Taiwan)	2,550,503	5.57%
Lin Zhi Long	R.O.C. (Taiwan)	2,232,841	4.88%
Goh Mui Teck William	Singapore	2,069,274	4.52%
Hidaka Hiroyuki	Japan	1,049,274	2.29%
Tong-An Investment Co., Ltd.	R.O.C. (Taiwan)	720,662	1.57%

~53~

Name of Major Shareholders	Nationality or Place of Registration	Shareholding (share)	Percentage (%)
Sean Hsu	R.O.C. (Taiwan)	504,882	1.10%
Jie-yuan Weng	R.O.C. (Taiwan)	353,711	0.77%
Dafa Fund Account	R.O.C. (Taiwan)	305,385	0.67%

(V) Share prices for the past 2 fiscal years, together with the Company's net worth per share, earnings per share, dividends per share, and related information:

Unit: NT$

					Unit: NT$
Item	Year		2019	2020	Current year to March 31, 2020 (Note 8)
Market price per unit (Note 1)	Highest		34.95	23.75	22.05
	Lowest		21.20	12.50	17.55
	Average		26.51	17.41	19.82
Net Worth Per Share (Note 2)	Before distribution		25.87	24.85	25.29
	After distribution		24.27	Note 9	−
Earnings per share	Weighted average shares (thousand shares)		44,191	45,760	45,760
	Earnings per share (Note 3)	Before adjustment	0.88	0.69	0.12
		After adjustment	0.85	Note 9	−
Dividend	Cash Dividend		0.06	0.3681839 (Note 9)	−
	Stock Dividends	Stock Dividends Appropriated from Retained Earnings	0.35	0.35 (Note 9)	−
		Stock Dividends Appropriated from capital surplus	−	−	−
	Accumulated Undistributed Dividends (Note 4)		−	−	−
Return on Investment	P/E ratio(Note 5)		30.125	25.23	−
	Price-dividend ratio(Note 6)		441.83	47.29	−
	Cash dividend yield (Note 7)		0.23%	2.11%	−

If shares are distributed in connection with a capital increase out of earnings or capital reserve, it shall
further disclose information on market prices and cash dividends retroactively adjusted based on the number of shares after distribution.
Note 1: State the highest and lowest market price of each year, and calculate the average market price for each year by the annual turnover and volume.

~54~

Note 2: Based on the number of shares that have been issued at the end of the year and the allocation according to resolution of the shareholders’ meeting in the next fiscal year.
Note 3: If there are retrospective adjustments due to matters such stock dividend distributions, the earnings per share before and after the adjustment shall disclosed.
Note 4: If the conditions attaching to equity issuance includes payment of dividends to make up for not having distributed a dividend in years in which it did not post a profit, the accumulated unpaid dividends of each fiscal year shall be disclosed.
Note 5: P/E ratio = current year average closing price per share /earnings per share. Note 6: Price-dividend ratio = current year average closing price per share / cash dividend per share. Note 7: Cash dividend yield = cash dividend per share/ current year average closing price per share. Note 8: Net value per share and earnings per share refers to the amount in the financial report of the most recent quarter up to the date of publication of the annual report, audited and certified or reviewed by a CPA. Whereas other values refer to the amount in the most recent fiscal year up to the date of publication of the annual report.
Note 9: The 2020 earnings distribution has been approved by the board of directors' meeting on March 30, 2021, and submitted for resolution by the shareholders' meeting.
(VI) The Company's dividend policy and implementation thereof:
Dividend Policy provided in the Articles of Incorporation According to Article 99 of the Company's Articles of Incorporation, the

Company is currently in growth stage, and hence dividends can be distributed by cash/stock to shareholders in consideration of the Company's capital expenditures, business expansion plans, financial planning and other plans for sustainable development. During the listing period, except for laws and regulations in Cayman Islands, provisions for TWSE/TPEx listed companies or the Articles of Incorporation, or the rights in the shares, the Company’s distribute dividends in accordance with the distribution policy in Article 99(1). If there is a surplus at the end of the fiscal year, it shall first allocated for tax payments and make up for previous losses (including the losses of the previous fiscal year), then retained for special reserves (if any), and the remaining surplus (hereinafter referred to as "distributable surplus") can be distributed according to resolution of the annual shareholders' meeting in the following manner:

  - (1) Directors’ remuneration shall not be higher than 3% of pre-tax profit,

~55~

(2) Employees’ compensation shall not be lower than 0.1% of pre-tax profit, and
(3) Shareholders’ dividends shall not be lower than 5% of the distributable earnings, of which cash dividends shall account for at least 3% of the total dividends.
Distribution of stock dividends at the Shareholders’ Meeting

The Company’s 2020 earnings distribution was resolved by the board of directors on March 30, 2021, with the proposed cash dividend is NT$0.3681839 per share. After the resolution of the shareholders' meeting on June 28, 2021, the Board shall fix a date for the distribution of cash dividend, and shall have full authority to handle the effect of change in outstanding shares on the dividend payout ratio.

(VII) Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders' meeting: Not applicable.
(VIII) Compensation to employees, directors, and supervisors:
Ratio or scope of compensation to employees, directors, and supervisors, as set forth in the Company’s Articles of Incorporation: Please refer to: (VI) The Company's dividend policy and implementation thereof.
The basis for the estimated compensation to employees, directors, and supervisors for the current period, the basis for calculating the number of shares to be distributed, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure: The Company has distributed NT$700,000 as directors' remuneration and NT$250,000 as employees' compensation in 2020. If there is discrepancy between the actual distributed amount and the estimated figure when the compensation to directors and employees is distributed according to the Company’s Articles of Incorporation, it will be regarded as a change in accounting estimate, and recorded as profit/loss in the year of shareholders’ resolution.
Information on distribution of compensation to employees as approved by the Board of Directors:

The Company’s 2020 earnings distribution has been approved by the Board of Directors on March 30,2021. Information on the distribution of compensation to employees and directors are as follows:

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  - (1) The employees’ compensation of $250,000 distributed in cash and directors’ remuneration of $700,000 as resolved at the shareholders’ meeting.

  - (2) Employees’ compensation of NT$0 is distributed in stock, which accounted for 0% of the sum of the current after-tax net income and total employee compensation.

The actual distribution of compensation to employees, directors, and supervisors for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized amount, additionally specify the amount of the discrepancy, the cause, and how it is treated: No difference.
(IX) Buyback of Treasury Stock: Not applicable.

II. Corporate Bonds (including overseas corporate bonds): None.

III. Issuance of Preferred Stocks: None

IV. Issuance of Global Depository Receipts: None

V. Issuance of Employee Stock Options: None

VI. Issuance of New Restricted Employee Share: None

VII. Status of New Shares Issuance in Connection with Mergers and Acquisitions: None

VIII. Implementation of the Company's Capital Allocation Plans:

The Company does not have issues that were completed in the most recent 3 years but have not yet fully yielded the planned benefits.

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Five. Operational Summary

I. BUSINESS ACTIVITIES

(I) Scope of business:
Business content: The main business items of the Group is producing the press components for automobile and motorcycle and producing press production line machine
Percentage out of the entire company business

			December 31,2020	December 31,2020
Major Products	2019		2020
	Amount	%	Amount	%
Press production line Equipment	165,713	9.23	35,884	3.04
Automobile components	1,533,391	85.40	1,079,044	91.32
Motorcycle components	80,328	4.47	41,851	3.54
Revenue fromprocessing	15,532	0.87	9,566	0.81
Medical device	601	0.03	15,266	1.29
Total	1,795,565	100.00	1,181,611	100.00

3. Current products (services) of the Company

Product category	Service
Press production line machine	According to the market demand and characteristic requirement, selling press production line equipment to customers and provide differentiated services, such as the service for in-situ installation and instruction and the logistics technical support service for the repair,maintenance,and spareparts supply.
Automotive and motorcycle components	The Company provides a wide range of product specifications and categories, mainly for motorcycle components and automobile safety system components, such as: door lock parts, seat parts, brake disc shock absorber, flange, exhaust system hook and so on.
Revenue from processing	The revenue from processing of automobile components
Medical device	The Company provides multiple specifications of medical sterilization containers and sterilization baskets,etc.

The new products planned to be developed:
(1) Medical device
(2) The products development in automation equipment and technology field.

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(II) Industry summary:
Current status and development of the industry (1) Automotive industry overview
- A. Automotive industry overview

Automotive industry, being one of the world's largest and one of the most important industry, has become the pillar industry of national economy in United States, Japan, Germany, France and other industrial developed countries, and accounted for a large proportion in the manufacturing industry. It has a strong driving effect on the upgrading of industrial structure and the development of related industries, and has many characteristics such as high industrial correlation, wide coverage, high technical requirements, strong integration, large number of components, and large added value. Automobile products go through the process of market research, product research and development, production and manufacturing, and sales feedback. The product development cycle is quite long, and the production and manufacturing process is rather complicated. As a result, it involves a wide range of satellite manufacturers, which need the mutual cooperation of various industries. The automotive industry can be divided into whole automotive industry and automobile component industry According to industrial production statistics, the automobile component industry can be classified into the following ten categories

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Figure 1, automotive industry classification

==> picture [378 x 315] intentionally omitted <==

Source: Industrial Technology Research Institute, IEK(2015/02). Note: Other automobile components include automobile beam, body stamping component, bumper, exhaust pipe, castings, auxiliary airbag system, seat belt and other components not listed.

a. Global automobile industry

According to the data from LMC Automotive on the global car market scale in recent years, the estimated global car sales in 2020 are 78.03 million cars, representing a 13% decline compared to the previous year. The decline was caused by the continuous decline in the global car market, as well as the COVID-19 pandemic, which has led to the city lockdown in many countries to prevent its spread. As a result, people's lives were restricted and the overall car market was severely affected by the decrease in the use of cars. In China, after the downturn in the first quarter of 2020, the Chinese car market began to ease in the second quarter as the government implemented various policies on car consumption such as the lifting restrictions on car

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purchases and providing subsidies in the third and fourth tier cities for purchasing cars from domestic brands, which gradually improved the depressed car market, resulting in an annual sales volume of 25.272 million vehicles, a decrease of 1.9% from the previous year. In Europe, the European car market was already suffering from a global downturn in demand and the transition to electric vehicles. The COVID-19 pandemic caused most of the car showrooms to shut down, the production line to stop, product inventories to rise and new car sales to drop, resulting in a severe decline in new car registrations in Europe, and annual car sales dropped by 22% to 15.32 million vehicles. The United States was the worst-hit country in the world by the COVID-19 pandemic. Not only were car manufacturers forced to shut down to prevent and control the pandemic, which affected the production of vehicles, but the demand for vehicles was also particularly low as the economy was hit severely, resulting in 14.95 million vehicles sold for the year, a 15% decline compared to the previous year. In recent years is shown in Figure 2.

Figure 2, the global size of automotive markets in recent year

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Source: LMC Automotive, sorted by PATEC

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The main market sales of light vehicles in the world from 2019 to 2020 are summarized in the table below.

Country	2019	2019	2020	2020
	Sales Quantities (Unit: 10,000)	%	Sales Quantities (Unit: 10,000)	%
China	2,545	28	2,446	31
U.S.A.	1,699	19	1,447	19
W. Europe	1,628	18	1,240	16
Japan	513	6	454	6
E. Europe	413	5	389	5
India	352	4	216	3
Brazil/Argentina	311	3	228	3
Canada	193	2	155	2
Korea	175	2	186	2
Others	1,201	13	1,005	13
Total	9,030	100	7,766	100

b. Global automotive component industry

Automotive industry is high precision, and high degree of technical integration of comprehensive industry. The development process of product is quite long, which is from market research, product development, manufacturing to sales feedback. The manufacturing process is also very complicated, so it involves a wide range of industries, which relevant satellite manufacturers need to cooperate with various industries. There are plenty of automobile components. Depending on the complexity of the components, the number of components required is up to 30,000 units. The materials that are used in each component include steel, nonferrous metals, rubber, asbestos, china, fiber and petrochemical industry. The manufacturing method of components includes casting, press, forging, mechanical processing and thermal processing and so on. The completed components are inspected for quality before being transported to the central factory for assembly. The assembly process of automobile in the center factory includes welding, painting, pre-assembly of partial components, and assembly of vehicle. The automobile components must pass the inspection and test standards in various conditions before leaving the factory. Only after being confirmed as qualified, can a safe and reliable automobile be considered as completion.

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With respect to the development trend of global automobile market, although the automotive industry is rather mature and the whole industrial chain structure is also very complete, in current year, the content rate of automobile components of plant are decreasing under pressure of profit and cost. Consequently, the degree of dependence on the external automobile component plants gradually increases. Automobile component plant from a simple component original equipment manufacturing, become the main research and development partner of the plants, which has transferred pressure to component plants and caused the cost pressures among major automobile component suppliers worldwide are increasing. Therefore, outsourcing or joint venture manufacturing methods have been adopted to bring automobile component manufacturers business opportunities. The scale of the global automobile industry is gradually expanding, and after years of efforts in the development of the automotive industry, automobile components have had the advantages of a small number of diverse and flexible manufacturing. After on-going investing in research and development and upgrading of production technology, it has strength of international competitiveness.

Basically, the international automobile component industry is developing with plants and local government with relevant industry policies. There are two main markets. One is to cooperate with the local domestic, foreign car manufacturers play the role of OEM, and provide the original factory to assemble new automobile components. The other is to provide components maintained or refitted to domestic and foreign aftermarket. In terms of sales outlet of components, it can be divided into four kinds of sales outlet of automotive components, which are Original Equipment Manufacturing (OEM), Original Design Manufacturing (ODM), Original Equipment Service (OES), After Market (AM). OEM and ODM market are for the original assembly components, while OES is the original certified components for after-sales maintenance. The components that AM provides are components for aftermarket maintenance and refitting.

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Figure 3: The type of international division of labor in automotive components

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Source: Industrial Technology Research Institute (2013/05)

The automotive industry is different from electronics industry, which upstream and downstream are the closed markets of a few manufacturers. Each automobile component needs a rigorous and lengthy testing and certification before they can be used by the original equipment manufacturing. The automotive industry has high requirements for quality systems and yield. ISO-9001, QS-9000 and TS-16949 are basic requirements. The components purchased are almost no defects.

The global automobile component industry continues to be highly dependent on vehicle production. With emerging countries, particularly China, benefiting from rapid domestic economic growth in recent years, the demand for vehicles has also increased significantly. In the meantime, the global large plants have expanded rapidly, which drive other components suppliers to follow up, so as to meet the overall production demand. As overall car sales increase, so does demand for aftermarket components. In addition, consumers tend to hold vehicles for longer periods of time, which increases the market demand for replacement of aftermarket components. In 2019, the global automobile market was in a recession, and the sales momentum of whole vehicles was depressed. However, the poor sales of the international automobile manufacturers affected the demand for upstream parts and components, and prompted whole vehicle manufacturers to transfer the pressure to the upstream parts

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manufacturers, so that they could stand a keener price cutting competition which affects their profits.

B. Motorcycle industry overview

General motorcycle industry refers to the manufacture of motorcycle and parts. According to the definition of Standard Industrial Classification prepared by Directorate-General of Budget, Accounting and Statistics, Executive Yuan, it is the industry which manufactures cycles, three-wheel motorcycle, engine, motorcycle‘s sidecar and motorcycle specialized parts. The industrial production is classified into the motorcycle industry and motorcycle component industry. The detailed categories are shown in the following table:

Table 1: The table of motorcycle industry classification

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Source: Directorate-General of Budget, Accounting and Statistics, Executive Yuan

Motorcycle originated in Europe, America and other places. Before World War II, leading manufacturers in the motorcycle industry are mainly European and American brands, including BMW, PIAGGIO, DUCATI, TRIUMPH, HARLEY‐ DAVIDSON, INDIAN and so on. After World War II, Japanese motorcycle manufacturers emerged at the historic moment, and with the characteristics of use, it is suitable to use in developing countries. HONDA, YAMAHA, SUZUKI and KAWASAKI gradually become global leaders. Currently, Asia is the world's major motorcycle market, accounting for 90% of the global motorcycle sales in 2017. India, the largest market, has grown rapidly in recent years. Under the double

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influence of China's anti-motorcycle policy and slowdown of economic growth, India’s motorcycle sales volume in 2016 surpassed that of China, making India the world's largest motorcycle production and sales country. According to the statistics of SIAM, India’s automotive association, in 2017 the output of India's two wheeled vehicles reached 23,150,000, with a growth of 16.1% over the same period. The sales volume reached 20,190,000, with a growth of 14.8%. Both of them broke through the 20 million mark. At present, the motorcycle penetration rate in rural areas of India still has room for improvement and is expected to continue to drive sales. China, the second largest motorcycle market, gave to India its number one rank in motorcycle sales for 23 consecutive years in 2016 due to its government's ban on motorcycles. According to the statistics and analysis of CAAM, China’s automotive association, in 2017 the total production and sales volume of China's motorcycle industry recovered after five consecutive years of decline. The output of two-wheel plus three-wheel motorcycles was 17,156,000, up 1.9% over the same period. The sales volume was 17,135,000, up 2.0%. According to AISI, Indonesia’s automotive association, Indonesia, as the third largest motorcycle market, had a motorcycle production of about 6,321,000 in 2017, up 1.7% over the same period. The sales volume was about 5,886,000, down 0.8%. The sales volume fell below the 6 million level for two consecutive years, mainly due to a rise in electricity and vehicle registration fees, which lowered the public's willingness to buy.

Figure 4: Global main motorcycle market distribution

Country	2013	2014	2015	2016	2017
India	1,481	1,600	1,646	1,759	2,019
China	2,289	2,129	1,882	1,680	1,713
Indonesia	777	787	648	593	589
Vietnam	283	240	290	320	327
Pakistan	80	74	106	163	193
Thailand	200	170	164	174	181
Philippine	75	79	85	114	132
Taiwan	64	67	67	79	91
Brazil	159	143	119	86	81
Colombia	66	70	68	67	50

Source: Automobile industry associations and motorcycle associations of various countries, sorted by ARTC

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Countries such as North America and Europe, with stable economy and mature market, have limited growth of demand for motorcycle in the future, which tend to focus on leisure and urban short distance travel, with relatively low growth range. In addition to the current main regional markets, developing countries such as Africa are also increasing the demand for motorcycle. With the economic growth, people's demand for transportation tools changes, and the demand for two-wheelers will also gradually increase, which is expected to become a major global motorcycle market in the future.

C. Machine tool industry overview

The production value of machine tool are US$ 875.2 million in 2017, which is 7.3% higher than in 2016. In order of production value, the top ten machine tool countries in the world are China, Japan, Germany, Italy, America, South Korea, Taiwan, Swiss, Spain and India.

Figure 5: The main production of the top 15 countries in 2017

==> picture [427 x 281] intentionally omitted <==

Source: Gardner Publication, Inc.; TMBA finishing

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Since 2009, China leaps to the world's largest producer. Strong domestic demand gives rise to create China to be the world's largest country of consumption of machine tools, which makes its machine tools become the world's largest machine tool consumer and importer for many years. On the other hand, the current market for machine tools in China is still dominated by domestic demand, and the value of exports is relatively small. In the last one or two year, as the independence of machine tool in China has gradually become effective, some of the low-end machine tools produced by China have been exported to emerging markets in Southeast Asia, so the export value of China has gradually increased. In 2017, China remains the world's largest demand country for machine tool, with a total output value of us $24.52 billion, going up by 3.6% compared to 2016, and a global market share of 28%. China is also the world's largest country of consumption for machine tools. The market size in 2017 was US$29.97 billion, going up by 9% compared to 2016. It is expected that under the promotion of the "Made in China 2025" policy, China's tool machine consumption will continue to increase.

Relations with industries upstream, downstream and at the same level
A. Automobile components

==> picture [356 x 211] intentionally omitted <==

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B. Motorcycle components

==> picture [369 x 163] intentionally omitted <==

C. Machine tool equipment

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(3) Various trends of product development

A. Automobile components

Caused by the globalization trend of auto industry, the industry value chain from research and development, procurement, production, sales to after-market, each functional activity has tended to global configuration and retain research and development institutions in local. Instead of investing in replicating products to other target markets, each functional activity has been allocated to the global market according to their capabilities. As a result of the new specialized division of labor cooperation system, the plants adopt the global procurement strategy for reducing the cost. On the other hand, there is a trend of separation between

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the component companies of the original collaborative system, which also leads to more and more multinational component companies.

The development modes of automobile component manufacturers can be divided into three categories: (1) Enter into the international plants or the supply chain system of Tier-1. (2) Joint venture with local plants or technical partners to enter overseas markets. (3) Cooperate with big international factories to set up delivery warehouse or logistics center, so as to seize the opportunity of local automobile after-market and maintenance market. The Group's current development direction is mainly in the previous two categories

In addition, automobile components industry development and automotive production are closely related to after-sales service and maintenance. There are three major automotive industry in the world: China, North America and Japan. These three regions all belong to the mature automobile market and are also the important consumer market of automobile components in the world.

In recent years, the global plants and automobile components industry has been developing towards the decrease of enterprises, expansion of business scale and rapid internationalization. The overall trend is as follows:

Industrial scale: The innovation of product and technology is also committed to the direction of plants. To reduce development costs and component costs, the plants will expand the economies of scale of a single platform or model through common platforms, modular design and global strategic vehicles.
Specialization of production: So as to shorten the whole new cars development time, and ensure the quality, cost and delivery time, automobile components factories can no longer only produce as well as provide loading components on assembly line based on drawings provided by plants, but should be more deeply participate in the whole value chain of automobile, from research and development, sales to after-sales service to improve professional level.
Internationalization of production and operation: In line with the global plants, the scope of multinational automobile component factories is becoming larger and larger. Its main purpose is to match with plants overseas, to develop new markets, or to seek low-cost advantages in local production. Therefore, the formation of

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automobile components factory production and management of internationalization.

The collaborative system relationship is complicated: In the past, plants and component suppliers were inseparable through the operation of a collaborative system. However, with the white-hot competition in the automobile market, plants not only require the existing subcontractors to reduce the annual cost, but also seeks compliance with specifications through its procurement platform but replace subcontractors that cannot match price cuts with component factories of superior supply prices.
Upgrading of automobile application technology: The other pressure that component suppliers need to face is the upgrading of automobile application technology, including miniaturization, lightweight, energy saving and so on. Suppliers also need to invest in research and development to meet the needs of new technologies.
Automobile component manufacturers will more invest actively in the China market: In the future, the plants will mainly invest in developing countries. Apart from manufacturing, design and engineering, value activities will also be introduced simultaneously. And the scale of automotive market in China continues to grow and becomes the world's largest automotive sales country. The domestic market is also the reason why plants will manufacture locally. Its current car ownership per thousand is still low. Therefore, it brings business opportunities for plants, and so does for automobile component manufacturers. Also, due to the growth of the automobile market in China over the years, the demand for automotive component industry in the automobile aftermarket will increase. Automobile component manufacturers are planning to expand investment into China for gaining access to the huge automobile components market and actively cooperate with local automobile manufacturers for business opportunities.
Energy efficiency and low carbon emissions have become an inevitable trend in the development of automobile products. With fuel prices still high and environmental concerns, the proportion of energy-saving and hybrid vehicles is gradually increasing. Government policies and related fiscal and tax incentives are the most important driving force at present. Electric cars will still be one of the industry's core development within automobile manufacturers

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because apart from the change of automobiles’ power system, the automobile manufacturers have dedicated to developing small energy-saving models. In addition to complying with regulatory requirements, it will also provide consumers with more options to buy cars in tough economic times.

B. Motorcycle components

In recent years, due to the rapid changes in the global climate, countries have become increasingly concerned about environmental pollution and exhaust emissions from automobile and motorcycle. Each motorcycle manufacturer keeps processing research and development of new products in order that it can produce safer, more environmentally friendly, higher quality products, which has encouraged upstream suppliers to develop the newer technologies, more environmentally friendly and more expensive and profitable components. With the rapid growth of economy, the need of motorcycles in Southeast Asian Nations gradually increases. The main Japanese motorcycles manufacturers such as HONDA, YAMAHA and SUZUKI has shifted value activities, including procurement, production or sales to Southeast Asian Nations such as Indonesia, Vietnam and Thailand, where the motorcycle market is growing rapidly in order to decrease labor cost. The relevant potential competitors are also dominated by this market. For this reason, the future development of the Group not only actively becomes the main suppliers in Indonesia market, but also looks other ASEAN market.

C. Machine tool equipment

In terms of machine tool production - China, China has been engaging in the economic structure adjustment and the transformation of the development direction. Because of the development of key areas such as aviation, ships, automobiles, energy and other aspects, there is huge need for high-end CNC, high efficiency cutting tool and precision measuring machine. On the other hand, the rise of intelligent manufacturing also provides a new path for the development of machine tool industry. In the next five years, the development demand of tool machine industry in China will further shift to the high-end. According to Gardner Research’s statistics, although the sales growth of the machine tool industry was in a downward trend in 2012, the sources of product with serious decline were mainly medium and low-end products, which also indicated that the demand for machine tools in China was shifting to the

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high-end. Overall, the demand for high-end machine tools in China has maintained a strong trend.

The global machine tool market is constantly in the competition of pursuing high efficiency and low energy consumption. Meanwhile, emerging fields and emerging materials also put forward new requirements for the machine tool market. Consequently, machine tool suppliers should not only pursue in-depth development in traditional fields, but also make their products catch up with the pace of emerging fields to maintain competitiveness and their position.

(4) Competition status

In recent years, the world's major manufacturers covet the Chinese huge automobile market and ASEAN area’s motorcycle market. Furthermore, as the cost of production can't effectively reduce the pressure, the products are gradually made by other national foundry production or nearby local procurement. With the economic rise of mainland China and the continuous growth of ASEAN market economy in recent years, the average income of the Chinese people has been increasing steadily and the consumer spending also rose. As a result, local demand for automobile and motorcycle has grown steadily and the China and ASEAN markets have benefited. With the continuous increase in the production of automobile and motorcycle components, the demand for press production line equipment for the production of related components also increases. For this purpose, in addition to actively improving the production efficiency and reducing the production cost of automobile components, the Group also strengthens the sales market of press production line equipment and fights for more sales orders for machine equipment.

In general, for the reason that the wide use of industrial products, the current competitive trend is not as fierce as that of electronic products. Nevertheless, as the use of industrial products is wider, the future market will be valued, which means that the competition will be more obvious in the future.

Technology and research & development summary
(1) Technological arrangement in business operations, research & development

What customers appreciate the Group is always being ahead of the same industry with the speed of research and development. Along with the

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Group based on years of experience in metal processing and the ability to develop module itself, the key factor is that the Group can adjust the machine instantly to meet the requirements of customers with different product specifications. With the ability to develop samples quickly, effectively improve customer product design and process integration, the Group has been maintaining good relations with customers, and more willing to attract international customers to cooperate.

The Group’s main technical capabilities of product manufacturing process include press forming, assembly, automatic production and detecting. By designing, homemade automatic production and measuring equipment, it reaches 100% of manufacturing and quality inspection and also meets the special requirements of high precision specification and quality assurance. Through the new product quality planning process, it continues to promote the establishment of innovative precision technology.

(2) Personnel involved in research & development and their educational

background and employment history

Year Education	2019	2020	2021 As of March 31,
Above Masters	7	6	6
Bachelor’s Degree	23	23	23
Senior High School	3	18	15
Total	33	47	44

(3) R&D expenses invested in latest five years

Unit: NT$ thousands

			Unit: NT$ thousands
Item Year	R&D expenses	Consolidated net operatingrevenue	%
2020	35,333	1,181,611	2.99
2019	52,964	1,795,565	2.95
2018	79,453	2,191,727	3.63
2017	110,443	2,073,289	5.33
2016	73,246	2,009,440	3.65

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(4) Technology and products developed successfully in the last five years

As of March 31, 2021

		As of March 31,2021
No.	Items	Description
1	Cold press compound die automatic discharge device	It can improve production efficiency and production safety, especially suitable for large press parts compound discharge device.
2	Floating die set device	It is high precision and small gap blanking die, which can improve theprecision of the die.
3	Thick plate blanking die	It can improve production efficiency and production safety, especiallysuitable forpressing parts with thickplates.
4	Reel stretch press automatic discharge device	It can improve production safety and meet the requirements of mass production as well as improve the working stability and the efficiencyofparts discharge.
5	Press riveting and flattening die	It can reduce unnecessary procedures, effectively improve work efficiency,and reduce manufacturingcosts.
6	Cold die automatic discharge device	It can make die discharge smoothly and simply, make the waste materials in the mold fall down smoothly, and greatly improve theproduction efficiencyandproduction safety.
7	Fixture device on pierce punch forming	It can be processed coaxial parts and larger cylindrical, improve theprocessingefficiency.
8	Curl press die	It is an innovation of engineering, and effectively reduce the process.
9	Ironing burring press engineering	It can improve the engineering and work efficiency to meet the needs of massproduction.
10	Emboss mold for plate workpiece	Completing the design and optimization of the emboss mold for plate workpiece, which increases working stability and efficiency.
11	Pre-punching hole of die for plate workpiece	Through the use of pressure spring, increase the working stabilityand efficiency
12	Burring mold for plate workpiece	It can improve quality of burring end surface and the working efficiency
13	Solid rod upsetting mold	It can improve engineering and work efficiency and mold stability.
14	Compound mold for blank stretching	It improves the engineering, effectively reduce the process and processing costs, and improve the machining precision and qualityof components.
15	Device for material discharge automatically	It can separate the press part from the material belt automatically and improve the production efficiency and safety.
16	Clod hobbing	It can improve the engineering, effectively reduce the processing cost and improve the precision and quality of components.
17	Aluminum material embossingfixture	It can improve the precision and quality processing of components.

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No.	Items	Description
18	Stainless steel flanged dimplingdie	It can increase the strength of the female die, and do mirror buffingfor female die insert andpierce.

(III) Long-term and short-term plans for business development.

The Group draws up various long-term and short-term plans to plan the future business direction of the Group in order to cope with the trend of future industrial development and overall economic environment and enhance its competitiveness. The brief description of the Group’s long-term and short-term plans

Short-term development strategy and plan
(1) Marketing strategy
- A. Strengthening the good relationship with customers, keep abreast of the latest market information, reasonably estimate the future demand planning of customers for products.
- B. Continuous participating in customer project plan, suggesting and assist to evaluating equipment requirement, configuration, cost, delivery and other supporting solutions.
- C. Active participation in international exhibitions of related industries, increasing market visibility and enhancing brand image of the Group by participating in the exhibition, so as to win orders of machines and equipment from international big factories and obtain higher profits.
(2) Procurement strategy

Maintain good interaction with suppliers, understand new product development plan and price trend, and provide customers’ idea of the product or future demand.

(3) Operational management and financial support
A. In response to operational development, through sound financial planning and operation management, the Group resources will be allocated to maximize the overall benefits of the Group resources.
B. Making the best of the advantage of capital market to establish sound and diversified financing channels and establishing close and mutually beneficial relationships with financial institutions in response to working capital required for business growth and development.
C. The introduction of enterprise resource planning system (ERP), which is the integration of front-end and back-end information, provides

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more timely financial information as the basis for management decision-making.

  - D. Organizing internal staff education and training on a regular or ad hoc basis to enhance technical research and development, business and management capabilities. Moreover, encouraging employees to give the comments for improvement within the Group and strengthen the communication bridge between the Group and employees in order to reduce the risk of labor disputes.

Long-term plan
(1) Marketing strategy
- A. Continuing to strengthen the customer base, increase operational flexibility, reduce operational risks, so that the operation will not have a significant impact on single customer, regional market, individual industries, and so on, and continuing to maintain the competitiveness of the Group.
- B. Seeking strategic partners can not only reach new markets, customers and sales networks, but expand the product range, enhance economic efficiency and competitiveness, thereby expanding the economic scale and become the momentum for future growth.
- C. Setting up overseas machine and equipment sales market, increasing the revenue of machine and equipment sales, and increasing the contribution of revenue and profit.
- D. Cultivating professional talents, collecting information on future development trends, grasping the market highlights of competitors and new entrants, and expanding the European sales market.
(2) Procurement strategy
- A. Expanding the source of suppliers can not only strengthen the stable supply of goods, ensure the reliability of delivery, but also obtain competitive purchasing price and maintain the competitive advantage of purchasing cost.
- B. Seeking strategic partners can not only reach new markets, customers and sales networks, but expand the product range, enhance economic efficiency and competitiveness, thereby expanding the economic scale and become the momentum for future growth.
(3) Operational management and financial support
- A. Establishing sound internal control management system,
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shaping excellent corporate culture, and realizing the vision of sustainable business operation.

B. Through the diversification of capital market financing channels, strengthen the financial structure for long-term development strength; Cooperating with the group operation scale growth, so as to enrich the management team and enhance the group's popularity and image.
C. Promoting the concept of global competition and lifelong learning for employees, aiming at multinational enterprise groups.

II. MARKET AND SALES OVERVIEW

(I) Market Analysis
Sales (Provide) Region of Main Products (Service)

Unit: NT$ thousands; %

			Unit: NT$ thousands;%	Unit: NT$ thousands;%
Year Area	2019		2020
	Amount	%	Amount	%
Chana	694,840	38.70	470,619	39.83
South east Asia region	546,055	30.41	306,720	25.96
Europe	438,966	24.45	284,114	24.04
Others	115,704	6.44	120,158	10.17
Total	1,795,565	100.00	1,181,611	100.00

2. Market share:

The Group is as a professional manufacturer of precision metal components. Because most of the Group product components are automobile components, it is hard to calculate its market share. Since its establishment, the Group has been adhering to the concept of serving customers and has become a supplier of MQB (Modularer Querbaukasten) platform of Volkswagen Group. Therefore, the Group’s market share of products should also be significantly increased. Accordingly, the goal of the Group’s market share is continued increasing the Group's performance growth. With the steady growth of global automotive market demand, it is expected that the demand for automobile components will continue to grow in the future. There is still great room for growth in the Group's revenue.

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Future market supply/demand and growth
A. Future market supply/demand

The automobile and motorcycle components industry is monopoly market. As automotive manufacturers strive for stability in their component supply chain, most of manufacturers will not switch suppliers easily. The automobiles and motorcycles are also the industry with a high emphasis on safety, which its components has higher precision and reliability than that of other industries, so the downstream plants have strict authentication mechanisms for the components suppliers. As a result, the automotive high entry threshold. The system manufacturer is based on quality control, and once the qualified supplier is selected, it is less likely to change partners easily, thus forming a relatively closed supply chain relationship. The growth of the company's industrial market is analyzed as follows:

a. Automobile components

Multinational automobile manufacturers of well-known brands have established new models of international division of labor and actively engaged in automotive industry and market operation in emerging countries such as China, due to the fact that the upcoming globalization. This not only increases the dependence of local automotive components suppliers on multinational automobile manufacturers, but also attracts more manufacturers to invest, building up a more integrated automotive industry supply chain because of the huge demand in emerging countries. As far as automobile sales quantity is concerned, it is difficult to find explosive room for growth as automobile appetite is almost at the stage of saturation in developed countries. In the meantime, as the economic rise of emerging countries, the increase in people’s income generate growing demand for automobiles, which the vehicle market will continue to grow steadily in the medium to long term.

In 2020, global car sales dropped sharply due to the impact of the COVID-19 pandemic. But the industry expects that new car sales will be boosted by the fact that the U.S. vaccine progress is better than expected and that the Biden administration's $1.9 trillion revival plan is gradually helping the economy to recover while people' lives are getting back to normal. China's car sales are relatively stable because of the outbreak is under control, and the Chinese government

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has focused on expanding the domestic consumption and increasing car sales as one of the key priorities, along with the infrastructure development, which will boost the growth in China's car market. However, the recovery in Europe has been very slow, and the production and sales of cars in the European region are expected to be less than they were before the pandemic until 2023; therefore, the economy in the car industry is likely to improve in 2021.

China has become the world's largest automobile production and sales country, and cars per capita are far below the standards of developed countries. But for the past 10 years, the rapid growth of the number of automobiles, has brought Chinese society came many problems such as congestion, pollution and traffic safety, formed the contradiction between quantity growth and limitation. This is also the problem that needs to be faced when Chinese government is actively developing automotive industry. Overall, as people consuming ability rise, demand has increased. It is expected that the sales volume of motorcycle as a whole in China will still grow year by year, but the growth of new car sold will gradually decrease or stagnate over the next few years.

With the rapid growth of China's automotive industry in recent years, car ownership increases sharply. The scale of China's demand for automotive components continue to expand, owing to the fact that the low unit price of Chinese automobiles, the relatively unstable quality and the relatively high frequency of component replacement. Meanwhile, with Chinese people's income gradually increased, the price is no longer the only one consideration when people change components. Instead, the importance of driving safety increase. Compared with Chinese automotive components industry, foreign has quality advantage, so the demand for automotive components in Chinese market will continue to rise. So as to fight for this business opportunity, in recent years, the foreign automotive components industry develops more actively in China.

There are few local manufacturers investing 100% in automotive OEM components industry in Indonesia. Most of them are domestic and foreign joint ventures or factories invested by Japanese, Taiwanese or Korean companies. Most precision components need to be imported. Indonesian vehicle operators believe that there is great opportunities for Indonesia to regain its position as a regional vehicle

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assembly and components production center with the implementation of ASEAN Free Trade Area and political instability in Thailand. TOYOTA Astra Motor indicates that Indonesia has a potential market and natural resources, coupled with the implementation of ASEAN Free Trade Area, which 5% import tariffs on automobiles and components have been lifted among six ASEAN founding members, including Thailand, Malaysia, Philippines, Singapore, Brunei and Indonesia. It has become very accessible to export cars and automotive components from Indonesia to southeast Asian countries, and the industry is now in the best position to overtake Thailand.

Even though Indonesia has a large automotive component market, Japanese’s automobile manufacturers have a closed system. Most of the major automotive components are monopolized by their agents or joint ventures, consequently, OEM suppliers of Japanese automotive components produced in foreign countries have little access to their supply chains. As for the large scale of the AM, the manufacturers estimated that around two-thirds of them are non-factory components, so there is still a lot to be done.

b. Motorcycle components

Due to the motorcycle has the characteristic of being easy to use, being applicable to wider road surface, cargo capacity and not taking up a lot of space, it has become the important tools for commuting and carrying goods. Different from the developed countries which regard motorcycles as leisure and competition, motorcycles in emerging countries are more widely used, especially in Asia. In countries with lower per capita income, and less developed public transportation systems, it becomes common that motorcycle is used as daily transport and production tool. In terms of the analysis of global motorcycle market development, the trend of increasing population and increasing urbanization will still drive the growth of global motorcycle market as a whole, however, due to the low oil price and the slow upturn of global economy, the motorcycle is still a temporary means of transport. The car is still the type of vehicle that consumers are eager to buy, so the growth momentum of global motorcycle will be relatively flat in the future. According to the industrial technology research institute, it estimated that the global motorcycle market will only grow to 80 million units in 2017.

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Figure 7: Analysis of global motorcycle market size trend

==> picture [321 x 158] intentionally omitted <==

Source: Industrial Technology Research Institute, IEK(2015/05).

According to Indonesian Motorcycle Industry Association, the data is shown in the following table

Table 3: Indonesia motorcycle sales and export statistics during 2014 and 2020

Table 3: Indonesia motorcycle sales and export statistics during 2014 and 2020	Table 3: Indonesia motorcycle sales and export statistics during 2014 and 2020	Table 3: Indonesia motorcycle sales and export statistics during 2014 and 2020
Unit: Volume
Year	Sales	Exports
2014	7,867,195	41,746
2015	6,480,155	228,229
2016	5,931,285	284,065
2017	5,886,103	434,691
2018	6,383,108	627,421
2019	6,487,460	810,433
2020	3,660,616	700,392

Source: Indonesian Motorcycle Industry Association and AISI website

Indonesia is the third largest motorcycle market in the world. Like other Southeast Asian countries, due to the high population density, the lack of road infrastructure and mass transportation tools, the traffic jam issue in major cities in Indonesia is quite serious. Therefore, motorcycles with convenient driving and low price have become the first choice for people. With the improvement of income level and the increase of personal consumption, the annual sales

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volume exceeded 8 million in 2011. In 2012, due to an increase of motorcycle loan down payments and the impact of stricter financial audit standards of financial institutions, the market was significantly tightened. In addition, the continuous devaluation of the rupiah exchange rate in 2014 led to an increase of production cost of imported parts and components quoted in US dollars, coupled with the reduction of inflation-based fuel subsidies. The consumer market has been in a weak state for many years. However, Indonesia has a population of about 262 million, and is the fourth largest country in the world. With the continuous increase of basic local wages, the number of middle-level consumers has increased, and the consumption power of its domestic market has also been driven. In 2018, the sales volume returned to more than 6 million vehicles.

C. Machine tool equipment

Due to the continued recession in the overall economic growth rate of China and the reduced demand in most emerging markets, it is estimated that the output value of machine tool in China will shrink further in 2016, with a total output value of US$ 20.2 billion, 8.5% lower than that in 2015.

Figure 8: Analysis of machine tool market trend in China during 2014 and 2018

==> picture [343 x 173] intentionally omitted <==

Source: Gardner Research(2016/04) sorted by Industrial Technology Research Institute, IEK (2016/05).

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However, in the future, the following factors will be conducive to the transformation of machine tool manufacturers in China:

The continued development of large commercial aircraft and general aviation markets in the Chinese will bring new demand to the aerospace machine tool market. China will continue to develop high-end rail transport equipment, and actively enter the international market, will form another large-scale high-end machine tool market. Furthermore, Chinese government actively encourages manufacturers to carry out high-end machine tool localization. Driven by the conducive market demand, it will be able to encourage Chinese machine tool manufacturers to continue to carry out the research and development of high-end machine.
The Chinese is actively promoting the application of intelligent manufacturing and forming a complementary and cooperative situation with German industry 4.0 in terms of market and technology. Although it is not obvious that the intelligent machine tool are needed in China market, facing the shortage of workers caused by the lowest fertility issue and the need to strengthen the country's overall competitiveness through the transformation of manufacturing industry, many machine tool manufacturers in China have invested in the research and development of intelligent tool and increased the proportion of manufacturing service revenue.
Many enterprises in China have accumulated many old machine tool equipment for the last 30 years. The enterprise has gradually emerged the trend of machine tool refitting and remanufacturing for improving production efficiency, processing quality and reduce energy consumption, and it also brought new business opportunities for machine tool manufacturers in China.

4. Competitive niche

(1) Relationship with customers

The Group maintains long-term and good partnership with major customers and provides advice and demand for market intelligence and product development to jointly expand the market. Through the past many years of hard work, it has become an important supplier of international

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large factories. In the international automobile manufacturers’ supply chain system, the main supplier is not easy to be changed and replaced because international automobile manufacturers’ procurement and certification system is complicated and strict, plus a long time to prepare, and what they care is its high quality, stable supply and R&D efficiency. As the cost price is not the most important factor, what international automobile manufacturers care about the potential risk and cost is due to changing the suppliers too often, which causes intangible loss and time cost.

(2) Continuous investment in research and development and technology upgrading

The Group has put lots of effort on the investment of research and development. Recently, so as to shorten the development process, show the determination and efforts in product development speed, technology improvement and cost control the personnel and equipment investment are growing.

(3) Competitive price:

For the sake of gradually achieving the market demand of cost reduction, the Group should adopt the international procurement layout, in response to rising costs and carry out precise production management to drive the management improvement by technology improvement.

(4) International Organization for Standardization:

It has obtained ISO9002, QS9000 and ISO/TS16949 certification of international quality, and the quality management system is in line with international standards. To meet the strict requirements on the quality of suppliers, major international automobile manufacturers have developed QS 9000, the certification system of quality. Only when the supplier meets the certification qualification will it be the qualified supplier. In accordance with the increasingly strict requirements and specifications of international plants, the Group has passed the ISO/TS16949 quality certification, and ensures that the Group has met the basic requirements of international plants Therefore, through this certification, it not only can improve the Group's product image, but also contribute to increase international competitiveness.

(5) Precision testing instrument

The Group’s detecting instruments is a testing equipment that has been equipped with international standards. The product yield is nearly 100%.

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(6) Professional technical ability and stable quality:

Since the Group established, it has been continuously inventing and developing. It builds up its own professional and technical capabilities, has the ability to customize products to meet customers’ special needs and enhance customers' competitiveness. The products with stable quality are also recognized by customers.

Positive/negative factors of long-term development, and the countermeasures thereof:

Positive factors

(1) China market that flourishes has brought the market opportunity

Although China has become the country that has the highest sale volume of cars around the world, its car ownership per thousand is still low, which is less than half the global average and less than a tenth of that in developed countries. With the continuous economic development in China, the automobile market in China is still in a stage of high demand. This huge business opportunity will attract manufacturers in automotive industry to invest in China, which will help automobile component manufacturers to compete in the China market.

(2) Due to having been dedicating product technology and market for many years, it has cultivated stable cooperation mode with customers.

Since the Group has been working with Faurecia group, it has become one of its main qualified suppliers. Participating in research and development and design which is based on technical cooperation has raised the Group’s adding value. It can be seen that after years of mutual trust and cooperation and repeated certification, the quality and price of the Group's products have been recognized.

(3) Component plants in Europe, America and Japanese are eager to establish regional production bases:

As the rise in the Asia-pacific area market, the international automobile manufacturers have been into Asia and south east Asia region. Considering the cost and nearby customer service, component plants in Europe, America and Japanese are eager to establish regional production bases. With the Group’s excellent manufacturing management and quality management ability, it can enter the supply chain of international automobile manufacturing market.

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Negative factors

(1) International raw material prices fluctuate greatly, which makes raw material inventory management and cost control more challenging. The main raw material of the group is steel. With the continuous growth of turnover, the use of raw material has increased significantly. Moreover, the Group has not signed long-term purchase contracts with suppliers, and the huge fluctuation of raw material prices makes it difficult to grasp the cost and delivery date.

Countermeasures:

Through direct interaction with customers, the Group understands the customers’ needs, timely adjusts and arranges production resources, actively allocates and improves self-production and capacity, produces products in line with customer needs, and increases the competitiveness of products by providing high-quality products, reasonable prices and quality services. The Group also keeps abreast of the price fluctuations in the raw material market and purchases the most beneficial raw materials at the appropriate time. In addition, it also reduces production costs by means of economies of scale and improved manufacturing process to maintain profitability.

(2) Wages are rising in China and Indonesia, which raise production costs Countermeasures:

The Group not only improving production process to reduce the waste of raw materials in production and shorten labor hours, so that it can improve the production efficiency and reduce the cost simultaneously. The Group has also gradually increased the ratio of automated production and introduced automatic production machinery to replace part of the labor to stabilize product quality and reduce labor costs.

(II) Major Use and Production Procedures of Main Products
Major Use of Main Products

The Group mainly provides customers different type of precision processing of metal materials and professional manufacture of automotive and motorcycle components. Automobile components are mainly used in automobile door lock system, seat system, brake system, exhaust system, clutch and other related automobile safety systems. Motorcycle components are

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mainly used in motorcycle starter gear, brake system and clutch and other related motorcycle safety systems.

Production Procedures:

==> picture [454 x 107] intentionally omitted <==

(III) Supply Status of Main Materials

Major Raw Materials	Source of Supply	SupplySituation
Carbon steel	Suzhou Baogang, Shanghai Baomeng, Brycote Corporation (the agent of products for China Steel Corporation), Hyundai	Fine
Stainless Steel	Jiangsu Daming,Wuxi Puxin	Fine
Stainless Iron	Jiangsu Daming	Fine

(IV) Major Suppliers and Customers in the last two years:
A list of major suppliers accounting for 10% or more of the Company’s order volume in either of the two most recent fiscal years and 2021Q1, and the explanation of the reasons for increase or decrease:

Units: NT$ thousands

	2019	2019			2020	2020			2021Q1	2021Q1
Company	Amount	Ratio to annual net purchase (%)	Relation with the issuer	Company	Amount	Ratio to annual net purchase (%)	Relation with the issuer	Company	Amount	Ratio to annual net purchase (%)	Relation with the issuer
Jiangsu Daming	119,699	11.75	None	Jiangsu Daming	80,240	11.49	None	Jiangsu Daming	25,819	13.90	None
Wuxi Puxin	78,429	7.70	None	Wuxi Puxin	78,094	11.18	None	Wuxi Puxin	17,981	9.68	None
Others	820,793	80.55	None	Others	539,946	77.33	None	Others	142,003	76.42	None
Total	1,018,921	100.00	−	Total	698,280	100.00	−	Total	185,803	100.00	−

The reason for increase or decrease: The main reason that the change of purchase amount for the abovementioned suppliers is based on the change of product demand of the suppliers. The change is reasonable.

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A list of any clients accounting for 10% or more of the Company's total sales amount in either of the two most recent fiscal years and 2021Q1, and the explanation of the reasons for increase or decrease:

Units: NT$ thousands

	2019	2019			2020	2020			2021Q1	2021Q1
Company	Amount	Ratio to annual net revenue (%)	Relation with the issuer	Company	Amount	Ratio to annual net revenue (%)	Relation with the issuer	Company	Amount	Ratio to annual net revenue (%)	Relation with the issuer
Faurecia	635,935	35.42	None	Faurecia	419,360	35.49	None	Faurecia	125,882	38.72	None
Customer A	203,043	11.31	None	Bentler	161,285	13.65	None	Customer A	38,936	11.98	None
Bentler	112,486	6.26	None	Customer A	109,785	9.29	None	Bentler	27,043	8.32	None
Others	844,101	47.01	None	Others	652,466	55.22	None	Others	160,286	40.98	None
Total	1,795,565	100.00	−	Total	1,181,611	100.00	−	Total	325,104	100.00	−

The reason for increase or decrease: The main reason that the change of sales amount for the abovementioned customer is based on the change of business demand of the customers. The change is reasonable.

(V) Production in the last two years

Unit: Units, Set, NT$ thousands

Year / Production Major Products		2019			2020
	Capacity (Note)	Quantity	Amount	Capacity (Note)	Quantity	Amount
Pressproduction line machine	30	18	146,771	30	5	108,780
Automobile components	135,000,000	101,140,103	1,159,829	135,000,000	71,633,552	816,844
Motorcycle components	15,000,000	13,122,913	74,029	15,000,000	9,883,496	55,755
Revenue fromprocessing	16,000,000	9,921,501	14,437	16,000,000	6,400,518	9,566
Total	166,000,030	124,184,535	1,395,066	166,000,030	87,917,570	990,945

Note: Capacity refers to the quantity that the company can produce with existing manufacturing equipment

under normal operation after measuring the factors such as halt in production and holiday.

(VI) Sales value for the last two years

Unit: Units, Set, NT$ thousands

			Unit: Units, Set, NT$ thousands	Unit: Units, Set, NT$ thousands
Year/ Sales & Sales value Major Products	2019		2020
	Sales	Sales value	Sales	Sales value
Press production line equipment and maintenance service	23	165,713	1	35,884

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Year/ Sales & Sales value Major Products	2019	2019	2020	2020
	Sales	Sales value	Sales	Sales value
Automobile components	99,655,992	1,533,391	72,778,140	1,079,044
Motorcycle components	12,992,808	80,328	9,878,293	41,851
Revenue fromprocessing	9,921,501	15,532	6,400,518	9,566
Medical instruments	196	601	100	15,266
Total	122,570,520	1,795,565	89,057,052	1,181,611

III. In the last two years and the number of employees up to the printing date of this annual report

Unit: person

	Year	2019	2020	Up to the printing date of this annual report in 2021
Staffs	Managers	40	34	34
	Administration Assistants	292	229	217
	Technicians	635	507	544
	Total	967	770	795
	Average age	31.16	36.15	36.46
Averageyears of service		3.86	6.52	6.71
Academy Ratio	Doctor	1	3	3
	Master	10	15	14
	Bachelor’s Degree	134	100	102
	Below Senior High School	822	652	676

IV. DISBURSEMENTS FOR ENVIRONMENTAL PROTECTION

(I) According to laws and regulations if it is required to apply for a permit for installing anti-pollution facilities, or permit of pollution drainage, or to pay anti-pollution fees, or to organize and set up an exclusively responsible unit/office for environmental issues, the description of the status of such applications, payment or establishment shall be made:

The Group’s China plant (Wuxi Jingxin) has obtained the drainage license certificate (certificate no.: 2019-317 ) in September 2019, which allows the local urban drainage facilities to drain water within the scope of application.

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(II) Setting forth the company's investment on the major anti-pollution facilities, the use purpose of such facilities and the possible effects to be produced: None
(III) Describing the process undertaken by the company on environmental pollution improvement for the last two years and up to the printing date of this annual report. If there had been any pollution dispute, its handling process shall also be described: There are no pollution dispute happened for the last two years and up to the printing date of this annual report.
(IV) Explain the losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in environmental inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, and the content of the dispositions), and disclosing an estimate of possible expenses that could be incurred currently and in the future and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided: None.
(V) Explaining the current condition of pollution and the impact of its improvement to the profits, competitive position and capital expenditures of the company, as well as the projected major environment-related capital expenses to be made for the coming two years: The Group has obtained legal and complete environment operation licenses in the last two years and up to the printing date of this annual report. Each environmental protection work has been carried out effectively and there is no major environmental pollution.

V. LABOR RELATIONS

(I) List of employee benefits, in-service training, internal training, retirement system and implementation status, as well as employer-employee agreements, and protection measures for employees’ right:
Employee benefits
- The Group has always valued the employee benefits. Apart from
- establishing employee outings, marriage, funeral and other events, the Group also hold group insurance for employees and annual meetup, provide lunch and other events. In the meantime, the Group distributes compensation for employees on the basis of percentage regulated in the Article of Incorporation. Employee benefits and employees’ right are fully considered.

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The status of in-service training and internal training

For the quality of human resources, in addition to the strict appointment conditions, during the appointment period, the personnel department will formulate an annual education and training plan, including internal training and external courses, according to the needs of the employees' position and expertise, so as to improve the employees' themselves learning ability.

Retirement system and execution

The Group’s retirement plans are governed by the relevant local related retirement system and regulations in each major operation location.

Employer-employee agreements, and protection measures for employees’ right: The Group has always valued the employees’ right and the voice of

employees. To maintain the good relations, the employees can communicate with personnel management department or proper senior managers through open communicate. So far, no major labor disputes have happened.

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

The Group has always valued the labor-management relation. There have been no losses resulting from labor disputes in the last two years and up to the printing date of this annual report.

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VI. IMPORTANT CONTRACTS

Type of Contract	Counter Party	Contract Period	Highlights of Provisions	Covenant
Lease Agreement	Lessor: RBC Investor Lessee: Patec SG	2019.04 ~ 2022.03	Rent the office located at 03748P, Singapore(8,601 ft2)	None
Lease Agreement	Lessor: WuXi Foretell Technology Co., Ltd. Lessee: WuXi Jingxin and WuXi Patec	2009.08 ~ 2024.07	Rent the land, building and equipment located at stage 5, shuofang industrial park, new district,Wuxi city	None
Lease Agreement	Lessor: WuXi Foretell Technology Co., Ltd. Lessee: WuXi Jingxin and WuXi Patec	2017.01 ~ 2024.12	Rent the land, building and equipment located at stage 5, shuofang industrial park, new district,Wuxi city	None
Lease Agreement	Lessor: Realys Ingatlan Kft Lessee: Patec Kft	2018.04 ~ 2038.04	Rent land and building which the property registered land serial no. is 12995/4(5,225 m2)	None
General Agreement for Omnibus Credit Lines	Lender: HSBC Borrower: Patec SG Guarantor: Patec Precision	2020.11.25~ 2025.11.25	1. Total credit amount: SGD 2 million 2. Collateral conditions: The Company has signed the guarantee that the maximum amount is SGD 2 million and bear jointly and severally responsibility for guarantee.	None
General Agreement for Omnibus Credit Lines	Lender: Resona Bank Borrower: Patec Precision Guarantor: Patec Precision	2020.11.25~ 2025.11.24	1. Total credit amount: SGD 3 million 2. Collateral conditions: The Company has signed the guarantee that the maximum amount is SGD 3 million and bear jointly and severally responsibility for guarantee.	None
General Agreement for Omnibus Credit Lines	Lender: Budapest Borrower: Patec Kft	2020.11.19~ 2026.11.18	Total credit amount: EUR 0.5 million	None

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Six. AN OVERVIEW OF THE COMPANY’S FINANCIAL STATUS

I. Condensed financial information for the Last 5 Years

(I) Condensed Balance Sheets and Income Statements
Condensed Balance Sheets – Based on IFRS

Units: NT$ thousands

Year Item	Year Item		Financial	Summaryfor The Last Five Years	Summaryfor The Last Five Years	Summaryfor The Last Five Years
		2016	2017	2018	2019	2020	As of March 31
Current assets		1,674,195	1,843,395	1,744,794	1,716,011	1,693,943	1,626,618
Property, Plant and Equipment		376,658	330,902	311,078	249,421	266,663	269,251
Right-of-use assets		-	-	-	305,338	260,831	271,301
Intangible assets		5,148	4,937	5,033	4,961	4,701	4,729
Other assets		101,580	92,844	93,477	41,555	37,724	39,865
Total assets		2,157,581	2,272,078	2,154,382	2,317,286	2,263,862	2,211,764
Current liabilities	Before distribution	503,477	967,101	781,755	721,683	591,238	600,204
	After distribution	578,552	995,773	810,427	724,373	608,086	617,052
Non-current liabilities		252,671	44,227	22,374	266,796	373,861	371,365
Total liabilities	Before distribution	756,148	1,011,328	804,129	988,479	965,099	971,569
	After distribution	831,223	1,040,000	808,274	991,169	981,947	988,417
Equity Attributable to Shareholders of the Parent		1,164,633	1,090,086	1,161,597	1,143,092	1,137,064	1,157,043
Capital stock		375,127	383,072	410,964	448,268	457,597	457,597
Capital surplus		377,185	392,635	372,244	372,244	342,507	358,335
Retained Earnings	Before distribution	414,780	409,884	493,192	492,743	500,030	488,616
	After distribution	337,245	352,540	451,743	474,364	483,182	471,768
Others equity		(2,459)	(59,408)	(81,706)	(134,066)	(163,070)	(147,505)
Treasurystock		-	(36,097)	(36,097)	(36,097)	-	-
Non-controllinginterest		236,800	170,664	188,656	185,715	161,699	83,152
Total equity	Before distribution	1,401,433	1,260,750	1,350,253	1,328,807	1,298,763	1,240,195

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Item	Year		Financial	Summaryfor The Last Five Years	Summaryfor The Last Five Years	Summaryfor The Last Five Years
		2016	2017	2018	2019	2020	As of March 31
	After distribution	1,326,357	1,232.078	1,346,108	1,326,117	1,281,915	1,223,347

Source: The annual financial report that has been audited or reviewed by CPAs is based on IFRS.

2. Condensed Statement of Comprehensive Income– Based on IFRS

Units: NT$ thousands

Year Item		Financial	Summaryfor The Last Five Years	Summaryfor The Last Five Years	Summaryfor The Last Five Years
	2016	2017	2018	2019	2020	As of March 31
OperatingRevenue	2,009,440	2,073,289	2,191,727	1,795,565	1,181,611	325,104
Operatingmargin	584,272	612,108	608,758	437,621	293,338	81,762
Operating profit	256,750	231,879	219,384	113,020	54,481	9,887
Non-operating income and expenses	(21,824)	(2,133)	4,201	(1,148)	(1,370)	124
Profit before income tax	234,926	229,746	223,585	111,872	53,111	10,011
Net profit from continuing operations	234,926	229,746	223,585	111,872	53,111	10,011
Net loss from discontinued operations	−	−	−	−	−	−
Netprofit(loss)for theyear	162,835	159,915	164,086	52,296	27,288	3,555
Other comprehensive income(income after tax)	(72,493)	(60,139)	(25,312)	(57,404)	(46,933)	19,628
Total comprehensive income for theyear	90,342	99,776	138,774	(5,108)	(19,645)	23,183
Net income attributable to Shareholders of theparent	114,931	130,247	144,341	38,797	31,528	5,434
Net income attributable to non-controllinginterests	47,904	29,668	19,745	13,499	(4,240)	(1,879)
Total comprehensive income attributable to owners of the parent	45,532	74,179	121,490	(14,360)	(3,338)	20,999
Total comprehensive income attributable to non-controllinginterest	44,810	25,597	17,284	9,252	(16,307)	2,184
Earningsper share	3.08	3.21	3.27	0.85	0.69	0.12

Source: The annual financial report that has been audited or reviewed by CPAs is based on IFRS.

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(II) The name of the CPAs and their auditor’s opinions for the most recent five years:

Year	CPA	Name of CPA	Audit Opinion	Remarks
2016	Pey-Ling Du Eileen Liang	PwC Taiwan	Unqualified opinion	−
2017	Pey-Ling Du Eileen Liang	PwC Taiwan	Unqualified opinion	−
2018	Chin-Chang Chen Yi-Fan Lin	PwC Taiwan	Unqualified opinion	−
2019	Chin-Chang Chen Yi-Fan Lin	PwC Taiwan	Unqualified opinion	−
2020	Chin-Chang Chen Yi-Fan Lin	PwC Taiwan	Unqualified opinion	−

II. FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS

(I) Financial Ratio Analysis – Based on IFRS

Units: NT$ thousand

	Year Item	FINANCIAL ANALYSIS FOR THE PAST	FINANCIAL ANALYSIS FOR THE PAST	FINANCIAL ANALYSIS FOR THE PAST	FINANCIAL ANALYSIS FOR THE PAST	5 FISCAL YEARS	5 FISCAL YEARS
		2016	2017	2018	2019	2020	As of March 31
Financial structure (%)	Debt Ratio	35.05	44.51	37.33	42.66	42.63	43.93
	Ratio of long-term capital to property, plant and equipment	435.67	382.88	435.80	624.74	599.41	573.65
Solvency (%)	Current ratio	332.51	190.61	223.19	237.78	286.51	271.01
	Quick ratio	247.10	135.91	145.67	168.11	222.29	205.44
	Interest coverage ratio	23.07	21.99	18.66	9.88	7.07	4.98
Operating performance	Accounts receivable turnover(times)	3.30	3.08	3.12	2.84	2.51	3.23
	Average collection days	110.61	118.51	116.99	128.52	145.42	113.00
	Inventory Turnover (Times)	4.00	3.24	3.05	2.67	2.12	2.68
	Accounts payable turnover(times)	6.67	5.45	6.26	6.81	5.52	6.95
	Average days in sales	91.25	112.65	119.67	136.70	172.17	136.19
	Property, plant and equipment turnover (times)	5.34	5.86	6.83	6.41	4.58	4.85
	Total assets turnover (times)	1.01	0.94	0.99	0.80	0.52	0.58
Profitability	Return on Total Assets (%)	8.56	7.58	7.83	2.74	1.47	0.96
	Return on stockholders' equity (%)	11.98	12.01	12.57	3.90	2.08	1.12
	Pre-tax income to paid-in capital(%)	62.63	59.97	54.41	24.96	11.61	8.75
	Net Margin(%)	8.10	7.71	7.49	2.91	2.31	1.09

~96~

	Year Item	FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS	FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS	FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS	FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS	FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS	FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS
		2016	2017	2018	2019	2020	As of March 31
	Earningsper share(NT$)	3.08	3.45	3.57	0.88	0.69	0.12
Cash Flow	Cash flow ratio(%)	23.21	12.39	4.33	55.61	34.67	25.82
	Cash flow adequacy ratio (%)	84.11	63.18	63.01	182.16	282.18	442.58
	Cash reinvestment ratio (%)	2.04	6.96	0.28	22.11	10.58	7.54
Leverage	Operatingleverage	3.68	3.60	4.48	6.65	7.10	6.22
	Financial leverage	1.04	1.05	1.06	1.13	1.19	1.34
	Analysis of financial ratio differences for the last two years: (Not required if the difference does not exceed 20%) (1) Current ratio`：`The increase in current ratio was mainly due to the repayment of part of bank borrowings to reduce current liabilities. (2) Quick ratio`：`The increase in current ratio was mainly due to the repayment of part of bank borrowings to reduce current liabilities. (3) Interest coverage ratio`：`Mainly due to the decrease in interest expenses is less than the decrease in profit before income tax. (4) Inventory Turnover`：`Mainly due to the decline in the overall operation of the current period due to the impact of Covid-19, the operating costs decreased. (5) Profitability`：`Mainly due to the decrease in net profit in the current period due to the impact of Covid-19. (6) Cash flow ratio`：`Mainly affected by Covid-19, the current period's net profit decreased and the overall accounts receivable and inventories decreased compared with the previous period, resulting in a decrease in cash inflow from operating activities compared with the previous period. (7) Cash flow adequacy ratio`：`Mainly due to the net cash inflow from operating activities has been good in recent years, which is sufficient to pay dividends and capital expenditures, resulting in an increase in the cash flow adequacyratio.

Source: The annual financial report that has been audited or reviewed by CPAs is based on IFRS.

Note 1: No information on the net cash flow of operating activities for the latest five years is available for calculation.

Note 2: The computation formula of financial analysis

Financial structure
(1) Debt Ratio= Total liabilities / Total assets
(2) Ratio of long-term capital to property, plant and equipment= (Total equity + Non-current liabilities) / Net property, plant and equipment
Solvency
(1) Current ratio= Current assets / Current liabilities
(2) Quick ratio= (Current assets – Inventory – Prepaid expenses) / Current liabilities
(3) Interest coverage ratio= Income before income tax and interest expenses / Current interest expenses
Operating performance
(1) Accounts receivable (including accounts receivable and notes receivable arising from business operations) turnover= Net sales / Average accounts receivable (including accounts receivable and notes receivable arising from business operations)
(2) Average collection days= 365/ Accounts receivable turnover
(3) Inventory turnover= Cost of sales / Average inventory

~97~

(4) Accounts payable (including accounts payable and notes payable arising from business operations) turnover= Cost of sales / Average accounts payable (including accounts payable and notes payable arising from business operations)
(5) Average days in sales= 365/ Inventory turnover
(6) Property, plant and equipment turnover= Net Sales / Average net property, plant and equipment
(7) Total assets turnover= Net Sales / Average total assets
Profitability
(1) Return on total asset= (Net income (loss) + Interest expenses x (1 -Tax rate) ) / Average total assets
(2) Return on stockholders' equity= Net income (loss) / Average total equity
(3) Profit ratio= Net income (loss)/ Net sales
(4) Earnings per share= (Net income (loss) attributable to ownerss of the parent – Preferred Shares) / Weighted average number of shares outstanding
Cash flow
(1) Cash flow ratio= Net cash from operating activities / Current liability
(2) Cash flow adequacy ratio = Five-year sum of net cash from operating activities / Five-year sum of capital expenditures, Increase in inventory and Cash dividend)
(3) Cash reinvestment ratio= (Net cash from operating activities – Cash dividends) / (Gross property, plant and equipment + Long-term investments + Other asset + Working capital)
Leverage:
(1) Operating leverage= (Net sales - Variable cost) / Operating income
(2) Financial leverage= Operating income / (Operating Income – Interest expenses)

~98~

III. SUPERVISORS’ OR AUDIT COMMITTEE’S REPORT FOR THE MOST RECENT YEAR’S FINANCIAL STATEMENT

Patec Precision Industry Co., Ltd.

Audit Committee’s Audit Report

The Board of Directors has prepared the Company’s 2020 Business Report, Financial Statements, and proposal for allocation of earnings. The CPA firm of PricewaterhouseCoopers was retained to audit PATEC’s Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and earnings allocation proposal have been reviewed and determined to be correct and accurate by Audit Committee members of the Company. According to relevant requirements of the Securities and Exchange Act and Company Law, we hereby submit this report.

Patec Precision Industry Co., Ltd.

Chairman of the Audit Committee

Yen Chun-Teck

30th March, 2021

~99~

IV. FINANCIAL STATEMENT FOR THE MOST RECENT FISCAL YEAR

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To The Board of Directors and Shareholders of PATEC PRECISION INDUSTRY CO., LTD.

Opinion

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

In our opinion, 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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audit of the consolidated financial statements as at and for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China; and in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, “Rule No. Financial-Supervisory-Securities-Auditing-1090360805 issued by the Financial Supervisory Commission on February 25, 2020” and generally accepted auditing standards in the Republic of China for our audit of the consolidated financial statements as at and for the year ended December 31, 2019. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

~100~

Key audit matters

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

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

Recognition of overseas warehouse operating revenue

Description

Refer to Notes 4(3) and 6(13) for accounting policy on revenue recognition and details of operating revenue.

The Group’s Mainland China subsidiary, Wuxi Jingxin Precision Machining Co. Ltd. (referred herein as “Wuxi Jingxin”), stored inventories in warehouses which were under the custody of foreign third parties and checked and accepted by custodians in order to meet the requirements of overseas sales customers. The custodians regularly send inventory reports to Wuxi Jingxin to verify the quantities, and Wuxi Jingxin recognises operating revenue based on actual used inventories by customers which are shown in the inventory reports provided by custodians.

As a result of the multi-location of the Company’s warehouses in Europe, which involved manual verification, we considered the recognition of overseas warehouse operating revenue as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

We obtained an understanding and evaluated Wuxi Jingxin’s procedures on overseas warehouse operating revenue, and selected samples to check the accuracy of operating revenue recognition.
We obtained the inventory reports as at the balance sheet date, and checked whether the timing of revenue recognition was reasonable.
We performed confirmation procedures for significant warehouse locations.

~101~

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

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

~102~

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

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

Auditors’ responsibilities for the audit of the consolidated financial statements

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

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

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.

~103~

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.

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.

~104~

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.

Chen, Ching Chang[Lin, Yi-Fan ]

For and on behalf of PricewaterhouseCoopers, Taiwan March 30, 2021

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

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

~105~

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

Assets	December31,2020 AMOUNT % `$` `740,600` `33` `146,012` `6` `414,609` `18` `13,070` `1` `332,254` `15` `47,398` `2` `1,693,943` `75` `266,663` `12` `260,831` `11` `4,701` `-` `23,689` `1` `14,035` `1` `569,919` `25` `$` `2,263,862 100`	December31,2019	December31,2019
	AMOUNT `$` `740,600` `146,012` `414,609` `13,070` `332,254` `47,398` `1,693,943` `266,663` `260,831` `4,701` `23,689` `14,035` `569,919` `$` `2,263,862`	AMOUNT `$` `472,198` `218,665` `520,221` `2,145` `436,619` `66,163` `1,716,011` `249,421` `305,338` `4,961` `24,304` `17,251` `601,275` `$` `2,317,286`	%
Current assets 1100 Cash and cash equivalents 1136 Financial assets at amortised cost-current 1170 Accounts receivable, net 1200 Other receivables 130X Inventories 1410 Prepayments 11XX Total current assets Non-current assets 1600 Property, plant and equipment, net 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred tax assets 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets			`20` `9` `23` `-` `19` `3`
			`74`
			`11` `13` `-` `1` `1`
			`26`
			`100`

(Continued)

~106~

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December31,2020
December31,2019
Notes
AMOUNT
%
AMOUNT
%
6(6)
$
336,069
15
$
405,857
18
6(13)
3,725
-
8,688
-
154,426
7
167,432
7
6(7)
51,775
2
78,415
4
7,231
-
5,938
-
22,973
1
23,754
1
6(8)
6,846
-
-
-
8,193
1
31,599
1
591,238
26
721,683
31
6(8)
112,175
5
-
-
6(17)
22,138
1
24,612
1
187,471
8
229,436
10
6(9)
52,077
3
12,748
1
373,861
17
266,796
12
965,099
43
988,479
43
6(10)
457,597
20
448,268
19
6(11)
342,507
15
372,244
16
6(12)
134,066
6
81,706
4
365,964
16
411,037
18
6(10)
(
163,070 ) (
7) (
134,066) (
6)
-
- (
36,097) (
2)
1,137,064
50
1,143,092
49
161,699
7
185,715
8
1,298,763
57
1,328,807
57
$
2,263,862 100
$
2,317,286
100

Current liabilities
2100
Short-term borrowings
2130
Contract liabilities-current
2170
Accounts payable
2200
Other payables
2230
Current income tax liabilities
2280
Lease liabilities-current
2320
Long-term liabilities, current portion
2399
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings
2570
Deferred tax liabilities
2580
Lease liabilities-non-current
2670
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
Equity attributable to owners of the
parent
Share capital
3110
Ordinary share
Capital surplus
3200
Capital surplus
Retained earnings
3320
Special reserve
3350
Unappropriated retained earnings
Other equity interest
3400
Other equity interest
3500
Treasury stocks
31XX
Total equity attributable to
owners of the parent
36XX
Non-controlling interest
3XXX
Total equity
3X2X
Total liabilities and equity

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

~107~

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31,2020 AND 2019`

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

Items Year ended December 31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(15)
$
1,181,611
100
$
1,795,565
100
6(3)(19)
(
888,273 ) (
75) (
1,357,944) (
76)
293,338
25
437,621
24
6(19)
(
45,474 ) (
4) (
74,501) (
4)
(
157,838 ) (
14) (
195,155) (
11)
(
35,333 ) (
3) (
52,964) (
3)
(
212 )
- (
1,981)
-
(
238,857 ) (
21) (
324,601) (
18)
54,481
4
113,020
6
15,208
1
10,050
1
6(16)
10,881
1
8,668
-
6(17)
(
18,711 ) (
1) (
7,261)
-
6(18)
(
8,748 ) (
1) (
12,605) (
1)
(
1,370 )
- (
1,148)
-
53,111
4
111,872
6
6(20)
(
25,823 ) (
2) (
59,576) (
3)
$
27,288
2
$
52,296
3
( $
9,730 ) (
1) ($
1,519)
-
6(20)
1,356
-
380
-
(
38,559 ) (
3) (
56,265) (
3)
($
46,933 ) (
4) ($
57,404) (
3)
($
19,645 ) (
2) ($
5,108)
-
$
31,528
2
$
38,797
2
($
4,240 )
-
$
13,499
1
($
3,338 ) (
1) ($
14,360) (
1)
($
16,307 ) (
1) $
9,252
1
$
0.69
$
0.85
$
0.69
$
0.85

4000
Operating revenue
5000
Operating costs
5900
Gross profit
Operating expenses
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Impairment loss determined in
accordance with IFRS 9
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
Other comprehensive income (loss)
Components of other comprehensive
income (loss) that will not be
reclassified to profit or loss
8311
Loss on remeasurements of defined
benefit plans
8349
Income tax related to components of
other comprehensive income that
will not be reclassified to profit or
loss
Components of other comprehensive
income (loss) that will be reclassified
to profit or loss
8361
Exchange differences on translation
of foreign financial statements
8300
Other comprehensive loss for the
year
8500
Total comprehensive loss
Profit (loss) attributable to:
8610
Owners of parent
8620
Non-controlling interest
Comprehensive (loss) income
attributable to:
8710
Owners of parent
8720
Non-controlling interest
Earnings per share (in dollars)
9750
Basic earnings per share
9850
Diluted earnings per share

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

~108~

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in thousands of New Taiwan dollars)`

`Notes`					`Equity attributable`	`Equity attributable`	`to owners of th`	`e`	`parent`			`Total`	`Non-controllin` `g interest`	`Total`
	`Ordinary share` `$` `410,964` `-` `-` `-` `-` `-` `37,304` `-` `-` `$` `448,268` `$` `448,268` `-` `-` `-` `-` `-` `15,689` `-` `(` `6,360)` `$` `457,597`		`Capital`	`R`	`eserves`	`Stock warrants`	`Retain`	`e`	`d Earnings` `Unappropriated` `retained earnings`	`Exchange` `difference on` `translation of` `financial` `statements`	`Treasury shares`
		`Additional` `paid-in capital`	`Changes in` `ownership` `interests in` `subsidiaries`		`Employee stock` `warrants`		`Special reserve`
`6(12)` `6(14)`		`$` `363,699` `-` `-` `-` `-` `-` `-` `-` `-` `$` `363,699` `$` `363,699` `-` `-` `-` `-` `-` `-` `-` `(` `29,737)` `$` `333,962`	`$` `208` `-` `-` `-` `-` `-` `-` `-` `-` `$` `208` `$` `208` `-` `-` `-` `-` `-` `-` `-` `-` `$` `208`		`$` `8,337` `-` `-` `-` `-` `-` `-` `-` `(` `8,337)` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`	`$` `-` `-` `-` `-` `-` `-` `-` `-` `8,337` `$` `8,337` `$` `8,337` `-` `-` `-` `-` `-` `-` `-` `-` `$` `8,337`	`$` `59,408` `-` `-` `-` `22,298` `-` `-` `-` `-` `$` `81,706` `$` `81,706` `-` `-` `-` `52,360` `-` `-` `-` `-` `$` `134,066`		`$` `436,784` `38,797` `(` `797)` `38,000` `(` `22,298)` `(` `4,145)` `(` `37,304)` `-` `-` `$` `411,037` `$` `411,037` `31,528` `(` `5,862)` `25,666` `(` `52,360)` `(` `2,690)` `(` `15,689)` `-` `-` `$` `365,964`	`($` `81,706 )` `-` `(` `52,360 )` `(` `52,360 )` `-` `-` `-` `-` `-` `($` `134,066 )` `($` `134,066 )` `-` `(` `29,004 )` `(` `29,004 )` `-` `-` `-` `-` `-` `($` `163,070 )`	`($` `36,097 )` `-` `-` `-` `-` `-` `-` `-` `-` `($` `36,097 )` `($` `36,097 )` `-` `-` `-` `-` `-` `-` `-` `36,097` `$` `-`	`$ 1,161,597` `38,797` `(` `53,157)` `(` `14,360)` `-` `(` `4,145)` `-` `-` `-` `$ 1,143,092` `$ 1,143,092` `31,528` `(` `34,866)` `(` `3,338)` `-` `(` `2,690)` `-` `-` `-` `$ 1,137,064`	`$` `188,656` `13,499` `(` `4,247 )` `9,252` `-` `-` `-` `(` `12,193 )` `-` `$` `185,715` `$` `185,715` `(` `4,240 )` `(` `12,067 )` `(` `16,307 )` `-` `-` `-` `(` `7,709 )` `-` `$` `161,699`	`$ 1,350,253` `52,296` `(` `57,404 )` `(` `5,108 )` `-` `(` `4,145 )` `-` `(` `12,193 )` `-` `$ 1,328,807` `$ 1,328,807` `27,288` `(` `46,933 )` `(` `19,645 )` `-` `(` `2,690 )` `-` `(` `7,709 )` `-` `$ 1,298,763`

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

~109~

`PATEC PRECISION INDUSTRY CO., LTD. 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 OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Expected credit loss / Provision for bad
debts

Loss (gain) on disposal of property, plant
and equipment

Interest income
Depreciation

Gain on disposal of subsidiaries

Depreciation on right-of-use assets

Interest expense

Changes in operating assets and liabilities
Changes in operating assets
Accounts receivable
Other receivables
Inventories
Prepayments
Changes in operating liabilities
Contract liabilities
Accounts payable
Other payables
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows from operating
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in financial assets at
amortised cost-current
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and
equipment
Decrease in other non-current assets
Proceeds from disposal of subsidiaries
Net cash flows from (used in)
investing activities Notes
2020

2019
$
53,111$
111,872

12(2)
212
1,981

6(14)
294(
592 )
(
15,208 ) (
10,050 )
6(4)
50,654
57,432
6(14)
(
467 )
-
6(5)
27,612
30,515
6(15)
8,748
12,605

93,039
216,490
(
11,550 )
25,310
24,700
105,436
18,765(
2,237 )
(
4,963 ) (
50,500 )
(
13,006 ) (
63,827 )
(
25,037 )
3,790
(
23,406 ) (
1,107 )
39,329
5,489
222,827
442,607
15,208
10,050
(
8,748 ) (
8,811 )
(
24,294 ) (
42,534 )
204,993
401,312

72,653(
166,671 )

(
7,907 ) (
27,558 )

3,223
5,710
3,216
3,908
12,948
-
84,133(
184,611 )

(Continued)

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`PATEC PRECISION INDUSTRY CO., LTD. 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 FINANCING ACTIVITIES
Increase in short-term borrowings

Decrease in short-term borrowings

Repayment of convertible bonds
Payment of lease liability

Proceeds from long-term borrowings
Cash dividends paid
Cash dividends paid to non-controllong
interest
Payments for acquisition of equity of
non-controlling interest
Net cash flows used in financing
activities
Effect of exchange rate changes on cash and
cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year Notes
2020

2019
6(20)
$
685,464$
418,384
6(20)
(
759,287 ) (
219,738 )
-(
171,900 )
6(20)
(
28,958 ) (
48,982 )
118,933
-
(
1,597 ) (
4,121 )
-(
12,193 )
(
17,201 )
-
(
2,646 ) (
38,550 )
(
18,078 ) (
26,542 )
268,402
151,609
6(1)
472,198
320,589
6(1)
$
740,600$
472,198

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

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PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

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

1. HISTORY AND ORGANIZATION

Patec Precision Industry Co., Ltd. (the “Company”) was incorporated in the Cayman Islands on June 29, 2011. Starting from June 3, 2015, the Company’s stocks were officially listed on the Taiwan Stock Exchange. The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in investment holdings, production and sale of press machines and parts for automobiles and motorcycles.

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

These consolidated financial statements were authorised for issuance by the Board of Directors on March 30, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

==> picture [441 x 48] intentionally omitted <==

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

International
Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

New standards, interpretations and amendments endorsed by the FSC are as follows: New Standards,Interpretations andAmendments	effective from 2020 International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of	January 1, 2020
material’
Amendments to IFRS 3, ‘Definition of a business’	January 1, 2020
Amendments to IFRS 9, IAS 39 and IFRS 7, 'Interest rate benchmark	January 1, 2020
reform’
Amendment to IFRS 16, ‘Covid-19-related rent concessions’	January 1, 2020
Note: Earlier application from January 1, 2020 is allowed by the

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

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

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

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New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, 'Interest Rate Benchmark Reform— Phase 2’	January 1, 2021 January 1, 2021

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

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

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

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

yet included in the

New Standards,Interpretations andAmendments

International
Accounting
StandardsBoard

Amendments to IFRS 3, ‘Reference to the conceptual framework’
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, 'Insurance contracts'
Amendments to IAS 1, ‘Classification of liabilities as current or non-
current’
Amendments to IAS 1, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Definition of accounting estimates’
Amendments to IAS 16, ‘Property, plant and equipment: proceeds before
intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a contract’
Annual improvements to IFRS Standards 2018–2020

January 1, 2022
To be determined by
International
Accounting Standards
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(4) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC

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Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(5) Basis of preparation

A. Except for defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation, the consolidated financial statements have been prepared under the historical cost convention.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(6) Basis of consolidation

A. Basis for preparation of consolidated financial statements:
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

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B. Subsidiaries included in the consolidated financial statements:

~115~

Name of Name of investor subsidiary The Company PATEC PTE. LTD. (PATEC) PATEC Press Automation Technology Pte Ltd. (PAT) PATEC Wuxi Jingxin Precision Machining Co. Ltd. (Wuxi Jingxin) PATEC Patec Precision Kft (KFT) PATEC Patec Medical Supplies Pte. Ltd. (Patec Medical) PATEC KABAM Pte Ltd (KABAM) PAT PT. PATEC PRESISI ENGINEERING (PT. Patec) Wuxi Jingxin Wuxi Baida Precision Molding Co., Ltd. (Wuxi Baida) Wuxi Jingxin Yancheng Jingxin Precision Machining Co. Ltd. (Yancheng Jingxin) PT. Patec PT. PDF Presisi Engineering (PT. PDF) PT. Patec PT. API Precision (PT. API)	Main business activities Sale of press machines Production and sale of press machines Production and sale of products for automobiles Production and sale of products for automobiles Medical device and equipment Application sales of manipulators Production and sale of products for automobiles and motorcycles Production and sale of press machines Production and sale of products for automobiles Production and sale of products for automobiles Production and sale of products for automobiles	December December 31,2020 31,2019 100 100 100 100 93 93 100 100 58 58 100 100 70 70 100 100 0 100 89 89 89 89 Ownership (%)	Description Note 1 Note 2
		December 31,2020 100 100 93 100 58 100 70 100 0 89 89

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Note 1: To meet the Group’s operating policies, on April 1, 2019, PATEC invested SGD 0.3 thousand and acquired a 100% equity interest in BIONICXP. Additionally, on May 30, 2019, BIONICXP increased its capital in cash amounting to SGD 100 thousand which was fully subscribed by PATEC. BIONICXP was renamed as KABAM Pte Ltd. on December 16, 2020.
Note 2: The subsidiary, Wuxi Jingxin, sold its 100% equity interest in the subsidiary, Yancheng Jingxin, in September 2020 as resolved by the shareholders and entered into a share transfer agreement for RMB 5,530 thousand in the same month. As of December 31, 2020, all proceeds have been collected.

The disposed subsidiary’s carrying amount of assets and liabilities on August 31, 2020 is shown below:

is shown below:
Assets: Cash Accounts receivable Other receivables Fixed assets Total assets Liabilities: Other payables Total net assets	August 31, 2020
	10,849 $ 12,128 625 1,327
	24,929
	1,603
	23,326 $

C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:

As of December 31, 2020 and 2019, the non-controlling interest amounted to $161,699 and $185,715, respectively. The information on non-controlling interest and respective subsidiaries is as follows:

subsidiaries is as follows:
Name of Principal place subsidiary ofbusiness Wuxi Jingxin Group China PT. PATEC Group Indonesia		Non-controllinginterest
	December	Ownership (%) 7 30 31,2020	December31,2019
	Amount 80,272 $ 79,569		Ownership Amount (%) 75,980 $ 7 99,608 30

Summarized financial information of the subsidiaries:

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Balance sheets

Current assets Non-current assets Current liabilities Non-current liabilities Total net assets

		WuxiJingxinGroup	WuxiJingxinGroup	WuxiJingxinGroup	WuxiJingxinGroup
		December31,
		2020			2019
	$	1,272,500		$	1,144,627
		131,135			153,944
(		226,382)	(		143,429)
(		30,502)	(		69,706)
	$	1,146,751		$	1,085,436

Current assets Non-current assets Current liabilities Non-current liabilities Total net assets Statements of comprehensive income

		PT.PATEC Group	PT.PATEC Group
		December 31,
		2020		2019
	$	176,920	$	226,961
		170,791		185,510
(		68,337)	(	78,690)
(		26,654)	(	17,970)
	$	252,720	$	315,811

Statements of comprehensive income
			WuxiJingxinGroup
			Years ended	December31,
			2020		2019
Revenue		$	776,807		$	1,117,898
Profit before income tax			155,510			233,469
Income tax expense	(		17,348)	(		33,019)
Profit for the year		$	138,162		$	200,450
Other comprehensive income (loss)		$	9,289	($		42,845)
Total comprehensive income for the year		$	147,451		$	157,605
Comprehensive income attributable to
non-controlling interest		$	10,322		$	11,026
Dividends paid to non-controlling interest		$	-		$	12,193

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			PT.PATEC Group	PT.PATEC Group
			Years ended	December	31,
			2020		2019
Revenue		$	284,931	$		453,585
(Loss) profit before income tax	(		25,853)			7,586
Income tax expense	(		4,524)	(		3,423)
(Loss) profit for the year	($		30,377)	$		4,163
Other comprehensive loss	(		26,114)	(		4,624)
Total comprehensive loss for the year	($		56,491)	($		461)
Comprehensive loss attributable to non-controlling interest	($		18,495)	($		952)

Statements of cash flows

Statements of cash flows
			WuxiJingxin			Group
			Years ended	December31,
			2020			2019
Net cash generated from operating activities		$	303,167		$	373,687
Net cash generated from (used in) investing
activities			83,032	(		166,890)
Net cash used in financing activities	(		11,796)	(		186,992)
Effect of exchange rates on cash and cash
equivalents			2,931	(		8,300)
Increase in cash and cash equivalents			377,334			11,505
Cash and cash equivalents, beginning of year			234,192			222,687
Cash and cash equivalents, end of year		$	611,526		$	234,192

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			PT.PATEC	PT.PATEC	PT.PATEC	Group
			Years ended	December31,
			2020			2019
Net cash (used in) generated from operating	($		1,133)		$	60,985
activities
Net cash used in investing activities	(		3,485)	(		13,305)
Net cash used in financing activities	(		11,360)	(		27,819)
Effect of exchange rates on cash and cash
equivalents	(		1,631)	(		1,009)
(Decrease) increase in cash and cash
equivalents	(		17,609)			18,852
Cash and cash equivalents, beginning of year			37,886			19,034
Cash and cash equivalents, end of year		$	20,277		$	37,886

(7) Foreign currency translation

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

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income within “other gains and losses”.
B. Translation of foreign operations

The operating results and financial position of all the group entities, associates and joint

~120~

agreements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  - (a) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  - (b) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  - (c) All resulting exchange differences are recognised in other comprehensive income.

(8) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realised within twelve months from the balance sheet date;
- (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a) Liabilities that are expected to be paid off within the normal operating cycle;
- (b) Liabilities arising mainly from trading activities;
- (c) Liabilities that are to be paid off within twelve months from the balance sheet date;
- (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(9) Cash equivalents

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

(10) Financial assets at amortised cost

A. Financial assets at amortised cost are those that meet all of the following criteria:
(a) The objective of the Group’s business model is achieved by collecting contractual cash flows.
(b) The assets’ contractual cash flows represent solely payments of principal and interest.

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B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.
C. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

(11) Accounts and notes receivable

A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(12) Impairment of financial assets

For assets at amortised cost including accounts receivable that have a significant financing component, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

(13) Derecognition of financial assets

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

(14) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(15) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in

~122~

which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures 27 years Machinery and equipment 5 ～ 10 years Transportation equipment 5 ～ 10 years Office equipment 3 ～ 10 years Other equipment 5 ～ 10 years Leasehold assets 5 ～ 10 years

(16) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities
A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.
C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
- (a) The amount of the initial measurement of lease liability; and
- (b) Any lease payments made at or before the commencement date.
- The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.
(17) Intangible assets goodwill
Goodwill arises in a business combination accounted for by applying the acquisition method.

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(18) Impairment of non-financial assets

A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.
B. The recoverable amounts of goodwill shall be evaluated periodically. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
(19) Borrowings
A. Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(20) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(21) Derecognition of financial liabilities

Financial liability is derecognised when the obligation under the liability specified in the contract is either discharged or cancelled or expired.

(22) Employee benefits

A. Short-term employee benefits

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Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

B. Pensions
(a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in these corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.
- ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
- iii. Past service costs are recognised immediately in profit or loss.
C. Employees’ compensation and directors’ and supervisors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(23) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

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B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

(24) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(25) Dividends

Shareholders’ dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s Board of Directors. Cash dividends are recorded as liabilities. Stock dividends recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

(26) Revenue recognition

Sales of goods

A. The Group manufactures and sells press machines and products for automobiles and motorcycles. Sales are recognised when control of the products has transferred, being when the products are delivered to the customers, the customers have full discretion

~126~

over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customers’ 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 customers, and either the customers have accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

B. The goods are often sold with volume discounts based on aggregate sales over a 12-month period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated sales returns and allowances. Accumulated experience is used to estimate and provide for the sales returns and allowances, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognised for expected sales returns and allowances payable to customers in relation to sales made until the end of the reporting period. The sales usually are made with a credit term of 91 to 180 days, which is consistent with the market practice, so the contract does not contain a significant financing component.
C. The Group’s obligation to provide a repair or exchange for faulty products under the standard warranty terms is recognised as a provision.
D. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

(27) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Group’s Chief Operating Decision-Maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

(28) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises expenses for the related costs for which the grants are intended to compensate. Government grants related to property, plant and equipment are presented by deducting the grants from the asset’s carrying amount and are amortised to profit or loss over the estimated useful lives of the related assets as reduced depreciation expenses.

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5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Critical judgements, estimates and assumptions concerning uncertainties are addressed below:

(29) Critical judgements in applying the Group’s accounting policies

None.

(30) Critical accounting estimates and assumptions

None.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(31) Cash and cash equivalents

None. )Critical accounting estimates and assumptions None. TAILS OF SIGNIFICANT ACCOUNTS )Cash and cash equivalents
Cash on hand Demand deposits Time deposits	2020 2019 32 $ 238 $ 739,072 325,748 1,496 146,212 740,600 $ 472,198 $ December31,
		238 $ 325,748 146,212
		472,198 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. As of December 31, 2020 and 2019, cash and cash equivalents amounting to $59,966 and $48,586 were pledged to others as collateral and were classified to current financial assets at amortised cost. Details are provided in Note 8.
C. The Group has deposits with maturity over three months amounting to $86,046 and $170,079, and the effective interest rate was 1.95% and 3.05%~3.85% in 2020 and 2019, respectively. As the time deposits are not highly-liquid investments, they were classified to current financial assets at amortised cost.

(32) Accounts receivable

assets at amortised cost. )Accounts receivable
				December31,
			2020			2019
Accounts receivable		$		417,840	$		523,473
Less: Allowance for bad debts	(			3,231)	(		3,252)
		$		414,609	$		520,221

A. The ageing analysis of accounts receivable is as follows:

~128~

Not due Up to 30 days 31 to 90 days 91 to 180 days Over 181 days	2020 2019 350,694 $ 463,804 $ 32,268 38,993 17,159 14,327 13,749 1,880 3,970 4,469 417,840 $ 523,473 $ December31,

The above ageing analysis was based on due date.

B. As of December 31, 2020 and 2019, accounts receivable were all from contracts with customers. As of January 1, 2019, the balance of receivables from contracts with customers amounted to $738,775.

C. The Group does not hold any collateral as security.
D. Information relating to credit risk is provided in Note 12(2).

(33) Inventories

Cost 163,536 $ 64,720 137,501 365,757 $ Cost 192,506 $ 72,467 205,355 470,328 $	Allowance for valuation loss 11,419) ($ 62) ( 22,022) ( 33,503) ($ December31,2020 December31,2019	Bookvalue 152,117 $ 64,658 115,479 332,254 $

Cost	Allowance for valuation loss	Bookvalue
192,506 $ 72,467 205,355	7,109) ($ 62) ( 26,538) ( 33,709) ($	185,397 $ 72,405 178,817
470,328 $		436,619 $

The cost of inventories recognised as expense for the year:

Cost of inventory sold Inventory write-down	2020 880,163 $ 8,110 888,273 $	2019
		1,330,623 $ 27,321
		1,357,944 $

~129~

(34) Property, plant and equipment

)Property, plant and equipment

Buildings and
Machinery and Transportation
Office
Leasehold
Construction
structures
equipment
equipment
equipment
improvements
Others
inprogress
At January 1, 2020
Cost
62,252
$ 644,019
$ 21,314
$ 12,065
$ 14,117
$ 29,581
$ 1,354
$ Accumulated depreciation
22,133)
(
461,421)
(
15,729)
(
10,047)
(
6,641)
(
19,310)
(
-
40,119
$ 182,598
$ 5,585
$ 2,018
$ 7,476
$ 10,271
$ 1,354
$ 2020
Opening net book amount
40,119
$ 182,598
$ 5,585
$ 2,018
$ 7,476
$ 10,271
$ 1,354
$ Additions
-
7,182
-
83

6
636
-
Disposals
-
4,521)
(
232)
(
16)
(
-
75)
(
-
Reclassifications
-
27,693
-
-
-
-
51,972
Depreciation charge
2,253)
(
42,179)
(
1,707)
(
576)
(
2,002)
(
1,937)
(
-
Net exchange differences
2,395)
(
11,318)
(
33)
(
207
305)
(
749)
(
239)
(
Closing net book amount
35,471
$ 159,455
$ 3,613
$ 1,716
$ 5,175
$ 8,146
$ 53,087
$ At December 31, 2020
Cost
58,395
$ 616,279
$ 16,537
$ 11,302
$ 12,782
$ 27,789
$ 53,087
$ Accumulated depreciation
22,924)
(
456,824)
(
12,924)
(
9,586)
(
7,607)
(
19,643)
(
-
35,471
$ 159,455
$ 3,613
$ 1,716
$ 5,175
$ 8,146
$ 53,087
$

Total

784,702
$ 535,281)
(
249,421
$ 249,421
$ 7,907
4,844)
(
79,665
50,654)
(
14,832)
(
266,663
$ 796,171
$ 529,508)
(
266,663
$

~130~

Buildings and
Machinery and Transportation
Office
Leasehold
Construction
structures
equipment
equipment
equipment
improvements
Others
inprogress
At January 1, 2019
Cost
63,649
$ 668,544
$ 32,706
$ 11,823
$ 11,793
$ 29,199
$ 859
$ Accumulated depreciation
20,272)
(
436,589)
(
17,132)
(
9,812)
(
5,752)
(
17,938)
(
-
43,377
$ 231,955
$ 15,574
$ 2,011
$ 6,041
$ 11,261
$ 859
$ 2020
Opening net book amount
43,377
$ 231,955
$ 15,574
$ 2,011
$ 6,041
$ 11,261
$ 859
$ Adjustment due to
retrospective application
(Note)
-
(14,830)
(7,771)
-

-
-
-
43,377
217,125
7,803
2,011
6,041
11,261
859
Additions
-
19,677
1
1,014
4,903
1,427
536
Disposals
-
3,741)
(
-
46)
(
1,284)
(
47)
(
-
Reclassifications
-
3,164
150
-
-
-
-

Depreciation charge
2,376)
(
47,678)
(
2,338)
(
931)
(
1,913)
(
2,196)
(
-
Net exchange differences
882)
(
5,949)
(
31)
(
30)
(
271)
(
174)
(
41)
(
Closing net book amount
40,119
$ 182,598
$ 5,585
$ 2,018
$ 7,476
$ 10,271
$ 1,354
$ At December 31, 2019
Cost
62,252
$ 644,019
$ 21,314
$ 12,065
$ 14,117
$ 29,581
$ 1,354
$ Accumulated depreciation
22,133)
(
461,421)
(
15,729)
(
10,047)
(
6,641)
(
19,310)
(
-
40,119
$ 182,598
$ 5,585
$ 2,018
$ 7,476
$ 10,271
$ 1,354
$

Total

818,573
$ 507,495)
(
311,078
$ 311,078
$ (22,601)
288,477
27,558
5,118)
(
3,314
57,432)
(
7,378)
(
249,421
$ 784,702
$ 535,281)
(
249,421
$

Note: Adjusted to right-of-use assets because of the adoption of IFRS 16.

Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

~131~

`－` (35) Leasing arrangements lessee

A. The Group leases various assets including land, buildings, machinery and equipment, business vehicles. Rental contracts are typically made for periods of 1 to 34 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Machinery and equipment Transportation equipment (Business vehicles) Office equipment (Photocopiers) Land Buildings Machinery and equipment Transportation equipment (Business vehicles) Office equipment (Photocopiers)	December31,2020 December31,2019 Carrying amount Carrying amount 42,861 $ 47,112 $ 206,787 242,710 7,828 9,708 3,269 5,634 86 174 260,831 $ 305,338 $ Years endedDecember31	December31,2020 December31,2019 Carrying amount Carrying amount 42,861 $ 47,112 $ 206,787 242,710 7,828 9,708 3,269 5,634 86 174 260,831 $ 305,338 $ Years endedDecember31
	2020 Depreciationcharge 1,395 $ 22,808 1,218 2,111 80 27,612 $	2019
		Depreciation charge
		1,464 $ 24,698 1,952 2,316 85
		30,515 $

C. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets were $0 and $18,738, respectively.
D. The information on profit and loss accounts relating to lease contracts is as follows:

For the years ended December 31, 2020 and 2019, the $0 and $18,738, respectively. The information on profit and loss accounts relating to Office equipment (Photocopiers)	additions to right-of-use assets were lease contracts is as follows: 80 85 27,612 $ 30,515 $	additions to right-of-use assets were lease contracts is as follows: 80 85 27,612 $ 30,515 $
Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts	2020 2019 $ 1,805 $ 2,064 4,137 7,419 Years ended December31,
		2019
		$ 2,064 7,419

E. For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases were $34,900 and $58,465, respectively.

(36) Short-term borrowings

were $34,900 and $58,465, respectively. Short-term borrowings
Type of borrowings Bank borrowings Unsecured borrowings Secured borrowings Interest rate range	December31,
	2020 163,832 $ 172,237 336,069 $ 0.85%~4.50%	2019
		197,430 $ 208,427
		405,857 $
		0.85%~6.05%

~132~

Details of assets pledged as collateral for borrowings is provided in Note 8.

(37) Other payables

Details of assets pledged as collateral for borrowings )Other payables	is provided in Note 8.
Payables for cash dividends - owners of the parent Payables for cash dividends - non-controlling interest Payables for investment Expense payable and others	December31,2020 1,116 $ 7,199 - 43,460 51,775 $	December31,2019 24 $ - 17,201 61,190
		78,415 $

To meet the Group’s operating policies, the Board of Directors of the Company during its meeting resolved to acquire 8% equity interest in the Mainland China subsidiary, Wuxi Jingxin, from its shareholders through the subsidiary, PATEC, with the transaction price of RMB 30 million. The transaction has been fully paid on March 23, 2020.

- (38) Long term borrowings

	Borrowing period and Type ofborrowings repayment term Long-term bank borrowings Unsecured borrowings - Resona Borrowing period is from November 25, 2020 to November 24, 2025; principal is repayable quarterly from November 2021 Unsecured borrowings - HSBC Borrowing period is from November 25, 2020 to November 25, 2025; principal is repayable monthly from November 2021 Unsecured borrowings - BUDAPEST Borrowing period is from November 19, 2020 to November 18, 2026; principal is repayable quarterly from September 2021 Less: Current portion	Interest rate range 2.50% 3.00% 0.19%-1.69%	Collateral None None None		31-Dec-20
					63,754 $ 42,503 12,764 119,021 6,846) ( 112,175 $

(39) Pensions

A. The consolidated entity, PT. Patec, has a defined benefit pension plan in accordance with the regulations of the Republic of Indonesia. As of December 31, 2020 and 2019, the net amount of liabilities recognised in the balance sheet was $24,866 and $12,748, respectively.
B. Other consolidated entities make monthly contributions to pension and post-retirement

~133~

funds administered by the government in accordance with local pension regulations.

(40) Share capital
A. As of December 31, 2020, the Company has 45,760 thousand shares of ordinary stock outstanding, and the paid-in capital was $457,597 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

~134~

Movements in the number of the Company’s ordinary shares outstanding (in thousands) are as follows:

ollows:
	Years ended December31,
	2020	2019
At January 1	44,191	40,460
Stock dividends	1,569	3,731
At December 31	45,760	44,191

B. Treasury shares
(a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

treasury shares are as follows:
Name of company Reason for holdingthe shares reacquisition Number of shares The Company To be reissued to employees - Name of company Reason for holding the shares reacquisition Number of shares The Company To be reissued to employees 636 December December	Bookvalue 31, 2020
	- $ 31, 2019
	Book value
	36,097 $

(b) On August 17, 2017, the Board of Directors during its meeting resolved to purchase treasury shares during the estimated period from August 18, 2017 to October 17, 2017, and the estimated price ranged between NT$50 and NT$65. As of December 31, 2017, the Company had purchased a total of 636 thousand shares in the amount of $36,097. The treasury shares have been retired as agreed by the Board of Directors on November 13, 2020.
(c) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.
(d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.
(e) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within five years from the reacquisition date and shares not reissued within the five-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

(41) Capital surplus

The Company’s capital surplus arose from the paid-in capital in excess of par. Subject to the Cayman Company Rules, so long as the shares are listed on any securities exchange, the Company may use capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations to issue new shares to stockholders, provided that the Company has no accumulated deficit, as approved by the shareholders by way of a special resolution, in accordance with the Company’s Articles of Incorporation.

(42) Retained earnings

A. At the end of the accounting year, if there is any retained earnings (including the

~135~

unappropriated earnings of prior years), shall first be used to pay all taxes and offset prior years’ operating losses (including the deficits of prior years) and then set aside special reserve (if any). The residual should be distributed based on the majority vote of the shareholders during their meeting. The ratio of appropriation of retained earnings proposed by the Board of Directors should not be less than 5% of distributable retained earnings, the dividends should be distributed to shareholders in accordance with their shareholding ratio. The amount of cash dividends should not be less than 3% of total dividend distribution.

B. As the Company is in the growth stage, the dividend policy is adopted taking into consideration the Company’s capital expenditure, future expansion plans, financial plan and other plans for continuous development.
C. Dividends, bonus or other benefits to shareholders should be distributed in New Taiwan dollars.
D. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
E. On June 22, 2020 and June 28, 2019, the shareholders resolved the distribution of earnings for 2019 and 2018 as follows:

			Years endedDecember31,	Years endedDecember31,
	2019			2018
		Dividends per			Dividends per
	Amount	share (indollars)		Amount	share (indollars)
Cash dividend	$ 2,690	$	0.06 $	4,145	$	0.10
Stock dividend	15,689		0.35	37,304		0.92
Special reserve	52,360		`-`	22,298		`-`

(43) Operating revenue

A. The Group derives revenue from sale and maintenance of machinery and parts of automobiles and motorcycles, processing goods and services. Please refer to Note 14 for relating disclosure.
B. The Group’s overall revenue was affected by the delay in sales orders caused by the global pandemic, Covid-19, in 2020. The Group continued to pay attention on market changes to adjust purchases and production schedules and actively negotiates with customers on the production and supply schedules of products. After assessment, the COVID-19 pandemic has no significant impact on the scope and price of service contracts.
C. As of December 31, 2020 and 2019, and January 1, 2019, the Group recognised contract liabilities in relation to contract revenue amounting to $3,725, $8,688 and $59,188, respectively.
D. For the years ended December 31, 2020 and 2019, revenue recognised that was included in the contract liability balance at the beginning of the year was $8,269 and $59,188, respectively.

~136~

(44) Other gains and losses

Other gains and losses
		Years ended	December	31,
		2020		2019
Net currency exchange loss	($	13,734)	($	7,853)
Gain on disposal of subsidiaries		467		-
(Loss) gain on disposal of property, plant and
equipment	(	294)		592
Miscellaneous disbursements	(	5,150)		-
	($	18,711)	($	7,261)

(45) Finance costs

Interest expenses: Bank borrowings Convertible bonds Others Finance costs	2020 2019 6,943 $ 6,747 $ - 3,794 1,805 2,064 $ 8,748 $ 12,605 Years endedDecember31,

(46) Employee benefit expense

Employee benefit expense
			Years endedDecember		31,
			2020		2019
Employee benefit expense
Wages and salaries		$	274,509	$		359,742
Insurance expense			2,871			10,354
Pension costs	(		5,147)			32,376
Other personnel expenses			12,878			24,728
		$	285,111	$		427,200
Depreciation		$	78,266	$		87,947

A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees' compensation and directors’ and supervisors’ remuneration. The ratio shall not be lower than 0.1% for employees’ compensation and shall not be higher than 3% for directors’ and supervisors’ remuneration.
B. The employees’ compensation and directors’ and supervisors’ remuneration for the years ended December 31, 2020 and 2019 were estimated and accrued based on a ratio of distributable profit of current year as regulated in the Company’s Articles as of the end of the reporting period. For 2020 and 2019, employees’ compensation was accrued at $250 and $200, respectively; directors’ and supervisors’ remuneration was accrued at $700 for both years. The aforementioned amounts were recognised in salary expenses.
C. Employees’ compensation and directors’ remuneration for 2019 amounted to $250 and $700, respectively, as resolved by the Board of Directors during its meeting on March 27, 2020. The difference of $50 between the amounts resolved at the Board meeting and the amounts of $200 and $700 recognised in the 2019 financial statements, had been adjusted in profit or loss in 2020. The distribution of the aforementioned amounts has not been

~137~

completed.

D. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.
E. Pension costs decreased for the year as the Mainland China government reduced the pension contributions and waived part of the estimated expense on social insurance of prior years in response to the Covid-19 pandemic.
(47) Income tax
A. Components of income tax expense

ome tax Components of income tax expense
			Years ended	December	31,
			2020		2019
Current tax:
Current tax on profits for the year		$	26,328	$	47,319
Prior year income tax underestimation			-		89
Total current tax			26,328		47,408
Deferred tax:
Origination and reversal of temporary
differences	(		505)		12,168
Income tax expense		$	25,823	$	59,576

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

as follows:
	Years	ended	December	31,
	2020			2019
Remeasurement on defined benefit obligations	($	1,355)	($	380)

C. Reconciliation between income tax expense and accounting profit:

			Years endedDecember	Years endedDecember	31,
			2020		2019
Tax calculated based on profit before tax
and statutory tax rate		$	18,067	$		36,073
Prior year income tax underestimation			-			89
Effects from items disallowed by tax
regulation	(		7,082)	(		4,289)
Taxable loss not recognised as deferred tax
assets			3,803			27,703
Assessment of realisation of deferred tax
assets			11,035			-
Income tax expense		$	25,823	$		59,576

Note: The basis for computing the applicable tax rate are the rates applicable in the respective countries where the Group entities operate.
D. Amounts of deferred tax as a result of temporary differences and loss carryforward are as follows:

~138~

2020

								Recognised
					Recognised			in other
						in profit	comprehensive
			January1			or loss		income		December31
Deferred tax assets
Temporary differences
Unrealised gain on
disposal of property,
plant and equipment		$	5,317	($		862)		-		$	4,455
Loss carryforward			5,487			10,640		-			16,127
Others			13,500	(		11,748)		1,355			3,107
		$	18,987	($		1,970)	$	1,355		$	23,689
Deferred tax liabilities
Temporary differences
Book-tax difference in the basis of finance lease	($		2,318)		$	1,315	$	-	($		1,003)
Investment income of long- term equity investments	(		17,897)	(		5,644)		-	(		23,541)
Others	(		4,397)			6,803		-			2,406
	($		24,612)		$	2,474	$	-	($		22,138)
						2019
								Recognised
					Recognised			in other
						in profit	comprehensive
			January1			or loss		income		December31
Deferred tax assets
Temporary differences
Unrealised gain on
disposal of property,
plant and equipment		$	5,738	($		421)	$	-		$	5,317
Loss carryforward			5,537	(		50)		-			5,487
Others			11,421			1,699		380			13,500
		$	22,696		$	1,228	$	380		$	24,304
Deferred tax liabilities
Temporary differences
Book-tax difference in the basis of finance lease	($		2,591)		$	273	$	-	($		2,318)
Investment income of long- term equity investments	(		2,604)	(		15,293)		-	(		17,897)
Others	(		6,021)			1,624		-	(		4,397)
	($		11,216)	($		13,396)	$	-	($		24,612)

E. Expiration dates of unused loss carryforward and amounts of unrecognised deferred tax assets are as follows:

~139~

December 31, 2020

	December31,2020
Year incurred 2015 2016 2017 2018 2019 2020	Amount filed/ assessed Unused amount 89,747 $ 89,747 $ 93,958 93,958 56,373 56,373 62,640 62,640 109,498 109,498 76,625 76,625 December31,2019	Unrecognised deferred tax assets - $ 93,958 56,373 62,640 109,498 27,365	Usable until - - - - - -
Year incurred 2015 2016 2017 2018 2019	Amount filed/ assessed Unused amount 89,747 $ 89,747 $ 93,958 93,958 56,373 56,373 62,640 62,640 109,498 109,498	Unrecognised deferred tax assets - $ 93,958 56,373 62,640 109,498	Usable until
			- - - - -

	2015 $ 2016 2017 2018 2019	89,747 89,747 $ - $ - 93,958 93,958 93,958 - 56,373 56,373 56,373 - 62,640 62,640 62,640 - 109,498 109,498 109,498 -	89,747 89,747 $ - $ - 93,958 93,958 93,958 - 56,373 56,373 56,373 - 62,640 62,640 62,640 - 109,498 109,498 109,498 -
(48)	Earnings per share Basic (Diluted) earnings per share Profit attributable to ordinary shareholders of the parent Basic (Diluted) earnings per share Profit attributable to ordinary shareholders of the parent	YearendedDecember31,2020
		Weighted average number of ordinary shares outstanding Earnings per share Amount aftertax (sharesinthousands) (indollars) 31,528 $ 45,760 0.69 $ YearendedDecember31,2019	Earnings per share (indollars)
			0.69 $
		Weighted average number of ordinary shares outstanding Amount aftertax (sharesinthousands) 38,797 $ 45,760	Earnings per share (indollars)
			0.85 $

~140~

(49) Supplemental cash flow information

Supplemental cash flow information
Financing activities with no cash flow effects: Retained earnings transferred to common stock	2020 2019 15,689 $ 37,304 $ Years ended December31,

(50) Changes in liabilities from financing activities

Short-term borrowings	Short-term borrowings	Leasepayable	Leasepayable	Long-term borrowings (including current portion) 2020	Long-term borrowings (including current portion) 2020
405,857 $ - 73,823) ( 4,035 336,069 $ Short-term borrowings		253,190 $ - 28,958) ( 13,788) ( 210,444 $		- $ - 118,933 88 119,021 $ 2019
	Short-term borrowings		Leasepayable	Bonds payable (including current portion)	Dividends payable
211,996 $ - 198,646 4,785) ( 405,857 $		309,099 $ - 48,982) ( 6,927) ( 253,190 $		168,106 $ - 171,900) ( 3,794 - $

7. RELATED PARTY TRANSACTIONS

(51) Names of related parties and relationship

Name of related party Relationship with the Company WEE LIANG KIANG Chief Executive Officer of the Company

(52) Significant related party transactions

I. Endorsements and guarantees provided by related parties:

)Significant related party transactions I. Endorsements and guarantees provided by related parties:
The above pertains to guarantee provided by the related borrowings. December31,2020 WEE LIANG KIANG 222,221 $	December 31, 2019
	243,841 $
	party for the Company’s

~141~

(53) Key management compensation

	Year ended December 31, 2020	Year ended December 31, 2020	Year ended December 31, 2019	Year ended December 31, 2019
Salaries and other short-term
employee benefits	$	23,428	$	29,573
Post-employment benefits		1,121		1,390
	$	24,549	$	30,963

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

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

Book value
December 31,
Pledged asset 2020 2019 Purpose
Property, plant and
equipment $ 35,388 $ 40,000 Short-term borrowings
Right-of-use asset 53,957 61,110 Long-term and short-
term borrowings and
lease payable
Financial assets at amortised
cost
- time deposits 59,966 48,586 Short-term borrowings
$ 149,311 $ 149,696
----- End of picture text -----

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

None

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

The subsidiary, Wuxi Jingxin, reduced capital amounting to RMB 15 million and returned it to the minority equity shareholders as resolved by the Board of Directors on September 30, 2020. The shareholding ratio of the Company increased to 100% from 93% after the capital reduction. The capital reduction had been registered in January 2021.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Relevant liability and capital ratios are provided in balance sheets for each period end.

(2) Financial instruments

A. Financial instruments by category

~142~

December 31, 2020 December 31, 2019

	December31,2020	December31,201
Financial assets Financial assets at amortised cost Loans and receivables Cash and cash equivalents Financial assets at amortised cost Accounts receivable Other receivables Guarantee deposits paid Financial liabilities Financial liabilities at amortised cost Short-term borrowings Accounts payable Other payables Long-term borrowings (including current portion) Lease liability	740,600 $ 146,012 414,609 13,070 12,052 1,326,343 $ 336,069 $ 154,426 51,775 119,021 661,291 $ 210,444 $	472,198 $ 218,665 520,221 2,145 15,109 1,228,338 $
		405,857 $ 167,432 78,415 -
		651,704 $
		253,190 $

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.
(b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.
ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.
iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.
iv. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: RMB, SGD and USD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~143~

Foreign currency (in thousands) Exchange rate 2,543 $ 7.98 2,718 6.53 871 362.61 673 1.32 495 0.20 4,813 0.01 55,261,885 0.00007 25,677,399 $ 0.00007 459 1.32 26,373 0.01 1,685 1.62 2,040 362.61 6,470 34.35 Foreign currency (in thousands) Exchange rate 3,301 $ 7.82 2,589 6.96 1,129 331.15 605 1.34 35,872 0.19 42,985 0.01 67,551,981 0.00007 32,765,462 $ 0.00007 214 1.34 41,243 0.01 4,000 0.19 1,256 1.51 1,102 331.15 1,550 29.94 7,040 33.62 925 22.27	Foreign currency (in thousands) Exchange rate 2,543 $ 7.98 2,718 6.53 871 362.61 673 1.32 495 0.20 4,813 0.01 55,261,885 0.00007 25,677,399 $ 0.00007 459 1.32 26,373 0.01 1,685 1.62 2,040 362.61 6,470 34.35 Foreign currency (in thousands) Exchange rate 3,301 $ 7.82 2,589 6.96 1,129 331.15 605 1.34 35,872 0.19 42,985 0.01 67,551,981 0.00007 32,765,462 $ 0.00007 214 1.34 41,243 0.01 4,000 0.19 1,256 1.51 1,102 331.15 1,550 29.94 7,040 33.62 925 22.27	Bookvalue Degree of (NTD) variation 87,025 $ 1% 76,335 1% 29,926 1% 18,906 1% 2,129 1% 1,310 1% 110,395 1% 51,295 $ 1% 12,888 1% 7,178 1% 57,861 1% 70,050 1% 222,221 1% December31,2020 December31,2019	Bookvalue Degree of (NTD) variation 87,025 $ 1% 76,335 1% 29,926 1% 18,906 1% 2,129 1% 1,310 1% 110,395 1% 51,295 $ 1% 12,888 1% 7,178 1% 57,861 1% 70,050 1% 222,221 1% December31,2020 December31,2019	Effect on Effect on other comprehensive profit or loss income 870 $ - $ 763 - 299 - 189 - 21 - 13 - 1,104 - 513 $ - $ 129 - 72 - 579 - 701 - 2,222 - Sensitivityanalysis	Effect on Effect on other comprehensive profit or loss income 870 $ - $ 763 - 299 - 189 - 21 - 13 - 1,104 - 513 $ - $ 129 - 72 - 579 - 701 - 2,222 - Sensitivityanalysis
Foreign currency (in thousands) 3,301 $ 2,589 1,129 605 35,872 42,985 67,551,981 32,765,462 $ 214 41,243 4,000 1,256 1,102 1,550 7,040 925	Exchange rate	Bookvalue (NTD) 110,975 $ 77,521 37,959 18,109 154,264 11,483 145,910 70,772 $ 6,398 11,363 17,201 42,224 37,037 46,413 236,669 20,598		Sensitivityanalysis
			Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on profit or loss 1,110 $ 775 380 181 1,543 115 1,459 708 $ 64 114 172 422 370 464 2,367 206	Effect on other comprehensive income
	7.82 6.96 331.15 1.34 0.19 0.01 0.00007 0.00007 1.34 0.01 0.19 1.51 331.15 29.94 33.62 22.27				- $ - - - - - - - $ - - - - - - - -

v. Total exchange loss, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2020 and 2019, amounted to $13,734 and $7,853, respectively.

(b) Credit risk

~144~

i.Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii.The Group adopts the following assumption to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the aging of contract payments was over 90 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
iii.The default occurs when the contract payments are past due over 365 days.
iv.The Group classifies customers’ accounts receivable in accordance with credit risk on trade. The Group applies the simplified approach to estimate expected credit loss under the provision matrix basis.
v.The Group used the forecastability of Basel Committee on Banking Supervision to adjust historical and timely information to assess the default possibility of accounts receivable. On December 31, 2020 and 2019, the provision matrix is as follows:

At December 31, 2020 Expected loss rate Total book value At December 31, 2019 Expected loss rate Total book value		Notpast due	Up to 30 days past due	31~90 days past due	91~180 days past due	Over 181 days past due		Total
		0.03% 350,694 $ Notpast due	0.03~4.96% 32,268 $ Up to 30 days past due	0.03~9.69% 17,159 $ 31~90 days past due				417,840 $ Total
		0.03% 463,804 $	0.03~7.81% 38,993 $	0.03~7.81% 14,327 $				523,473 $

vi. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable, contract assets and lease payments receivable are as follows:

receivable are as follows:
			2020			2019
At January 1		$	3,252		$	1,354
Reversal of impairment loss	(		1,371)			-
Provision for impairment			1,583			1,981
Effect of foreign exchange	(		233)	(		83)
At December 31		$	3,231		$	3,252

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities.
ii. Surplus cash held by the operating entities over and above balance required for working capital management are invested in time deposits, choosing instruments

~145~

with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts.

iii. As of December 31, 2020 and 2019, except for non-current liabilities, the Group’s short-term borrowings, accounts payable and other payables are all due within one year. The balance of cash flow within one year is undiscounted and agrees with each account’s balance under the balance sheets.
iv. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Between Between
December 31, 2020 Less than 1 year 1 and 2 years 2 and 5 years Over 5 years
----- End of picture text -----

Non-derivative financial liabilities: Short-term borrowings Accounts payable Other payables Lease liability Long-term borrowings (including current portion) December 31, 2019 Non-derivative financial liabilities: Short-term borrowings Accounts payable Other payables Lease liability	$ 336,069 154,426 51,775 26,727 6,846 Less than 1 year $ 405,857 167,432 78,415 29,426	$ - - - 22,102 29,836 Between 1 and 2 years $ - - - 28,000	$ - - - 46,993 89,751 Between 2 and 5 years $ - - - 61,365	$ - - - 120,595 2,999 Over 5 years $ - - - 139,803

(3) Fair value information

A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2)A.
B. The different levels that the inputs to valuation technique are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability. The fair values of the call and put options issued by the Group are included in Level 3.

~146~

13. SUPPLEMENTARY DISCLOSURES

(4) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: Please refer to table 2.
C. Holding of marketable securities at the end of the period ( not including subsidiaries, associates and joint ventures): None.
D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: None.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 3.

(5) Information on investees

Names, locations and other information of investee companies ( not including investees in Mainland China): Please refer to table 4.

(6) Information on investments in Mainland China

A. Basic information: Please refer to table 5.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

(7) Major shareholders information

Major shareholders information: Please refer to table 6.

14. SEGMENT INFORMATION

(8) General information

Management has determined the reportable operating segments based on the reports reviewed by the Chief Operating Decision-Maker that are used to make strategic decisions. The Group manufactures and sells customized machinery and equipment and parts of automobiles and motorcycles from a geographic perspective and provides information for the Chief Operating Decision-Maker to review. The areas of sales and order receiving are separated into four major areas which are Singapore, China, Indonesia and Europe. The Company’s Chief Operating Decision-Maker also separates into these four areas when managing finance and reviewing operating performance, therefore, Singapore, China, Indonesia and Europe shall be reportable segments.

(9) Measurement of segment information

The Chief Operating Decision-Maker assesses the performance of operating segments based on segment revenues and profit or loss after tax.

~147~

(10) Information about segments and their profit or loss

The segment information provided to the Chief Operating Decision-Maker for the reportable segments is as follows:

Year ended December 31, 2020

									Reconciliation	Reconciliation	Reconciliation
	Singapore		Indonesia			China		Europe		elimination			Total
Revenue from
external
customers
Machinery and	$	28,597	$	-	$	7,287	$	-		$	-	$	35,884
maintenance
service
Parts of		-		41,851		-		-			-		41,851
motorcycles
Parts of		-		243,080		743,245		92,719			-		1,079,044
automobiles
Processing		-		-		9,566		-			-		9,566
Medical devices		15,266		-		-		-			-		15,266
		43,863		284,931		760,098		92,719			-		1,181,611
Inter-segment
revenue		131,491		-		16,709		-	(		148,200)		-
Total segment	$	175,354	$	284,931	$	776,807	$	92,719	($		148,200)	$	1,181,611
revenue
Total segment profit (loss)	($	43,599)	($	30,377)	$	138,162	($	11,856)	($		25,042)	$	27,288
Segment income
(loss):
Depreciation	($	8,067)	($	28,728)	($	26,181)	($	17,087)		$	1,797	($	78,266)
Income tax
expense	$	4,028	($	4,524)	($	17,348)	($	1,239)	($		6,740)	($	25,823)

~148~

Year ended December 31, 2019

					Ye	arendedD	ece	mber31,	2019	2019	2019
									Reconciliation
											and
	Singapore		Indonesia			China	Europe			elimination			Total
Revenue from
external
customers
Machinery and	$	155,637	$	-	$	10,076	$	-		$	-	$	165,713
maintenance
service
Parts of		-		80,328		-		-			-		80,328
motorcycles
Parts of		-		373,257		1,035,919		124,215			-		1,533,391
automobiles
Processing		-		-		15,532		-			-		15,532
Medical devices		601		-		-		-			-		601
		156,238		453,585		1,061,527		124,215			-		1,795,565
Inter-segment
revenue		109,916		-		56,371		-	(		166,287)		-
Total segment	$	266,154	$	453,585	$	1,117,898	$	124,215	($		166,287)	$	1,795,565
revenue
Total segment profit (loss)	($	116,393)	$	3,025	$	200,451	($	13,047)	($		21,740)	$	52,296
Segment income
(loss):
Depreciation	($	7,809)	($	33,220)	($	30,760)	($	18,940)		$	2,782	($	87,947)
Income tax
expense	($	8,161)	($	3,423)	($	33,019)	($	1,465)	($		13,508)	($	59,576)

Note: Because the measurement amount of the Group’s assets does not include the measurement amount of segment assets reviewed by the Chief Operating Decision-Maker, therefore, the measurement amount of assets to be disclosed is $0 in accordance with IFRS 8, ‘Operating segments’.

(11) Reconciliation for segment income (loss)

As the Group’s Chief Operating Decision-Maker evaluates segment performance and determines how to allocate resources based on segment revenue and profit or loss, sales between segments are carried out at arm’s length. The revenue from external parties reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the statement of comprehensive income. The accounting policies of the operating segments are in agreement with the significant accounting policies summarized in Note 4, therefore, no adjustment to operating profit or loss is needed.

(12) Information on products and services

Please refer to Note 14(3).

(13) Major customer information

Major customer information of the Group for the years ended December 31, 2020 and 2019 is as follows:

~149~

		Years ended	December31,
	2020		2019
	Revenue	Segment	Revenue	Segment
Customer A	410,966 $	China	635,935 $	China
Customer B	158,346	China	112,486	China
Customer C	109,785	Indonesia	203,043	Indonesia

~150~

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~151~

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~152~

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~153~

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~154~

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~155~

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~156~

V. If the companies and other affiliated companies have incurred any financial difficulties in the latest year and up to the printing date of this annual report, the impact on the financial status of the Company: None.

~157~

Seven. A REVIEW AND ANALYSIS OF THE COMPANY’S FINANCIAL POSITION AND FINANCIAL PERFORMANCE, AND A LISTING OF RISKS

I. FINANCIAL POSITION

I. FINANCIAL POSITION	I. FINANCIAL POSITION	I. FINANCIAL POSITION
			Units: NT$ thousands
Year Item	2019	2020	Difference
			Amount	%
Current asset	1,716,011	1,693,943	(22,068)	(1.29)
Property, plant and equipment	249,421	266,663	17,242	6.91
Other assets	351,854	303,256	(48,598)	(13.81)
Total assets	2,317,286	2,263,862	(53,424)	(2.31)
Current liabilities	721,683	591,238	(130,445)	(18.08)
Long-term liability	-	112,175	112,175	N/A
Other liability	266,796	261,686	(5,110)	(1.92)
Total liabilities	988,479	965,099	(23,380)	(2.37)
Capital stock	448,268	457,597	9,329	2.08
Capital surplus	372,244	342,507	(29,737)	(7.99)
Retained Earnings	492,743	500,030	7,287	1.48
Exchange difference on translation of foreign financial statements	(134,066)	(163,070)	(29,004)	21.63
Treasurystock	(36,097)	-	36,097	(100.00)
Total equity	1,328,807	1,298,763	(30,044)	(2.26)
Where the difference exceeds 20% and the amount is changed for NT$ 10,000,000, the analysis is as follow: 1. Increase in long-term liability: Mainly due to the company increases long-term borrowings to avoid liquidity debt risks. 2. Increase in exchange difference on translation of foreign financial statements: Mainly due to the depreciation of SGD against TWD in 2020. 3. Decrease in treasury stock: Mainly due to the company cancels the treasury stock of employees who have not transferred overdue.

Source: The annual financial report that has been audited by CPA is based on IFRS.

~158~

II. Financial Performance:

(I) Financial Performance Analysis

Units: NT$ thousand

Year Item	2019	2020	Amount of Increase (Decrease)	%
OperatingRevenue	1,795,565	1,181,611	(613,954)	(34.19)
Gross Profit	437,621	293,338	(144,283)	(32.97)
OperatingExpenses	(324,601)	(238,857)	85,744	(26.42)
OperatingProfit	113,020	54,481	(58,539)	(51.80)
Non-operating income and expenses	(1,148)	(1,370)	(222)	(19.34)
Profit before tax from continuing operations	111,872	53,111	(58,761)	(52.53)
Income Tax Expense	(59,576)	(25,823)	33,753	(56.66)
Profit for theyear	52,296	27,288	(25,008)	(47.82)
Other comprehensive income (loss)	(57,404)	(46,933)	10,471	(18.24)
Total comprehensive income (loss)for theyear	(5,108)	(19,645)	(14,537)	(284.59)
Where the difference exceeds 20% and the amount is changed for NT$ 10,000,000, the analysis is as follow: 1. Operating Revenue, gross profit, operating profit, profit before tax from continuing operations and decrease in profit for the year: Mainly due to the global COVID-19 impact and the overall decline in operations. 2. Decrease in operating expenses: Mainly due to the global COVID-19 impact, the company's management reduced salaries and comply with austerity measures. 3. Decrease in income tax expense: Mainly due to the global COVID-19 impact, the company's profit for the year has decreased, so the corresponding income tax expense also has decreased. 4. Increase in total comprehensive losses: Mainly due to an increase in the exchange difference on translation of foreign financial statements of foreign operating institutions in the current period.

(II) Expected future sales volume and basis

Based on customers' estimated demand, and in viewing of capacity planning and past business experience, the Company set annual shipment target.

(III) The Impact on the Company's future financial business and response plan

The Company is still in the growth stage of the industry, meanwhile, the Company will pay attention to market demand changes all the time, the development of new customers to enhance the Company's profits, continuing to maintain a stable and well financial situation.

~159~

III. CASH FLOW

(I) Analysis of liquidity in the coming year

Item / Year	2019	2020	Amount of Increase (Decrease)	%
Net cash flows from operating activities - inflow(outflow)	401,312	204,993	(196,319)	(48.92)
Net cash flows from investing activities - inflow(outflow)	(184,611)	84,133	268,744	145.57
Net cash flows from financing activities - inflow(outflow)	(38,550)	(2,646)	35,904	93.14
The main reason of change in cash flow in the latest year: 1. Decrease in cash inflow from business activities: Mainly due to the global COVID-19 impact, the current period's net profit decreased and the overall accounts receivable and inventory decreased compared with the previous period, resulting in a decrease in cash inflow from operating activities compared with the previous period. 2. Increase in cash inflow from investment activities: Mainly due to an increase in fixed deposits in the current period. 3. Decrease in cash outflow from financing activities: Mainly due to the company increases long-term borrowings to avoid liquiditydebt risks.

(II) An analysis of the Company's cash liquidity for the coming year

The Company has not yet experienced any shortage of liquidity. As of March 31, 2021, the cash on the Company's account is NT$682,509 thousand. Based on the 2021 budget estimate, it should be sufficient to pay the cash outflow from the investment and financing activities without an insufficient liquidity problem.

IV. The Impact of Major Capital Expenditure Items on Financial Service for Latest Year

The amount of property, plant and equipment purchased by the Company in 2020 is NT$7,907 thousand, which is to expand the production capacity in line with business needs and purchase production line machinery and equipment. The capital source is generated from operations. According to the profit situation of the company, it has no significant impact on the company's finance.

V. The Company's policy for the most recent year on investments in other companies, the main reasons for profit/losses resulting therefrom, plans for improvement, and investment plans for the coming year.

(I) The Company’s Investment in Other Companies Policy

The Company focuses on what they do best. The policy of investments in other companies takes automobile and motorcycle components and press equipment as the investment target. The relevant executive departments shall follow the internal control system “Investment cycle” and “The Regulation of Acquiring or Disposing of Assets” and other procedures, which have been discussed and approved by the Board of Director or shareholders’ meeting.

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(II) The Company's policy for the most recent year on investments in other companies, the main reasons for profit/losses resulting therefrom, plans for improvement.

			Units: NT$ thousand	Units: NT$ thousand
The name of investment company	%	Recognized profit (loss) on investment in 2020	The reasons for profit/losses	Plans for improvement
Patec Pte. Ltd.	100	49,500	Mainly due to investment income recognized under equity-method.	None
Press Automation Technology Pte. Ltd.	100	(19,553)	Mainly due to the global COVID-19 impact, resulting in a decrease in press equipment orders.	Intends to gradually reduce the scale to reduce losses, and transfer the business to Wuxi Patec.
Wuxi Jingxin Precision Machining Co.,Ltd.	93	128,985	Mainly due to the stable operation of automotive components orders.	None.
Wuxi Patec Precision Machining Co., Ltd.	93	(2,035)	Mainly due to the global COVID-19 impact, resulting in a decrease in press equipment orders.	Actively consult and develop customers.
Patec Precision Kft	100	(20,305)	Mainly due to the global COVID-19 impact, causing customers to reduce production	Developed batteries (deep drawing) customers and actively follow up with customers to develop new projects
Patec Medical Supplies Pte. Ltd.	58	(4,483)	Plans to merge the medical business into Patec Pte. Ltd.	Intends to liquidate the company
Kabam Pte. Ltd.	100	546	An order for a security robot has been received.	None.
PT. Patec Presisi Engineering	70	(20,404)	Mainly due to the global COVID-19 impact, causing customers to reduce production	Actively consult and develop customers.
PT. PDF Presisi Engineering	89	(2,623)	Mainly due to the global COVID-19 impact, causing customers to reduce production	Actively consult and develop customers.

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The name of investment company	%	Recognized profit (loss) on investment in 2020	The reasons for profit/losses	Plans for improvement
PT. API Precision	89	(6,359)	Mainly due to the global COVID-19 impact, causing customers to reduce production	Actively consult and develop customers.

(III) The investment plan for the coming year

The Company has stepped into the medical equipment market in recent years. According to the data of the Taiwan Institute of Economic Research, the scale of the global medical equipment market in 2019 reached US$411.6 billion, 5.77% higher than that in 2018. The preferential tax rate and deregulation on the medical materials industry in the United States will effectively promote the development of the industry. In developed countries and China, the population aging speed will accelerate, and the population of chronic diseases caused by the change of life style and the increasingly serious environmental pollution will increase, which will respectively make the demand of mobile medical aids and physiological monitoring system grow significantly. In addition, emerging countries continue to strengthen their basic medical construction, and will therefore have a significant demand for medical devices and equipment. For example, China continues to implement the "2030 Healthy China" strategy to substantially improve the level of medical facilities in the second and third tier urban hospitals in China. BMI Research points out that the global medical material market will reach US$425.3 billion in 2020. With excellent press and cold forming technology, the company not only reduces the environmental pollution caused by the production process, but also effectively improves the product precision and production efficiency. In 2020, the company was selected as a strategic partner of the Islamic Development Bank (IsDB) and cooperated with First Armour, a subsidiary of the King Abdullah II Research and Development Bureau (KADDB) of Jordan, to develop the first fully automated N95 mask in Amman, Jordan Production line. This successful cooperation is expected to expand the company's automated production line to other IsDB bank member states, such as Egypt, Lebanon, and Iraq, and look forward to bringing more profits to the company.

VI. RISK MATTERS

(I) The impact upon the Company's changes in interest, exchange rates and inflation in the latest year, and the measures the company plans to adopt in response:
The impact upon the Company's changes in interest and the measures the company plans to adopt in response:
- To meet operational needs, the Group borrows long-term and short-term
- loans, and the interest expense mainly comes from bank loans and convertible bonds. The Group’s interest expense in 2019 and 2020 is 12,605 thousand and 8,748 thousand respectively, accounting for the operating profit ratio 11.15% and 16.06% respectively in the current year. Facing risks arising from interest rate fluctuations, the financial department of the Group may take the following measures:

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The financial units of the Group will keep an eye on the trend of interest rates and maintain good relationship with financial institutions to obtain a lower cost of capital and reduce liabilities when the company has abundant capital, so as to reduce the interest rate risk.

The impact upon the Company's changes in exchange rates and the measures the company plans to adopt in response:

The Group is multinational operation, which gives rice to the risk of exchange rate in different currencies, including SGD, USD, RP$ and RMB. The relevant risk of exchange rate comes from business transactions, recognized assets and liabilities and the net investment of foreign operations. The Group’s exchange loss in 2019 and 2020 is (7,853) thousand and (13,734) thousand respectively, accounting for the operating profit ratio (6.95%) and (25.21%) respectively in the current year. Facing risks arising from exchange rate fluctuations, the financial department of the Group may take the following measures:

  - (1) Financial personnel collect real-time foreign exchange information at any time, according to the future trend of exchange rates, maintain appropriate net foreign exchange position and provide business reference for quotation.

  - (2) To adjust the position of foreign currency deposits according to the changes in exchange rates, if necessary, to reduce the exchange rate risk by taking buy forward or sell forward exchange agreement and borrowing debts for hedging purposes.

  - (3) According to “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”, the “Operating Procedure for Derivatives Transaction” shall be stipulated as the basis for the transaction of derivative commodities, so as to limit the exchange losses of daily operations to a controllable range.

The impact upon the Company's changes in inflation and the measures the company plans to adopt in response:
- The Group’s past profits and losses have not been significantly affected by
- inflation. If the inflation leads to higher cost of goods purchased, the Group will adjust the sales price properly in addition, the group will review and compile relevant information for management decision making on a regular or irregular basis by referring to the economic data and reports of the government and research institutions.
(II) High-risk investments, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future.
The policy of high-risk investments and highly leveraged investments, the main reasons for the profits/losses, and response measures to be taken in the future: The Group focuses on main business operation and has never evolved in

other high-risk industries. Moreover, the financial policy is based on the principle of conservatism and does not make high-leverage investment, so the risk is still limited.

Regarding the policy of loans to other parties, the main reasons for the profits/losses, and response measures to be taken in the future:

The Group loans to other parties only toward the affiliated companies or the companies which has business with, and moreover, the Group shall comply with the regulations of "The Regulation for Management of Loans to Others" and handles the operation of financing. It has no impact on the profits or losses of the Group’s consolidated financial statements up to the printing date of this

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annual report. The Company will keep following the regulations when it loans to other parties in the future in order to minimize the risk.

Regarding the policy of endorsements and guarantees, the main reasons for the profits/losses, and response measures to be taken in the future:

The Group carries out endorsements and guarantees only toward the affiliated companies or the companies which has business with, and moreover, the Group shall comply with the regulations of the "endorsements and warranties" of the company and handles the operation of endorsements and guarantees. It has no impact on the profits or losses of the Group’s consolidated financial statements up to the printing date of this annual report. The Company will keep following the regulations when it engages in endorsements and guarantees in the future in order to minimize the risk.

Regarding the policy of derivatives transactions, the main reasons for the profits/losses, and response measures to be taken in the future:

The purpose of trading derivatives is hedging the risk of foreign currency assets or debt which is caused by changes in exchange rates. At present, the Group mainly uses forward forex buying (selling) and is in compliance with the Company’s “Procedures for Financial Derivatives Transactions” to minimize the risk.

(III) Future research and development projects, and expenditures expected in connection therewith:

Through the internal education and training, experience inheritance and well knowledge management policy, the Group and each subsidiary accumulated research and development team strength and strengthen the planning and R&D innovation ability of raw materials and products. The main scope of our research and development is to develop new products and process improvement. The Company provides customer high quality of products and services by improving current technical ability and manufacturing efficiency, the ability of developing products. In the future, the Company will continue to invest in research and development and process improvement to ensure the company's advantages in the industry.

(IV) The impact upon the Company's financial operations of important policy and legal developments at home and abroad, and the measures the Company plans to adopt in response:

The Group has been closely observing the important change of policy and law in each investment area, and timely consults legal and accounting experts to evaluate, recommend and plan the response measures in order to fully understand and adapt to the changes of market environment. The important change of policy and law in each investment area has no significant impact on the Company's finance and business in the latest year and up to the printing date of this annual report.

(V) The impact on the Company's financial operations of developments in science, technology, and industry, and the measures the Company plans to adopt in response: In addition to collecting and analyzing the market and technical development and changes of various automobile and motorcycle components at any time to reduce the impact of technological changes, the Group also actively engages in the development of new products and the improvement of press process to stabilize and ensure the source of profits. The change of technology, and industry has no significant impact on the Company's finance and business in the latest year and up to the printing date of this annual report

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(VI) The impact of changes in the Company's image upon its crisis management, and the measures the Company plans to adopt in response

The group has always adhered to the principle of professional, integrity and sustainable management, and values importance to corporate image and risk control. The Group has no major changes in corporate image resulting in crisis management in the last year and up to the printing date of this annual report.

(VII) The expected benefits and potential risks of any merger or acquisition, and measures to be adopted in response:

There is no plan for merger or acquisition in the last year and up to the printing date of prospectus. However, if there is any merger plan in the future, the Company will adhere to the prudent assessment attitude and consider whether or not merger will bring specific benefits to the company to ensure the protection of the Company’s interest and shareholders’ equity.

(VIII) The expected benefits and potential risks of any plant expansion, and measures to be adopted in response:

The Group doesn’t have plan for plant expansion for the coming year.

(IX) The risks associated with any concentration of sales or purchasing operations, and measures to be adopted in response:
The risks associated with any concentration of purchasing operations, and measures to be adopted in response

The Group has more than two suppliers of major raw materials and maintains a good cooperative relationship to ensure the flexibility of procurement and disperse the source of purchase.

The risks associated with any concentration of sales operations, and measures to be adopted in response

The Group mainly produces and sells automobiles and motorcycle components and press production line machine. The majority of customers are international well-known enterprises and their subsidiaries, among which the sales amount to the largest customer of automotive components accounts for more than 30% of the annual net sales. The main reason is that automotive industry is a closed market controlled by minority of companies, and the entry barrier is high. Moreover, in order to control the quality of product, most of automotive enterprises have their long-term stable cooperative suppliers, so it is industry characteristic that the concentration of sales among the world’s top automotive components manufacturers. In recent years, however, in addition to strengthening and consolidating the cooperative relationship with the customers, the group has also been actively developing new customers and dispersing its order sources, with a view to expanding the company's operation scale and further reducing the risk of sales concentration.

(X) Effect upon and risk to the Company if a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the company has been transferred or has otherwise changed hands, and measures to be adopted in response

The directors and major shareholders holding more than 10% of the shares of the Company have no substantial transfer of shares in the latest year and up to the printing date of this annual report.

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(XI) Effect upon and risk to the Company associated with any change in governance personnel or top management, and measures to be adopted in response:

There is no change in governance personnel or top management happened up to the printing date of this annual report. The company has strengthened various corporate governance measures, invited independent directors with financial and legal expertise and set up an audit committee for the sake of enhancing the overall operating efficiency and strengthening the protection of shareholders' equity.

(XII) Litigious and non-litigious matters
If there has been any substantial impact upon shareholders' equity or prices for the Company's securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving the company that was finalized or remained pending during the last two years and up to the printing date of this annual report: None.
If there has been any substantial impact upon shareholders' equity or prices for the company's securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving a company director, supervisor, general manager, de facto responsible person, or major shareholder with a stake of more than 10 percent, and the matter was finalized or remained pending during the last two years and up to the printing date of this annual report: None

(XIII) Other important risks and measures to be adopted in response:

(1) The risk that losing the top management and middle manager: Since the Group was established, the operation strategy, business
experience and industrial contacts accumulated by top management and middle manager have enabled the group to make substantial progress in business expansion. Therefore, the retention of top management and middle manager has a significant impact on the normal operation. The Group is committed to providing a competitive compensation and bonus system, supplemented by employee training, growth and promotion plans, and internal work environment improvement and optimization, to enhance the identification and coherence between top management and middle manager and the company, hence top management and middle manager are rather stable in many years.
(2) The management faces the challenge that the Company becomes listed company.

Although the Group has made remarkable achievements in the business of automobile component industry, after the stock listing, the Company has to face the vast investors, shareholders and professional investment institutions. Furthermore, the Group is a foreign company, it still needs some time to adopt and understand the relevant securities and regulations in Taiwan. Before applying for listing, the Group has been recruiting suitable talents for the operation of the Company, and organises excellent teams to serve as strong backing for the management to meet the challenges of becoming a listed company.

(3) The protection of shareholders' equity

There are many different regulations in companies between Caymen Islands and R.O.C. There are also many different regulations for companies’ operation in both countries. Investors’ view of shareholders’ equity on investing companies in R.O.C. cannot be used for investing companies in Caymen Islands. Investors should understand and consult with professionals ensuring whether or not there is a risk that an investment in Caymen Islands will not be protected by shareholders’ equity.

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Except the above, the Company’s measures to be adopted in response are as follow:

The Company has amended Article of Association in accordance with “Important matters in connection with protection of shareholder' equity of foreign issuer's country of registration checklist” stipulated by Taiwan Stock Exchange and fully disclosed the difference between Article of Association and checklist in the annual report. In the future, if there are major law changes in the Cayman Islands, the Company will also adhere to the principle of full disclosure of information so that investors, creditors and other information users have sufficient and appropriate information to make investment decisions.

(4) Information Security

In terms of information security risk control, the Company has established and implemented the information security management system, and formulated information security policy documents to standardize the information security of the Company. The Company also conducts information security risk assessment and internal information security cycle audits on a regular basis every year to ensure the effectiveness of the management system and legal compliance. Therefore, the risk of information security is not a major operational risk of the Company.

VII. Other Major Items: None

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Eight. Special Disclosure

I. INFORMATION RELATED TO THE COMPANY’S AFFILIATES

(I) Organizational Chart of Affiliated Companies:

==> picture [502 x 290] intentionally omitted <==

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(II) Information on Affiliated Companies

December 31, 2020; Unit: NT$ dollar

Company Name	Date of Incorporation	Address	Capital Stock	Main Business Activity
Patec Pte. Ltd.	09/2006	54 Serangoon North Avenue4 #05-01 Cyberhub North Singapore 555854	SG$ 31,286,731	Investment holding and buying and selling press machines
Press Automation Technology Pte. Ltd.	09/1992	54 Serangoon North Avenue4 #05-01 Cyberhub North Singapore 555854	SG$ 6,247,100	Assembly and selling of equipment
Wuxi Jingxin Precision Machining Co.,Ltd.	02/2002	No. C21-1, Shuofang Industrial Park Area, Phase 5, Xinwu Dist., Wuxi,China.	US$ 5,000,000	Manufacturing and selling of automotive components
Patec Precision Kft Co.,Ltd.	07/2008	3534 Miskolc, Muhi u. 2/a Hungary	HUF$ 157,250,000	Manufacturing and selling of automotive components
Patec Medical Supplies Pte. Ltd.	03/2017	54 Serangoon North Avenue4 #05-01 Cyberhub North Singapore 555854	SG$ 1,035,000	Sales medical device and equipment
Kabam Pte. Ltd.	08/2018	54 Serangoon North Avenue4 #05-01 Cyberhub North Singapore 555854	SG$ 100,000	Application sales of manipulators
PT. Patec Presisi Engineering	08/1997	Jl. Angsana Raya Blok L3-01 Delta Silicon Industrial Park, Lippo Cikarang, Bekasi 17550, Indonesia	US$ 6,200,000	Manufacturing and selling of automotive and motorcycle components
Wuxi Patec Precision Machining Co., Ltd.	07/2009	No. C21-1, Shuofang Industrial Park Area, Phase 5, Xinwu Dist., Wuxi,China.	RMB 10,000,000	Assembly and selling of equipment
PT. API Precision	03/2011	Jl. Angsana Raya Blok L3-01 Delta Silicon Industrial Park, Lippo Cikarang, Bekasi 17550, Indonesia	US$ 1,670,000	Manufacturing and selling of automotive components
PT. PDF Presisi Engineering	09/2011	Jl. Angsana Raya Blok L3-01 Delta Silicon Industrial Park, Lippo Cikarang, Bekasi 17550, Indonesia	US$ 1,360,000	Manufacturing and selling of automotive components

(III) Shareholders in Common of Patec and Its Subsidiaries with Deemed Control and Subordination: None
(IV) The industries covered by the business operated by the affiliates overall: The industries covered by the affiliates overall include the production, manufacture and sale of automotive and motorcycle parts and accessories, and the sale of medical equipment and robotic arms.

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(V) Directors, Supervisors and Presidents of Affiliated Companies:

		As of December 31, 2020; Unit: Shares	As of December 31, 2020; Unit: Shares	As of December 31, 2020; Unit: Shares
Company Name	Title	Name or Representative	Shareholding
			Shares	Percentage shareholding (%)
Patec Pte. Ltd.	Director Director	Wee Liang Kiang Goh Mui Teck William	− −	− −
Press Automation TechnologyPte. Ltd.	Director Director	Wee Liang Kiang Goh Mui Teck William	− −	− −
Wuxi Jingxin Precision Machining Co., Ltd.	Director Director Director Director Director	Wee Liang Kiang Goh Mui Teck William Chang Ping Wee Hong Jie OngJian Ming,Gary	− − − − −	− − − − −
Patec Precision Kft	Director Director Director	Wee Liang Kiang Wee Hong Jie ChangPing	− − −	− − −
Patec Medical Supplies Pte. Ltd.	Director	Wee Liang Kiang	−	−
Kabam Pte. Ltd.	Director	Wee HongJie	−	−
PT. Patec Presisi Engineering	President Director Director Director Director Director President Commissioner Commissioner Commissioner	Wee Hong Jie Ong Boon Hock Ong Jian Ming, Gary Budi Wirawan Kong Djohan Wee Liang Kiang Asan Tatang Sean Hsu	− − − − − − − −	− − − − − − − −
Wuxi Patec Precision MachiningCo.,Ltd.	Executive director Supervisor	Wee Liang Kiang PingChang	− −	− −
Yancheng JingXin Precision Machining Co.,Ltd.	General Manager	Ping Chang	−	−
PT. API Precision	President Director Director Director President Commissioner Commissioner	Wee Hong Jie Ong Boon Hock Kong Djohan Wee Liang Kiang Budi Wirawan	62,500 − 125,000 − −	3.74% − 7.49% − −
PT. PDF Presisi Engineering	President Director Director Director Director President Commissioner	Wee Hong Jie Ong Boon Hock Liao, Tze-Huan Thomas Rahmat Wee LiangKiang	− − − − −	− − − − −

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(VI) The financial position and results of operations of affiliated companies

Unit: NT$ thousands

Name	Capital	Total Assets	Total Liabilities	Net Value	Sales	Operating Profit(Loss)	Profit for the year(After income tax)	EPS(Dollar) (After income tax)
Patec Pte. Ltd.	709,809	982,295	251,784	730,511	110,821	(39,472)	(36,785)	Note
Press Automation TechnologyPte. Ltd.	354,175	174,759	25,187	149,572	59,996	560	372	Note
Wuxi Jingxin Precision MachiningCo.,Ltd.	166,164	1,328,655	224,052	1,104,603	757,094	157,465	138,162	Note
Patec Precision Kft Co., Ltd.	210,643	325,979	303,794	22,185	92,720	(9,763)	(11,856)	Note
Patec Medical Supplies Pte. Ltd.	12,996	6,797	226	6,571	13,735	(7,733)	(7,733)	Note
Kabam Pte. Ltd.	2,301	1,840	7,540	(5,700)	4,523	546	546	Note
PT. Patec Presisi Engineering	139,483	371,887	78,580	293,307	230,700	(13,287)	(20,513)	Note
Wuxi Patec Precision MachiningCo.,Ltd.	43,023	86,795	1,015	85,780	20,684	(3,655)	(2,556)	Note
PT. API Precision	34,314	32,219	19,359	12,860	47,873	(8,385)	(7,163)	Note
PT. PDF Presisi Engineering	37,595	49,196	13,675	35,521	46,028	(3,258)	(2,948)	Note

Note: Not limited company, so earnings per share cannot be calculated.

(VII) Consolidated Financial Statements on Affiliated Companies: refer to page 100 -156

(VIII) Reports on Affiliated Companies: Not applicable.

II. Privately placed securities handling status in the Latest Year and up to the Printing Date of this Annual Report: None.
III. Shares in the Company held or disposed of by subsidiaries in the latest year and up to the printing date of this annual report: None.
IV. Other Necessary Supplementary Notes: None.

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V. The description of significant difference in the regulations on the protection of Taiwan’s shareholders' equity:

The Company has amended its Articles of Association in accordance with important matters in connection with protection of shareholder equity listed in the “Important matters in connection with protection of shareholder' equity of foreign issuer's country of registration checklist”, issued by Taiwan Stock Exchange on December 25, 2019. However, some important matters concerning the protection of shareholder' equity are not applicable under the laws of the Cayman Islands. Please refer to the following table for details (the English version of the Articles of Association shall prevail, and the following Chinese contents are for reference only)

contents are for reference only)
Important matters in connection with protection of shareholder equity	Regulations of Articles and reasons for differences
The definition of “Special Resolution” is that where shareholders representing more than two-thirds of the total number of issued shares of the company present the shareholders' meeting, the resolution is implemented with the consent of more than half of vote cast of present shareholders. Where the total number of shares of present shareholders is less than the aforesaid quota may shareholders representing more than half of the total number of issued shares present the shareholders' meeting, the resolution is implemented with consent of two-thirds of vote cast of present shareholders.	In accordance with the requirement of Letter issued on 2010.04.13 TSEC No. 0991701319 by Taiwan Stock Exchange, article 38 and article 2(1) of Articles of Association stipulates that Special Resolution is the resolution that being passed by more than two-thirds of vote cast of Members as, being entitled to do so, vote in person or, in the case of any Members being Juristic Persons, by their respective duly authorized representatives or, where proxies are allowed, by proxy, present at a general meeting, which Members representing more than half of the total number of issued shares of the Company. At the same time, it complies with the requirements of the Cayman law and Taiwan Company Act on the voting ratio of public companies.
1. A company shall not cancel its shares, unless a resolution on capital reduction has been adopted by its shareholders' meeting; and capital reduction shall be effected based on the percentage of shareholding of the shareholders pro rata. 2. A company reducing its capital may return share prices (or the capital stock) to shareholders by properties other than cash; the returned property and the amount of such substitutive capital contribution shall require a prior approval of the shareholders’ meeting and obtain consents from the shareholders who receive such property. 3. The board of directors shall first have the value of such property and the amount of such substitutive capital contribution set forth in the preceding Paragraph audited	Articles 14 to 18 of the Cayman Islands’ company law have strict procedures and substantive rules for share capital reduction, and the relevant regulations are mandatory regulations, which can be amended only by the change of articles of association. The standard requirements are rather difference in share capital reduction between Cayman Islands’ company law and matters in connection with protection of shareholder' equity checklist. For the avoidance of doubt, based on the advices given from attorney of Cayman Islands, the Company hereby amend article 14 of the articles of association. The Company may reduce its share capital in the manner authorised, and subject to any conditions prescribed by the Law and the Applicable Listing Rules. As for the standard requirements of the matters in connection with protection of shareholder' equity checklist for the Company's

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Important matters in connection with protection of shareholder equity	Regulations of Articles and reasons for differences
and certified by a certified public accountant before the shareholders’ meeting.	capital reduction, the Company uses the way of purchase of shares, which are stipulated in article 22(1) of the Article of Association so as to achieve the standard requirements specified in the left-hand column.
1. If the general shareholders’ meeting is held outside the R.O.C, it shall be reported to the stock exchange for approval within two days after the board of directors' resolution or the shareholders’ convening permission obtained from the competent authority. 2. When the general shareholders’ meeting is held outside the R.O.C., the Company shall engage a professional Shareholder Service Agent within the R.O.C. to handle the shareholders’ voting matters.	As stipulated in the article 30 of Articles of Association, “During the Relevant Period, all general meetings shall be held in the R.O.C.” and no exception, it is no longer necessary to regulate the procedures for approval or declaration of shareholders’ meeting held outside the R.O.C. In addition, foreign issuer will hold general meeting within the R.O.C. during the Relevant Period, but foreign issuer shall engage a professional Shareholder Service Agent within R.O.C to handle the shareholders’ voting matters.
Any one or more Member(s) holding at least three percent (3%) of the issued and outstanding Shares of the Company for a period of one year or a longer time may, by depositing the requisition notice specifying the proposals to be resolved and the reasons, request the Board to convene an extraordinary general meeting. If the board of directors fails to give a notice for convening a special meeting of shareholders within 15 days after the filing of the request, the proposing shareholder(s) may, after obtaining an approval from the competent authority, convene a special meeting of shareholders on his/their own.	Since the foreign issuer is a company established in accordance with the Caymen Islands law, there is no local competent authority who is responsible for reviewing whether or not shareholders shall convene meeting their own. Article 31 of the current Articles of foreign issuer provides that Any one or more Member(s) holding at least three percent (3%) of the issued and outstanding Shares of the Company for a period of one year or a longer time may, by depositing the requisition notice specifying the proposals to be resolved and the reasons, request the Board to convene an extraordinary general meeting. If the Board does not give notice to Members to convene such meeting within fifteen (15) days after the date of the requisition notice, the proposing Member(s) may convene a general meeting. In respect of the requested shareholders may convene a shareholders' meeting by themselves in the preceding sentence, there is no need to obtain approval from the competent authority. This is in accordance with the requirement of Letter issued on 2010.04.13 TSEC No. 0991701319 by Taiwan Stock Exchange, and this shall have no adverse effect on shareholders' equity.

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Important matters in connection with protection
of shareholder equity

Regulations of Articles and reasons for
differences

A shareholder who casts his/her/its vote in
writing or by way of electronic transmission
shall be deemed to have attended the said
shareholders’ meeting in person.

A Member who exercises his voting power at a
general meeting by way of a written ballot or
by electronic transmission, in Caymen Islands,
shall be deemed to have appointed the
chairman of the general meeting as his proxy to
vote his Shares at the general meeting.
Therefore, article 56 of the Articles provides
that the chairman of the general meeting shall
be deemed to have been appointed as proxy.

In case a shareholder who has exercised
his/her/its voting power in writing or by way of
electronic transmission intends to attend the
shareholders' meeting in person, he/she/it shall,
two days prior to the meeting date of the
scheduled shareholders' meeting and in the
same manner previously used in exercising
his/her/its voting power, serve a separate
declaration of intention to rescind his/her/its
previous declaration of intention made in
exercising the voting power under the
preceding Paragraph Two. In the absence of a
timely rescission of the previous declaration of
intention, the voting power exercised in writing
or by way of electronic transmission shall
prevail.

In Ogier's opinion, to the best of his
knowledge, there are no relevant court
decisions in the Cayman Islands. However, the
British case (which is a persuasive case for the
Cayman Islands court) held that even if the
proxy was not revoked in the manner provided
for in the Articles, it did not prevent the
shareholder from cast the vote in person and
excluding the calculation of the voting right of
the entrusted agent.
Article 57 of the Articles of Association of
foreign issuers stipulates “In case a Member
who has cast his votes by a written instrument
or by way of electronic transmission intends to
attend the relevant general meeting in person,
he shall, at least two (2) day prior to the date of
the general meeting, revoke such votes by
serving a notice in the same manner as he cast
such votes. In the absence of a timely
revocation of such votes, such votes shall
prevail. Nonetheless, a Member who attends
and votes at a general meeting in person would
be deemed to have revoked his prior voting
instructions by a written instrument or by way
of electronic transmission, notwithstanding that
such shareholder has not submitted a
revocation notice in accordance with this
Article 57.” Which means that after Members
have cast their votes by a written instrument or
by way of electronic transmission, they don’t
follow the rules mentioned in article 57 of
Article of Association revoking such votes by
serving a notice in the same manner as they
cast such votes at least two days prior to the
date of the general meeting, and still attend and
vote at a general meeting in person.
Notwithstanding that the Members have not
actually sent notice of revocation, the

~174~

Important matters in connection with protection
of shareholder equity

Regulations of Articles and reasons for
differences

Members’ attendance and exercise of their cast
shall be deemed to have revoked their prior
written or electronic exercise of their cast in
accordance with the Articles of Association in
order to comply with the requirements of the
Cayman law.

1.
One or more Members holding three
percent (3%) or more of the total number
of the outstanding shares continuously for
a period of more than one year may
request in writing the Supervisor to file,
on behalf of the Company, an action
against a Director, and Taiwan Taipei
District Court of the R.O.C shall be the
court of competent jurisdiction for the first
instance.
2.
If the supervisor does not file a lawsuit
within 30 days after the request is filed by
the shareholders, shareholders may file a
lawsuit for the company, and Taiwan
Taipei District Court of the R.O.C shall be
the court of competent jurisdiction for the
first instance.

The Company does not have supervisors as it is
foreign issuer. Therefore, according to
Company Act, the regulation that the minority
shareholders request the supervisor to file a
lawsuit against the director, the Company can
replace the supervisor listed in the left column
with an independent director. On the basis of
article 85 of Articles of Association, minority
Members request the Board to authorise any
Independent Director to file, on behalf of the
foreign issuers’, an action against a Director
who has, in the course of performing his/her
duties, committed any act resulting in damage
to the Company or in violation of the Law, the
Applicable Listing Rules or these Articles, with
a competent court, including the Taiwan Taipei
District Court of the R.O.C.

~175~

Nine. Any event that results in substantial impact on the shareholders’ equity or prices of the Company’s securities as prescribed by Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act that have happened in the Latest Year and up to the Printing Date of this Annual Report: None.

~176~

AI assistant

Patec — Annual Report 2021

51988_rns_2021-08-31_720c0a02-f214-4f6f-8057-78eda5fd6b9e.pdf

Patec Precision Industry Co., Ltd.

2020 Annual Report

Printed on May 28, 2021

Table of Contents

One. Letter to Shareholders

2020 business report Dear Shareholders:

2020 operating results

2021 business plan

Two. Company Profile

I. Date of incorporation: June 29, 2011

II. A BRIEF HISTORY OF THE COMPANY

III. GROUP STRUCTURE

IV. Risk Matters:

Three. Corporate Governance Report

I. ORGANIZATIONAL SYSTEM

II. Information on the company's directors, general manager, deputy general manager, assistant general manager, and the supervisors of all the company's divisions and branch units

(I) Information on directors:

Range of Remunerations

4. The remuneration of the company's top five remuneration executives

III. THE STATE OF THE COMPANY’S IMPLEMENTATION OF CORPORATE GOVERNANCE

(II) Operations of the Audit Committee:

Statement of Internal Control System

IV. INFORMATION ON CPA PROFESSIONAL FEES

INFORMATION ON CPA PROFESSIONAL FEES

Currency: NT$

V. Information on replacement of certified public accountant: None.

VII. Evaluation of CPA’s independence:

Note 2: The original director Wee Liang Kiang was dismissed on March 15, 2021.

IX. Relationship information, if among the company's 10 largest shareholders any one is a related party or a relative within the second degree of kinship of another:

Four. Capital Raising Activities

I. CAPITAL AND SHARES

2. Type of Stock

3. General information about the reporting system: None.

(II) Shareholder structure:

(III) Diffusion of ownership:

2. Preferred Share: None.

II. Corporate Bonds (including overseas corporate bonds): None.

III. Issuance of Preferred Stocks: None

IV. Issuance of Global Depository Receipts: None

V. Issuance of Employee Stock Options: None

VI. Issuance of New Restricted Employee Share: None

VII. Status of New Shares Issuance in Connection with Mergers and Acquisitions: None

VIII. Implementation of the Company's Capital Allocation Plans:

Five. Operational Summary

I. BUSINESS ACTIVITIES

3. Current products (services) of the Company

a. Global automobile industry

B. Motorcycle industry overview

C. Machine tool industry overview

C. Machine tool equipment

A. Automobile components

B. Motorcycle components

C. Machine tool equipment

(4) Competition status

(2) Personnel involved in research & development and their educational

(3) R&D expenses invested in latest five years

(III) Long-term and short-term plans for business development.

II. MARKET AND SALES OVERVIEW

2. Market share:

C. Machine tool equipment

4. Competitive niche

Positive factors

Countermeasures:

(III) Supply Status of Main Materials

(V) Production in the last two years

(VI) Sales value for the last two years

III. In the last two years and the number of employees up to the printing date of this annual report

IV. DISBURSEMENTS FOR ENVIRONMENTAL PROTECTION

V. LABOR RELATIONS

VI. IMPORTANT CONTRACTS

Six. AN OVERVIEW OF THE COMPANY’S FINANCIAL STATUS

I. Condensed financial information for the Last 5 Years

2. Condensed Statement of Comprehensive Income– Based on IFRS

II. FINANCIAL ANALYSIS FOR THE PAST 5 FISCAL YEARS

III. SUPERVISORS’ OR AUDIT COMMITTEE’S REPORT FOR THE MOST RECENT YEAR’S FINANCIAL STATEMENT

Patec Precision Industry Co., Ltd.

Audit Committee’s Audit Report

Patec Annual Report 2021

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019`

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31,2020 AND 2019`

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Expressed in thousands of New Taiwan dollars)`

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019`

`PATEC PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019`

`－` (35) Leasing arrangements lessee